Today’s News 29th May 2018

Turkey May Purchase Russian Stealth Fighters, If Delivery Of US F-35s Is Halted

A U.S. Senate committee swiftly passed the latest version of a $716 billion defense bill last week, including a hard-hitting measure to block Turkey from acquiring Lockheed Martin F-35 Lightning II fighter jets.

Democratic Senator Jeanne Shaheen and Republican Senator Thom Tillis are responsible for the new amendment to the National Defense Authorization Act that would eliminate Turkey from the F-35 program over its recent purchase of Russian S-400 anti-missile system.

In response, Turkey pivoted towards Russia, and is expected to acquire Sukhoi SU-57 fifth-generation fighter jets, if Washington chooses to suspend Ankara from the F-35 program.

“Turkey’s manufacturing partner in the US Senate that the F-35 to even want to put embargoes can change the defensive equation. Ankara will not give up its right on the plane it expects to deliver in June. But the option for Russian-made SU has begun to be discussed,” according to the Yeni Safak Turkish newspaper.

If not sure in Plan A, you better prepare for a Plan B. At least, Turkey reportedly considers turning to Russian-made fifth-generation Su-57 fighter jets in case its F-35 deal with the US fails. (Source: Sputnik)

Nevertheless, according to the Turkish newspaper, Ankara is not abandoning its claim to the expensive American fifth-generation fighter jet, with the first of 21 F-35 planes expected to arrive in June. Turkey has merely initiated new discussions as an alternative to the expensive F-35 program if Washington terminates the contract. That alternative, well, is the low-cost Russian-made Su-57 jets, which are nearly halved in price compared to the F-35s.

As of Monday, Ankara has made no official statements on that matter.

While the news reports have yet to be acknowledged by Turkish officials, a source in the Turkish defense industry told Sputnikthat current media reports are based on experts’ opinion and do not reflect the official position of Ankara.

Professor Dr. Beril Dedeoğlu told the Yeni Safak Turkish newspaper:

“If the decision is confirmed by Trump, this may mean that other agreements are also broken. So if you do not sell them to us, we go to other security systems. We have other agreements with Russia, we get it from China. This is not for the benefit of America, it is not meaningful for its interests. Turkey will remind them of this situation.”

Professor Dr. Beril Dedeoğlu. (Source: Yeni Safak)

Military Aviation researcher Hakan Kilic said:

“Military Aviation researcher Hakan Kilic: “Trump if he signed the decision of the US Senate, will turn Turkey into Europe. Turkey does not receive the F 35 type aircraft, as an alternative to Europe with the UK Eurofighter 2000 have. There is no special feature on radar, but it is a much better plane than the F-16, even an F-35. Because their maneuverability is very strong. ”

Military Aviation researcher Hakan Kilic. (Source: Yeni Safak)

Military strategist Abdullah Agar said:

“F-35 type aircraft deal is a deal with mutual obligations. One side has no way to cancel the agreement by itself. But the US has previously shown a similar picture in Iran’s nuclear deal. Now he can do something similar. If it does, it will have many consequences in a strategic sense. Trump (F-35 on the embargo) If the Senate approves the decision of Turkey-US relations will be further stretched. Turkey needed to achieve naturally warfare tools and instruments will enter those other engagements. “

Security Expert Abdullah Agar. (Source: Yeni Safak)

As it turns out, Washington’s politicians could unknowingly be Moscow’s greatest defense salesperson, as Turkey, a member of NATO, is now pivoting towards Russian military hardware, including S-400 missile systems, and now, the possible sale of Russian fifth-generation fighter jets… Well, that was not supposed to happen.
How GDPR Kills The Innovation Economy

Via John Battle’s Searchblog,

It’s somehow fitting that today, May 25th, marks my return to writing here on Searchblog, after a long absence driven in large part by the launch of NewCo Shift as a publication on Medium more than two years ago. Since then Medium has deprecated its support for publications (and abandoned its original advertising model), and I’ve soured even more than usual on “platforms,” whether they be well intentioned (as I believe Medium is) or indifferent and fundamentally bad for publishing (as I believe Facebook to be).

So when I finally sat down to write something today, an ingrained but rusty habit re-emerged. For the past two years I’ve opened a clean, white page in Medium to write an essay, but today I find myself once again coding sentences into the backend of my WordPress site.

Searchblog has been active for 15 years – nearly forever in Internet time. It looks weary and crusty and overgrown, but it still stands upright, and soon it’ll be getting a total rebuild, thanks to the folks at WordPress. I’ll also be moving NewCo Shift to a WordPress site – we’ll keep our presence on Medium mainly as a distribution point, which is pretty much all “platforms” are good for as it relates to publishers, in my opinion.

So why is today a fitting day to return to the open web as my main writing outlet?

Well, May 25th is the day the European Union’s General Data Protection Regulation (GDPR) goes into effect.

It’s more likely than not that any reader of mine already knows all about GDPR, but for those who don’t, it’s the most significant new framework for data regulation in recent history. Not only does every company that does business with an EU citizen have to comply with GDPR, but most major Internet companies (like Google, Facebook, etc) have already announced they intend to export the “spirit” of GDPR to all of their customers, regardless of their physical location. Given that most governments still don’t know how to think about data as a social or legal asset, GDPR is likely the most important new social contract between consumers, business, and government in the Internet’s history. And to avoid burying the lead, I think it stinks for nearly all Internet companies, save the biggest ones.

That’s a pretty sweeping statement, and I’m not prepared to entirely defend it today, but I do want to explain why I’ve come to this conclusion. Before I do, however, it’s worth laying out the fundamental principles driving GDPR.

First and foremost, the legislation is a response to what many call “surveillance capitalism,” a business model driven in large part (but not entirely) by the rise of digital marketing. The grievance is familiar: Corporations and governments are collecting too much data about consumers and citizens, often without our express consent. Our privacy and our “right to be left alone” are in peril. While we’ve collectively wrung our hands about this for years (I started thinking about “the Database of Intentions” back in 2001, and I offered a “Data Bill of Rights” back in 2007), it was Europe, with its particular history and sensitivities, which finally took significant and definitive action.

While surveillance capitalism is best understood as a living system – an ecosystem made up of many different actors – there are essentially three main players when it comes to collecting and leveraging personal data.

First are the Internet giants – companies like Amazon, Google, Netflix and Facebook. These companies are beloved by most consumers, and are driven almost entirely by their ability to turn the actions of their customers into data that they leverage at scale to feed their business models. These companies are best understood as “At Scale First Parties” – they have a direct relationship with their customers, and because we depend on their services, they can easily acquire consent from us to exploit our data. Ben Thompson calls these players “aggregators” – they’ve aggregated powerful first-party relationships with hundreds of millions or even billions of consumers.

