Mar 31

Today’s News 31st March 2018

  • California Woman Refuses To Sell Home To Trump Supporters

    A Sacramento woman selling a house which has been in her family for half a century will sell to just about anyone – unless they’re a Trump supporter.

    The homeowner, who has declined to give her name, told CBS Sacramento “I told her [the realtor] that I didn’t want her to sell it to a Trump supporter.”

    The woman’s realtor, Elizabeth Weintraub, says that the “no Trump supporter” caveat is a first for her. “We can ask somebody how they voted, but they don’t have to tell us,” said Weintraub.

    But is it actually legal? Attorney Allen Sawyer thinks not: “That’s an unlawful contractual term that infringes the freedom of association and first amendment rights,” said Sawyer.

    According to the Fair Housing Act, political party affiliation doesn’t fall into one of the seven protected classes. They include race, religion, color, disability. National origin, sex and familial status. –CBS Sacramento

    “People have a right to believe what they want to believe and they shouldn’t be restricted from purchasing property based on that,” said Sawyer.

    Either way – the seller is clearly limiting the buying pool according to certified appraiser Ryan Lundquist – who notes that “39 percent of voters voted for Donald Trump in the Sacramento region. That’s an absolute fact.” 

    The homeowner doesn’t care: “When you’re talking about principals, morals, and ethics, it’s very very deep,” she said. 

     

  • The Death Of The Liberal World Order

    Authored Leonid Savin via Oriental Review,

    A few days ago the president of the Council on Foreign Relations, Richard Haass, published an article, titled “Liberal World Order, R.I.P.” In it, he states that the current threat to the liberal world order is coming not from rogue states, totalitarian regimes, religious fanatics, or obscurantist governments (special terms used by liberals when referring to other nations and countries that have not pursued the Western capitalist path of development), but from its primary architect — the United States of America.

    Haass writes: “Liberalism is in retreat. Democracies are feeling the effects of growing populism. Parties of the political extremes have gained ground in Europe. The vote in the United Kingdom in favor of leaving the EU attested to the loss of elite influence. Even the US is experiencing unprecedented attacks from its own president on the country’s media, courts, and law-enforcement institutions. Authoritarian systems, including China, Russia, and Turkey, have become even more top-heavy. Countries such as Hungary and Poland seem uninterested in the fate of their young democracies…

    “We are seeing the emergence of regional orders. Attempts to build global frameworks are failing.”

    Richard Haas

    Haass has previously made alarmist statements, but this time he is employing his rhetoric to point to the global nature of this phenomenon. Although between the lines one can easily read, first of all, a certain degree of arrogance — the idea that only we liberals and globalists really know how to administer foreign policy — and second, the motifs of conspiracy.

    “Today’s other major powers, including the EU, Russia, China, India, and Japan, could be criticized for what they are doing, not doing, or both.”

    Probably this list could be expanded by adding a number of Latin American countries, plus Egypt, which signs arms deals with North Korea while denying any violation of UN sanctions, and the burgeoning Shiite axis of Iran-Iraq-Syria-Lebanon.

    But Haass is crestfallen over the fact that it is Washington itself that is changing the rules of the game and seems completely uninterested in what its allies, partners, and clients in various corners of the world will do.

    “America’s decision to abandon the role it has played for more than seven decades thus marks a turning point. The liberal world order cannot survive on its own, because others lack either the interest or the means to sustain it. The result will be a world that is less free, less prosperous, and less peaceful, for Americans and others alike.”

    Richard Haass’s colleague at the CFR, Stewart Patrick, quite agrees with the claim that it is the US itself that is burying the liberal world order. However, it’s not doing it on its own, but alongside China. If the US had previously been hoping that the process of globalization would gradually transform China (and possibly destroy it, as happened to the Soviet Union earlier), then the Americans must have been quite surprised by how it has actually played out. That country modernized without being Westernized, an idea that had once been endorsed by the leader of the Islamic revolution in Iran, Ayatollah Khomeini.

    Now China is expanding its influence in Eurasia in its own way, and this is for the most part welcomed by its partner countries.

    But this has been a painful process for the US, as it is steadily and irrevocably undermining its hegemony.

    “Its long-term ambition is to dismantle the U.S. alliance system in Asia, replacing it with a more benign (from Beijing’s perspective) regional security order in which it enjoys pride of place, and ideally a sphere of influence commensurate with its power.

    China’s Belt and Road initiative is part and parcel of this effort, offering not only (much-needed) infrastructure investments in neighboring countries but also the promise of greater political influence in Southeast, South, and Central Asia. More aggressively, China continues to advance outrageous jurisdictional claims over almost the entirety of the South China Sea, where it continues its island-building activities, as well as engaging in provocative actions against Japan in the East China Sea,” writes Patrick.

    And as for the US:

    “The United States, for its part, is a weary titan, no longer willing to bear the burdens of global leadership, either economically or geopolitically.

    Trump treats alliances as a protection racket, and the world economy as an arena of zero-sum competition. The result is a fraying liberal international order without a champion willing to invest in the system itself.”

