Dec 30

Today’s News 30th December 2016

  • So Many Questions…

    By Chris at www.CapitalistExploits.at

    There are two things I’ve not done in a while.

    The first of them is to answer some of the questions that come pouring in. My apologies to all those unanswered – lack of response due to volume, not bad manners.

    Hey Chris,

     

    would you mind if I too throw a question at you?

     

    I’m thinking about this for a while now, but never went ahead and actually asked anyone, so here we go: how do you learn all this stuff?

     

    I mean, I don’t have a finance background. I studied philosophy and political science at university, so I’m used to thinking about stuff (from the former, PolSci was mostly BS).

     

    Later this month I’ll turn 28. I work for myself as basically a web developer in the insurance sector and have put away money for a while now. I took notes whenever I saw stuff in the markets for the last two or three years and would’ve been right often enough, but never trusted my judgement and only really invested twice (once in a friend’s company, once in some Mongolian companies just before they went down 90% around 2014).

     

    When a friend introduced me to some people in Mongolia a few years ago and I started consulting in the financial services sector there I asked him if there’s anything I should read to fix my lack knowledge of in finance, but he replied that it was mostly just common sense. I’ve also talked to your friend Kuppy a few times when I was in UB and got a similar impression: that it was just about thinking stuff through.

     

    On the other hand, there’s shitloads of numbers and terms and metrics I don’t know. Most of them are probably irrelevant, but I guess some of them are important I don’t yet know which is which. And you guys do have analysts, right?

     

    When this year I told my aforementioned friend that I wanted to get a CFA to understand the lingo, he told me that all stuff didn’t matter anymore and I think I remember reading something similar in one of your emails a few months ago.

     

    So I’m wondering, how would you go about learning this stuff?

     

    For me, the obvious thing is thinking stuff through, reading financial history, keep earning money from work, slowly migrate it into making money from money through small trial and error steps. I’m wondering though whether I’m missing the quant part. And at the same time I’m worried of getting myself into the sway of dumb non-functioning economic theories and missing the stuff that’s of real importance if I were to focus on the quant part.

     

    I’m curious to hear your thoughts.

     

    – D

    Answer:

    Let’s start with what a friend and business partner loves to say: What equation are you trying to solve?

    I’m going to suggest it’s the following: You’re wanting to know how to evaluate things in order to be comfortable with your investment decisions. Sound fair?

    It’s one problem with our education system. It doesn’t teach us how to think, how to critically examine and question, test and retest in order to find the truth.

    Kuppy is right when he says just think stuff through. So let’s take two real world examples which come to mind.

    Example 1:

    I was just having a discussion with an associate about my belief that we’ve seen the top of the bond market and I think rates are going higher (something I’ve written a lot about). My friend’s in private equity and we had the discussion which he’d not thought about.

    Let’s say you’re an asset manager with a few billion to allocate. What happens to your base case assumptions on asset allocation in a rising rate environment? Well, private equity, which is nuts at the moment anyway, has been competing against fixed income. Easy! How hard is it to beat zero?

    So take away some of the zero and on a relative basis you get capital shifting. This doesn’t require you to understand Black-Scholes pricing, risk parity, foreign exchange flows, or any other “financial” knowledge. Think stuff through and take it beyond first level thinking. Do it lots, do it regularly, and you start training your brain. It’s just a muscle, after all.

    Example 2:

    I’m trying to make sure my kids aren’t completely ignorant. The other day we were at a mall, and I bought them an ice cream in a food hall. Their purpose was to eat an ice cream and mine to get them to think. So there were a dozen food outlets. I asked them to tell me which one they’d buy and why.

    The responses were typical from a 10 and 11-year old. They picked their favourite foods. I told them to pick the one that will make them the most money. So how do you figure that out?

    Basic math and metrics. Shop size (some are bigger than others). Those with larger footprint have higher lease costs but potentially more traffic. So I told them to spend a few minutes and tell me which one is getting the most traffic. Easy: It was McDonald’s.

    Next question. Who’s second? Easy. Sushi place.

    Then a trickier question. I told them to tell me which one is getting the most traffic relative to size. Done. Sushi place. After doing some napkin math with them and making it easy at 50% size difference (it wasn’t but this was teaching them how to evaluate the world and think).

    Next: What’s the average dollar spend at the sushi shop and what’s the average dollar spend at McDonald’s? So they had to do some math, a bunch of guessing, and so on. They guessed the average dollar spend at McDonald’s was about $12 and about $18 at Sushi.

    Back to size of shop. Sushi shop is about half the footprint so probably half the lease costs.

    Staffing was only 2 at Sushi shop and about 8 at McDonald’s (as far as we could tell). That’s the biggest cost (labour). So McDonald’s has about a double on lease costs and a 4x on labour costs, and the average dollar spend is $12 compared to Sushi place at $18.

    Our guesstimates where that McDonald’s runs about 30% more traffic so we can level the playing field by saying that Sushi place gross dollar spend isn’t $18 but 30% less (due to 30% less traffic) so this is $12.60. Easy. Now factoring in half the lease costs and a quarter labour costs my kids quickly figured out that they’d buy Sushi place.

    Sitting there doing my own math on it, if you put a gun at my head and told me to buy one I’d buy Sushi place and I reckon I’d be correct, and that’s without ever touching their financial statements.

    Now, obviously you wouldn’t go out and buy Sushi place based on these variables and based on sitting and eating an ice cream for 10 minutes at a food hall. That would be sillier than blindly buying a low volatility ETF right now but when you do this regularly, fast, and repeatedly (I have trouble not doing it – just a defect, I guess), then you’ll find you’re pretty good at quickly rapidly analysing the world around you.

    Hi there

     

    Thanks for all the great content. I was just wondering if you knew of any great books etc that really explain the global financial system/geopolitics in depth that you have come across or would recommend?