The second group are the thousands of adtech players, most notably visualized in the various Lumascapes. These are companies that have grown up in the tangled, mostly open mess of the World Wide Web, mainly in the service of the digital advertising business. They collect data on consumers’ behaviors across the Internet and sell that data to marketers in an astonishingly varied and complex ways. Most of these companies have no “first party” relationship to consumers, instead they are “third parties” – they collect their data by securing relationships with sub-scale first parties like publishers and app makers. This entire ecosystem lives in an uneasy and increasingly weak position relative to the At Scale First Parties like Google and Facebook, who have inarguably consolidated power over the digital advertising marketplace.

Now, some say that companies such as Netflix, Amazon and Apple are not driven by an advertising model, and therefore are free of the negative externalities incumbent to players like Facebook and Google. To this argument I gently remind the reader: All at scale “first party” companies leverage personal data to drive their business, regardless of whether they have “advertising” as their core revenue stream. And there are plenty of externalities, whether positive or negative, that arise when companies use data, processing power, and algorithms to determine what you might and might not experience through their services.

The third major player in all of this, of course, are governments. Governments collect a shit ton of data about their citizens, but despite our fantasies about the US intelligence apparatus, they’re not nearly as good at exploiting that data as are the first and third party corporate players. In fact, most governments rely heavily on corporate players to make sense of the data they control. That interplay is a story into itself, and I’m sure I’ll get into it at a later date. Suffice to say that governments, particularly democratic governments, operate in a highly regulated environment when it comes to how they can use their citizens’ data.

But until recently, first and third party corporate entities have had pretty much free reign to do whatever they want with our data. Driven in large part by the United States’ philosophy of “hands off the Internet” – a philosophy I wholeheartedly agreed with prior to the consolidation of the Internet by massive oligarchs – corporations have been regulated mainly by Terms of Services and End User License Agreements, rarely read legal contracts which give corporations sweeping control over how customer data is used.

This all changed with GDPR, which went into effect today.

There are seven principles as laid out by the regulatory body responsible for enforcement, covering fairness, usage, storage, accuracy, accountability, and so on. All of these are important, but I’m not going to get into the details in this post (it’s already getting long, after all).

What really matters is this: The intent of GDPR is to protect the privacy and rights of consumers against Surveillance Capitalism.

But the reality of GDPR, as with nearly all sweeping regulation, is that it favors the At Scale First Parties, who can easily gain ‘consent’ from the billions of consumers who use their services, and it significantly threatens the sub-scale first and third party ecosystem, who have tenuous or fleeting relationships with the consumers they indirectly serve.

Put another way: You’re quite likely to click “I Consent” or “Yes” when a GDPR form is put in between you and your next hit of Facebook dopamine. You’re utterly unlikely to do the same when a small publisher asks for your consent via what feels like a spammy email.

An excellent example of this power imbalance in action: Facebook kicking third-party data providers off its platform in the wake of the Cambridge Analytica scandal, conveniently using GDPR as an excuse to consolidate its power as an At Scale First Party (I wrote about this at length here).

In short: because they have the scale, resources, and first party relationships in place, At Scale First Party companies can leverage GDPR to increase their power and further protect their businesses from smaller competitors. The innovation ecosystem loses, and the tech oligarchy is strengthened.

I’ve long held that closed, walled-garden aggregators are terrible for innovation. They starve the open web of the currencies most crucial to growth: data, attention, and revenue. In fact, nearly all “innovators” on the open web are in thrall to Amazon, Facebook, Apple, and/or Google in some way or another – they depend on them for advertising services, for ecommerce, for data processing, for distribution, and/or for actual revenue.

In another series of posts I intend to dig into what we might do about it. But now that the early returns are in, it’s clear that GDPR, while well intentioned, has already delivered a massive and unexpected externality: Instead of limiting the reach of the most powerful players operating in the world of data, it has in fact achieved the opposite effect.
China Accelerates Next-Gen Nuclear Weapons Development To Compete With US, Russia

As we have been documenting over the last year and beyond, China is rapidly modernizing its military; unveiling a new stealth bomber, an array of guided-weapons, and deploying further from home. Their most recent focus has been on next generation nuclear weapons – as Beijing ramps up blast experiments for nukes comprised of smaller, smarter warheads designed to limit damage by targeting specific targets, according to the South China Morning Post.

Between September 2014 and last December, China carried out around 200 laboratory experiments to simulate the extreme physics of a nuclear blast, the China Academy of Engineering Physics reported in a document released by the government earlier this year and reviewed by the South China Morning Post this month.

In comparison, the US carried out only 50 such tests between 2012 and 2017 – or about 10 a year – according to the Lawrence Livermore National Laboratory. –SCMP

China’s development of next gen nukes will put them in direct competition with the United States and Russia, sparking concerns by experts over the prospect of a new cold war arms race that has the potential of boiling over into thermonuclear war.

Of primary concern is the notion that nations possessing smaller, targeted nukes might be more inclined to use them vs. larger and more devastating munitions – which could easily lead down the slippery slope of larger nuclear exchanges.

These new weapons are considered more “usable” for tactical tasks such as destroying an underground bunker while generating little radioactive fallout.

Pentagon officials have said the US wants its enemies to believe it might actually use its new-generation weapons, such as smaller, smarter tactical warheads designed to limit damage by destroying only specific targets.

But with these relatively safer and less destructive weapons in hand, governments may end up losing the inhibition to use them. -SCMP

“The use of small warheads will lead to the use of bigger ones,” Beijing-based naval expert Li Jie told the Post. “If other countries use nuclear weapons on us, we have to retaliate. This is probably why there is research to develop new weapons.”

While an international ban prohibits China from testing actual nuclear weapons (a ban North Korea has laughed at for years), major nuclear powers continue to conduct testing via high-powered gas guns that fire high speed projectiles at weapons-grade laboratory materials.

The tests are conducted using a large, sophisticated facility known as a multi-stage gas gun, which simulates the extreme heat, pressure and shock waves produced in a real nuclear blast.

The experiments with the gas gun provide scientists with the data they need to develop more advanced nuclear weapons.

In the past, researchers used supercomputers to draw on historic data derived from live nuclear tests performed before the international ban was imposed in the 1990s.

But new technology that emerged in recent years, such as hypersonic vehicles and artificial intelligence, opened the door for the development of new nuclear weapons that could be smaller in size and more precise.

The gas gun works by using special explosives to force a piston along a hydrogen-filled metal tube. Once the hydrogen gas reaches a certain temperature and pressure, an “impactor” is released which travels at incredibly high speeds of at least 18,640 MPH towards a target.

Smaller than a saucer, the impactor is comprised of the same materials used in a nuclear warhead such as plutonium, metal, plastic or foam of different densities – resulting in a chemical reaction similar to that of a nuclear detonation.

[insert: gas gun.JPG, f29bb5ca-5f25-11e8-a4de-9f5e0e4dd719_972x_130850.jpg , f2cf81f2-5f25-11e8-a4de-9f5e0e4dd719_972x_130850.jpg ]

US gas gun at Jasper facility in Nevada

The impactors are quite difficult to produce, as even the slightest structural defect at the microscopic level of just a few nanometers can ruin the experiment, according to Luo Guoqiang of China’s Minyang research center.