    One can agree with both authors’ assessments of the changed behavior of one sector of the US establishment, but this is about more than just Donald Trump (who is so unpredictable that he has staffed his own team with a member of the very swamp he was preparing to drain) and North American populism. One needs to look much deeper.

    In his book, Nation of Devils:  Democratic Leadership and the Problem of Obedience, Stein Ringen, a Norwegian statesman with a history of service in international institutions, notes:

    “Today, American democratic exceptionalism is defined by a system that is dysfunctional in all the conditions that are needed for settlement and loyalty…

    Capitalism has collapsed into crisis in an orgy of deregulation. Money is transgressing into politics and undermining democracy itself.”

    And, quoting his colleague Archon Fung from the Harvard Kennedy School, “American politics is no longer characterized by the rule of the median voter, if it ever was. Instead, in contemporary America the median capitalist rules as both the Democratic and Republican parties adjust their policies to attract monied interests.” And finally Mr. Ringen adds, “American politicians are aware of having sunk into a murky bog of moral corruption but are trapped.”

    Stein Ringen

    Trump merely reflects the dysfunctionality and internal contradictions of American politics. He is the American Gorbachev, who kicked off perestroika at the wrong time. Although it must be conceded that if Hillary Clinton had become president, the US collapse would have been far more painful, particularly for the citizens of that country. We would have seen yet more calamitous reforms, a swelling influx of migrants, a further decline in the nation’s manufacturing base, and the incitement of new conflicts. Trump is trying to keep the body of US national policy somewhat alive through hospice care, but what’s really needed is a major restructuring, including far-reaching political reforms that would allow the country’s citizens to feel that they can actually play a role in its destiny.

    These developments have spread to many countries in Europe, a continent that, due to its transatlantic involvement, was already vulnerable and susceptible to the current geopolitical turbulence. The emergence of which, by the way, was largely a consequence of that very policy of neoliberalism.

    Stein Ringen continues on that score:

    “Global financial services exercise monopolistic power over national policies, unchecked by any semblance of global political power. Trust is haemorrhaging. The European Union, the greatest ever experiment in super-national democracy, is imploding …”

    It is interesting that panic has seized Western Europe and the US — the home of transatlanticism, although different versions of this recipe for liberalism have been employed in other regions — suffice it to recall the experience of Singapore or Brazil. But they don’t seem as panicked there as in the West. Probably this is because the Western model of neoliberalism does not provide any real freedom of commerce, speech, or political activity, but rather imposes a regime of submission within a clearly defined framework. Therefore, the destruction of the current system entails the loss of all those dividends previously enjoyed by the liberal political elites of the West that were obtained by speculating in the stock market, from the mechanisms of international foreign-exchange payments (the dollar system), and through the instruments of supranational organizations (the UN, WTO, and World Bank). And, of course, there are the fundamental differences in the cultural varieties of societies.

    In his book The Hidden God, Lucien Goldmann draws some interesting conclusions, suggesting that the foundations of Western culture have rationalistic and tragic origins, and that a society immersed in these concepts that have “abolish[ed] both God and the community … [soon sees] … the disappearance of any external norm which might guide the individual in his life and actions.” And because by its very nature liberalism must carry on, in its mechanical fashion, “liberating” the individual from any form of structure (social classes, the Church, family, society, and gender, ultimately liberating man from his very self), in the absence of any standards of deterrence, it is quite logical that the Western world was destined to eventually find itself in crisis. And the surge of populist movements, protectionist measures, and conservative policies of which Haass and other liberal globalists speak are nothing more than examples of those nations’ instinct for self-preservation. One need not concoct conspiracy theories about Russia or Putin interfering in the US election (which Donald Trump has also denied, noting only that support was seen for Hillary Clinton, and it is entirely true that a portion of her financial backing did come from Russia). The baseline political decisions being made in the West are in step with the current crisis that is evident on so many levels. It’s just that, like always, the Western elites need their ritual whipping boy(although it would be more accurate to call it a human sacrifice). This geopolitical shake-up began in the West as a result of the implicit nature of the very project of the West itself.

    But since alternative development scenarios exist, the current system is eroding away. And other political projects are starting to fill the resultant ideological void — in both form as well as content.

    Thus it’s fairly likely that the current crisis of liberalism will definitively bury the unipolar Western system of hegemony.

    And the budding movements of populism and regional protectionism can serve as the basis for a new, multipolar world order.

  • Visualizing The Relationship Between Money & Happiness

    Can money buy you happiness?

    It’s a longstanding question that, as Visual Capitalist’s Jeff Desjardins notes, has many different answers, depending on who you ask.

    Today’s chart approaches this fundamental question from a data-driven perspective, and it provides one potential solution: money does buy some happiness, but only to a limited extent.

    MONEY AND HAPPINESS

    First, a thinking exercise.

    Let’s say you have two hypothetical people: one of them is named Beff Jezos and he’s a billionaire, and the other is named Jill Smith and she has a more average net worth. Who do you think would be happiest if their wealth was instantly doubled?