     

    I’m fascinated by all this stuff now but I’m finding that because I lack some of the basic understanding, I’m unable to distinguish between “doom porn merchants/permabears” etc and intelligent analysis (I don’t doubt that you’re the latter btw lol).

     

    Thanks in advance, will continue to listen/read and have introduced a few friends to your work.

     

    All the best, Rob. (London, UK)

    Answer:

    I used to read a ton of financial books in my twenties but not much anymore. I tend to read about science, history, and philosophy more now.

    I’d recommend any of Soros’ books, not because I like the guy (or even agree with some of his thinking) but he has a very different and extremely valuable way of assessing risk and understanding market dynamics.

    I honestly hesitate to suggest books because I feel like you can gain something from most any of them but the critical components are making sure you think for yourself as mentioned in the answer to the previous question above. Otherwise you’re just left taking in information and believing it no matter how poor it may be.

    For example, I’d suggest reading work by that pillar of stupidity, Paul Krugman. Why? Because understanding how he and many of his ilk think is valuable but not because it’s sound reasoning. I mean, I’m all for immortalising Paul Krugman. Make a statue out of him, if only so the the pigeons can poop on him for eternity.

    The second part of the question is around distinguishing wheat from chaff.

    Ok, so this question I get all the time.

    Do your due diligence. Most of the stuff you’re referring to will be one of the publishing sites which use “professional” marketing firms to write copy and then flog something based around hype. Just go look for previous marketing they’ve done and then see whether any of it worked out.

    It’s pretty easy to spot.

    If you’re being told that “there is some catastrophic event that is coming on X date and go here to learn how to protect yourself.” Or that some “secret” meeting in a dark room with an “un-named man” has just been revealed and riches/catastrophe await. Or some special code designed in a bunker in World War II that has now revealed the most incredible information and you, some unknown dude on the internet, get to find out.

    Because if you did find something that was truly going to make you a billionaire that’s the first thing you’d do, right?

    I mean you wouldn’t tell your loved ones and set yourself up. No, you’d immediately set up a website and hire a bunch of marketing copywriters and you’d spam people about it. That’s what you’d do. For sure!

    You get the picture. Any variation of that theme and you’re about 99% probability it’s full of nonsense.

    Here is the thing: Information is actually free. What’s valuable isn’t information per se, it’s knowing how to synthesise that information and execute on it. I know that sounds boring because everyone wants some magic wand or some guru with a crystal ball to tell them what to do. I’ll be the first to tell you that I’ve two balls and I assure you neither are crystal.

    And that brings me to the end of today’s post.

    I mentioned at the beginning there were two things I’d not done in a while.

    And the second is taking a break. And since it’s the silly season I’m going to do just that for the next week so you won’t hear from me.

    I do wish you joy, happiness, and money because, well, this is Capitalist Exploits.

    – Chris

    “Christmas is a season not only of rejoicing but of reflection.” — Winston Churchill

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  • DRUDGE REPORT HIT WITH MASSIVE DDOS ATTACK; MATT DRUDGE PONDERS IF GOVERNMENT WAS BEHIND ATTACK

    Drudgereport.com was the number 1 source of information during the elections. It was and always has been, or at least for the past decade or so, the single most popular destination for news — especially during elections. On the same day that the Obama administration announced sanctions again Russia, Drudge goes down.

    Coincidence?

    Drudge ponders aloud on Twitter.

    down

    One of my favorite interviews ever was when Drudge showed up to the Alex Jones show for a chat.

     

     

     

     

    Content originally generated at iBankCoin.com

  • Paul Craig Roberts Worries "What Is Henry Kissinger Up To?"

    Authored by Paul Craig Roberts,

    The English language Russian news agency, Sputnik, reports that former US Secretary of State Henry Kissinger is advising US president-elect Donald Trump how to “bring the United States and Russia closer together to offset China’s military buildup.” 

    If we take this report at face value, it tells us that Kissinger, an old cold warrior, is working to use Trump’s commitment to better relations with Russia in order to separate Russia from its strategic alliance with China.

    China’s military buildup is a response to US provocations against China and US claims to the South China Sea as an area of US national interests. China does not intend to attack the US and certainly not Russia.

    Kissinger, who was my colleague at the Center for Strategic and International studies for a dozen years, is aware of the pro-American elites inside Russia, and he is at work creating for them a “China threat” that they can use in their effort to lead Russia into the arms of the West. If this effort is successful, Russia’s sovereignty will be eroded exactly as has the sovereignty of every other country allied with the US.

    At President Putin’s last press conference, journalist Marat Sagadatov asked if Russia wasn’t already subject to forms of foreign semi-domination: “Our economy, industry, ministries and agencies often follow the rules laid down by international organizations and are managed by consulting companies. Even our defense enterprises have foreign consulting firms auditing them.” The journalist asked, “if it is not time to do some import substitution in this area too?”

    Every Russian needs to understand that being part of the West means living by Washington’s rules. The only country in the Western Alliance that has an independent foreign and economic policy is the US.

    All of us need to understand that although Trump has been elected president, the neoconservatives remain dominant in US foreign policy, and their commitment to the hegemony of the US as the uni-power remains as strong as ever. The neoconservative ideology has been institutionalized in parts of the CIA, State Department and Pentagon. The neoconservatives retain their influence in media, think tanks, university faculties, foundations, and in the Council on Foreign Relations.

    We also need to understand that Trump revels in the role of tough guy and will say things that can be misinterpreted as my friend, Finian Cunningham, whose columns I read, usually with appreciation, might have done.

    I do not know that Trump will prevail over the vast neoconservative conspiracy. However, it seems clear enough that he is serious about reducing the tensions with Russia that have been building since President Clinton violated the George H. W. Bush administration’s promise that NATO would not expand one inch to the East. Unless Trump were serious, there is no reason for him to announce Exxon CEO Rex Tillerson as his choice for Secretary of State. In 2013 Mr. Tillerson was awarded Russia’s Order of Friendship.

