- FBI, FAA, Air Force Investigate Armies Of Unidentified Drones Appearing Over 3 States At Night
FBI, FAA, Air Force Investigate Armies Of Unidentified Drones Appearing Over 3 States At Night
Authored by Michael Snyder via The End of The American Dream blog,
Since just before Christmas, armies of unidentified drones have been appearing each night in the skies above Colorado, Nebraska and Kansas. The drones are approximately 6 feet wide and they have red and white lights, but nobody knows where they are from or who owns them.
This is a story that is now receiving national attention, and the FBI, the FAA and the U.S. Air Force are all investigating this mystery. According to eyewitnesses, these drones can move “much faster than a regular aircraft”, and that would seem to indicate that they are highly sophisticated.
So far, the U.S. military, every government agency that has been asked, and many of the major companies in the area have all denied operating the drones. Federal, state and local law enforcement officials have been doing all that they can to solve this mystery, but so far they have come up completely empty.
And even though these drones are now receiving so much attention, they just keep coming back night after night. According to one northern Colorado resident, when the drones come out it looks like “something from a movie”…
For the last week, Michelle Eckert has spotted a high-flying, night-time mystery above her rural northern Colorado home. She has seen drones, sometimes a dozen or more with wingspans 6 feet wide.
“The sky is lit up with Christmas lights basically,” she told CBS News. “There’s lights and things flying all over. It reminded me of something from a movie.”
Sometimes eyewitnesses just see one drone. In other cases, the drones are working in pairs. And in other instances, there are large groups of up to 30 drones working in very close coordination.
On Thursday night, a Denver Post reporter went out in search of these drones, and it wasn’t long before some of them were spotted…
As light turned to dark Thursday, stars appeared in the night sky. And soon after, so did drones. Around 6:10 p.m., a Denver Post reporter and photographer spotted two unmanned aircraft whizzing west above I-70, 8 miles outside Limon.
More drones could be seen outside Last Chance, a slight whir audible as they passed overhead. The aircraft flashed one red light and one white. Two other yellowish lights remained on throughout the flight. In 20 minutes, a half-dozen flying objects could be seen traversing over the barren wind farms.
The fact that there are so many of them and that they are operating over such a large area would seem to indicate that this is not the work of some rogue individual.
But at this point we don’t have any answers.
Lincoln County Sheriff Tom Nestor has been working on this case for quite a few days, and his county map is now “dotted with blue and yellow thumbtacks” because so many people have been reporting sightings…
Inside the Lincoln County Sheriff’s Office in Hugo on Thursday afternoon, Sheriff Tom Nestor and Capt. Yowell stared at a county map hanging in a narrow hallway.
It’s dotted with blue and yellow thumbtacks, depicting sightings from across the county of just under 5,500 people. There’s a series of tacks clustered around Interstate 70 in Limon, with a few scattered north and south of the interstate. Some people reported the drones flying in packs. Others saw solo flights.
Nestor immediately suspected that a local company may be doing some mapping, but that theory didn’t turn up anything. And other law enforcement officials in the region have come up empty as well…
Nestor said he has spoken to local oil companies and drone experts, learning information but getting no answers. Neighboring sheriffs have spoken to the military, which has denied involvement, he said. The Air Force, the Defense Advanced Research Projects Agency, the Department of Defense, the Environmental Protection Agency, the North American Aerospace Defense Command and the University of Colorado Boulder have told The Denver Post that they’re not flying the drones.
The FAA has gotten involved, and you would think that they should be able to get to the bottom of this, but they are just as puzzled as everyone else…
Already, the FAA has contacted test sites, drone companies and companies that have received authorization to operate drones in the affected areas. But the agency has not been able to determine who is flying the aircraft, spokesman Ian Gregor said in a statement Monday.
The FAA also asked area airports and pilots to report sightings or people they see operating the drones from the ground.
So far there is no evidence that these drones are malicious, but just a few days ago we received a reminder of how deadly they can potentially be. Iranian military commander Qassem Soleimani was killed by a drone, and he probably never even knew that the attack was coming.
On Monday, dozens of federal, state and local law enforcement officials gathered in the town of Brush to talk about these drones. At the conclusion of the meeting, reporters were told that there is still “no explanation” for this mystery…
Mysterious drone sightings remains a mystery on Colorado’s Eastern Plains. Monday, more than 70 local, state and federal officials met in Brush to talk about findings and reports from the last couple of weeks.
Multiple law enforcement agencies, the FBI, United States Air Force and the FAA ended the meeting with no explanation of what the objects hovering over vast properties really are.
People living in Colorado, Nebraska and Kansas desperately want some answers, and now a similar sighting has been reported in Minnesota…
Drones were reported flying over Juniata and Hastings Sunday night. An operator has not been identified at this time.
Minneapolis Air Traffic Control contacted the Hastings Police Department with a report from an airplane pilot about the drones.
Air traffic control reported the drones were flying in a grid pattern around 9-10 p.m. Sunday, Police Capt. Mike Doremus said.
This sounds very similar to many of the other sightings, but nobody has been able to examine one of these drones up close yet, and so we still don’t know precisely what we are dealing with.
But what we do know is that our world is a very strange place, and it is getting stranger by the day.
Hopefully this is just some relatively harmless top secret U.S. military program that the Pentagon doesn’t want to talk about.
Because if these drones do not have a U.S. origin, then that opens up a completely different can of worms.
Tyler Durden
Tue, 01/07/2020 – 23:30 - Nine States Headed For Recession In Six-Months, Most Since Financial Crisis
Nine States Headed For Recession In Six-Months, Most Since Financial Crisis
President Trump’s core campaign promise was to “Make America Great Again,” through a revival of the manufacturing complex via launching a trade war against China and debt-fueled tax cuts for corporations. Most of the recovery, well, it was a sugar high, that by the time late 2018 rolled around, economic growth rates started to reverse.
Manufacturing data on Friday was more confirmation that an industrial recession continues to persist and could be broadening into early 2020. Now the slowdown appears to be spreading to nine states that are teetering on the edge of a recession.
The Federal Reserve Bank of Philadelphia published new leading index data for 50 states for November 2019 last week. The leading indexes are a six-month forecast of the coincident state indexes that show nine US states are expected to plunge into a recession within six-months – this is the most significant number of states to slide into a contraction since the financial crisis.
State leading indexes for November show that West Virginia’s economy is headed for a significant downturn. The coal industry is in tatters, manufacturing is busting, and an opioid crisis continues to ravage local communities across the state.
Delaware, Vermont, Oklahoma, Montana, Iowa, Kentucky, and Connecticut are other states where leading indexes are indicating an economic contraction could occur in the next six months.
Leading indicators suggest Midwest and Rust Belt states will record marginal growth in the next six months, but we should note that growth rates have quickly faded in these states where farming and manufacturing have gone bust.
Bloomberg data shows nine states are headed for an economic contraction; this is the highest amount since July 2009.
An industrial recession is broad-based at the moment, spreading to nine states, with the risk of infecting another 14 states in the Midwest and Rust Belt by 2021.
President Trump will be hitting the campaign trail momentarily and visiting many of these states where he promised an economic revival.
Tyler Durden
Tue, 01/07/2020 – 23:05 - No Survivors After Ukraine-Bound 737 Crashes Two Minutes Into Flight From Tehran
No Survivors After Ukraine-Bound 737 Crashes Two Minutes Into Flight From Tehran
Update: There were no survivors in the Ukraine International 737-800 which crashed shortly after takeoff from Iran, according to the head of the Iranian Red Crescent’s Relief and Rescue Organization in an appearance on state television. The New York Times, meanwhile, reports that the plane was carrying “at least 170 people,” while Bloomberg puts the number between 167 and 180. The cause of the crash has thus far been reported as a ‘technical problem.’
A Boeing 737-800 of the Ukraine International airline in Duesseldorf, Germany, in September.Credit…Ina Fassbender/Agence France-Presse — Getty Images Four helicopters and 22 ambulances were sent to the crash site, according to Bloomberg.
Updated photos of air crash flight #PS752 @isna_farsi pic.twitter.com/MGX7EetFEZ
— Aviation Newsroom (@Aviation_NewsTW) January 8, 2020
#BREAKING : More video about #Ukraine air crash flight #PS752 pic.twitter.com/0KgB6tbAah
— Aviation Newsroom (@Aviation_NewsTW) January 8, 2020
Another latest photo #PS752 pic.twitter.com/Gqy2ddw8yv
— Aviation Newsroom (@Aviation_NewsTW) January 8, 2020
Rescue crews said they could not save anyone Pic: Iranian Red Crescent https://platform.twitter.com/widgets.jshttps://platform.twitter.com/widgets.jshttps://platform.twitter.com/widgets.js
Nothing left of it. This is gut wrenching-> pic.twitter.com/kQ8q5EnjZd
— Bahman Kalbasi (@BahmanKalbasi) January 8, 2020
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The flight, Ukraine International Airlines Flight 752, departed Imam Khomenei International Airport at 6:12 a.m. on Wednesday bound for Kiev, Ukraine. It lost contact at 6:14 a.m. according to a flight tracker.