    Beff might be happy that he’s got more in the bank, but materially his life is unlikely to change much – after all, he’s a billionaire. On the flipside, Jill also has more in the bank and is likely able to use those additional resources to provide better opportunities for her family, get out of debt, or improve her work-life balance.

    These resources translate to real changes for Jill, potentially increasing her level of satisfaction with life.

    Just like these hypotheticals, the data tells a similar story when we look at countries.

    THE DATA-DRIVEN APPROACH

    Today’s chart looks at the relationship between GDP per capita (PPP) and the self-reported levels of happiness of each country. Sources for data are the World Bank and the World Happiness Report 2017.

    Courtesy of: Visual Capitalist

    According to the numbers, the relationship between money and happiness is strong early on for countries. Then later, when material elements of Maslow’s hierarchy are met, the relationship gets harder to predict.

    In general, this means that as a country’s wealth increases from $10k to $20k per person, it will likely slide up the happiness scale as well. For a double from $30k to $60k, the relationship still holds – but it tends to have far more variance. This variance is where things get interesting.

    OUTLIER REGIONS

    Some of the most obvious outliers can be found in Latin America and the Middle East:

    In Latin America, people self-report that they are more satisfied than the trend between money and happiness would predict.

    Costa Rica stands out in particular here, with a GDP per capita of $15,400 and a 7.14 rating on the Cantril Ladder (which is a measure of happiness). Whether it’s the country’s rugged coastlines or the local culture that does the trick, Costa Rica has higher happiness ratings than the U.S., Belgium, or Germany – all countries with far higher levels of wealth.

    In the Middle East, the situation is mostly reversed. Countries like Saudi Arabia, Qatar, Iran, Iraq, Yemen, Turkey, and the U.A.E. are all on the other side of the trend line.

    OUTLIER COUNTRIES

    Within regions, there is even plenty of variance.

    We just mentioned the Middle East as a place where the wealth-happiness continuum doesn’t seem to hold up as well as it does in other places in the world.

    Interestingly, in Qatar, which is actually the wealthiest country in the world on a per capita basis ($127k), things are even more out of whack. Qatar only scores a 6.37 on the Cantril Ladder, making it a big exception even within the context of the already-outlying Middle East.

    Nearby Saudi Arabia, U.A.E., and Oman are all poorer than Qatar per capita, yet they are happier places. Oman rates a 6.85 on the satisfaction scale, with less than one-third the wealth per capita of Qatar.

    There are other outlier jurisdictions on the list as well: Thailand, Uzbekistan, and Pakistan are all significantly happier than the trend line (or their regional location) would project. Meanwhile, places like Hong Kong, Ireland, Singapore, and Luxembourg are less happy than wealth would predict.

  • What Happens When Your Money Is Worthless? Living With A Devalued Currency

    Authored by J.G.Martinez via Daisy Luther’s Organic Prepper blog,

    This is one of the most important and valued articles to help you prepare. I think it could be useful, based on our experience with the economic collapse and its effects on the currency. Let me tell you what life is really like when your country has a devalued currency that is nearly worthless.

    How do you buy things with devalued currency?

    These last few days I was asked by a fellow prepper overseas how our internal trading, with such a devalued currency, was going on. He asked if we used silver coins and bartering. I answered him that we use mostly US dollars and Euros for large transactions like vehicles, land, and housing, as far as I know. But the reason people are mostly selling is that they are desperate to get out of the country, and the wealth they have accumulated in previous years vanishes, with the bad deals they seem forced to accept.

    On the other hand, for day-to-day payments, bolivars are still used, but the prices go up (always UP by the way) depending on the black market dollar price. This is, though, a perfect evidence that this black market dollar is controlled by the government: look at the evolution price, and you will find it stable just before any important election, political campaigns and such.

    This is no surprise, those who benefit the most from this black market are those “companies” that aligned with the dollar river…and nowadays that stream is getting dry.

    Bad news for oil industry workers

    I received very bad news for those still working in the oil industry. So you can understand what is in store for the employees, I have to explain some background first.

    As part of our monthly payment, we received a savings incentive: the company retained the 12.5% of our salary in their accounts until the end of the month, and provided another 12.5% (it sounds like a lot but it is not). So, by the end of the month, we had in the corporative account an additional 25%.

    This was one of the main benefits for the oil state workers, and that helped to deal with the high performance demanded by the industry. This money, during better times, was kept there until the end of the year, for a new car, or starting a side business,  some fancy vacations, and stuff. However I never used it for traveling overseas, but invested in land, some prepping gear and equipment, assisting my parents and my wife’s family, and short family trips from time to time to the beach, or my folks’ place and such.

    We had something like your 704(k), that could be retrieved from the corporative accounts to our payroll bank account. This supposedly was for the retirement of the employees. The economy tanked so fast that this is worthless now.

    In one of the speeches a few days ago, the new “cryptocurrency” that is not such, the Petro, is going to substitute the national currency in the savings additions for the employees. My friends that still remain working there told that it was going to be an “option” at first.