“The making of the impactor involves the cream of precision manufacturing. Thanks to numerous breakthroughs in recent years we are now beating our counterparts in the US with a series of impactors with superior performance,” he said.

Well made impactors, allow experiments to proceed faster at lower cost, while obtaining higher quality data.

Over the past three years, Chinese scientists have carried out more such gas gun tests than the United States has in 15 years.

In tunnels deep under mountains in Mianyang, southwestern Sichuan province, where China’s main nuclear design facilities are based, loud blasts from these experiments can be heard more than once a week.

In comparison, between 2003 and 2017, the US fired a total of 150 simulated shots at its Joint Actinide Shock Physics Experimental Research (Jasper) facility at the Nevada National Security Site. -SCMP

That said, China can’t hold a candle to the United States when it comes to advanced nuclear technology, according to Professor Wang Chuanbin, from the State Key Laboratory of Advanced Technology for Materials Synthesis and Processing at the Wuhan University of Technology.

Wang says that the number of live tests conducted by China pales in comparison with the U.S., which has set off over 1,000 nuclear warheads since 1945 beginning with the Manhattan Project. China, meanwhile, has only carried out 45 live tests.

“It is possible we are in a hurry to catch up,” Wang said.

James Lewis, senior vice-president at the Centre for Strategic and International Studies, a Washington-based think tank, said a new round of the nuclear arms race had already begun, though public opinion had yet to catch up with the grim reality.

The White House is considering a US$1.2 trillion plan to upgrade its nuclear stockpile. Earlier this year, the Pentagon announced it would develop new low-yield nuclear weapons that could be mounted on conventional cruise missiles and launched by submarines.

The White House’s developments are in response to Russia’s recent actions, according to Lewis, who notes that Russian President Vladimir Putin has revealed a series of new nuclear weapon designs – including smaller, tactical nukes – as well as a “super torpedo” capable of wiping out coastal cities.

“It’s not clear to me how successful the Russian programme will be, but it has stirred everyone up on the subject,” Lewis said. “After some debate, the US decided it needed to think about warheads, without the need for actual tests. It wouldn’t surprise me if China saw all this and decided that it had better get in the game.”

Following a February announcement by US officials of a new nuclear weapons policy, an editorial was published in Chinese state-run tabloid Global Times which said that China would seriously consider going public with its tactical, low-yield nuclear weapons program in response.

“China is a nation capable of massively increasing the size and improving the technology of its nuclear stockpiles,” stated the newspaper, adding “China needs a new policy to deal with a new situation.”

And as we mentioned last week, Bank of America’s Mike Hartnett writes that the “trade war” of 2018 should be recognized for what it really is: the first stage of a new arms race between the US & China to reach national superiority in technology over the longer-term via Quantum Computing, Artificial Intelligence, Hypersonic Warplanes, Electronic Vehicles, Robotics, and Cyber-Security.

At the end of the day, the China First strategy will be met head-on by an America First strategy. Hence the “arms race” in tech spending which in both countries is intimately linked with defense spending. Note military spending by the US and China is forecast by the IMF to rise substantially in coming decades, but the stunner is that by 2050, China is set to overtake the US, spending $4tn on its military while the US is $1 trillion less, or $3tn.

This means that some time around 2038, roughly two decades from now, China will surpass the US in military spending, and become the world’s dominant superpower not only in population and economic growth – China is set to overtake the US economy by no later than 2032 – but in military strength and global influence as well.

And, as Thucydides Trap clearly lays out, that kind of unprecedented superpower transition – one in which the world’s reserve currency moves from state A to state B – always takes place in the context of a war.

Which explains BofA’s long-term strategic recommendation: “We believe investors should thus own global defense, tech & cybersecurity stocks, particularly companies seen as “national security champions” over the next 10-years.“
Sanctioning The World, The US Inadvertently "Locks & Launches" Multipolarism

Authored by Alistair Crooke via The Strategic Culture Foundation,

The commemorative medal had already been cast and published. It depicts profiles of Trump and Jong Un, facing each other, at the 12th June historic meeting – at which Jong Un was supposed to disavow and discard his nuclear armament, irreversibly, and then to accept Trump’s gracious benediction. The meeting now is moot (and, since drafting, has been cancelled, blindsiding both Moon and Abe, and now back on), leaving in its wake, a frustrated and angry Trump. And, as we prefigured earlier, instead of realising that Team Trump had not been listening adequately to what Jong Un was signalling, Trump now blames Xi for upsetting ‘the deal’ from being struck.

China’s Global Times makes the point:

“The US unilaterally demands prompt peninsular denuclearization before it provides compensation to Pyongyang. China will not oppose such a deal between the US and North Korea. However, can Washington achieve it? Pyongyang has just given an answer … It would be OK if Washington pressures Pyongyang to gain an edge in negotiations, but Washington should think twice about the possibility of pushing the Korean Peninsula back to fierce antagonism.

It is clear from China’s perspective that the US has overestimated its weight in forcing North Korea to accept its demands. The US has forgotten the awkward situation it was in last year when it could not stop North Korea’s nuclear and missile tests, and the difficulty of taking military action against North Korea.

The US has always believed it was duped by North Korea, which is, in fact, far from correct. The US was responsible for the aborted peninsula resolutions, multiple times.”

Irritated too, by harsh comments made by ‘trade hawks’ on the lack of tangible result in trade negotiations with China (Steve Bannon, for example, told Bloomberg that Trump “changed the dynamic regarding China – but in one weekend, Secretary Mnuchin has given it away”), Trump now seems to be set to pivot towards a tougher China trade stance, saying that the talks had not achieved much, and that a new framework might be needed.

The Singapore summit cancellation (blamed in part, on Xi), and the disappointment with trade talks, arrives on the heels of the Pentagon revok ing China’s invitation to participate in RIMPAC, ‘the world’s largest naval exercise’, because of Beijing’s “aggressive actions in the South China Sea, which have recently included reports that it quietly installed ‘defensive’ missiles in the Spratly Islands – capable of striking US territory. Undeterred however by Pentagon threats, China responded by warning that its new J-20, fifth generation, stealth fighter, will henceforth be flying patrols in Taiwan’s airspace – a clear signal that Xi wants ‘his island’ back, and plans to get it.

In short, US friction with China is on an upwards trajectory, and may spike further, were Washington now to threaten the Korean peninsula with military action of some nature.

Friction is not confined to the US relationship with China however. Trump’s conversion to full-court ‘neo-Americanism’ (see here), it seems, has put Washington at odds with the World at large: Trade wars (China, Russia, EU & Japan), sanctions (Russia, Iran, et al), currency wars (Turkey, Iran Russia), etcetera, etcetera. This level and breadth of friction is not sustainable. The psychic tension must lead either to something somehow snapping (explosively) to break the tension, or to a marked U-turn in language and behaviour that relieves pressures more gently. At the moment we are still in the updraft. Trump has provoked literally everyone (even the usually compliant Europeans), as never before. And, consequently (and inadvertently), has accelerated markedly, the arrival of the incoming new global order – and, by heightening geo-political tension nearly everywhere, has accelerated further steps towards global de-dollarisation.