ADS-B data and aircraft information regarding #PS752. https://t.co/JMpj7igNHt
PS752 was operated by a 737-800 (not a MAX) registered UR-PSR. Delivered new to Ukraine International Airlines in 2016. pic.twitter.com/eMhnBtpQP6
— Flightradar24 (@flightradar24) January 8, 2020
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***
Raising chilling memories of the downing of MH-17 (false-flag) in Ukraine, the devastating news that a Ukrainian Airlines Boeing 737 passenger jet has crashed following takeoff from Iran is fascinatingly coincidental with tonight’s massive escalation (and rapid de-escalation) in Iraq.
Iranian state TV has confirmed the Ukrainian airplane, carrying 180 passengers and crew, has crashed near Tehran Imam Khomeini International Airport in Iran, after suffering technical problems minutes after take-off.
An investigation team was at the site of the crash in southwestern outskirts of Tehran, civil aviation spokesman Reza Jafarzadeh said.
The following clip is circulating social media claiming to be the last few seconds of the flight. Judging by the fireball, “technical” problems would be an understatement…
Alleged footage of #Ukraine International Airline #UIA flight number #PS752 that crashed in #Tehran #Iran. Flight ends in a massive fireball… https://t.co/5Gw8e5jRHb
— Strategic Sentinel (@StratSentinel) January 8, 2020
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There is something odd about this though, as FlightRadar24 shows, the plane was gaining altitude at around 8,000 feet when it suddenly disappears…
This terrible accident comes after Iranian President Rouhani appeared to threaten a western airliner,
Those who refer to the number 52 should also remember the number 290. #IR655
Never threaten the Iranian nation.— Hassan Rouhani (@HassanRouhani) January 6, 2020
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290 is a reference to the death toll from downed Iran Air Flight 655: in 1988, the U.S. warship Vincennes mistakenly shot down an Iranian passenger plane over the Gulf, killing all 290 aboard.
The attack was the deadliest aviation disaster involving an Airbus A300, as well as the deadliest to occur in Iran.
If you don’t know the story of Iranian Air Flight 655, then you don’t fully understand American-Iranian relations.
On July 3, 1988 the US Navy used missiles to shoot down an Iranian passenger jet – killing all 290 civilians – including 66 children – on board. pic.twitter.com/Jw3E2YtXBa
— Shaun King (@shaunking) January 6, 2020
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Tyler Durden
Tue, 01/07/2020 – 22:46 - Kassam: Democrats Supported Obama Killing Americans With Drones, But Take Issue With Trump Killing Terrorists
Kassam: Democrats Supported Obama Killing Americans With Drones, But Take Issue With Trump Killing Terrorists
Op-Ed By Raheem Kassam Via The Daily Caller
War with Iran is unavoidable… at least according to the media.
Democrats have been wringing their hands over Iranian Gen. Qasem Soleimani’s death, with some calling it a “war crime” and House Speaker Nancy Pelosi seeking to restrict the president’s powers.
But what did Democrats say when President Obama used his executive powers to strike (and kill) U.S. citizens in Yemen in 2011, including a 16-year-old boy?
Democratic Sens. Ron Wyden of Oregon, Mark Udall of Colorado, and Martin Heinrich of New Mexico said in a letter to Attorney General Eric Holder that the use of force was “legitimate use of the authority granted to the president.”
They said Obama had met the legal standard.
These three senators were part of the Senate Select Intelligence Committee. They went on to describe the killing of terror leader Anwar al-Awlaki:
Mr. al-Aulaqi [sic] clearly made a conscious decision to join an organized fighting force that was (and is) engaged in planning and carrying out attacks against the United States,” the senators wrote. “By taking on a leadership role in this organization, involving himself in ongoing operational planning against the United States, and demonstrating the capacity and intent to carry out these operations, he made himself a legitimate target for military action.
Does the same rationale apply to Soleimani? Or has it suddenly changed?
After all, Soleimani was the head of the Quds Force, recently designated a terrorist organization by the United States government.
Additionally, a Justice Department memo released in 2014 led to this report from the New York Times:
Intelligence officials had concluded that Awlaki was an operational terrorist leader who had gone overseas, become part of Al Qaeda or an associated force, and was “engaged in continual planning and direction of attacks” on Americans. His capture was not feasible, the memo said. Working from that premise, David Barron, then the acting head of the Justice Department’s Office of Legal Counsel, concluded that it would be lawful for the government to kill Awlaki, notwithstanding federal statutes against murdering Americans overseas and protections in the Constitution against unreasonable seizures and depriving someone of life without due process of law.
“We do not believe al-Awlaki’s citizenship provides a basis for concluding that he is immune from a use of force abroad” as otherwise congressionally authorized to use against Al Qaeda, Barron wrote, addressing the memo to Attorney General Eric H. Holder Jr.
Asked about the killing of Awlaki’s son a few weeks after the initial strike, Obama White House Press Secretary Robert Gibbs glibly replied about the drone strike on another U.S. citizen deemed to be a threat:
“I would suggest that you should have a far more responsible father if they are truly concerned about the well being of their children. I don’t think becoming an al Qaeda jihadist terrorist is the best way to go about doing your business.”
Politico also explained how the Democrats used the killing of Bin Laden and Awlaki as part of their reelection strategy, with the headline of one story reading, “Al-Awlaki’s killing bolsters Obama.”
The story asserted:
The killing of Al Qaeda leader Anwar al-Awlaki — just months after the killing of Al Qaeda founder Osama bin Laden — appears to eliminate the war on terror as a campaign issue for Republicans in the 2012 election and could even give President Barack Obama an unlikely advantage on national security, Democrats said Friday.
It’s remarkable that the president has, in many ways, taken national security off the table as an issue altogether,” Democratic operative and former White House spokesman Bill Burton said on MSNBC. “I don’t think a lot of folks would have thought three years ago that, at this point of the presidential race, President Obama would be sort of untouchable when it comes to national security.”
“His main platform should be, ‘I protected America from terrorists,’ and he should cite the death of the two terrorists and that he was brave and determined to make it happen, and he did,” said Bill Richardson, a former U.S. ambassador to the United Nations who, like Obama, ran for the Democratic presidential nomination in 2008. “He should run on foreign policy, easing tensions around the world, America regaining its respect abroad, and homeland security and terrorism. That’s what should be his main campaign address.”
It’s clear the media and Democrats have different standards for Obama than they do for Trump.
That’s been clear for a while.
The Trump administration should seize on the words of Democrats, diplomats, and the media to provide the rationale for the killing of a man who ISN’T a U.S. citizen (Soleimani) and has been on the terror list for some time.
Soleimani’s long history of pulling together attacks such as Benghazi, hundreds of deaths of Americans and others in the region, as well as the most recent attack on the U.S. embassy in Baghdad is all the rationale President Trump needed.
End of story.
Tyler Durden
Tue, 01/07/2020 – 22:40 - Facebook To Ban 'Deepfakes' And Other Misleading Videos
Facebook To Ban 'Deepfakes' And Other Misleading Videos
Facebook announced in a Monday blog post that deepfakes – computer generated imitations of people – will no longer be allowed on the platform, along with footage which has been otherwise edited in ways that aren’t obvious to the average person.
Manipulations can be made through simple technology like Photoshop or through sophisticated tools that use artificial intelligence or “deep learning” techniques to create videos that distort reality – usually called “deepfakes.” While these videos are still rare on the internet, they present a significant challenge for our industry and society as their use increases. -Facebook
“There are people who engage in media manipulation in order to mislead,” writes VP of global policy management, Monika Bickert.
Going forward, the company will remove ‘misleading and manipulated media’ if it meets the following criteria:
- It has been edited or synthesized – beyond adjustments for clarity or quality – in ways that aren’t apparent to an average person and would likely mislead someone into thinking that a subject of the video said words that they did not actually say. And:
- It is the product of artificial intelligence or machine learning that merges, replaces or superimposes content onto a video, making it appear to be authentic.
The company says the policy does not apply to parody or satire, or a video which has been “edited solely to omit or change the order of words.”
“While these videos are still rare on the internet, they present a significant challenge for our industry and society as their use increases,” Monika Bickert, the company’s vice president for global policy management, wrote in a blog post. –Washington Post
According to the BBC, Facebook announced last September that it would allocate $10 million to improve deepfake detection technology.
Mark Zuckerberg, Facebook’s chief executive, has himself featured in a deepfake video. The clip featured a computer-generated version of Zuckerberg crediting a secretive organisation for the success of the social network.
William Tunstall-Pedoe, a computer scientist who sold his AI company to Amazon, told BBC News that Facebook deserved credit for trying to tackle the “difficult area”.
“The fact the video is fake and intended to be misleading is the key thing for me,” he said. “Whether sophisticated AI techniques are used or less sophisticated techniques isn’t relevant.”
Other companies like Google and Microsoft are also trying to combat deepfakes. –BBC
Facebook will work with academia, government and businesses to combat deepfakes, according to the report.
Tyler Durden
Tue, 01/07/2020 – 22:15 - "Closing The Gender Gap" At Any Cost Threatens The Academic Integrity Of STEM Education
"Closing The Gender Gap" At Any Cost Threatens The Academic Integrity Of STEM Education
Authored by Atilla Sulker via The Mises Institute,
The National Bureau of Economic Research recently published a study which concluded that the grading policies for STEM classes contribute to the gender gap in the STEM field.
The study finds that STEM classes, on average, assign lower grades compared to non-STEM classes and that this tends to deter women enrolling. Women — who value higher grades more than men — are apparently put off by the lower average grades in STEM subjects. This is despite the fact that “women have higher grades in both STEM and non-STEM classes,” according to the study.