    As Professor Michel Chossudovsky has pointed out, a global corporation such as Exxon has interests different from those of the US military/security complex. The military/security complex needs a powerful threat, such as the former “Soviet threat” which has been transformed into the “Russian threat,” in order to justify its hold on an annual budget of approximately one trillion dollars. In contrast, Exxon wants to be part of the Russian energy business. Therefore, as Secretary of State, Tillerson is motivated to achieve good relations between the US and Russia, whereas for the military/security complex good relations undermine the orchestrated fear on which the military/security budget rests.

    Clearly, the military/security complex and the neoconservatives see Trump and Tillerson as threats, which is why the neoconservatives and the armaments tycoons so strongly opposed Trump and why CIA Director John Brennan made wild and unsupported accusations of Russian interference in the US presidential election.

    The lines are drawn. The next test will be whether Trump can obtain Senate confirmation of his choice of Tillerson as Secretary of State.

    The myth is widespread that President Reagan won the cold war by breaking the Soviet Union financially with an arms race. As one who was involved in Reagan’s effort to end the cold war, I find myself yet again correcting the record.

    Reagan never spoke of winning the cold war. He spoke of ending it. Other officials in his government have said the same thing, and Pat Buchanan can verify it.

    Reagan wanted to end the Cold War, not win it. He spoke of those “godawful” nuclear weapons. He thought the Soviet economy was in too much difficulty to compete in an arms race. He thought that if he could first cure the stagflation that afflicted the US economy, he could force the Soviets to the negotiating table by going through the motion of launching an arms race. “Star wars” was mainly hype. (Whether or nor the Soviets believed the arms race threat, the American leftwing clearly did and has never got over it.)

    Reagan had no intention of dominating the Soviet Union or collapsing it. Unlike Clinton, George W. Bush, and Obama, he was not controlled by neoconservatives. Reagan fired and prosecuted the neoconservatives in his administration when they operated behind his back and broke the law.

    The Soviet Union did not collapse because of Reagan’s determination to end the Cold War. The Soviet collapse was the work of hardline communists, who believed that Gorbachev was loosening the Communist Party’s hold so quickly that Gorbachev was a threat to the existence of the Soviet Union and placed him under house arrest. It was the hardline communist coup against Gorbachev that led to the rise of Yeltsin. No one expected the collapse of the Soviet Union.

    The US military/security complex did not want Reagan to end the Cold War, as the Cold War was the foundation of profit and power for the complex. The CIA told Reagan that if he renewed the arms race, the Soviets would win, because the Soviets controlled investment and could allocate a larger share of the economy to the military than Reagan could.

    Reagan did not believe the CIA’s claim that the Soviet Union could prevail in an arms race. He formed a secret committee and gave the committee the power to investigate the CIA’s claim that the US would lose an arms race with the Soviet Union. The committee concluded that the CIA was protecting its prerogatives. I know this because I was a member of the committee.

    American capitalism and the social safety net would function much better without the drain on the budget of the military/security complex. It is more correct to say that the military/security complex wants a major threat, not an actual arms race. Stateless Muslim terrorists are not a sufficient threat for such a massive US military, and the trouble with an actual arms race as opposed to a threat is that the US armaments corporations would have to produce weapons that work instead of cost overruns that boost profits.

    The latest US missile ship has twice broken down and had to be towed into port. The F-35 has cost endless money, has a variety of problems and is already outclassed. The Russian missiles are hypersonic. The Russian tanks are superior. The explosive power of the Russian Satan II ICBM is terrifying. The morale of the Russian forces is high. They have not been exhausted from 15 years of fighting without much success pointless wars against women and children.

    Washington, given the corrupt nature of the US military/security complex, can arms race all it wants without being a danger to Russia or China, much less to the strategic alliance between the two powers.

    The neoconservatives are discredited, but they are still a powerful influence on US foreign policy. Until Trump relegates them to the ideological backwaters, Russia and China had best hold on to their strategic alliance. Anyone attempting to break this alliance is a threat to both Russia and China, and to America and to life on earth.

  • Dollar Flash Crashes On Last Trading Day Of 2016

    It is oddly appropriate that in a year everyone finally admitted markets are manipulated by central banks and broken by HFT algos, that on the last trading day of 2016, the dollar flash crashed with for no reason whatsoever.

    Shortly after 6:30pm Eastern, the dollar plunged by 150 pips against the Euro, once 1.05 stops were taken out, with algos sending the EURUSD as high as 1.07 in a matter of seconds…

    … while concurrently the Swiss Franc soared as much as 1.6% against the greenback, as the USDCHF tumbled from just over 1.025 to just above 1.0050 as the pair briefly flirted with parity.

    What caused it? As there was no fundamental news, the answer is the same catalyst as the pound sterling flash crash: once EURUSD stops were taken out, algos all piled up on the same side of the trade and with virtually non existent market depth, it sent the world’s most actively traded currency pair soaring. Indeed, as FX traders in Asia, cited by Bloomberg said, the EUR/USD jump was partly driven by a surge of algo-buy orders after pair rose above 1.0500 in early session.

    Others agreed: as Shigeki Yoshitoshi, head of Japan FX and commodities sales at Australia & New Zealand Bank said, it “seems to be no particular factor driving euro sharply higher in extremely thin volume” adding that “there wasn’t any particular news. Markets are extremely thin and perhaps position tuning occurred.”

    So after the initial freak out where are markets now? Well, according to Bloomberg, after the Euro was dealt as high as 1.07 on the EBS platform, though that price level has been dismissed by banks and clients according to Asia-based FX traders, the pair is slowly returning to its pre-freakout level. As Bloomberg adds, the post-mortem of the EURUSD spike already has “traders swapping stories of clients dealing away and banks shedding tears” especially those who were stopped out by a few good stop-busting algos. 

    And while funds were seen buying under 1.0500, when the pair hit 1.0540 one trader says he had to take the loss.