Again, even the Europeans are rueing that they chose not to configure the Eurozone, as distinct and separate to the dollar hegemony – when they had the chance. Now they pay the price of their impotence in their – now ‘outlawed’ – trade with Iran. Rather too late in the day, the EU proposes to abandon the petrodollar for Euros in respect to their purchases of Iranian oil; but in all probability, it will be to no avail. EU leaders stand shocked and angered by the ruthlessness by which the US intends to strangle all EU commerce with Iran.

What is interesting here, is how China views the nature of the friction with the US, and its root cause: It – via a Global Times op-ed – starts with a clear warning: “When the second round of trade talks finished last week, a number of [US] media reports were hailing the end of the trade war threat. Some even said that China had won the first round of the negotiations with the US: This conclusion is totally wrong, and the idea that the trade friction has been resolved, is groundless. There hasn’t been a trade war yet, just a series of warnings…” (Emphasis added).

The author then goes on to say that US trade deficits are not at the root of the friction between the two states: “The real culprit is the monopoly of the US dollar in the global market”, and the enforced use of the dollar to settle payments. The US must “avoid over-supply of the dollar, and allow greater use of other currencies such as the yuan and the euro to promote more balanced currency supply … [and] the US must amend its currency policy”.

President Putin is saying the same: Addressing the Russian parliament, he said that “the whole world sees the dollar monopoly is unreliable: It is dangerous for many, not only for us”. He added that sanctions, and trade actions via the WTO, are increasingly being improperly used by the US primordially, to secure competitive advantage, or to hold back competitors’ economic development (a principal Chinese complaint).

In other words, they want the ‘US-led global order’ swamp drained, just as much as Trump desires to see the Washington swamp drained.

Trump seems happy however, to use ’swamp’ tactics toward the external world in order to make America Great again (even as he decries the Establishment ’swamp’ at home), but the non-West is as thoroughly disenchanted by the ‘global order swamp’ tactics as is Trump’s base: They want the dollar hegemony gone, their own sovereignties restored – and are re-grouping politically to achieve it. Its parts, though distinct, seem to be coming together.

The mafia-like, Trump ‘shakedown’ of Chancellor Merkel (‘give up Nord Stream II, or we’ll shake you Germans down, in terms of Steel and Aluminum), firstly, is catalyzing the possibility of a major re-orientation of European policy.

The European resolve on Russia sanctions long has been shaky: German and Italian businesses have been hard hit financially, and it has been essentially Merkel who held the European ‘line’. These European sanctions are solely Ukraine-related, and the Chancellor has been talking with Putin in Sochi about Ukraine. There, in Sochi, Putin offered two ideas: a UN peace-keeping force for Ukraine, and continued transit of Russian gas through the Ukraine corridor (a major European point) – if that were to prove commercially viable.

If these thoughts prove to be fecund, it would allow Merkel to front-run ‘the inevitability of an Italian ‘no’ to renewal of Russia sanctions in September’. She could be ‘leading again’: taking forward an initiative of her own – balm to the European ego after the disappointing experience of JCPOA. Soothing the Ukraine irritant, in this way, would also allow a Germany – now, in this new US tariff era, even less open to taking a ‘hit’ on European delinquent debt, or to re–financing French infrastructure – to view Russia as a natural partner. It might also allow her to defuse somewhat the immigration ‘bomb’ by agreeing with Putin a mechanism by which the some of the one million Syrian refugees in Germany, return home. Next week, Merkel goes to China, to see how to finesse US pressure on Europe to side with America – against China. We may find, contrarily, that Germany ends up closer to China, which has been investing heavily in Germany, rather than closer to the US (though Germany cannot easily avoid being pig-in-the middle in this trade fight).

Of course, the Anglo ‘Establishment’ will do almost anything to stop the political centre of gravity shifting from the shores of the Atlantic, eastwards. The head of the British Security Service (MI5) has already been sent on a mission by Washington to hype the Russian ‘threat’ to a gathering of thirty European states; and the US envoy in Kiev, Kurt Volker, declared American military support for retaking the breakaway self-proclaimed republics of Donetsk and Lugansk.

At the same time, for Japan, the Korean peninsula has been long viewed as a buffer between it and the mainland. Its division however, and the American presence in the south, had seemed the guarantor of the buffer. But then the South gave Moon a mandate for re-unification – and Jong Un in response, dramatically began his charm offensive. The status quo of the ‘buffer’ that had been a given, evidently was no longer ‘a given’. There might be an agreement and, even potentially, over time, increased Chinese influence there. Professor Victor Teo n oted that “Trump’s agreement to meet the North Korean leader Kim Jong-un, had sidestepped Abe and “cut him off at his knees”.

Even as a possibility, this was a serious problem for Japan, who would lose its buffer with China – and depending on the extent of any putative US withdrawal from the region – lose its defence umbrella too. Equally unnerving, Politico notes, was “Trump’s apparent U-turn on the Trans-Pacific Partnership. In January 2017, three days into his presidency, Trump reneged on Barack Obama’s China-containing, 12-nation trade deal.” “It humiliated Abe, who 67 days earlier hustled to Trump Tower to head off Washington’s TPP exit. Twelve months later, Trump added salt to those wounds by adopting a weak dollar policy and slapping duties on steel and aluminum — 25 percent and 10 percent, respectively. He doled out exemptions to Canada, Mexico and others, but none for best friend Abe. Then came Trump’s proposed $150 billion worth of taxes on goods from China, Japan’s main export market.”

So, not surprisingly then, Abe has reached out to China, both to hedge against the US on tariff worries, and to insert Japan into the strategic discussions on Korea’s future (the Chinese premier Li Keqiang made an official visit to Tokyo on 9 May to participate in trilateral talks with the Japanese and South Korean leaders).

The point here is that this trilateral re-set of relations followed high-level economic talks between China and Japan last month, and recalling China’s clear warning about the dollar problem, and the need to widen the use of the Yuan and other currencies in trade, it is not hard to guess that Chinese-Japanese trade will gradually be de-dollarised, if these talks succeed.

In the same vein, Lawrence Sellin of The Daily Caller reports that:

“Chinese efforts towards Iran-Pakistan cooperation have also borne fruit. In recent months, there has been a flurry of agreements in trade, defense, weapons development, counter-terrorism, banking, train service, parliamentary cooperation and — most recently — art and literature.