The study also shows that women are more likely to switch out of STEM than men. To increase female participation, the authors propose curving all courses to around a B. They estimate that this would increase female enrollment by 11.3 percent.
This may seem like a noble endeavor, but it is based on a faulty premise, and it will have adverse effects.
The authors aim to solve the problem of the gender gap in STEM, but they never explain why this should be a goal. Individuals have distinct abilities, and efforts to “equalize” their abilities and interests based on gender goes against this.
That men have lower attrition rates in STEM should not necessarily be seen as an advantage. For example, another study by Karen Clark, a doctoral candidate at Liberty University, shows that women are, on average, more persistent than men in staying in college. This may be, in part, because they are more likely to avoid high-attrition courses of study like STEM.
The effort to “close the gender gap” in STEM represents a preference for minority status over merit that deems a student’s performance less important than her femaleness. Yet it only hurts individuals to put them in a field in which they will be unhappy or perform poorly, regardless of gender. If an individual, no matter how gifted, is averse to the risk of possibly burning out and forgoing a good grade, then maybe STEM isn’t the right field.
STEM curricula are deliberately rigorous, as their subjects are not easy, and bridges tend to collapse when things go wrong. This is why there are weed-out classes to discourage students from pursuing them lightly. In general, women earn higher marks, but students trying to maintain a high GPA — something women value more than men — might rather avoid such classes. There is no guarantee that in STEM subjects reasonable effort will earn one an A.
Thus, we should not mistake an individual’s willingness to work hard with fitness for STEM. Rather, it is their ability to cope with the possibility of burnout and lower grades, in addition to hard work, that is the better indicator. The National Bureau of Economic Research study clearly shows that men express this ability at a higher rate.
The authors’ view presents yet another dilemma. If we are to close the gender gap in STEM, why not also do so in other areas? What if the history, philosophy, and business departments also have this disparity? Why not intervene in every department, every class, and so on? This would create an endless continuum of administrative oversight and indifference to merit.
The authors would likely agree that such an approach would be too extreme, but this concession destroys their argument. The goal is to close the gender gap, but if this end is not pursued to the extreme, one group will still be “less equal” by their definition.
We should ask ourselves if we are really to throw out pure merit for the sake of an unbacked ideal like “We need more women in STEM.” We never seem to question why we pursue these ideals, or the many unseen effects of pursuing such policies. We just accept them as sacred.
Tyler Durden
Tue, 01/07/2020 – 21:50 - Indonesia Deploys Fighter Jets To South China Sea Amid Tensions With China
Indonesia Deploys Fighter Jets To South China Sea Amid Tensions With China
The Indonesian Air Force has deployed four General Dynamics F-16 Fighting Falcons to the South China Sea on Tuesday in a stand-off with China over its exclusive economic zone, reported Reuters.
The stand-off began last month when Beijing sent a coast guard vessel and commercial fishing boats to the disputed waters off the coast of Indonesia’s northern Natuna islands.
Fajar Adriyanto, the air force spokesman, said four F-16 fighter jets have been conducting flight missions over the islands as a deterrent against China.
“They’re doing standard patrols to protect our sovereign area. It just so happened that they’re patrolling Natuna,” Adriyanto said. “We don’t have the order to start a war with China.”
Indonesian President Joko Widodo said Monday that increased Chinese vessels in the disputed waters is a direct violation of international law.
Widodo said there’s no negotiation with China when it comes “to our sovereignty.”
Indonesian president Joko Widodo told reporters: “There is no negotiation when it comes to our sovereignty.”
Sends 4 more warships to join 6 already in a standoff with China over the Natuna islands, with China significantly under powered. pic.twitter.com/pNftTWnoK1— Graphenes (@Graphenes1) January 7, 2020
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In the last week, the Indonesian Navy has ramped up patrols in the same region that is known for vast natural resources, reported Channel News Asia.
China’s foreign ministry spokesman Geng Shuang said Tuesday Beijing had “opened diplomatic channels” with Indonesia since the stand-off began, and said “both countries shoulder responsibility for maintaining regional peace and stability.”
Reuters notes that ship tracker data shows at least two Chinese ships, Zhongguohaijing and Haijing 3511, were on the edge of Indonesia’s exclusive economic zone on Tuesday. Both ships were located on China’s “nine-dash line.”
Commander of Indonesian Military #TNI 1st Joint Regional Defense Command #Kogabwilhan, Vice Admiral Yudo Margono, show the result of aerial reconnaissance conducted by our Boeing 737-200 Surveillance towards China ship in North #Natuna Sea
Source: IG Indonesian_airfroce pic.twitter.com/wqd39tAgnT
— JATOSINT (@Jatosint) January 4, 2020
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This isn’t the first time both countries have faced a stand-off near Natuna. Indonesia has, for years, deterred Chinese vessels from the region, it’s just this time Indonesia has deployed fighter jets as a response to China’s aggression.
What can possibly go wrong at a time when the Middle East is on the verge of war?
Tyler Durden
Tue, 01/07/2020 – 21:25 - Finance Professors: Buybacks Done As Open-Market Repurchases Should Be Banned
Finance Professors: Buybacks Done As Open-Market Repurchases Should Be Banned
Authored by William Lazonick, Mustafa Erdem Sakinç, and Matt Hopkins via Harvward Business Review,
Even as the United States continues to experience its longest economic expansion since World War II, concern is growing that soaring corporate debt will make the economy susceptible to a contraction that could get out of control.
The root cause of this concern is the trillions of dollars that major U.S. corporations have spent on open-market repurchases — aka “stock buybacks” — since the financial crisis a decade ago. In 2018 alone, with corporate profits bolstered by the Tax Cuts and Jobs Act of 2017, companies in the S&P 500 Index did a combined $806 billion in buybacks, about $200 billion more than the previous record set in 2007. The $370 billion in repurchases which these companies did in the first half of 2019 is on pace for total annual buybacks that are second only to 2018. When companies do these buybacks, they deprive themselves of the liquidity that might help them cope when sales and profits decline in an economic downturn.
Making matters worse, the proportion of buybacks funded by corporate bonds reached as high as 30% in both 2016 and 2017, according to JPMorgan Chase. The International Monetary Fund’s Global Financial Stability Report, issued in October, highlights “debt-funded payouts” as a form of financial risk-taking by U.S. companies that “can considerably weaken a firm’s credit quality.”
It can make sense for a company to leverage retained earnings with debt to finance investment in productive capabilities that may eventually yield product revenues and corporate profits. Taking on debt to finance buybacks, however, is bad management, given that no revenue-generating investments are made that can allow the company to pay off the debt. In addition to plant and equipment, a company needs to invest in expanding the knowledge and skills of its employees, and it needs to reward them for their contributions to the company’s productivity. These investments in the company’s knowledge base fuel innovations in products and processes that enable it to gain and sustain an advantage over other firms in its industry.
The investment in the knowledge base that makes a company competitive goes far beyond R&D expenditures. In fact, in 2018, only 43% of companies in the S&P 500 Index recorded any R&D expenses, with just 38 companies accounting for 75% of the R&D spending of all 500 companies. Whether or not a firm spends on R&D, all companies have to invest broadly and deeply in the productive capabilities of their employees in order to remain competitive in global markets.
Stock buybacks made as open-market repurchases make no contribution to the productive capabilities of the firm. Indeed, these distributions to shareholders, which generally come on top of dividends, disrupt the growth dynamic that links the productivity and pay of the labor force. The results are increased income inequity, employment instability, and anemic productivity.
Buybacks’ drain on corporate treasuries has been massive. The 465 companies in the S&P 500 Index in January 2019 that were publicly listed between 2009 and 2018 spent, over that decade, $4.3 trillion on buybacks, equal to 52% of net income, and another $3.3 trillion on dividends, an additional 39% of net income. In 2018 alone, even with after-tax profits at record levels because of the Republican tax cuts, buybacks by S&P 500 companies reached an astounding 68% of net income, with dividends absorbing another 41%.
Why have U.S. companies done these massive buybacks?
With the majority of their compensation coming from stock options and stock awards, senior corporate executives have used open-market repurchases to manipulate their companies’ stock prices to their own benefit and that of others who are in the business of timing the buying and selling of publicly listed shares. Buybacks enrich these opportunistic share sellers — investment bankers and hedge-fund managers as well as senior corporate executives — at the expense of employees, as well as continuing shareholders.
In contrast to buybacks, dividends provide a yield to all shareholders for, as the name says, holding shares. Excessive dividend payouts, however, can undercut investment in productive capabilities in the same way that buybacks can. Those intent on holding a company’s shares should therefore want it to restrict dividend payments to amounts that do not impair reinvestment in the capabilities necessary to sustain the corporation as a going concern. With the company plowing back profits into well-managed productive investments, its shareholders should be able to reap capital gains if and when they decide to sell their shares.
Stock buybacks done as open-market repurchases emerged as a major use of corporate funds in the mid-1980s after the Securities and Exchange Commission adopted Rule 10b-18, which gives corporate executives a safe harbor against stock-price manipulation charges that otherwise might have applied. As a mode of distributing corporate cash to shareholders, buybacks surpassed dividends in 1997, helping to elevate stock prices in the internet boom. Since then, buybacks, which are much more volatile than dividends, have dominated distributions to shareholders when the stock market is booming, as companies have repurchased stock at high prices in a competition to boost their share prices even more. As shown in the exhibit “Buying When Prices Are High,” major companies have continued to do buybacks in boom periods when stock prices have been high, rendering these businesses more financially fragile in subsequent downturns when abundant profits disappear.