    But we all know that this is just a way to IMPOSE the Petro on the people and inject it in the national economy despite the US sanctioning. Add to this the fact that most of the workers have NO idea about how to trade with it, nor how to exchange it for food as they use to do with the savings incentive. See my point?. They cut off the employees revenue and give them a worthless “crypto” that is useless.  How is going to buy food with that a 58-year-old secretary, for example, without other computer skills than using the social networks, the email and word processors? Even worse, they are FORCING the employees to accept a currency that is prohibited by the US financial authorities, they will be subject to the sanctioning automatically, completely unwilling to trade with that crypto.

    What concerns me the most, is that the presidential speech announced that everyone who wants to sell their properties will have to do it in cryptocurrency. (I have the audio file to prove it) This is nothing more than the imposition of the convertible Cuban peso. The hard currencies for the elites, the USDs and Euros, and the garbage currencies that they worked so hard to destroy, for the ignorant, starving masses.

    The dangers of alternative trade

    It is unlikely to see someone paying with silver coins, as far as I am aware. Bartering? Sure, but that is mostly in the rural communities. In the cities, bartering is not common. There are some brave initiatives to start paying employees with a dozen eggs a week, additional to the salary, as an incentive. I have seen it in the newspaper ads.

    This said, I have seen real bargains in collectible coins, some silver 1-ounce coins memorabilia of our independence, called “doblones” commonly found here, which means people have used them as wealth storage.

    The problem is that if you need to buy food with devaluated currency, perhaps you won´t get as much as you need. The currency will be valued by your seller. However, I am sure that if this becomes much more common, in the communities far away from the major cities some sort of local economy will soon be in place.

    Some nuts are trying to impose an alternative currency named “Elorza” (you may want to google search it) in a frontier town with the same name in the Apure state. This is, besides being illegal, is delusional. Years ago I bought a couple of doblones that were not cased; the following year I needed cash and wanted to sell them, at the silver spot price with a plus, but the buyers that contacted me did not want to pay the fair price, even though the silver was down about $2 under the original price I paid for. So I went to a jeweler and could sell them there.

    This means that they could be used as currency, but it depends on the culture of the society whether they will accept it or not. The total of those doblones is 20.000, so their value should increase every year. There are some other commemorative coins, but people are negotiating them in dollars because most of the people want to leave the country.

    There has been a place, in a major city, where you barter or exchange your goods for something else that you may need, but criminals made impossible to keep this kind of flea market in public places. I have received alarming reports from friends in the coastal fishing towns. The “colectivos” gang are now forcing the small fishermen to sell them their catch of the day at gunpoint. Ar-15s at the shoulder and all. Then they sell the fish to the people at 3 times the price they pay the fishermen.

    The national guard and police do not get involved. They just receive their fee: milk crates filled up with devalued bills. The source of this information is highly trusted, so I can write about this with confidence. It was a friend of mine, a former co-worker who was there and saw everything from his car. His parents live in this coastal city, called Cumana. He was going to buy but after that, he decided to go to a supermarket. The beach market where people used to buy fresh at lower prices is no longer secure.

    Other types of enterprise

    My father has been working over 25 years as a repairman for electrical farm equipment. Pumps, mill engines, alternators, generators, that kind of stuff. He has been lately charging his customers and receiving staples and supplies: corn flour, pasta, rice, even pork meat, poultry, cheese, eggs and such. When customers don’t have a way to pay, he has also made repairs and received as payment lots of old, worn, used spare parts that he  rebuilds whenever he finds some idle time. Once the parts are fully functional, he trades or sells them.

    He is a smart trader and always get an edge on his deals. What the customers see as junk he knows that someone else will need it once it is repaired, and he has a good network. Almost everyday someone knocks at his door looking for a spare part. He has adapted all kind of equipment, even upgrading with modern, efficient components, or simplifying some complex control systems. He often gets the parts he has removed as part of his payment, and sometimes the clients are so happy and satisfied with their equipment being up and working again that they just give the parts away to him. So he has always has a lot of spares in his small workshop at home, and a captive market for this. My brother has been learning from him, and he is slowly gaining the needed skills to keep the family business running.

    Suggestions for preparing for a time when your currency has no value

    I would suggest that small, close communities who are self-reliance oriented start working on a plan with some guidelines in the macro aspects of the economy.

    • Which coins would be accepted, based on their precious metal content?

    • What about electronic devices like thumbdrives, Sds, solar panels?

    • Think about everything that could have an intrinsic/bartering value.

    • YES, drinkable alcohol is one of the best currencies you could stockpile. Even better if you know how to produce it. I have known that our local beer factory in my former town is producing pumpkin and tapioca beer! Is that great or what?

    Accumulation of some cash is good, even if it is devalued currency. It saved my sorry backside to be able to leave at the best possible time. But without the needed knowledge, skills and intuition about where things were really going, it would have been much more difficult.

  • Easter Egg Costs Soar Near Record High

    With the long weekend upon us, whether you’re Christian or not, it seems the chocolatey-goodness of Easter appeals to almost all Americans (with 84% planning to celebrate this year), although only half of those celebrating are planning a church visit.