    Finally, if any readers missed the move, fear not: with the world’s most actively traded market having become a farcical, flash crashing joke, it is only a matter of time before the next algo-driven freak out returns.

  • Anthony Bourdain Slams "Privileged" Liberals For Their "Utter Contempt" Of Working-Class America

    Celebrity chef and host of CNN’s Parts Unknown Anthony Bourdain is no fan of Trump, and he made as much clear in today’s interview with Reason. When asked what concerns him about Trump, he responded: “what I am not concerned about with Trump? Wherever one lives in the world right now I wouldn’t feel too comfortable about the rise of authoritarianism. I think it’s a global trend, and one that should be of concern to everyone.”

    However, while a liberal bashing Trump is hardly news, what was more noteworthy is that the celebrity chef also unloaded on “his own side”, when he called out elite east coast liberals – of which he admitted he is part of – saying that their “utter contempt” for working-class Americans was unhelpful and nauseating.

    The utter contempt with which privileged Eastern liberals such as myself discuss red-state, gun-country, working-class America as ridiculous and morons and rubes is largely responsible for the upswell of rage and contempt and desire to pull down the temple that we’re seeing now.

    Bingo. It is also why the “shocking” Trump presidency is nothing more than the public’s revolt to “Eastern liberals” shooting themselves in the foot by overly believing their own BS.

    But Bourdain did not stop there, next lashing out at the tidal wave of artificial political correctness sweeping over the nation: “I hate the term political correctness, the way in which speech that is found to be unpleasant or offensive is often banned from universities. Which is exactly where speech that is potentially hurtful and offensive should be heard” Bourdain said.

    He continued:

    The way we demonize comedians for use of language or terminology is unspeakable. Because that’s exactly what comedians should be doing, offending and upsetting people, and being offensive. Comedy is there, like art, to make people uncomfortable, and challenge their views, and hopefully have a spirited yet civil argument. If you’re a comedian whose bread and butter seems to be language, situations, and jokes that I find racist and offensive, I won’t buy tickets to your show or watch you on TV. I will not support you. If people ask me what I think, I will say you suck, and that I think you are racist and offensive. But I’m not going to try to put you out of work. I’m not going to start a boycott, or a hashtag, looking to get you driven out of the business.

    But it was his commentary on the arrogance of the liberal superclass that all other liberals (and conservatives) should note and learn from, and it is 100% accurate.

    I’ve spent a lot of time in gun-country, God-fearing America. There are a hell of a lot of nice people out there, who are doing what everyone else in this world is trying to do: the best they can to get by, and take care of themselves and the people they love. When we deny them their basic humanity and legitimacy of their views, however different they may be than ours, when we mock them at every turn, and treat them with contempt, we do no one any good. Nothing nauseates me more than preaching to the converted.

     

    The self-congratulatory tone of the privileged left—just repeating and repeating and repeating the outrages of the opposition—this does not win hearts and minds. It doesn’t change anyone’s opinions. It only solidifies them, and makes things worse for all of us. We should be breaking bread with each other, and finding common ground whenever possible. I fear that is not at all what we’ve done.

    Bourdain is, of course, correct, although we fail to see how America manages to cross so many great divides – racial, ethnic, social, religious, and of course, wealth – in the near future, no matter who the president is, in a peaceful manner.

    Finally, in an amusing twist, Bourdain despises such shining examples of self-righteous liberals as Bill Maher even more than he hates Trump. When asked what he thinks of Bill Maher, his answer was emphatic:

    Insufferably smug. Really the worst of the smug, self-congratulatory left. I have a low opinion of him. I did not have an enjoyable experience on his show. Not a show I plan to do again. He’s a classic example of the smirking, contemptuous, privileged guy who lives in a bubble. And he is in no way looking to reach outside, or even look outside, of that bubble, in an empathetic way.

    In retrospect, if more people could see the world through Bourdain’s eyes, there may still be hope.

  • The Rich Got Richer In 2016 – $237 Billion Richer!

    While Warren Buffett did best of all the billionaires in 2016, he was far from alone.

     

    The biggest fortunes on the planet whipsawed through $4.8 trillion of daily net worth gyrations in 2016.

    The volatility — triggered by disappointing economic data from China at the start of the year, the U.K.’s vote to leave the European Union in the middle and the election of billionaire Donald Trump at the end — didn’t prevent the richest from getting richer.

    Their fortunes rose 5.7 percent for the year at the close of trading on Dec. 27, or some $237 billion, according to the Bloomberg Billionaires Index.

  • Oliver Stone Slams The Establishment's "The Russians Are Coming" Narrative

    Authored by Oliver Stone (via Facebook),

    THE RUSSIANS ARE COMING

    As 2016 draws to a close, we find ourselves a deeply unsettled nation. We’re unable to draw the lines of our national interest. Is it jobs and economy, is it national security, or is it now in our interest to ensure global security — in other words, act as the world’s policemen?

    As the “failing” (to quote Trump) New York Times degenerates into a Washington Post organization with its stagnant Cold War vision of a 1950s world where the Russians are to blame for most everything — Hillary’s loss, most of the aggression and disorder in the world, the desire to destabilize Europe, etc. — the Times has added the issue of ‘fake news’ to reassert its problematic role as the dominant voice for the Washington establishment. Certainly this is true in the case of Russia’s ‘hacking’ the 2016 election and putting into office its Manchurian Candidate in Donald Trump. Apparently the CIA (via various unnamed intelligence officials), and the FBI, NSA, Director of National Intelligence James Clapper (who notoriously lied to Congress in the Snowden affair), President Obama, the DNC, Hillary Clinton, and Congress agree that Russia, and Mr. Putin predominantly, is responsible.