Secret security-related discussions among the Chinese, Pakistanis and Iranians military officials have been ongoing for at least a year. A major stimulus for those discussions has been the planned construction of a Chinese naval base on Pakistan’s Jiwani peninsula, immediately west of Gwadar near the Iranian border…

A China-Iran-Pakistan alliance would have sweeping ramifications for U.S. foreign policy. For starters, it would render our current efforts in Afghanistan untenable, most likely provoking an American exit under conditions dictated by the Chinese and Pakistanis. It would initiate the beginning of an anti-access, area denial strategy against the U.S. Fifth Fleet in the Persian Gulf and Arabian Sea region, similar to what the Chinese have attempted to implement against the U.S. Pacific Fleet in the South China Sea. Even the mere contemplation of such an alliance could give the Iranians considerable leverage in the face of American sanctions.”

Iran has already joined the East Asian Economic free trade area – and on 9th June, will also be attending the Shanghai Co-operation Council 2018 summit, in China. (It seems that Iran is not exactly being ostracised post-JCPOA.)

What links these many parts to the jigsaw however, is the Chinese (and Russian and Iranian view) that the Yuan and the Euro need to be more readily available as currencies in which trade is conducted – and “that the US must amend its currency policy” (that is to end its oscillation between strong and weak dollar cycles, which has been so profitable for US financial institutions, but lethal to Emerging Markets). Virtually everyone agrees on this now.

For this to happen, China needs to widen and deepen the Yuan base, and to provide a liquid market in Chinese sovereign debt. The Shanghai oil futures market is already making its impact on deepening China’s sovereign bond market (as traders park their Yuan proceeds in it, knowing that ultimately the Yuan may be redeemed for gold). US sanctions on Iran will give this further impetus, as Iranian oil becomes sold in Shanghai. The Chinese-owned London Metal Exchange has lately announced that it will begin trading Yuan currency commodity options, too. Soon we will have Yuan-based commodity benchmarks. All in all, the use of the dollar in non-US trade, is being, step by step, progressively shrunk.

But the second Chinese requirement for resetting the trading world by the US ‘amending its currency policy’, serendipitously seems to be occurring as a result of autonomous domestic financial dynamics: Trump’s ‘weak dollar’ has been giving way to elevated dollar values (for a variety of reasons). It provides the perfect conditions for China gently to devalue the Yuan (which has been appreciating against the dollar over recent months), and for Europe to do the same, in a co-ordinated downward float against a spiking dollar. The lower exchange value of Yuan and Euro simply will partly, or wholly, reverse the impact of US sanctions on exports to the US. Might this currency co-ordination too be on the agenda for Merkel next week in China?

If these US policies are not sustainable, what then? The primal flaw to the neo-con maximum leverage doctrine is its lack of any easy ladder down which to climb that does not appear to be a national US humiliation. Usually, if pressure doesn’t work, it is assumed that it was because there was not enough of it – for example, Trump attributes the weaknesses to the JCPOA to Obama failing to let the Iranians stew in sanctions for long enough. Obama cut the pressures too early in Trump’s view – and hence got a ‘flawed agreement.’

A deeper point – and one made by the Chinese in respect to North Korea – is that others do not think in the way of President Trump. The radical utilitarianism evident when Trump says that Jong Un will be “safer, happier and richer” if he accepts Trump’s ultimatum reflects precisely the shallow materialism, on which the global political tide has turned. The so-called ‘populist’ call for a return to traditional national values precisely is a rejection of JS Mills type of utilitarian politics. It is, as it were, the wish to return to being human, in a rounder way.
Watch: Israeli Autonomous Drone Evacuates Wounded, Delivers Cargo In IDF Demonstration

Tactical Robotics (a subsidiary of Urban Aeronautics Ltd.), based in Yavne, Israel, recently debuted its autonomous drone named Cormorant, a single-engine Vertical Take Off and Landing (VTOL) aircraft with internal lift rotors enabling it to land and take off almost anywhere. The drone’s radical new design offers life-saving technologies onto the modern battlefield and emergency disaster situations.

Tactical Robotics (a subsidiary of Urban Aeronautics Ltd) has taken the lead in the development of the Cormorant. (Source: Tactical Robotics)

Earlier this month, the Israel-based robotics company successfully completed its ﬁrst “mission representative” demonstration for its primary customer, the Israel Defence Forces (IDF). The demonstration was conducted at Megiddo Airﬁeld in the Galilee, according to the Tactical Robotics press release. The Cormorant drone performed a series of pre-planned ﬂights to a speciﬁed point of delivery, offloading specialized cargo, and loading of a manikin that simulated a wounded soldier on the battlefield, which was then returned to the point of origin.

“The demonstration, a combination of cargo delivery and casualty evacuation, reﬂects Cormorant’s unique dual-role capability as the only UAS recognized by NATO to fulﬁll both cargo delivery and CasEvac missions. As such, the aircraft is designed to exceed the standard reliability and handling qualities required of a typical, tactical UAS in order to meet the requirements to safely ferry human “cargo” back from the battleﬁeld,” Tactical Robotics said.

Cormorant IDF Mission Demo May 2018

Cormorant’s rotor arrangement minimizes its footprint. Internal lift rotors embedded underneath the aircraft within the airframe — allows it access to obstructed areas with wires, buildings, forests, jungles, and even challenging terrain, where helicopters could never attempt a touchdown.

The aircraft’s single turbocharged engine powers the two lift rotors and two smaller rotors mounted vertically on either side of the drone’s tail.

According to Tactical Robotics’s website, the engine gives the Cormorant the ability to lift over 1,000 pounds of cargo — or about two wounded soldiers.

Cormorant CasEvac Loading at IDF demo. (Source: Tactical Robotics’s YouTube)

The mission range of the drone is about 30 miles at over 100 mph. The drone’s design followed the most stringent FAA design requirements for rotorcrafts, which could boost its chances for broad adoption in military, civilian, and even industrial applications.

The Cormorant for casualty evacuation and cargo demonstration for the IDF

In 2017, Cormorant completed its first flight over low terrain, and, in 2018, the aircraft was recently tested for military applications by the IDF. The company expects the drone to be in full operational use by 2020, which could complement IDF soldiers in a war with Syria and or Iran.
London-to-Langley Spy Ring; The Roots Of Obamagate Become Clearer

A recent article by George Neumayr in The American Spectator provides an excellent forensic dig into the earliest stages of the US Intelligence Community’s surveillance of people in Trump’s orbit – and makes clear something that many pointing to a politicized “witch hunt” have long suspected; the Obama DOJ/FBI began looking into “Trumpworld” and the Russians long before the official timeline would suggest.

Moreover, the operation was conducted in close coordination with foreign counterparts, primarily the United Kingdom and Australia, but primarily the former.

All of this raises plenty of questions, but one conclusion about this epic fiasco requires no spying: the fingerprints of the British are all over it. –American Spectator

Here is George Neumayer explaining, how the “roots of Obamagate become clearer” originally published in The American Spectator.

* * *

Even before the first Republican primary, a London-to-Langley spy ring had begun to form against Donald Trump. British spies sent to CIA director John Brennan in late 2015 alleged intelligence on contacts between Trumpworld and the Russians, according to the Guardian.