    Statista’s Felix Richter points out that the following infographic shows which holiday customs Americans are particularly fond of, what gifts they plan to give and what it is they consider most important about Easter.

    Infographic: Easter in the United States 2018 | Statista

    You will find more infographics at Statista

    However, the cost of Easter is soaring…

    Egg prices in the U.S. have surged close to a record high, just in time for Easter when demand normally rises.

    As Bloomberg reports, the wholesale cost of a dozen eggs in the Midwest has more than doubled in the five weeks through March 23 to $2.71, U.S. Department of Agriculture data show, the highest since a bird-flu outbreak in August 2015.

    A large laying-hen flock bodes well for ample egg supplies ahead, meaning despite higher prices, omelettes can likely stay on the menu.

  • Judge Rules California Starbucks Must Have Cancer Warnings On Their Coffee

    In what is only the latest outrageous ruling by a California judge so far this year, Starbucks and a handful of other coffee chains lost a yearslong legal battle against a consumer advocacy group trying to force coffee companies to attach cancer warnings to their packaging, according to Reuters. 

    The Council for Education and Research on Toxics (CERT) sued 90 coffee retailers on the grounds they were in violation of a state law requiring companies to warn consumers about potentially cancerous chemicals in their products. Several defendants settled before the final decision and agreed to post the signage and pay millions in fines.

    Coffee

    A chemical called acrylamide, which is one of the byproducts of roasting coffee beans, is present in brewed coffee and is listed as a potential carcinogen. CERT’s lawsuit was filed back in 2010.

    Per Reuters, Los Angeles Superior Court Judge Elihu Berle ruled in a decision dated Wednesday that the defendants in the lawsuit had failed to prove that coffee isn’t a carcinogen.

    Of course, Starbucks’ lawyers aren’t the only ones having difficulty proving this.

    Research shows that coffee can lower the incidence of diabetes and liver disease – and even prolong life. The World Health Organization removed coffee from its “possible carcinogen” list in 2016.

    One professional researcher contacted by CBS said there’s not enough evidence, in his opinion, to warrant such a warning label on coffee. Coffee companies have said removing acrylamide from brewed coffee would make it implausibly expensive and difficult to prepare in stores.

    Others have said that if the potato chip industry was able to remove acrylamide from its product (which it did after being sued by CERT), Big Coffee could also accomplish it.

    But regardless of whether a warning is truly warranted, many California coffee shops already hang warnings advising customers about the dangers of acrylamide.

    But what’s worse for companies like Starbucks is that if the industry loses the inevitable appeal (companies have already said they’re “considering it”), the judge could impose a stiff civil penalty. By law, it could be as high as $2,500 per person exposed and per incident over the span of eight years. That could be an astronomical figure in California, the most populous state in the US, with 40 million residents.

    If the ruling does stand, coffee companies might decide it’s easier and cheaper to print warnings on all of their packaging – rather than producing separate packaging just for California.

    So once again, the impact of a California judge’s ruling will be felt across the entire country.

  • Xi Jinping And Kim Jong-Un: Make Korea United Again!

    Authored by Federico Pieraccini via The Strategic Culture Foundation,

    Kim Jong-un’s visit reveals much about the tactics that will be used in the negotiations between the Korean leader and the American president; it also consolidates a historical relationship between Pyongyang and Beijing.

    The recent meeting in Beijing between the two supreme leaders of DPRK and China has captured global attention. The summit remained secret throughout its duration, revealed by the Chinese leader only when the visit had ended and the Korean leader was on his way back home. Rumours of the encounter continued to be denied by the Chinese foreign minister right up to Tuesday. The denials had a lot to do with the fact that a positive outcome for the meeting, this being the first one, could not be guaranteed. The final statements, the relaxed atmosphere, the many images displaying mutual smiles and acknowledgement reveal that the two leaders of the Chinese and Korean Communist parties are on the same page. Despite wishful thinking from the US, which interpreted the lack of meetings in previous years as a change in Chinese attitudes towards North Korea, the meeting highlighted positive impressions by Xi Jinping about the developments on the peninsula as well as confirmed the strategic thinking of Kim Jong-un.

    Kim Jong-Un’s strategy deserves particular attention. The ability to deter aggression from the United States and South Korea existed well before Pyongyang’s development of a nuclear deterrent, thanks to the enormous number of artillery guns it has directed towards Seoul. A possible conflict would have caused millions of deaths, destroyed the American forces on the peninsula (the American bases would have been the first to be eliminated, really only being there to serve as a tripwire), and upset the alliance with Seoul, which would have borne an unacceptable toll. Kim Jong-un and his father had already secured a powerful enough deterrent to ward off aggression against their country. The strategy behind developing nuclear weapons becomes more clear following the just-concluded meeting with Xi Jinping.