JPMorgan Chase has constructed a time series for 1997 through 2018 that estimates the percentage of buybacks by S&P 500 companies that have been debt-financed, increasing the financial fragility of companies. In general, the percentage of buybacks that have been funded by borrowed money has been far higher in stock-market booms than in busts, as companies have competed with one another to boost their stock prices.
In 2018, however, as stock buybacks by companies in the S&P 500 Index spiked to more than $800 billion for the year, the proportion that were financed by debt plunged to about 14% in the last quarter. Why was there a sharp decline in 2018, when the dollar volume of buybacks far surpassed the previous peak years of 2007, 2014, and 2015?
The answer is clear: Corporate tax breaks contained in the Tax Cuts and Jobs Act of 2017 provided the corporate cash for the vastly increased level of buybacks in 2018. First, there was a permanent cut from 35% to 21% in the tax rate on corporate profits earned in the United States. Second, going forward, the 2017 law permanently freed foreign profits of U.S.-based corporations from U.S. taxation (Under the Act, the U.S. Treasury has been reclaiming some tax revenue lost because of a tax concession dating back to 1960 that had enabled U.S.-based corporations to defer payment of U.S. taxes on their foreign profits until repatriating them).
In 2018 compared with 2017, corporate tax revenues declined to $205 billion from $297 billion, hypothetically increasing the financial capacity of U.S.-based corporations to do as much as $92 billion more in buybacks in 2018 without taking on debt. Given that from 2017 to 2018 stock buybacks by S&P 500 companies increased by $287 billion (from $519 billion to $806 billion), the reality is that, through the corporate tax cuts, the federal government essentially funded $92 billion in buybacks by issuing debt and printing money to replace the lost corporate tax revenues.
Since the total federal government deficit increased by $114 billion (from $665 billion in 2017 to $779 billion in 2018), we can (again hypothetically) think of $92 billion of this additional government debt as taxpaying households’ gift to business corporations to enable them to do even more buybacks debt-free, shifting the debt burden of stock buybacks from corporations to taxpayers. If, as a “transfer payment,” we add $92 billion to the $150 billion in debt that, according to the JPMorgan data, S&P 500 companies used to fund buybacks in 2018, the percentage of their 2018 buybacks that were debt-financed rises to 30%, greater than the proportion of 29% for 2017. But because of corporate tax cuts, in 2018 taxpaying households were burdened with about 38% of the combined government and business debt that enabled corporations to do buybacks.
Whether it is corporate debt or government debt that funds additional buybacks, it is the underlying problem of the corporate obsession with stock-price performance that makes U.S. households more vulnerable to the boom-and-bust economy. Debt-financed buybacks reinforce financial fragility. But it is stock buybacks, however funded, that undermine the quest for equitable and stable economic growth.
Buybacks done as open-market repurchases should be banned.
Tyler Durden
Tue, 01/07/2020 – 21:00 - Born Right: Chelsea Clinton Has Made $9M Sitting On Corporate Board
Born Right: Chelsea Clinton Has Made $9M Sitting On Corporate Board
Chelsea Clinton has made $9 million in under nine years while serving on the board of an internet investment company, according to Barron’s.
According to the report, Clinton receives an annual salary of $50,000 and $250 in restricted stock units from IAC/InterActiveCorp, which owns such brands as Vimeo, College Humor, OkCupid, Tinder, Angie’s List and Home Advisor.
Clinton, who has been an IAC director since 2011, receives an annual $50,000 retainer and $250,000 in restricted IAC stock units, or RSUs. As of Dec. 31, she owned the equivalent of 35,242 IAC shares, consisting of 29,843 shares and 5,399 share units under a deferred-compensation plan, according to a form she filed with the Securities and Exchange Commission. Share units convert to stock when an IAC director leaves the board.
The value of Clinton’s stake has surged along with the stock. Her IAC shares were valued at $8.95 million as of Friday’s close at $253.91. That is up from $7.2 million in June, and up from $6.6 million in October 2018. –Barron’s
Notably, Chelsea joined the board of IAC the same year she joined NBC News as a $600,000 per year ‘special correspondent’ doing virtually nothing, before switching to a month-to-month contract three years later.
While Chelsea ostensibly wasn’t hired to protect a Ukrainian oligarch from prosecution, it’s clear that those who are ‘born right’ receive dividends in spades.
Tyler Durden
Tue, 01/07/2020 – 20:35 - Indian Ocean Naval Base Diego Garcia: The Launchpad To Attack Iran
Indian Ocean Naval Base Diego Garcia: The Launchpad To Attack Iran
Submitted by Great Game India, a journal on Geopolitics and International Relations.
The Indian Ocean island Naval Base of Diego Garcia is the key launchpad for United States in case of an attack on Iran in the wake of the assassination of Iranian General Qassem Soleimani in a drone strike. The Pentagon has send six B-52 strategic bombers to military base on Diego Garcia that is beyond the range of Iran’s ballistic missiles to prepare to hit Tehran if given the order.
B-52 Bombers deployed at Diego Garcia
The US Defense Department is sending six B-52 bombers to the Diego Garcia military base in the northern Indian Ocean as preparations for possible military action against Iran move forward.
The Pentagon is deploying six B-52 Stratofortress bombers (like the ones seen in the above stock image) to a military base in the northern Indian Ocean, according to a CNN report from Monday Pentagon officials told CNN on Monday that the B-52 will be available for operations against the Islamic Republic if ordered into action, though the deployment does not signal a decision has been made about any attack plans, as reported by Dailymail.
The United States maintains several military bases in a number of Middle Eastern countries in close proximity to Iran, but it chose to deploy its bombers to Diego Garcia because it is out of reach of Iran’s longest range missiles, according to the Pentagon.
JAN 06: USAF B-52Hs MYTEE51 & 52 departed Barksdale AFB for Diego Garcia in the Indian Ocean due to #Iran tensions. pic.twitter.com/2PgkMMnAXw
— Aircraft Spots (@AircraftSpots) January 7, 2020
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This is the second time in the last year that the American military has deployed B-52 bomber aircraft to the region due to rising tensions with Iran.
In May, the White House ordered six B-52s to deploy to an American military base in Qatar as well as other bases in ‘southwest Asia’ after it received reports of alleged threats from Iran.
Diego Garcia – British occupied American Naval Base in Indian Ocean
The Chagos Islands were colonized by France in the 18th century and African slaves were shipped in to cultivate coconuts. In 1814, France ceded the islands to Britain, which in 1903 merged them with Mauritius, its colony about 1,200 miles to the south-west.
Diego Garcia is a British Occupied Indian Ocean Territory and the largest of the islands in the Chagos Archipelago about 1,000 miles south off the coast of India In 1965, Britain separated the Chagos Islands from Mauritius, paying £3million for them. When Mauritius became independent in 1968, the islands remained under British control, and were renamed the British Indian Ocean Territory. In 1966, Britain leased the islands to the United States for 50 years.
Between 1968 and 1973, about 2,000 Chagos islanders were evicted. Most were shipped to Mauritius and the Seychelles. Evicted islanders enlisted the help of human rights lawyer Amal Clooney when they took their fight to the Supreme Court in 2015, but the court ruled against them.
The secretive military base on Diego Garcia, the largest island, has been dubbed ‘the Guantanamo of the East’ amid suspicions it was a key staging post in the US rendition and torture program.
In 2016, the US lease was extended to 2036.
Strategic location
The American presence there can be attributed to the fact that Diego Garcia’s location is strategically vital. Diego Garcia has been a launching point for US military actions in the Middle East – including the 2001 campaign against Afghanistan following the September 11 attacks and the 2003 invasion of Iraq.
The horseshoe-shaped atoll of Diego Garcia (right) measures about 17 square miles. It is surrounded by about 60 other atolls. The coastline of Diego Garcia form a natural harbor, making it ideal to station a naval base there It is also a refueling station for US Air Force jets that patrol the South China Sea. Diego Garcia was also designated an emergency landing spot for space missions by NASA.
The future of the American presence on the atoll was thrown into doubt earlier this year when a United Nations court ruled that the British illegally seized control of the island. The court, in a nonbinding ruling, said that control over the territory should be returned to Mauritius.
Diego Garcia is home to between an estimated 3,000-5,000 American military personnel. There is also believed to be a small number of British soldiers stationed at the site as well as civilian contractors mostly from Mauritius. These contractors are believed to cook and clean for the soldiers and sailors.
This satellite image taken in 2006 shows B-52s and KC-135s on the ramp at Diego Garcia The horseshoe-shaped atoll measures about 17 square miles. It is surrounded by about 60 other atolls. The coastline of Diego Garcia form a natural harbor, making it ideal to station a naval base there. Diego Garcia is also a tropical paradise that is home to a significant population of turtles, giant migrating birds, and coconut crab.
The US military has long been tight-lipped about Diego Garcia. Unlike the base in Guam, spouses of military personnel are not allowed on the atoll. It was also reported that Diego Garcia was used as one of the CIA’s ‘black sites’ – the secret rendition program in which the Americans interrogated and tortured suspected extremists.