Here’s the crucial paragraph in the story:

GCHQ first became aware in late 2015 of suspicious “interactions” between figures connected to Trump and known or suspected Russian agents, a source close to UK intelligence said. This intelligence was passed to the US as part of a routine exchange of information, they added.

Notice it doesn’t say the “Trump campaign” but “figures connected to Trump.” One of those figures was Michael Flynn, who didn’t join the campaign until February 2016. But Brennan and British intelligence had already started spying on him, drawing upon sham intelligence from Stefan Halper, a long-in-the-tooth CIA asset teaching at Cambridge University whom Brennan and Jim Comey would later send to infiltrate the Trump campaign’s ranks.

It appears that Halper had won Brennan’s confidence with a false report about Flynn in 2014 — a reported sighting of Flynn at Cambridge University talking too cozily with a Russian historian. Halper had passed this absurdly simpleminded tattle to a British spy who in turn gave it to Brennan, as one can deduce from this euphemistic account in the New York Times about Halper as the “informant”:

The informant also had contacts with Mr. Flynn, the retired Army general who was Mr. Trump’s first national security adviser. The two met in February 2014, when Mr. Flynn was running the Defense Intelligence Agency and attended the Cambridge Intelligence Seminar, an academic forum for former spies and researchers that meets a few times a year.

According to people familiar with Mr. Flynn’s visit to the intelligence seminar, the source was alarmed by the general’s apparent closeness with a Russian woman who was also in attendance. The concern was strong enough that it prompted another person to pass on a warning to the American authorities that Mr. Flynn could be compromised by Russian intelligence, according to two people familiar with the matter [italics added].

Again, that’s early 2014 and a file on Flynn is already sitting on Brennan’s desk. In 2015, as word of Flynn’s interest in the Trump campaign spreads, the London-to-Langley spy ring fattens the file with more alarmist dreck — that Flynn had gone to a Russian Television gala and so forth. By February 2016, when it is reported that he has joined the Trump campaign as an adviser, the spy ring moves into more concerted action.

It had also extended its radar to Carter Page, George Papadopoulos, and Paul Manafort. Peter Strzok, the FBI’s liaison to Brennan, could have already clued Brennan in to Page and Manafort (both were already known to the FBI from previous cases), but Brennan needed British intelligence for Papadopoulos and it delivered. Either through human or electronic intelligence (or both), it reported back to Brennan the young campaign volunteer’s meetings in Italy and London with Professor Joseph Mifsud, whose simultaneous ties to British intelligence and Russia are well known.

The stench of entrapment that hangs over this part of the story is unmistakable, and the spy ring’s treatment of Papadopoulos looks flat out cruel. Every figure who plays a key role in tripping him up — Mifsud, the Australian diplomat Alexander Downer, and Stefan Halper — has ties to British intelligence.

David Ignatius, who is the Washington Post’s stenographer for John Brennan, dropped a wonderful crumb in his passive-aggressive column about Stefan Halper this week — “Stefan Halper is just another middleman.” A middleman between whom? The answer is British intelligence and Brennan/Comey. As if to punctuate this point, Ignatius — after belittling Halper as a gossipy academic who is no “James Bond,” a sign that his handlers will burn him and profess ignorance of his entrapping methods (when this happens, remember Comey’s “tightly regulated” tweet) — turns to a “former British intelligence officer” to vouch for Halper’s credibility. This unnamed former British intelligence officer adopts a very knowing, almost proprietary, tone, as if to acknowledge that the spying on the Trump campaign was a British-American venture from the start. Ignatius writes, “A former British intelligence officer who knows Halper well describes him as ‘an intensely loyal and trusted U.S. citizen [who was] asked by the Bureau to look into some disconcerting contacts’ between Russians and Americans.”

“Intensely loyal and trusted,” “asked by the Bureau” — how would he know? These are the insiderish phrases of a handler or fellow member of the ring.

The size of the London-Langley spy ring isn’t known but its existence is no longer in doubt. In light of it, Obama State Department official Evelyn Farkas’s bragging bears reexamination. It is obvious that gossip about the transatlantic ring had spilled out to State Department circles and other Obama orbits, generating chatter even from a relatively minor figure like Farkas (who may have just been repeating what she had heard at a cocktail party after she left the administration):

I had a fear that somehow that information would disappear with the senior people who left. So it would be hidden away in the bureaucracy, and that the Trump folks if they found out how we knew what we knew about the Trump folks, the Trump staff’s dealings with Russians, that they would try to compromise those sources and methods, meaning we would no longer have access to that intelligence. So I became very worried because not enough was coming out into the open and I knew there was more.

Whispers of the ring’s work had picked up by the time Brennan had formed his “inter-agency taskforce” at Langley and Comey’s official probe began. Brennan was presiding over a “turf-crossing operation that could feed the White House information,” as revealingly put by Michael Isikoff and David Corn in Russian Roulette. The operation also crossed an ocean, placing a central scene of the spying in London as the ring oafishly built its file.

What started in late 2015 with promise ended in panic, with British sources for the alleged Trump-Russia collusion going silent or mysteriously disappearing. A few days after Trump’s inauguration, the director of GCHQ, Robert Hannigan, abruptly resigned, prompting the Guardian to wonder if the sudden resignation was related to “British concerns over shared intelligence with the US.” All of this raises plenty of questions, but one conclusion about this epic fiasco requires no spying: the fingerprints of the British are all over it.
Inside Hong Kong's Massive Mail-Order Date-Rape Drug Problem

In the first four months of 2018, Hong Kong authorities have already seized more GBL, a common date-rape drug, than they did during all of 2017 according to the South China Morning Post, citing a senior Chinese customs agent.

Between January and the end of April, authorities recovered 131kg of gamma-Butyrolactone (GBL), a cleaning chemical frequently used in date rapes. To put that in perspective, 124kg of the chemical was seized last year, carrying a street value of nearly HK$4 million (US$512,820). There were no seizures in the first four months of 2017.

Colorless and odorless, GBL was listed by Hong Kong as dangerous in 2012 – while trafficking it carries a maximum penalty of life imprisonment and a HK$5 million fine (US$637,393). Users of the common party drug experience feelings of reduced inhibitions and euphoria, while stronger doses can cause sleepiness, confusion and dizziness.

Warning bells sounded after a local male model and an Australian man were arrested earlier this month at a flat in Central, where customs officers seized 13 litres of GBL. The drug was believed to be intended for use in Hong Kong’s Lan Kwai Fong nightlife district.

The arrests were prompted by the discovery at Hong Kong International Airport’s cargo terminal of 10 litres of GBL, with a street value of HK$200,000, in a parcel sent from Lithuania. –SCMP

After customs officers found 10 liters of GBL hidden in a parcel from Lithuania in mid-May, police posing as couriers carried out a controlled delivery of the shipment to a Hong Kong apartment, where the male model, 53, and a Hong Kong man, 30, were arrested.