    Kim Jong-un’s willingness to meet Donald Trump in bilateral talks, and the possibility that Pyongyang will give up its nuclear arsenal, stand out. The meeting with Xi Jinping in all likelihood focused on the demands to be made to Trump: the removal of the North American presence in the south of the country is something on which China and DPRK are in strong agreement. The desired outcome for Beijing and Pyongyang (but also for Moscow) would see Washington remove its forces from South Korea in exchange for opening up North Korea’s sites to international inspections. China and Russia would be happy to see the US threat to their nuclear deterrence removed (even if, with the latest hypersonic weapons revealed by Putin, the problem does not seem to arise). This would also bring great advantages to Seoul, which could embark on a rapprochement with the North, starting with a possible reunification of the peninsula; and under the economic and energetic aegis of Russia and China, the peninsula could be included in the One Belt One Road (OBOR), as well as as benefitting from Moscow’s gas.

    Of course this scenario clashes with the recent appointments of Mike Pompeo and John Bolton to the top of the American administration, confirmed by the threat of dissolving the Joint Comprehensive Plan of Action (JCPOA) reached with Iran, undoing a deal reached through the efforts of multiple countries. The consequences would be significant, with the United State coming across as an unreliable state in international relations.

    This aspect for Pyongyang, Beijing, Moscow and even Seoul counts up to a certain point. The extraordinary diplomatic message that Kim Jong-un and Xi Jinping have sent to allies and adversaries alike is that to allow for peace and the possibility of reunification for the Korean peninsula, Kim is apparently willing to renounce his nuclear weapons, his most important deterrent. But interestingly, North Korea has always been able to rely on its formidable conventional deterrent to guarantee its security anyway. For the survival of Kim and his circle, thousands upon thousands of artillery pieces aimed at Seoul are enough to keep any potential aggressor at bay. Another obvious consideration is that any use by Kim of his nuclear weapons against the United States or its allies would result in the total annihilation of the DPRK. So the question remains: if North Korea has always guaranteed its survival through its conventional deterrence, why has it developed a nuclear deterrent as well on top of this? The most logical answer is so as to bring the United States to the negotiating table.

    Pyongyang’s stroke of diplomatic and strategic genius lies in getting the United States to abandon the Korean peninsula in exchange for North Korea renouncing its nuclear arsenal. This hypothesis puts Kim Jong-un on the positive side of the negotiations, coming across as a reasonable and serious negotiating partner willing to find a way to guarantee peace on the whole peninsula. If Kim Jong-un is willing to give up what apparently, until yesterday, seemed impossible in the interests of reaching an agreement to ensure the survival of the two Koreas, then Pyongyang is presenting itself as Seoul’s guarantor of peace. The message Moon Jae-in could receive from the negotiations is that an “enemy” like North Korea is willing to give up its most significant weapon, while the Americans march in with the likes of Bolton and Pompeo, ready to slam their fists on the negotiating table by refusing to make any concessions.

    While Kim Jong-un has every intention of placing any blame for a failure of negotiations on the American side, and seems to have all the reasons ready in place to do so, the meeting between Kim Jong-un and Xi Jinping seems aimed at laying the groundwork to break the alliance between Seoul and Washington. We can already imagine the scene, with Pyongyang ready to renounce its nuclear weapons, Seoul ready to enter into dialogue about the reunification of the country, China and Russia happy with the denuclearization of the North, and above all, the elimination of the prospects of a terrible war on the peninsula. In this climate, Washington would be left completely isolated in refusing to entertain any prospect of abandoning the peninsula. Thanks to its less-than-perfect relations with its European allies, and its intention to annul the Iranian JCPOA, Washington would leave itself looking like it is neither able to keep its promises nor willing to pursue any credible diplomatic path.

    The reality is that an overall agreement between North Korea and the United States is practically impossible for one fundamental reason: the United States uses the excuse of having to protect South Korea to maintain a permanent presence on the peninsula for the purposes of containing China and Russia, both through missile defense and by maintaining a military presence near their borders. For this reason, while Moscow and Beijing have multiple reasons for seeking an agreement between Pyongyang and Washington, both are aware that the US has no intentions of abandoning its presence in South Korea. The meeting between Kim Jong-un and Trump is a well-designed trap prepared by Moscow, Beijing and Pyongyang, maybe over many months or even years. The most realistic objectives are to further isolate Washington in the region, to bring Beijing and Seoul closer together, and to drive a wedge between Seoul and Washington. Moscow would use the failure of these negotiations to earn more leverage with its European partners, all eager to see a solution to the Korean crisis. Furthermore, Moscow could increase its opportunity to enter the energy market in South Korea as a result of Seoul diversifying its energy sources. Beijing has every intention of avoiding a war on the peninsula, which would be disastrous in many respects, not only humanitarian but also in the possibility of Washington camping on China’s border as a result of destroying the DPRK.

    South Korea’s Moon Jae-in looks on anxiously, ready to reach an agreement with the North. The mastery of Sino-Korean diplomacy has created a win-win situation for Pyongyang, with Washington’s eventual failure in the negotiations having negative reverberations with her allies in region. This is probably the reason why many in the US administration greeted Trump’s decision to accept talks with Kim negatively.