The strategic bombers were on their way Monday to Diego Garcia, an atoll that is home to a vital US military base But its most important function for the American military is the airstrip. The runways at Diego Garcia allow US warplanes to freely operate in the skies above Africa to the southwest; the Middle East and Central Asia to the north and west; and the Far East and Asia to its east, as reported by Business Insider.
USAF RC-135S 62-4128 CHAOS45 departed Diego Garcia at 2330Z for a mission in the Bay of Bengal to monitor India’s ASAT anti-satellite missile test The Americans used this Naval base at Diego Garcia to spy on India’s Mission Shakti. USAF RC-135S 62-4128 CHAOS45 departed Diego Garcia at 2330Z for a mission in the Bay of Bengal to monitor India’s ASAT anti-satellite missile test. USAF KC-135Rs FRESH53 and 54 provided tanker support and returned to Diego Garcia.
In response to India’s Mission Shakti the US launched what is dubbed as Operation Olympic Defender. At the Space Symposium the head of United States Strategic Command Gen. John Hyten called for Space Rules in response to India’s ASAT test sharing for the first time American Space War plans, known as Operation Olympic Defender, with a small number of allies. It is believed these allies referred to by Hyten are members of the Five Eyes.
American Military Bases on Target
The American military footprint in the Middle East and central Asia includes approximately 14,000 troops in Afghanistan; 13,000 soldiers in Kuwait; 13,000 more in Qatar; 7,000 in Bahrain; 6,000 in Iraq; 5,000 in the United Arab Emirates; 3,000 in Saudi Arabia; 3,000 in Jordan; and 2,500 in Turkey. There are much smaller troop levels in Syria and Oman, according to The Washington Post.
Unlike US military bases in the Middle East, Diego Garcia is out of range of Iran’s most advanced missiles. The map above shows Iranian missile capabilities In total, Iran could conceivably strike at areas that would place more than 55,000 American soldiers at risk. Its ballistic missile arsenal includes weapons that are very difficult to target because they are either road-mobile or hidden inside highly fortified mountain fortresses, according to The War Zone.
In the event of war between Iran and either the United States or its Sunni Arab allies, the Iranians would only need a few minutes to launch ballistic missiles from subterranean strongholds. Iran could hit American bases, airfields, and other key sites.
Any conflict with Iran would most likely include a US deployment of its B-2 stealth bomber, though there are no reports indicating that the Pentagon has forward deployed these planes to the region. A B-2 bomber is seen above dropping a GBU-57 Massive Ordnance Penetrator That is why the Pentagon would most likely rely on its fleet of strategic bombers based in Diego Garcia. If war did break out with Iran, the US has at its disposal machines of war like the B-52 and the B-2 Spirit bombers that can unleash devastating blows.
The Americans would most likely deploy the B-2s to drop precision-guided 40,000-pound ‘bunker buster’ GBU-57 Massive Ordnance Penetrators (MOPs), which are specially designed to pierce through Iran’s mountain complexes.
The B-52 Stratofortress: America’s long-range strategic bomber
The United States Air Force currently has 76 B-52 Stratofortress bombers in service today. Designed and built by the Seattle-based Boeing Company, the B-52 is a long-range strategic bomber that has been used by the Air Force since the 1950s.
A US Air Force B-52 Stratofortress heavy bomber drops bombs in this undated file photo It is capable of carrying up to 70,000 pounds of weapons while flying at a combat range of more than 8,800 miles without aerial refueling. This heavy bomber is powered by 8 turbofan engines manufactured by Pratt & Whitney. Each engine is capable of producing 17,000 pounds of thrust to propel the plane forward in the air.
The B-52 also boasts a wingspan of 185ft. Each aircraft has a length measuring 159ft4in. The plane stands at a height of 40ft8in. The aircraft weighs approximately 185,000 pounds. It can take off at a maximum weight of 488,000 pounds.
To fly its long-range bombing missions, it needs fuel – a lot of it. Each B-52 has a fuel capacity of 312,197 pounds. The plane is a subsonic aircraft that can reach speeds of 650mph. It can also fly at a top altitude of 50,000ft as claimed by the Boeing Company.
US-Iran tensions
An Iranian government minister denounced Trump as a ‘terrorist in a suit’ after the US president sent a series of Twitter posts on Saturday threatening to hit 52 Iranian sites, including targets important to Iranian culture, if Tehran attacks Americans or US assets to avenge Soleimani’s death.
Tensions in the Middle East have soard since a top Iranian general, Qassem Soleimani (pictured), was killed in a US drone strike near Baghdad airport on Friday, shocking the Islamic Republic Talking to reporters aboard Air Force One on the way to Washington from Florida on Sunday evening, Trump stood by those comments. ‘They’re allowed to kill our people. They’re allowed to torture and maim our people. They’re allowed to use roadside bombs and blow up our people. And we’re not allowed to touch their cultural sites? It doesn’t work that way,’ he said.
Iranian state media said ‘millions’ of people had gathered in Tehran to mourn Soleimani’s death in scenes not witnessed since the death of revolutionary leader Ayatollah Ruhollah Khomeini in 1989 Democratic critics of the Republican president have said Trump was reckless in authorizing the strike, and some said his comments about targeting cultural sites amounted to threats to commit war crimes. Many asked why Soleimani, long seen as a threat by US authorities, had to be killed now. Republicans in Congress have generally backed Trump’s move.
The Iraqi Resolution
The Iraqi parliament passed a resolution calling for an end to all foreign troop presence, reflecting the fears of many in Iraq that Friday’s strike could engulf them in another war between two bigger powers long at odds in Iraq and across the region.
Iran’s Supreme Leader Ayatollah Ali Khamenei (center) leading a prayer as President Hassan Rouhani (fifth right) perform the prayer over the caskets of slain Iranian military commander Qassem Soleimani and Iraqi paramilitary chief Abu Mahdi al-Muhandis at Tehran University on Monday While such resolutions are not binding on the government, this one is likely to be heeded: Prime Minister Adel Abdul Mahdi had earlier called on parliament to end foreign troop presence as soon as possible.
Trump also threatened sanctions against Iraq and said that if US troops were required to leave the country, Iraq’s government would have to pay Washington for the cost of a ‘very extraordinarily expensive’ air base there.
He said if Iraq asked US forces to leave on an unfriendly basis, ‘we will charge them sanctions like they’ve never seen before ever. It’ll make Iranian sanctions look somewhat tame.’ Iran and the United States have been competing for clout in Iraq since the US-led invasion in 2003 that toppled Saddam Hussein.
Russian Spying over Mar-a-Lago
About 24 hours after arriving from Moscow, a private jet regularly used by the head of Russia’s largest state-run bank remained at an airport just a short drive from where Donald Trump was vacationing, giving rise to concerns whether the Russians were spying on top secret discussions taking place at Mar-a-Lago where the decision to assassinate Iranian General Qassem Soleimani was taken by US President Donald Trump.
Tyler Durden
Tue, 01/07/2020 – 20:10 - "If I'm A Criminal, It’s Open Season": Atlanta Police To Stop Chasing Criminals
"If I'm A Criminal, It’s Open Season": Atlanta Police To Stop Chasing Criminals
In a country where the balance of power swings wildly between law enforcement and criminals, Atlanta has launching a program that as of this moment will let crime run rampant without and police officers in pursuit. Literally.
Last week, Atlanta Police Chief Erika Shields sent out an email to the entire police force notifying officers that the department will no longer chase suspects, in what is now called a “zero chase policy.” According to WSB-TV, Shields cited “the risk to the safety of the officers and the public for each chase”, and “knowing that the judicial system is largely unresponsive to the actions of the defendants.”
Ostensibly, the change comes after public outcry following a deadly crash last month that killed two men during a police chase. The APD’s response: halt all police chases indefinitely.
This change comes after last month’s deadly crash during a chase that killed two men. https://t.co/SvonkFUsPY
— Matt Johnson (@MattWSB) January 3, 2020
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“Please know that I realize this will not be a popular decision; and more disconcerting to me personally, is that this decision may drive crime up,” Shields said in a memo announcing the change. “I get it.”
While she noted that “an overwhelming number of crimes are committed where a vehicle is involved” and that significant arrests often follow zeroing in on a specific vehicle, other factors influenced the decision.
“Namely, the level of pursuit training received by officers who are engaging in the pursuits, the rate of occurrence of injury/death as a result of the pursuits and the likelihood of the judicial system according any level of accountability to the defendants as a result of the pursuit. At his point and time, the department is assuming an enormous risk to the safety of officers and the public for each pursuit, knowing that the judicial system is largely unresponsive to the actions of the defendants.”
Additionally, in her email, Sands said that while Executive Command Staff “will work to identify specific personnel and certain specialized pursuit training to enable the department to conduct pursuits in limited instances, but until these standards have been formalized, effective immediately, the department has a zero chase policy.“
Here is a department-wide email sent from Chief Erika Shields today. pic.twitter.com/EJ8skpZnzp
— Matt Johnson (@MattWSB) January 3, 2020
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Adding insult to injury, and further crippling police officer morale, the police chief went so far to suggest that the US court system is broken, and allows criminals to get away without punishment: “I don’t want to see us cost someone their life in pursuit of an auto theft person or a burglar, when the courts aren’t even going to hold them accountable”, Sands said on Friday.
Chief Shields suggests criminals are already getting away w/o punishment, via the court system.