    Certainly the psychotic, war-loving Senator John McCain is right up there alongside these patriots, calling President Putin a “thug, bully and a murderer and anybody else who describes him as anything else is lying.” He actually said this — the man whose sound judgment chose Sarah Palin as his VP nominee in ’08. And the Times followed by printing the story in its full glory on page one, clearly agreeing with McCain’s point of view. I don’t remember Presidents Eisenhower, Nixon, or Reagan, in the darkest days of the 1950s/80s, ever singling out a Russian President like this. The invective was aimed at the Soviet regime, but never were Khrushchev or Brezhnev the target of this bile. I guess this is a new form of American diplomacy. If a black youth in our inner cities were killed or a Pakistani wedding party were murdered by our drones, would President Obama be singled out as a murderer, bully, thug? Such personalization is a sign of sickness in our thinking and way beneath what should be our standards.

    Note the enclosed link from the Veteran Intelligence Professionals for Sanity (which includes the ex-NSA reformer Bill Binney, a mathematical genius who inspired the Nic Cage character in “Snowden,” and who talks here about what hacking really means, as opposed to a ‘leak’). The Times and other mainstream media have surprisingly evaded any contrary evidence, such as that presented by Craig Murray, ex-ambassador and Wikileaks spokesman who says he was given the information in a Washington park by a Democratic ‘insider’ who was disgusted by the behavior of the DNC; Murray then gave it to Wikileaks. This was a ‘leak,’ not a ‘hack,’ and always seemed to me the likely source for this scandal (as I think the Sony leak was as well, falsely blamed on North Korea, but that’s another matter). And if this were to be properly investigated, it might very well lead to the discovery that this was Hillary Clinton’s ‘Nixon moment.’ Clearly the DNC offices were up to no good. Ironically, Clinton first made her name as one of the investigators into Watergate. See Mark Ames’s article, “Site Behind McCarthyite Blacklist,” tracking this foul play to Washington Post journalist Craig Timberg.

    I remember well in the 1950s when the Russians were supposed to be in our schools, Congress, State Department — and according to many Eisenhower/Nixon supporters — about to take over our country without serious opposition (and they call me paranoid!). It was this same media who insisted on our need to go to Vietnam to defend our freedoms against the communists 6,000 miles away. And after the Red Scare finally went away for good in 1991, let us remind ourselves that It never ended. It became Hussein of Iraq with his weapons of mass destruction, and talk of the ‘mushroom cloud.’ It became a Demon, as real as any Salem Witch Trial. It was Gaddafi of Libya, and then it was Assad of Syria. In other words, as in an Orwellian prophesy, it never ended, and I can guarantee you it never will — unless we the people who can still think for ourselves in this existential matter, can say “Enough” to this demon act. “Enough,’ “go away” — laugh in their faces.

    Of course, the NYT/WaPo nexus rarely will publish any of our serious dissents and thus we must take refuge in alternate media, such as ‘Consortiumnews,’ ‘The Intercept,’ ‘Naked Capitalism,’ ‘Counterpunch,’ ‘Zero Hedge,’ ‘Antiwar.com,’ ‘Truthdig,’ ‘Common Dreams.’ Yet I think we were all quite shocked (but not surprised) when recently we saw 200 websites listed as tools of the Kremlin (WaPo’s November 24, “Russian propaganda effort helped spread ‘fake news’ during election”).

    My God, the ghost of Izzy Stone is back from the 1950s! For that matter, so is Tom Clancy from the ’80s. False thrillers will now be written about the Russians hacking the American elections. Money and TV serials will be made. I’ve never read such hysterical junk (call it what it is — “fake news”) in the New York Times, in which the editorials have become outrageous diatribes, many of them presumably written by Serge Schmemann, one of those ideologues who still finds Russians under his bed at night (called ‘White Russians’ in the old days who, like right-wing Cubans in Miami, can never live down past grievances). Schmemann is obviously riding high at the NYT edit board. We can make fun of this, but it’s an irresponsible and dangerous editorializing, which has invaded the MSM’s reporting. Their thinking has clearly influenced the Pentagon and many of our Generals’ statements. When one group-think controls our national conversation, it’s so sad, a pathetic loss of judgment, and it becomes ultra dangerous. In this spirit, I’m linking several crucial essays of new vintage, pointing out the disgrace the MSM has become.

    As much as we may disagree with Donald Trump (and I do) he’s right now target number one of the MSM propaganda — until, that is, he changes to the anti-Kremlin track over, God knows, some kind of petty dispute cooked up by CIA, and in his hot-headed way starts fighting with the Russians. It wouldn’t be long then until he declares a state of war against Russia. I have no doubt then that our over-financed military ($10 to every 1 Russian dollar) will mean NOTHING against a country that right now believes the US, with the largest buildup of NATO on its borders since Hitler’s World War II, is crazed enough to prepare for a preemptive strike. In his analysis, “The Need to Hold Saudi Arabia Accountable,” Robert Parry points out that this conflict ironically started in the 1980s with the Neoconservatives defining Iran as the number one terrorist sponsor in the world. How this leads to our present mess is a brilliant analysis that is unknown to the American public.

    I urge you to read the following articles and stay calm in your thinking. But bring it to bear in some way.

    Robert Parry, “Making Russia ‘The Enemy’,” Consortiumnews
    http://bit.ly/2hz4jTI

    Joe Lauria, “Russia-Hack Story Another Media Failure,” Consortiumnews
    http://bit.ly/2hmndK4

    Justin Raimondo, “Stop the CIA Coup,” Antiwar.com
    http://bit.ly/2hgka9c

    Robert Parry, “The Need to Hold Saudi Arabia Accountable,” Consortiumnews
    http://bit.ly/2ifNRZ3

    Ray McGovern, “US Intel Vets Dispute Russia Hacking Claims,” Consortiumnews
    http://bit.ly/2gB2yWo

    Mark Ames, “Site behind Washington Post’s McCarthyite Blacklist,” Naked Capitalism
    http://bit.ly/2goUVT5

    Robert Parry, “A Sour Holiday Season for Neocons,” Consortiumnews
    http://bit.ly/2imXXVb

    As a believer in what Thich Nhat Hanh says, every single one of us, even through our prayers, can add to the betterment of this world. I never thought I’d find myself at this point in time praying for the level-headedness of a Donald Trump. You might remember “The Iliad.” As Homer would have it, the gods would huddle up during each day’s battles and decide on the outcome. Who would die and who would live. Are the gods still listening?