    Accepting to engage in talks signals a preparedness to negotiate. But as we can anticipate, the unwillingness of the Americans to accede to North Korean demands to abandon the peninsula doom the talks. At the same time, Pyongyang’s offer to give up its nuclear weapons will leave Washington bearing responsibility for the failure of the talks if there is no commensurable response. For this reason, Trump has ingeniously decided to bring in two warmongers like Pompeo and Bolton, intending to scare Kim into a negotiating position more favorable to Washington, a strategy he intends to also pursue in relation to Iran.

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    The truth is that American diplomacy has no room for maneuver with Korea; and since war is unthinkable, it is not even a real threat. This leaves Trump with a lot of bluster and a bunch of snarling hawks in tow, but with Pyongyang and Beijing left holding the aces, as will become clear in the coming weeks when all the cards are laid on the negotiating table.

  • Einhorn Steamrolled: Greenlight Plunges 14% YTD Despite Tech Wreck

    For much of 2017, hedge funds – most of which again underperformed both their benchmark and the broader market – complained that they were not generating alpha for one reason: there was no volatility. Well, they got their wish in spades last month when after months of record low, single-digit VIX, equity vol exploded resulting in a 3.9% slide in the S&P 500 and as 10-year yields backing up.

    And so with volatility spiking, and what every commentator saying it was a “stockpicker’s market” hedge funds surely had a blockbuster month, right?

    Well, no, quite the opposite in fact: according to the Bloomberg Hedge Fund database, in February hedge funds posted an overall drop of 2.19%, wiping out all of January’s gains, and leaving them flat for the year. Yes, somehow the month that all hedge funds were waiting for lead to widescale losses and last month ended up being the worst month for hedge funds since January 2016, when they slumped 2.57%.

    Furthermore, as we noted two weeks ago, when looking at the breakdown of specific names at the top and bottom, one stood out: David Einhorn’s Greenlight was down 11.86% as of Feb. 28, making it the worst performing hedge fund in the entire HSBC Universe.

    We also flagged another problem: back on March 19 we noted that if the recent tech selloff accelerates, it would be a hedge fund bloodbath, because as we showed then, virtually every hedge fund is long tech names, with 4 of the 5 most widely owned names Amazon, Facebook, Google and Microsoft.

    We also hinted that such a tech wreck may actually be beneficial to Einhorn, who famously has a big tech-heavy “bubble basket” and which has – until recently – crushed his performance.

    Well, we were right about one thing: as of Friday, the HFRX Global Hedge Fund Index had dropped to the lowest level in 2018, down 1.2% YTD, and was back to levels last seen in October 2017.

    We were, however, wrong about the ongoing tech rout helping Greenlight, because according to Bloomberg, Einhorn’s main hedge fund fell another 1.9% in March, extending its loss this year to 14%.

    Superficially, this is not that bad – in fact, one can say that Greenlight beat his benchmark as it outperformed the S&P’s 2.5% March drop. That will hardly enthuse Greenlight’s long-suffering LPs who have been patiently waiting for Einhorn to have another home run, and which failed to happen despite last week’s tech bust. In other words, David will be sending another letter to his clients explaining why this all “must be frustrating to you.”

    Some more details from Bloomberg:

    Einhorn’s fund added to its losses despite a selloff in several technology companies at the end of March, including Amazon.com Inc. and Netflix Inc. The money manager has been shorting a group of technology stocks, including those companies, which he’s described as a “bubble basket,” though Friday’s letter didn’t list his current investment positions.

    In late February, Einhorn said on a conference call  for his Greenlight Capital Re, that his hedge fund was experiencing its worst underperformance ever, as it suffered a 12% decline in the first two months of the year.

    Greenlight has posted lackluster returns in recent years as markets, especially for growth stocks, have risen while the hedge fund has stuck to its value-investing strategy.

    Since then, unfortunately it has gone from bad to worse for the poker afficionado who remains dead last in the YTD HSBC rankings and who will soon face strong pressure from LPs to come up with a hail mary if the “bubble basket” was indeed a dud.

  • New Satellite Imagery Shows Shocking Yemen Devastation As Saudi Crown Prince Tours US

    Saudi Arabia and other oil rich Gulf Cooperation Council (GCC) allied states like the UAE have long managed to escape the scrutiny of media and international human rights bodies thanks to their deep pockets and security relationship with the West. Their collective oil, weapons, and infrastructure investment interdependency with Britain and the US have generally translated into Western governments, media, and human rights organizations toeing the party line on the gulf sheikhdoms, content to (with a few sporadic exceptions) uncritically present them as some kind of “reform-minded” terror-fighting benevolent monarchies looking out for democratic interests and championing human rights.

    This is currently being demonstrated more than ever during Saudi Crown Prince Mohammed bin Salman’s (MBS) extensive and ongoing tour of the United States after a visit to the UK earlier this month. The kingdom’s heir apparent landed in Washington nearly two weeks ago and met with Trump and other high US officials before embarking on a multi-city tour across the United States.