“Inside the flat, 3kg of the drug Ice, three litres of GBL and 2kg of various illegal drugs such as cocaine, cannabis buds and resin, and Ecstasy were seized along with some tablets of suspected stimulants and packaging equipment,” a customs officer said, adding “We are still investigating how long it had been used as a drug distribution and packaging centre, and we are also looking into the source of the drugs.”

“We recently noticed some date rape drug in parcels arriving from Lithuania destined for Hong Kong. The parcels stated boldly that the contents were chemicals for industrial use, the customs source said. “The liquid is commonly used as an industrial cleaner in some countries and is perfectly legal. It is widely available on the internet.”

One online shop based in Lithuania said on its website that GBL could be used as a solvent to remove paint, oil, ink and graffiti. A 350ml bottle costs as little as 16.49 euros (US$19.20).

“We send orders through DHL across the entire world,” it said.

In late April, a 25-litre bottle of GBL was found in a parcel from Lithuania when customs conducted a check on an express parcel company in Cheung Sha Wan. On the same day officers arrested two men in an industrial unit in Kowloon Bay, where one more litre of GBL was seized. -SCMP

The Hong Kong Security Bureau’s Narcotics Division states on its website that GBL can result in drowsiness even at low doses, while leading to unconsciousness or death in higher quantities.

“This clear, odourless liquid is often used as a date rape drug and is added to flavoured drinks to mask its salty taste,” it stated. “It can be put into a person’s drink when they are not aware, making them vulnerable to sexual assault or rape.”
US Army Major Reflects On The Tragic Record Of American Regime Change
Authored by Major Danny Sjursen via TruthDig.com,

We used to call him “Mookie.” God, we hated him.

Back in 2006-07, while patrolling the streets of east Baghdad, Muqtada al-Sadr’s Mahdi Army militia was our sworn enemy.

These impoverished, slum-dwelling Shiite youths hit us with sniper fire and deadly improvised explosive devices day after day. They killed and maimed American troops daily, including my boys – Alex Fuller and Mike Balsley – who died Jan. 25, 2007. We’d patch up our wounded, call in a medevac helicopter, then roll back into those city streets the very next day. As we patrolled, Sadr’s ubiquitous face would taunt us, plastered as it was on billboards, posters and flags throughout the neighborhood.

Now, in a truth stranger than fiction, Sadr’s political party has won the recent Iraqi elections. The former warlord and killer of Americans may now play kingmaker in Iraq. Of course, mine is only one – highly biased – side of the story. From Sadr’s perspective, we were occupiers, a foreign military force with no legitimacy in his country. Perhaps he had a point. Still, Sadr’s victory demonstrates just how far off the rails America’s project in Iraq has gone, and it epitomizes the unintended consequences of offensive war and regime change.

When the United States uses its impressive military machine to topple a tyrant – in this case, Saddam Hussein – it’s impossible to predict the course of the chaos that follows. Fracture a society, it seems, and the most nefarious (and well-armed) actors often rise to the top: militiamen, criminal elements, Islamists and sociopaths of various stripes. Sadr is just one example.

Still, Washington never seems to learn. Since October 2001, our military has been ordered to topple at least three sovereign governments—those of Afghanistan, Iraq and Libya—and is theoretically seeking to overthrow another regime in Syria. Republican and Democratic presidents alike have ordered these ill-advised operations, demonstrating the striking bipartisanship of American militarism.

Let us, then, take a tour of the tragic outcomes unfolding today in each of these victims of U.S.-imposed regime change.
Afghanistan was the “good war,” according to former President Barack Obama—the one we had to fight. After all, Osama bin Laden and al-Qaida central were there. So, less than a month after the 9/11 attacks, American bombs and paratroopers started falling on the Taliban regime throughout Afghanistan. It was all over pretty quick. The Taliban surrendered or fled, bin Laden escaped to Pakistan, and that was that. Only the U.S. military never left. What began as a kill-or-capture mission quickly morphed into a lengthy military occupation and an ill-fated attempt to remake Afghan society in America’s own image.

How’s that turned out? Well, the Taliban and anti-American insurgency never really ended. In fact, it’s worse than ever. Washington backed a highly corrupt, venal, Afghan government that lacked legitimacy and was chock full of former warlords. Peace is no closer today than it was in 2001.

Here matters stand in 2018, 17 years into America’s longest war. Consider the biggest story that no one is talking about in today’s Trump-obsessed mainstream media: the recently released report by the Special Inspector General for Afghan Reconstruction. According to this official watchdog agency:
- Afghan troop numbers are decreasing while casualties are increasing.
- More Afghan districts are contested by the Taliban than at any time in recent memory.
- Civilian casualties are increasing.
- Afghanistan’s Taliban-funding opium crop just reached record levels.
- Worst of all, Afghanistan’s gross domestic product is so reliant on foreign aid that it cannot sustain itself independently.
In Afghanistan, the United States turns out to have brought only chaos; to have worsened an already awful social situation. Rather than lessening extremism, U.S. occupation has only emboldened the Taliban and led to the creation of a local Islamic State franchise in Afghanistan’s mountainous east.

Iraq was a war of choice. Based on flawed—if not deceptive—intelligence, the invasion succeeded in toppling Saddam but ushered in looting, criminality, insurgency and a brutal civil war that has never really ended. By backing the once-oppressed Shiites, the U.S. empowered a chauvinist tyranny of the majority and alienated the country’s Kurdish and Sunni minorities. By 2004, both Sunni and Shiite insurgents (including Sadr’s gang) were attacking U.S. troops and murdering civilians in the streets.

Matters temporarily improved in 2009-12, when Washington made a desperate play—paying off former insurgents to turn on the most radical Islamists in their midst. Unfortunately, this was but a Band-Aid on a gaping wound, one that couldn’t staunch the chaos over the long term. When conventional U.S. forces left Iraq in December 2011, they left behind a Shiite autocrat who massacred protesters and oppressed minorities. The civil war again ran hot, Islamic State arose and captured one-third of the country, and the northern Kurds essentially declared de-facto independence. Iraq was fractured, divided and blood-soaked—again.

So it was that U.S. soldiers again re-entered the country. They are still there; fighting and sometimes dying on behalf of a government in Baghdad that will soon be led by one its sworn enemies—Muqtada al-Sadr.

In Libya, “no-drama” Obama assured us, the U.S. could “lead from behind” and let the mostly European international community do much of the heavy lifting in the takedown of yet another dictator, Moammar Gadhafi. It didn’t turn out that way. U.S. airstrikes devastated the regime’s military and an assortment of tribal militias overturned the Libyan government. Gadhafi? Well, he never saw the inside of an international tribunal; instead he was captured and lynched, beaten, sodomized with a bayonet and shot to death. Secretary of State Hillary Clinton glowed in the aftermath of his murder, boasting that “we came, we saw, he died.”