  • Duterte Says US Ambassadors Are CIA "Spies" As Alleged US Plot To Overthrow Him Emerges

    Coming at an awkward time, just as the US accused Russia of doing (once again, without a shred of valid proof as opposed to a report which the DHS was quick to disown) what the CIA has done to other nations for decades, earlier today everyone’s favorite volatile, vulgar and outspoken Philippine President Rodrigo Duterte derided U.S. ambassadors as “spies”, responding to a media report of an alleged American plot to destabilize his government, a job he said some envoys were appointed solely to do.

    Quoted by Reuters, the former mayor said though had received no intelligence reports of any U.S. plan to undermine his presidency, he believed most ambassadors were in cahoots with the Central Intelligence Agency (CIA), which had a track record of meddling in other countries’ affairs. 

    The reason for the latest outburst is because the Manila Times newspaper on Tuesday reported a former U.S. ambassador to the Philippines had prepared a “blueprint to undermine Duterte“, citing a document it had received from a what it described as a “highly placed source”.

    The Manila Times said Philip Goldberg, who recently ended his term as ambassador in Manila, had outlined various strategies over an 18-month period to destabilize Duterte. That would include supporting the opposition and co-opting the media, the military, neighboring countries and senior government officials to turn against Duterte and isolate him economically.

    Duterte has previously called Goldberg a “gay son of a bitch” and referred to him in three successive live television interviews on Thursday, as Washington’s “superstar” with a track record of trying to undermine governments.

    He may well be right: Goldberg was expelled as ambassador to Bolivia in 2008 by then President Evo Morales, who accused him of siding with his rightist opponents and of orchestrating street protests. The United States rejected that and said his expulsion was a “grave error”.

    “Maybe he will deny it but it’s not good,” Duterte said of Goldberg’s alleged blueprint, which he said was plausible because of Goldberg’s history.

    The U.S. State Department, which has yet to admit on the record that it is in the government overthrow business, naturally described the allegations as “false.”

    Duterte, however, had a more cynical view: “most of the ambassadors of the United States, but not all, are not really professional ambassadors. At the same time they are spying, they are connected with the CIA,” Duterte said in a television interview.

    He added that “the ambassador of a country is the number one spy. But there are ambassador of the U.S., their forte is really to undermine governments.”

    Meanwhile, U.S. Assistant Secretary of State for East Asia and the Pacific Daniel Russel dismissed the Manila Times report.

    “No such blueprint exists,” he said in a statement on Tuesday.

    “The United States respects the sovereignty of the Philippines and the democratic choices made by the Philippine people.”

    Sure it does, and just to “prove” it here is a paper which showed that between 1946 and 2000, the US intervened in foreign elections “only” 81 times, of which 65% were covert.

  • US Retaliates Against Russia For "Hacking The Election": Expels 35 Diplomats, Unveils Sanctions

    As promised (or threatened), the Obama administration has unveiled – via the US Treasury – new sanctions against Russia over election hacking allegations (that as yet have not been supported by any actual evidence). Despite president-elect Trump’s comments that “we ought to get on with our lives,” the sanctions apply to five entities and six individuals, and also including the expulsion of 35 Russian diplomats and closing two Russian compounds in New York and Maryland in response to a campaign of harassment against American diplomats in Moscow, a senior U.S. official said on Thursday.

    Amusingly, one of the entities is Russia’s FSB, aka the Federal Security Service, i.e. the Russian spy service, to the list of Specially Designated Nationals and Blocked Persons. Which, perhaps, means that previously the US would look the other way when known spies would enter the US.

    The move against the diplomats from the Russian embassy in Washington and consulate in San Francisco is part of a series of actions announced on Thursday to punish Russia for a campaign of intimidation of American diplomats in Moscow and interference in the U.S. election.

    The Russian diplomats would have 72 hours to leave the United States, the official said. Access to the two compounds, which are used by Russian officials for intelligence gathering, will be denied to all Russian officials as of noon on Friday, the senior U.S. official added.

    “These actions were taken to respond to Russian harassment of American diplomats and actions by the diplomats that we have assessed to be not consistent with diplomatic practice,” the official said .The State Department has long complained that Russian security agents and traffic police have harassed U.S. diplomats in Moscow, and U.S. Secretary of State John Kerry has raised the issue with Russian President Vladimir Putin and his foreign minister, Sergei Lavrov.

    “By imposing costs on the Russian diplomats in the United States, by denying them access to the two facilities, we hope the Russian government reevaluates its own actions, which have impeded the ability and safety of our own embassy personnel in Russia,” the official said.

    As for proof, well just trust Obama, who said that “data theft and disclosure activities could only have been directed by the highest levels of the Russian government.” And Iraq had WMD, or something….

    The outgoing president finally threatens that he will continue to take more sanctions against Russia, without noting in advance just what they will be. He better hurry: Obama has 23 days left as US president.

    * * *

    Full statement from President Obama

    Statement by the President on Actions in Response to Russian Malicious Cyber Activity and Harassment

     

    Today, I have ordered a number of actions in response to the Russian government’s aggressive harassment of U.S. officials and cyber operations aimed at the U.S. election. These actions follow repeated private and public warnings that we have issued to the Russian government, and are a necessary and appropriate response to efforts to harm U.S. interests in violation of established international norms of behavior.

     

    All Americans should be alarmed by Russia’s actions. In October, my Administration publicized our assessment that Russia took actions intended to interfere with the U.S. election process. These data theft and disclosure activities could only have been directed by the highest levels of the Russian government. Moreover, our diplomats have experienced an unacceptable level of harassment in Moscow by Russian security services and police over the last year. Such activities have consequences. Today, I have ordered a number of actions in response.