“I don’t want to see us cost someone their life in pursuit of an auto theft person or a burglar, when the courts aren’t even going to hold them accountable,” she said today. pic.twitter.com/fbymXG0wKz
— Matt Johnson (@MattWSB) January 3, 2020
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APD’s previous pursuit policy, which went into effect Sept. 15, 2018, allowed up to three police vehicles to join in a vehicle chase. Under that policy, officers were authorized to pursue a vehicle in one of the following situations: the suspect has a deadly weapon, the officer believes the suspect poses an immediate threat of violence to officers or others; or when there is probable cause to believe the suspect has committed or threatened serious physical harm. Additionally, all police officers involved in a vehicle pursuit were instructed to utilize their siren, flashing blue lights and headlights.
But the department’s policy has come under scrutiny, along with other law enforcement agencies, when bystanders were harmed or killed by the pursuit.
On Dec. 4, two friends and neighbors, Mark Hampton and Jermanne Jackson, were running errands, according to their families. Hampton had to pick up medication for his disabled son. The two were killed when their car was hit by an SUV speeding through the intersection of Campbellton Road and Lee Street, according to police. Hampton was 43; Jackson was 44. The two 19-year-olds in the SUV had allegedly carjacked someone hours earlier, according to police, and both Marguell Scott and Emmanuel Fambro were charged with murder.
“It’s so senseless,” said Hampton’s mother, Deborah Hampton, told The Atlanta Journal-Constitution days after his death. “It just seems like it’s a dream. A nightmare.”
It will soon be a nightmare for all law abiding citizens, however: Chris Rich, who has lived in Atlanta for about five years, was trying to make sense of the policy decision Friday afternoon (he was hardly alone):
“This is pretty drastic,” he said. “If I’m a criminal, it’s open season. It’s going to impact all the law-abiding citizens. It’s worrisome.”
Then again, Rich understands where Shields is coming from, and wishes the police department felt more support from other agencies: “We’ve got these guys working hard, trying to make our streets safe, and then you’ve got this revolving door with these repeat offenders. I just cannot understand why the mayor’s office is not putting more pressure on the DA’s office or the judicial system. There needs to be a unified front.”
Alas, now that crime itself has become ‘racist’ instead of a united front, expect more cities to take a position that makes it “open season” for criminals who now will know in advance that no police will give chase if and when any particular crime escalates. In other words, expect a surge in crime because the alternative, a crackdown on crime, is now seen as racist and politically disadvantageous to those in charge of inner city slums.
Car Jackers in ATL right now… pic.twitter.com/WTkN0LxxK3
— Audi Aficionado🇧🇧 (@Jay_71Eight) January 3, 2020
Tyler Durden
Tue, 01/07/2020 – 19:45 - Markets In Turmoil: Gold & Oil Spike As Stocks, Bond Yields Plunge After Iran Attack
Markets In Turmoil: Gold & Oil Spike As Stocks, Bond Yields Plunge After Iran Attack
Just when you thought it was safe to buy the most expensive, most complacent stock market rally in the world…
Iran begins retaliation against America’s killing of Soleimani…
Dow futures are down over 400 points
Gold has soared above $1600…
And WTI has erupted above $65…
Brent Crude futures have spike over 5% to the highest since the spike during the Saudi refinery attack…
Source: Bloomberg
Treasury yields are plunging…
Source: Bloomberg
Bitcoin is bid…
Source: Bloomberg
And VIX futures are exploding higher…
Time to get on the phone!
Tyler Durden
Tue, 01/07/2020 – 19:34 - 2020 Will Be A Crucial Year For Oil
2020 Will Be A Crucial Year For Oil
Authored by Nick Cunningham via OilPrice.com,
It’s the start of a new year and a new decade, and the oil market is as unpredictable as ever.
Will OPEC+ extend its cuts? Will U.S. shale finally grind to a halt? Is this the “year of the electric vehicle”? Here are 10 stories to watch in 2020.
Shale debt, shale slowdown.
The debt-fueled shale drilling boom is facing a reckoning. Around 200 North American oil and gas companies have declared bankruptcy since 2015, but the mountain of debt taken out a few years ago is finally coming due. Roughly $41 billion in debt matures in 2020, which ensures more bankruptcies will be announced this year. The wave of debt may also force the industry to slam on the breaks as companies scramble to come up with cash to pay off creditors.
Year of the EV.
Some analysts say that 2020 will be the “year of the EV” because of the dozens of new EV models set to hit the market. In Europe, available EV models will rise from 100 to 175. The pace of sales slowed at the end of last year, but the entire global auto market contracted. EVs may struggle to keep the pace of growth going, but EVs are capturing a growing portion of a shrinking pie.
Climate change.
2020 starts off with hellish images from the out-of-control Australian bushfires. 2019 was one of the warmest years on record and the 2010s was the warmest decade on record. As temperatures rise and disasters multiply, pressure will continue to mount on the oil and gas industry. As Bloomberg Opinion points out, climate change has surged as a point of concern for publicly-listed companies. Oil executives are betting against climate action, but they are surely aware of the rising investment risk. In the past two months, the European Investment Bank is ending financing for oil, gas and coal, and Goldman Sachs cut out financing for coal and Arctic oil. More announcements like this are inevitable.
IMO.
Sulfur rules from the IMO kicked in at the start of the year. The rules – lowering sulfur concentration limits from 3.5 to 0.5 percent – affects a 4-mb/d market for marine fuels. Refiners and shippers have used several strategies to comply, including the installation of scrubbers and the ramp up of low-sulfur fuels. Once seen as a looming disaster, the IMO rules take effect with few hiccups, although Reuters reports there are some problems with sediment found in the new fuels.
Oversupply, oversupply, oversupply.
Several markets are suffering from oversupply – coal, gas (LNG) and crude oil. While a lot of factors are at play, OPEC+ has a great deal of influence over crude. The glut of natural gas in the U.S. will be harder to correct, and gas associated with crude oil may continue to rise despite the financial wreckage in the shale gas industry. The global market for LNG is also oversupplied, with JKM prices hitting multi-year lows for the time of year. Some analysts have even raised the prospect of cancelled deliveries as spot prices continue to fall.
Renewables continue to grow.
Renewables accounted for the majority of new capacity additions in the U.S. in 2019. Energy storage capacity is expected to double in 2020. Some ambitious state-level policies were announced last year, targeting 100 percent renewable energy. Roughly 10 U.S. utilities have announced decarbonization plans. Renewables vastly outperformed oil and gas stocks last year, but with falling costs and policies increasingly favorable to renewables, the future for solar and wind looks bright.
Geopolitical risks persist.
The surest of sure bets, geopolitical risk will continue to loom over oil markets. The year started off with a standoff at the U.S. embassy in Baghdad, which follows the U.S. airstrikes a few days earlier. The immediate situation presents little risk to oil supplies, but the incident comes on the heels of unrest in Basra, where much of the country’s oil is concentrated. Beyond that, the crisis in Iraq is really a proxy battle between the U.S. and Iran, a conflict that has once again flared up. Civil war in Libya, sanctions and unrest in Venezuela, and more regional conflict in the Middle East are just a few of the many potential flashpoints in 2020.
Trade war de-escalation.
The global economy may have avoided economic recession, with some indicators turning positive in recent months. The tariff reduction between the U.S. and China also points to an easing of economic headwinds. Every twist and turn of the trade war had enormous influence over oil prices in 2019, and the thaw between Washington and Beijing provided a boost at the end of the year. A further de-escalation – or a slide back to confrontation – will exercise enormous influence over commodity markets in 2020.
Shale gas-to-oil ratio.
Not only do U.S. shale drillers have financial problems, but operationally, the challenges are also mounting. 2019 saw deflated hopes surrounding well density, with a few high-profile disappointments related to parent-child well interference. There is also evidence that the tendency of shale wells to produce more gas over their lifetimes is a worse problem than previously thought. Meanwhile, the WSJ reported that shale wells are not producing as much as companies once promised. 2020 could offer more unwelcome surprises from the shale patch.
2020 election.
While every election is billed as the most important in recent memory, the 2020 U.S. presidential election is. A Trump reelection would ensure unfettered support for the oil and gas industry continues, despite the worsening climate crisis. A possible Democratic victory could see a fracking ban, new regulations and other taxes targeting fossil fuels, while potentially massive support for renewables. A lot is on the line.
Tyler Durden
Tue, 01/07/2020 – 19:25 - Did Goldman Just Steal A Page From The WeWork Crisis Playbook?
Did Goldman Just Steal A Page From The WeWork Crisis Playbook?
Is Goldman Sachs taking a page out of WeWork’s crisis playbook?
As the investment bank works to try and repair its reputation as a cloistered and, ultimately, corrupt institution that sometimes uses its penchant for secrecy to commit massive abuses like it did in the 1MDB scandal, Goldman has revealed planned changes to its financial disclosures that analysts said will offering more transparency into how the bank makes money, according to the WSJ.
The filing, which was published late Monday, comes ahead of the bank’s first investor day later this month, Goldman explained the changes to how it breaks down the performance of its various businesses. During the late Jan. investor day, Goldman execs are expected to outline new profit metrics and goals the bank expects to hit.
Investors should remember that WeWork authorized several changes to its corporate governance intended to allow more transparency and dilute the control of former CEO Adam Neumann, both the changes were derided as too little, too late, and the IPO was scrapped.