Unfortunately, and ever so predictably, Libya never became the liberal, democratic paradise the Obama administration dreamed of. Instead, seven years of factional warfare have followed. Libya is now fractured, divided between the forces of an autocratic general in the east, a tumultuous “official” government in the west, and sprinkled with fiefdoms of numerous Islamist factions, including a new franchise of Islamic State. Unlike George W. Bush, Obama at least seemed to realize his mistake and the mission’s failure, calling the operation a “shit show” and the “worst mistake” of his presidency.

Libya remains a shit show.
So that’s the tortured record of American regime toppling and regime “building” in the post-9/11 era. Three unabashed failures; the cost: nearly 7,000 American troops killed, hundreds of thousands of civilians dead, millions of refugees, and trillions of dollar spent.

The United States, and the world, is no safer now than it was in 2001. Given the counterproductive and horrific results of the “war on terror,” Washington would have been better served had it dug a massive hole in the Mojave Desert, bulldozed in those trillions of dollars and buried them.

Nonetheless, here we stand, with war hawks atop the Trump administration – led by national security adviser John Bolton and Secretary of State Mike Pompeo – who have repeatedly called for regime change in Iran and North Korea. It’s frightening.

Here’s a thought: When the war drums start beating again – and they will – let us remember the tragic record of the last three failed regime changes perpetrated by Washington and think long and hard before sleepwalking into the next catastrophe.

But don’t hold your breath.
"We Are Due For A Very Rude Wake Up Call": These Are The Biggest Short-Sellers Of Italian Bonds

In the aftermath of today’s political shock in Rome in which the populist coalition of the League and 5-Star launched an open rebellion against the president and Brussles, leaving the country facing a referendum on its Euro membership. and resulting in a furious crash in Italian bonds and bank stocks, which on Monday entered a bear market from their April highs…

… coupled with the sharp, sudden blowout in Bund-BTP spreads to levels suggestive of a news sovereign debt crisis in the Eurozone…

… and confirmed by the soaring redenomination risk not only in Italy, but also Portugal as contagion begins to spread…

… left only one question unanswered: why did it take the market so long to react to what many warned was coming as long ago as lat 2017?

After all, it was in December when we first pointed out a dramatic observation by Citi, which noted that over the past several years, the only buyer of Italian government bonds was the ECB, and that even the smallest political stress threatened a repeat of the 2011 “Berlusconi” scenario, when the freshly minted new ECB head Mario Draghi sent Italian yields soaring to prevent populist forces from seizing power in Italy.

Or maybe it didn’t, and it only took the bulls far longer than the bear to admit that nothing in Europe had been fixed, even as the bears were already rampaging insider Europe’s third largest economy.

Consider that according to the latest IHS Markit data, demand to borrow Italian government bonds — an indicator of of short selling — was up 33% to $33.3 billion worth of debt this year to Tuesday while demand to borrow bonds from other EU countries excluding Italy has risen only 5% this year.

That said, things certainly accelerated over the last week, when demand to borrow Italian bonds soared by $1.2 billion, which according to WSJ calculations, takes demand, i.e. short selling, close to its highest level since the financial crisis in 2008 (while demand to borrow bonds from EU countries excluding Italy has fallen by $800 million over the past week).

Said otherwise, while the events over the past week may have come as a surprise to many, to the growing crowd of Italian bond shorts today’s plunge and the blowout in Italian-German spreads was not only expected, but quite predictable and extremely lucrative… which is also a major problem as Brussels is well-known to take it very personally when a hedge fund profits from the ongoing collapse of Europe’s failing experiment in common everything, and tends to create huge short squeezes in the process, no matter how obvious the (doomed) final outcome is.

So who are these hedge funds who better watch their back?

According to the WSJ, the most prominent Italian short is also the least surprising:

Among big-name managers profiting from the selloff in Italian bonds is Alan Howard, the secretive billionaire co-founder of hedge fund firm Brevan Howard. A little-known hedge fund run personally by Mr. Howard has been betting that Italy’s borrowing costs will rise relative to Germany’s, said two people familiar with the fund’s positioning.

And considering the furious spike in the Italian-German spread, one can safe say that Howard is looking at a paper (for now) profit in the hundreds of millions if not more.

Profits from Mr. Howard’s position in Italy are among bets that have his helped the fund gain 7.5% this month and 13% this year, said one of the people. That makes it one of the top-performing funds to be betting on global bonds and currencies this year.

Another name making it rain as Italy goes down the drain is Robert Citrone’s Discovery Capital Management. According to the WSJ, Citrone, an alumnus of Julian Robertson’s U.S. hedge fund giant Tiger Management, “has also been betting on Italian bond spreads widening, said a person familiar with the matter.”

Of course, it is unclear just how long these funds’ winning ways will continue. As the WSJ accurately notes, betting against BTPs has been next to impossible in recent years, because despite the country’s 130% debt-to-GDP ratio and abysmal economic growth, the ECB’s relentless bond-buying has suppressed yields and made shorting the bonds extremely unprofitable.

Now, however, things are changing, and it is all due to the ECB (again, as we laid out in our December note): “traders say that has changed as the ECB slowly unwinds its stimulus package and political risk rises in Italy.”

“QE has destroyed any sense of risk in the sovereign bond market and we may be due for a very rude wake-up call once the dust settles,” said Joseph Oughourlian, founder of London-based hedge fund Amber Capital.

According to the WSJ, Amber has hedged its positions in Italian banks by betting that the spread between Italian and German government bonds will widen and shorting Italian corporate bonds, and for good reason: as BofA recently showed, in Italy there is “close to a staggering 90% of corporate credits” that now yield less than BTPs.

Yes, this means that according to the market, Italian corporate bonds are safer than the underlying sovereign, in this case Italy, itself, which is virtually impossible in reality, but is all too real thanks to the perverse action of the ECB which continues to buy Italian corporate bonds in the open market week after week, skewing the market beyond comprehension.

Meanwhile, Oughourlian and other shorters say the new government’s spending plans could push the country’s deficit up by €150 billion ($128 billion) while Rome could try to renegotiate its relationship with Europe; there is also the growing threat of a parallel currency which could effectively lead to a “fork” in the euro and the collapse of the common currency, something which Europe thought it had managed to prevent with the 3rd bailout of Greece in 2015.

“What’s most troubling is that markets haven’t yet woken up to this major political risk,” Oughourlian said.

And now that the period of denial is over, everyone else is starting to rush in:

“We’ve seen increased interest in owning volatility, particularly in European banks—not just Italy but other peripheral names,” said James Conway, EMEA head of equity trading strategy at Citigroup. “The theme [we’re seeing] is owning protection on the periphery.”

Needless to say, piling on into what is effectively a trade betting on the dissolution of the Eurozone right now is the worst possible outcome, and assures that it is only a matter of time before the ruthless despotic autocrats in Brussels change the rules once again, banning shorting of Italian bonds altogether, or even forcing shorts to immediately cover their positions, leading to another historic, if brief, short squeeze.

We now eagerly await to see just how long it will take the ECB and Europe’s unelected bureaucrats to put this specific plan into action, crushing countless hedge funds – who still believe in fair and efficient capital markets – in the process.