     

    I have issued an executive order that provides additional authority for responding to certain cyber activity that seeks to interfere with or undermine our election processes and institutions, or those of our allies or partners. Using this new authority, I have sanctioned nine entities and individuals: the GRU and the FSB, two Russian intelligence services; four individual officers of the GRU; and three companies that provided material support to the GRU’s cyber operations. In addition, the Secretary of the Treasury is designating two Russian individuals for using cyber-enabled means to cause misappropriation of funds and personal identifying information. The State Department is also shutting down two Russian compounds, in Maryland and New York, used by Russian personnel for intelligence-related purposes, and is declaring “persona non grata” 35 Russian intelligence operatives. Finally, the Department of Homeland Security and the Federal Bureau of Investigation are releasing declassified technical information on Russian civilian and military intelligence service cyber activity, to help network defenders in the United States and abroad identify, detect, and disrupt Russia’s global campaign of malicious cyber activities.

     

    These actions are not the sum total of our response to Russia’s aggressive activities. We will continue to take a variety of actions at a time and place of our choosing, some of which will not be publicized. In addition to holding Russia accountable for what it has done, the United States and friends and allies around the world must work together to oppose Russia’s efforts to undermine established international norms of behavior, and interfere with democratic governance. To that end, my Administration will be providing a report to Congress in the coming days about Russia’s efforts to interfere in our election, as well as malicious cyber activity related to our election cycle in previous elections.

    More details from the NYT:

    The Obama administration struck back at Russia on Thursday for its efforts to influence the 2016 election, ejecting 35 Russian intelligence operatives from the United States and imposing sanctions on Russia’s two leading intelligence services, including four top officers of the military intelligence unit the White House believes ordered the attacks on the Democratic National Committee and other political organizations.

     

    In a sweeping set of announcements, the United States was also expected to release evidence linking the cyberattacks to computer systems used by Russian intelligence. Taken together, the actions would amount to the strongest American response ever taken to a state-sponsored cyberattack aimed at the United States.

     

    The sanctions were also intended to box in President-elect Donald J. Trump. Mr. Trump has consistently cast doubt that the Russian government had anything to do with the hacking of the D.N.C. or other political institutions, saying American intelligence agencies could not be trusted and suggesting that the hacking could have been the work of a “400-pound guy” lying in his bed.

     

    Mr. Trump will now have to decide whether to lift the sanctions on the Russian intelligence agencies when he takes office next month, with Republicans in Congress among those calling for a public investigation into Russia’s actions. Should Mr. Trump do so, it would require him to effectively reject the findings of his intelligence agencies.

    As Bloomberg reports, among those targeted were officials of GRU, Russia’s military intelligence agency, which cybersecurity experts in the U.S. have linked to the hacking of the Democratic National Committee and party officials through a group they have nicknamed APT 28 or Fancy Bear. The U.S. also is sanctioning some Russian state institutions and cyber companies associated with them.

    The NYT adds that the Obama administration is also planning to release a detailed “joint analytic report” from the Federal Bureau of Investigation and the Department of Homeland Security that is clearly based in part on intelligence gathered by the National Security Agency. A more detailed report on the intelligence, ordered by President Obama, will be published in the next three weeks, though much of the detail — especially evidence collected from “implants” in Russian computer systems, tapped conversations and spies — is expected to remain classified.

    In the most amusing twist, even the NYT admits that “despite the fanfare and political repercussions surrounding the announcement, it is not clear how much real effect the sanctions may have.”

    And while we are confident Putin is thoroughly amused at this moment by Obama’s last ditch effort to posion US-Russian relations, we eagerly await the Russian response.

    * * *

    From the US Treasury

    Issuance of Amended Executive Order 13694; Cyber-Related Sanctions Designations

    12/29/2016

    Today, the President issued an Executive Order Taking Additional Steps To Address The National Emergency With Respect To Significant Malicious Cyber-Enabled Activities.  This amends Executive Order 13694, “Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities.”  E.O. 13694 authorized the imposition of sanctions on individuals and entities determined to be responsible for or complicit in malicious cyber-enabled activities that result in enumerated harms that are reasonably likely to result in, or have materially contributed to, a significant threat to the national security, foreign policy, or economic health or financial stability of the United States.  The authority has been amended to also allow for the imposition of sanctions on individuals and entities determined to be responsible for tampering, altering, or causing the misappropriation of information with the purpose or effect of interfering with or undermining election processes or institutions.  Five entities and four individuals are identified in the Annex of the amended Executive Order and will be added to OFAC’s list of Specially Designated Nationals and Blocked Persons (SDN List).  OFAC today is designating an additional two individuals who also will be added to the SDN List.  

    Specially Designated Nationals List Update

    The following individual has been added to OFAC’s SDN List: 

    • ALEXSEYEV, Vladimir Stepanovich; DOB 24 Apr 1961; Passport 100115154 (Russia); First Deputy Chief of GRU (individual) [CYBER2] (Linked To: MAIN INTELLIGENCE DIRECTORATE).

    • BELAN, Aleksey Alekseyevich (a.k.a. Abyr Valgov; a.k.a. BELAN, Aleksei; a.k.a. BELAN, Aleksey Alexseyevich; a.k.a. BELAN, Alexsei; a.k.a. BELAN, Alexsey; a.k.a. “Abyrvaig”; a.k.a. “Abyrvalg”; a.k.a. “Anthony Anthony”; a.k.a. “Fedyunya”; a.k.a. “M4G”; a.k.a. “Mag”; a.k.a. “Mage”; a.k.a. “Magg”; a.k.a. “Moy.Yawik”; a.k.a. “Mrmagister”), 21 Karyakina St., Apartment 205, Krasnodar, Russia; DOB 27 Jun 1987; POB Riga, Latvia; nationality Latvia; Passport RU0313455106 (Russia); alt. Passport 0307609477 (Russia) (individual) [CYBER2].