Beginning with Q4, Goldman plans to report performance broken down into four main businesses: Services for the bank’s corporate clients, trading, money management and services for wealthy – and now, even non-wealthy – individuals.
A quick look at Goldman’s 8-k filing reveals a chart that breaks down these changes, offering a preview of how they will appear in the bank’s Q4 earnings report.
Another chart offers some context by detailing some of the biggest moves of businesses from Goldman’s old to its new structure.
And here’s a bullet-point breakdown, included in the filing, that offers a little more clarity on the changes:
- Investing & Lending results are now included across the four segments as described below.
- Investment Banking additionally includes the results from lending to corporate clients, including middle-market lending, relationship lending and acquisition financing, previously reported in Investing & Lending. These results are included within Corporate lending.
- Institutional Client Services has been renamed Global Markets and additionally includes the results from providing warehouse lending and structured financing to institutional clients, previously reported in Investing & Lending, and the results from transactions in derivatives related to client advisory and underwriting assignments, previously reported in Investment Banking.
- Investment Management has been renamed Asset Management and additionally includes the results from investments in equity securities and lending activities related to the firm’s asset management businesses, including investments in debt securities and loans backed by real estate, both previously reported in Investing & Lending.
- Consumer & Wealth Management is a new segment that includes management and other fees, incentive fees and results from deposit-taking activities related to the firm’s wealth management business, all previously reported in Investment Management. It also includes the results from providing loans through the firm’s private bank, providing unsecured loans and accepting deposits through the firm’s digital platform, Marcus: by Goldman Sachs, and providing credit cards, all previously reported in Investing & Lending.
As investors try to suss out the implications of these changes, it’s worth remembering that last time Goldman did something like this, it was operating from a “position of weakness,” according to WSJ. Back in 2011, the bank started disclosing its profits from its proprietary investing, a practice that continues to this day in a way that’s seemingly designed to skirt the Dodd-Frank ban on prop trading.
Indeed, an early VC investment made by Goldman in Uber netted the firm hundreds of millions in profits during the ride-hailing company’s IPO last year. Some might say Goldman was one of the few Wall Street banks for whom Uber’s floundering IPO was still a smash-hit success.
Circling back to the filing, Goldman is setting aside $302 million for potential consumer credit losses in the first nine months of 2019, compared with $338 million for 2018 and $123 million in 2017.
Infamous banking analyst Mike Mayo (now with Wells Fargo) praised the changes in an interview with Bloomberg.
“The presentation is more consistent with the way the business is run and the way it is presented by peers,” Mike Mayo, an analyst at Wells Fargo & Co., said in a note. “While we view management as focused more on long-term value, this attitude shows that management is aware of an underperforming stock price.”
The news had a positive impact on Goldman’s shares, sending them up 1% on a day where US indexes have been in the red all morning.
Last year, Goldman’s shares climbed 38%, managing to shrug off worries about the bank’s role in the 1MDB scandal, as well as a consumer-lending business that hasn’t lived up to the bank’s (and Wall Street analysts’) expectations. Despite this, the bank still lags its peers – including archrival Morgan Stanley – on several key valuation metrics.
The changes are part of CEO David Solomon’s efforts to put a “shot of transparency” into the bank for investors. The move will “peel back the curtain on Goldman’s lending and proprietary bets and reshape its quarterly reports to investors to look more like those of its peers,” like JPM and BofA.
Solomon’s motives are simple and obvious: despite shares rallying nearly 40% last year, Solomon reportedly believes Goldman shares could be trading much higher than where they are right now. In a private gathering, Solomon reportedly told other executives that Goldman shares could climb above $400 (it’s trading at $235 on Tuesday).
With that in mind, expect the bank to pull out every gimmick it can to try and boost investors’ confidence that Solomon is reforming the bank after the post-crisis years where the bank trawled the emerging world for business, cowboy-style, under the leadership of former CEO Lloyd Blankfein.
Read Goldman’s new 8-K below:
8k-01-06-20 by Zerohedge on Scribd
Tyler Durden
Tue, 01/07/2020 – 19:05 - The "Real" Phillips Curve Is Not Flat
The "Real" Phillips Curve Is Not Flat
Submitted by Joseph Carson, former global director of economic research at AllianceBernstein
Jerome Powell, Chairman of the Federal Reserve, has stated that the relationship between unemployment and inflation “was a strong one 50 years ago…. and has gone away”. This relationship, called the Phillips Curve, now has disappeared according to the Fed view.
Contrary to Powell’s assertion, the ”real” Phillips curve is not flat, but the appearance of a “flatter” relationship between prices and wages is largely due to a technical change in the measurement of housing prices, the single most important item in the inflation index.
In 1998, the Bureau of Labor Statistics (BLS) made a technical change in the measurement of owner-occupied housing. Because of an inadequate and declining sample of owner-occupied housing, BLS statisticians felt the process was “time-consuming” and “futile” as it could no longer provide a consistent and accurate reading of housing costs from the owner-occupied units.
So the remedy, according to BLS, was to drop the owner-housing sample. They instead linked the price data from the rental market to owner-occupied market, even though the two markets are fundamentally separate.
At the time, there was little reaction or opposition from the technical change for the simple reason no one knew, perhaps even the statisticians at BLS, what the new measurement would eventually show in real time.
Yet, in hindsight, the impact of the change should have been obvious to all parties since the change involved replacing a house price series that accelerates during economic growth cycles with a rental series that does not. In reality, the technical change had the effect of “flattening” reported consumer price inflation.
Why is this important?
First, before declaring the Phillips curve relationship is gone, it is advisable to look at all of the factors that could be altering the relationship between prices and wages. Comparing inflation-to-inflation readings before and after 1998 is a non-starter due to materially different measures of housing inflation. The removal of the house price signal from reported inflation contributed to the breakdown of the Phillips curve for the simple reason it removed the single largest cyclical driver of consumer price inflation.
Second, companies use reported consumer price inflation, among other things, to help them gauge wage increases, so it’s not surprising that there has been a close affinity between reported inflation and wage increases. To the extent the post-1998 measure of consumer price inflation rises less quickly than the older version, it would follow logically that wage growth would be slower as well, as else being equal. In other words, “flatter” reported inflation results in “flatter” wages so it theoretically takes even lower levels of unemployment to generate wage increases.
Third, reported consumer price inflation has a direct connection to policy rates, even more so since the introduction of an inflation-targeting regime to help guide monetary policy decisions. Policymakers have yet to acknowledge how the 1998 change in reported inflation and the direct link to official rates have impacted the economy and the financial markets in real time.
It’s always difficult to prove causation but since 1998 there have been three asset price cycles – two involving unprecedented increases in equity prices relative to GDP and the other one centered in real estate prices. The occurrence of a single asset price spike could be considered a one-off, but three in a span of 20 years strongly suggests there is a cause and effect from monetary policy.
Policymakers have mistakenly misread the breakdown of the Phillips curve, resulting in prolonged loose monetary policy. The Phillips curve is not dead, but it changed it stripes. The most important price signals nowadays mainly flow through the asset markets, which from operational standpoint shift the focus of monetary policy towards financial/market stability and away from price stability.
Kathleen Curran Aguiar, Chartered Financial Analyst, contributed to this article.
Tyler Durden
Tue, 01/07/2020 – 18:45 - CNN Settles $275M Lawsuit With 'Punchable' Teenager Nick Sandmann
CNN Settles $275M Lawsuit With 'Punchable' Teenager Nick Sandmann
CNN settled its $250 million lawsuit with Covington High School Student Nicholas Sandmann for an undisclosed sum on Tuesday.
Sandmann was viciously attacked by left-leaning news outlets over a deceptively edited video clip from the January, 2019 March for Life rally at the Lincoln Memorial, in which the teenager, seen wearing a MAGA hat, appeared to be mocking a Native American man beating a drum (a known political grifter who lied about the incident, and stole valor).
Around a day later, a longer version of the video revealed that Sandmann did absolutely nothing wrong – but not until the media had played judge, jury and executioner of Sandmann’s reputation.
That included CNN‘s Reza Aslan, who asked over Twitter “Have you ever seen a more punchable face than this kid’s?”
Honest question. Have you ever seen a more punchable face than this kid’s? pic.twitter.com/jolQ7BZQPD
— Reza Aslan (@rezaaslan) January 20, 2019
“Contrary to its ‘Facts First’ public relations ploy, CNN ignored the facts and put its anti-Trump agenda first in waging a 7-day media campaign of false, vicious attacks against Nicholas, a young boy who was guilty of little more than wearing a souvenir Make America Great Again cap,” Sandmann claimed in a 58-page lawsuit filed last May, according to the Washington Times.
Sandmann’s attorney told Fox News last March that “CNN was probably more vicious in its direct attacks on Nicholas than The Washington Post. And CNN goes into millions of individuals’ homes. It’s broadcast into their homes.”
In total, Sandmann has sought $800 million after also suing the Washington Post and NBC Universal.
Sandmann claims that the Post – which helped publicize a now infamous photo that helped trigger an Internet mob that swiftly outed the teen and demanded he be punished – led the hate campaign against Sandmann – and failed to practice proper journalistic due diligence – “because he was the white, Catholic student wearing a red ‘Make America Great Again’ souvenir cap on a school field trip to the January 18 March for Life in Washington, D.C. when he was unexpectedly and suddenly confronted by Nathan Phillips (‘Phillips’), a known Native American activist, who beat a drum and sang loudly within inches of his face (‘the January 18 incident’).”