    Last Tuesday MBS met with Bill and Hillary Clinton, Kissinger, Senator Chuck Schumer, and UN Secretary General Antonio Guterres during a stop in New York City.  On Friday, he also met with the CEOs of Morgan Stanley and JPMorgan, James Gorman and Jamie Dimon.

    Jamie Dimon and MbS

    He is scheduled to stop in Seattle and then California over the weekend, where he plans to strengthen ties with tech companies while meeting with Northwest business leaders.

    Not unexpectedly, mainstream media and politicians have fawned over the 32-year old prince’s visit. Americans can even find a slick, nearly 100-page, ad-free magazine at their local supermarket newsstand which is entirely devoted to praising MBS and his “New Kingdom” (in the words of the magazine’s title), produced by the owner of the National Enquirer – American Media Inc.

    Image source: The Daily Beast

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    The magazine of course has conveniently left out news of Saudi Arabia’s vicious 3-year long scorched earth bombing campaign over Yemen, which has left millions of Yemeni civilians displaced since 2015, and according to conservative UN estimates from early this year, has killed over 5,000 civilian noncombatants. 

    However, yet more hard empirical proof has emerged demonstrating that MBS and his allies in the West are decimating entire cities and civilian infrastructure in already deeply impoverished Yemen in their fight against Houthi rebels. 

    France 24 recently produced a graphic, based on satellite imagery captured through the opening two years of the war, showing just how devastating the Saudi coalition aerial campaign has been in Yemen’s capital city of Sanaa – which had a population approaching 2 million people before the war, and is the country’s largest city. 

    According to France 24:

    Satellite radar data from the European Space Agency shows the extent of Sanaa’s destruction. The capital of Yemen, part of which is listed as a UNESCO World Heritage Site, is in the grip of the war that has ravaged the country for three years.

    Satellite image analysis shows the shocking extent of Sanaa destruction. Source: MASAE Analytics via France 24. 

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    The France 24 report continues:

    SAR satellite data from the European Space Agency (ESA), compiled and analyzed by Masae Analytics, a privately held company specializing in data collection and analysis, measures the extent of destruction in the capital between February-March 2015 and May 2017…

    “The extent of the destruction in Sanaa is quite considerable, since the whole city is affected, said Emmanuel de Dinechin, associate director of Masae Analytics, interviewed by France 24. There are visible areas on the map that were targeted from the beginnin, and which were pounded fairly frequently during the period of analysis.”

    The US itself has been an integral part of the coalition (also including Bahrain, Kuwait, UAE, Egypt, Sudan, and with the UK as a huge supplier of weapons) fighting Shia Houthi rebels, which overran the Yemen’s north in 2014.

    Saudi airstrikes on the impoverished country have involved the assistance of US intelligence and use of American military hardware. Cholera has also made a comeback amidst the appalling war-time conditions, and civilian infrastructure such as hospitals have been bombed by the Saudis.

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    The war in Yemen has been drastically under-reported in US media, which tends to focus almost exclusively on human rights in places like Russia or Syria, where President Bashar al-Assad is consistently portrayed as little more than a homicidal maniac bent on massacring his own civilian population.

    But as we reported last summer, the United Nations is in possession of a secret report which details a litany of horrific war crimes on the part of the coalition, including the bombing of dozens of schools, hospitals, and civilian infrastructure. 

    The leaked 41-page draft UN document, was summarized at the time by Foreign Policy:

    “The killing and maiming of children remained the most prevalent violation” of children’s rights in Yemen, according to the 41-page draft report obtained by Foreign Policy.

    The chief author of the confidential draft report, Virginia Gamba, the U.N. chief’s special representative for children abused in war time, informed top U.N. officials Monday, that she intends to recommend the Saudi-led coalition be added to a list a countries and entities that kill and maim children, according to a well-placed source.

    Early in the war the prestigious Columbia Journalism Review produced a short study which attempted to explain, according to its title, Why almost no one’s covering the war in Yemen. Other analysts have since criticized the media and political establishment’s tendency to exaggerate Iran’s presence in Yemen and further willingness to ignore or downplay the clear war crimes of US client regimes in the gulf: while Iran-aligned states and militias are framed as the region’s terrorizers, the Saudi-aligned coalition’s motives are constantly cast as praise-worthy and noble.

    Meanwhile, the Pentagon this week reiterated its official (Orwellian) line that the US military’s deep level of assistance to the Saudi bombing campaign is actually geared toward reducing civilian harm. As Al-Monitor reports: “Speaking to reporters at the Defense Department on the heels of a meeting with Saudi Arabia’s Crown Prince Mohammed bin Salman last week, Mattis said a contingent of US advisers deployed to help with intelligence sharing are engaged in a ‘dynamic’ role to help ensure a reduction in civilian harm.”

    But Al Monitor also notes that civilian deaths have continued unabated, while further quoting Mattis as saying, “This is the trigonometry level of warfare.”

    So the official Pentagon line on Yemen seems to be that as it directly assists the Saudis in dropping bombs on civilians, it is actually helping those very civilians. Interesting logic.

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