    •  BOGACHEV, Evgeniy Mikhaylovich (a.k.a. BOGACHEV, Evgeniy Mikhailovich; a.k.a. “Lastik”; a.k.a. “lucky12345”; a.k.a. “Monstr”; a.k.a. “Pollingsoon”; a.k.a. “Slavik”), Lermontova Str., 120-101, Anapa, Russia; DOB 28 Oct 1983 (individual) [CYBER2].

    •  GIZUNOV, Sergey (a.k.a. GIZUNOV, Sergey Aleksandrovich); DOB 18 Oct 1956; Passport 4501712967 (Russia); Deputy Chief of GRU (individual) [CYBER2] (Linked To: MAIN INTELLIGENCE DIRECTORATE).

    •  KOROBOV, Igor (a.k.a. KOROBOV, Igor Valentinovich); DOB 03 Aug 1956; nationality Russia; Passport 100119726 (Russia); alt. Passport 100115101 (Russia); Chief of GRU (individual) [CYBER2] (Linked To: MAIN INTELLIGENCE DIRECTORATE).

    •  KOSTYUKOV, Igor (a.k.a. KOSTYUKOV, Igor Olegovich); DOB 21 Feb 1961; Passport 100130896 (Russia); alt. Passport 100132253 (Russia); First Deputy Chief of GRU (individual) [CYBER2] (Linked To: MAIN INTELLIGENCE DIRECTORATE).

    The following entities have been added to OFAC’s SDN List:

    •  AUTONOMOUS NONCOMMERCIAL ORGANIZATION PROFESSIONAL ASSOCIATION OF DESIGNERS OF DATA PROCESSING SYSTEMS (a.k.a. ANO PO KSI), Prospekt Mira D 68, Str 1A, Moscow 129110, Russia; Dom 3, Lazurnaya Ulitsa, Solnechnogorskiy Raion, Andreyevka, Moscow Region 141551, Russia; Registration ID 1027739734098 (Russia); Tax ID No. 7702285945 (Russia) [CYBER2].

    •  FEDERAL SECURITY SERVICE (a.k.a. FEDERALNAYA SLUZHBA BEZOPASNOSTI; a.k.a. FSB), Ulitsa Kuznetskiy Most, Dom 22, Moscow 107031, Russia; Lubyanskaya Ploschad, Dom 2, Moscow 107031, Russia [CYBER2].

    •  MAIN INTELLIGENCE DIRECTORATE (a.k.a. GLAVNOE RAZVEDYVATEL’NOE UPRAVLENIE (Cyrillic: ??????? ???????????????? ??????????); a.k.a. GRU; a.k.a. MAIN INTELLIGENCE DEPARTMENT), Khoroshevskoye Shosse 76, Khodinka, Moscow, Russia; Ministry of Defence of the Russian Federation, Frunzenskaya nab., 22/2, Moscow 119160, Russia [CYBER2].

    •  SPECIAL TECHNOLOGY CENTER (a.k.a. STC, LTD), Gzhatskaya 21 k2, St. Petersburg, Russia; 21-2 Gzhatskaya Street, St. Petersburg, Russia; Website stc-spb.ru; Email Address stcspb1@mail.ru; Tax ID No. 7802170553 (Russia) [CYBER2].

    •  ZORSECURITY (f.k.a. ESAGE LAB; a.k.a. TSOR SECURITY), Luzhnetskaya Embankment 2/4, Building 17, Office 444, Moscow 119270, Russia; Registration ID 1127746601817 (Russia); Tax ID No. 7704813260 (Russia); alt. Tax ID No. 7704010041 (Russia) [CYBER2].

    *  *  *

    Additionally – potentially unrelated:

    • U.S. TO CLOSE TWO RUSSIAN COMPOUNDS IN MARYLAND AND NEW YORK USED FOR INTELLIGENCE-RELATED ACTIVITIES – U.S. OFFICIAL
    • U.S. EXPELS 35 RUSSIAN DIPLOMATS IN WASHINGTON AND SAN FRANCISCO, GIVES THEM 72 HOURS TO LEAVE – U.S. OFFICIAL

    Bloomberg reports that The FBI and Homeland Security Department will release a report Thursday with technical evidence intended to prove Russia’s military and civilian intelligence services were behind hacking attacks during this year’s presidential campaign, according to a U.S. official.

    The documentation will be offered in tandem with sanctions that the Obama administration announced Thursday in retaliation for the breach of Democratic National Committee e-mails as Democrat Hillary Clinton and Republican Donald Trump were campaigning for the White House. The Russian government, which has denied responsibility for the hacking, has vowed to respond to any new sanctions with unspecified counter-measures.

     

    The joint report will include newly declassified information exposing the internet infrastructure that Russia used in the cyberattacks, including malware and computer addresses, according to the official who asked asked not to be identified before the report is made public.

     

    The release is intended to serve two purposes: to help prove the Russian government carried out the hacking while also frustrating officials in Moscow by exposing some of their most sensitive hacking infrastructure, the official said.

    And now we await as Putin retaliates, which he will momentarily, just as promised…

    Anticipating the sanctions Wednesday, Russia accused Obama of acting out of spite, and pledged retaliation.

     

    “People in the White House need to understand clearly that if Washington really takes new hostile steps, then it will receive a response,” foreign ministry spokeswoman Maria Zakharova said in a video statement.

    As The New York Times reports,

    The sanctions were also intended to box in President-elect Donald J. Trump. Mr. Trump has consistently cast doubt that the Russian government had anything to do with the hacking of the D.N.C. or other political institutions, saying American intelligence agencies could not be trusted and suggesting that the hacking could have been the work of a “400-pound guy” lying in his bed.

    Mr. Trump will now have to decide whether to lift the sanctions on the Russian intelligence agencies when he takes office next month, with Republicans in Congress among those calling for a public investigation into Russia’s actions. Should Mr. Trump do so, it would require him to effectively reject the findings of his intelligence agencies.

    Obama’s executive order is below.

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