Trial dates have not yet been set in those cases.
“This case will be tried not one minute earlier or later than when it is ready,” said Sandmann’s attorney, Lin Wood, who says they also plan to sue the owners of The Enquirer, Gannett, within the next 60 days.
Meanwhile, filmmaker and pundit Mike Cernovich compiled a short list of some of CNN‘s more memorable reporting screwups (via Cernovich.com):
- Jake Tapper reported that fired FBI director James Comey would testify that he never told Trump he was under investigation. After Comey testified, Tapper’s article was updated to include this disclaimer, “The article and headline have been corrected to reflect that Comey does not directly dispute that Trump was told multiple times he was not under investigation in his prepared testimony released after this story was published.
- Jim Acosta claimed Trump did not visit Steve Scalise after the tragic mass shooting committed by a far left wing terrorist.
- CNN had to retract a story about Anthony Scaramucci being under investigation after it was revealed to be fake news.
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- CNN White House Reporter Jeremy Diamond claimed Trump was first President since George H.W. Bush to not take questions at a press conference held in China. Jake Tapper himself RT’ed Diamond. This claim was false.
- CNN claimed that Trump committed a faux pas during a fish feeding ceremony held in Japan.
- White House reporter Manu Raju claimed Donald Trump Jr. had advanced knowledge of the Wikileaks release of the Podesta emails. This story was confirmed by two sources, and it was fake news. To this day, Raju refuses to burn the sources who fed him a fake story.
Tyler Durden
Tue, 01/07/2020 – 18:44 - The S&P's Biggest Bear Capitulates
The S&P's Biggest Bear Capitulates
First it was Dennis Gartman shutting down his newsletter after more than three decades, lamenting a market that no longer made any sense (a lament shared by Deutsche Bank’s Aleksanda Kocic), and now the market’s QE4-driven meltup has forced Wall Street’s biggest sellside bear to capitulate on his November call that the market will drop in 2020; instead UBS’ head of US equity strategy, Francois Trahan, has joined the bullish herd hiking his year-end S&P price target from 3,000, where he set the bottom of the year-ahead market forecasts alongside Morgan Stanley’s notorious bear Michael Wilson, to 3,250.
That said, as Bloomberg notes, Trahan’s new forecast is hardly exuberant, as it indicated a market that will close the year virtually unchanged from today’s level of 3,241. Still, he does joins other strategists in turning more optimistic after the S&P 500’s 29% rally in 2019 exceeded almost everyone’s expectations.
In a note to clients, Trahan writes that it will take time for the Fed’s lower borrowing costs to work though the economy and the benefits won’t take hold until 2021. As such, he believes that stocks are likely to pull back in the first half as earnings expectations are at risk of falling, and then recover during the later half in anticipation of a pickup in growth. This, as readers may recall, is the opposite of what BofA’s Michael Hartnett predicted: his forecast is for the S&P to ramp to 3,333 by March 3 after which it will drift lower heading into the political uncertainty of the November elections.
“We see this year as having two distinct phases for equities as markets transition from pricing in slower growth to pricing in an economic recovery,” Trahan wrote. “We expect a V-shaped year for the S&P 500”, he added although it is rather bizarre why the market will ramp into the election, especially if Democrats are gaining traction in the polls and as inflation starts to push higher, leaving the Fed with no opportunity to cut in the coming year.
While Trahan has skewed bearish for the past two years, his capitulation demonstrates a problem that has plagued most Wall Street strategists, whose modest 2019 year-end forecasts caught almost everyone scrambling to catch up to the market’s year-end rally. This skepticism has carried across, and according to Bloomberg’s latest survey, for 2020 sellside strategists provided the least optimistic annual outlook in two decades. As the chart below shows, the average prediction for the S&P 500 to end the year is at 3,318, which is only a 2.7% expected increase from current levels, the smallest for any year in data going back to 1999.
Earlier this week, two more strategists joined the bull parade, raising their own forecasts: Citi’s Tobias Levkovich hiked his price target by 75 points to 3,375 while RBC’s Lori Calvasina also boosted her target to 3,460 from 3,350. As we noted in December, even the market’s so-called permabear, Morgan Stanley’s Wilson, cautioned of the “risk” that the S&P 500 could melt up above his year-end fair projected range of 3,000 to 3,250, and in a Monday note, Wilson said that the index could surge as high as 3,500 in the first half because of central bank support.
“Markets can overshoot fair value in liquidity driven bull market,” Wilson wrote. “Depending on how the economic and earnings data came in during the year will determine if we need to raise our year-end targets or not.”
Tyler Durden
Tue, 01/07/2020 – 18:25 - Trump Tweets "All Is Well" After Iran Fires Missiles At Two US Airbases In Iraq
Trump Tweets "All Is Well" After Iran Fires Missiles At Two US Airbases In Iraq
Summary:
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President Trump has tweeted that “All is well!”
“Missiles launched from Iran at two military bases located in Iraq.
Assessment of casualties & damages taking place now. So far, so good!
We have the most powerful and well equipped military anywhere in the world, by far!
I will be making a statement tomorrow morning.”
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Iranian foreign minister Javid Zarif has tweeted:
“Iran took and concluded proportionate measures in self-defense under Article 51 of UN Charter targeting base from which cowardly armed attack against our citizens and senior officials were launched.”
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Iran has launched more than a dozen ballistic missiles against multiple bases housing U.S. troops in Iraq, an have threatened “more crushing responses” if Washington carried out further strikes.
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Initially, nine rockets hit the sprawling Ain al-Asad airbase in the country’s west, the largest of the Iraqi military compounds where foreign troops are based. The attack came in three waves just after midnight, AFP reported.
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Iran swiftly claimed responsibility for the attack, with state TV saying it had launched “tens of missiles” on the base.
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Iranian sources are claiming that the operation has a name: ‘Operation Martyr Suileimani’. Iran’s airforce has reportedly been deployed.
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Iraqi PMF announced the start of military operation “Overwhelming Response.”
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No confirmed details on injured/casualties – “working on initial battle damage assessments.” According to social media sources, the Pentagon has said that the Iranian missile attack resulted in casualties among Iraqis only
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President Trump “has been briefed” is “monitoring the situation closely and consulting with his national security team,” and despite initial reports from CNN he was set to address the nation, the press secretary has denied that Trump will address the nation tonight.
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The FAA has imposed restrictions for civilian flights over the Persian Gulf.
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ISNA reports that Iran has sent a letter to The United Nations Security Council saying it’s not after war.
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Markets are turmoiling: Safe-haven assets are soaring (bonds, bitcoin, and gold), Oil prices are jumping, and Stocks are getting slammed
Rabobank’s Michael Every has an early hot-take on the situation:
At this stage, with news hazy and facts on the ground absent, there appear two realistic scenarios.
One is that this attack is theatre to placate the large crowds who were so recently on Iran’s streets.
The alternative is that Iran has genuinely decided to test Trump by also upping the ante.
The only way to tell is if there are US casualties.
If we get images of dead and injured US soldiers, then the worst-case scenarios begin to open up. If no real damage has been done by these missiles, but Tehran gets to show the crowds it responded, then more positive possibilities are still available. We will find out shortly – but breaking news is that there are ‘only’ Iraqi casualties, according to its Ministry of Defence. It remains to be seen if that is a red line for Trump, or is the kind of collateral damage he was expecting after taking out former IRGC head Soleimani.
Given that this move from Iran appears totally out of keeping with their usual strategic acumen, either the loss of Soleimani has meant a total loss of talent, and/or self-control, or this is indeed a token level of revenge.
I will *cautiously* stick to that interpretation for now.
* * *
Update 16: President Trump has tweeted:
All is well! Missiles launched from Iran at two military bases located in Iraq. Assessment of casualties & damages taking place now. So far, so good! We have the most powerful and well equipped military anywhere in the world, by far! I will be making a statement tomorrow morning.
— Donald J. Trump (@realDonaldTrump) January 8, 2020
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And Iranian foreign minister Javid Zarif has also tweeted:
Iran took & concluded proportionate measures in self-defense under Article 51 of UN Charter targeting base from which cowardly armed attack against our citizens & senior officials were launched.
We do not seek escalation or war, but will defend ourselves against any aggression.
— Javad Zarif (@JZarif) January 8, 2020
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Stock futures have erased almost the entire drop…
And crude has tumbled back…
As if it never happened.
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Update 15: Between President Trump’s silence (no planned address to the nation) and reports that Iran has told the UN Security Council that “it does not seek war,” futures markets have pared losses…
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Update 14: According to NBC’s Ali Arouzi, Iran has said that if there is no retaliation from America for these latest attacks then they will stop attacking. But if America attacks then their response “will be crushing and wide spread.”
Iran is saying that if there is no retaliation from America for these latest attacks then they will stop attacking. But if America attacks then their response will be crushing and wide spread. #iran #soleimani #war
— Ali Arouzi (@aliarouzi) January 8, 2020
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Update 13: The FAA has banned all civilian flights over Iran, Iraq, the Persian Gulf, and the Gulf of Oman “due to heightened military activities” and the “potential for miscalculation or misidentification” according to AP.
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Update 12: Iran has warned that if there is retaliation for the two waves of attacks they launched their 3rd wave will destroy Dubai and Haifa.
Iran is warning that if there is retaliation for the two waves of attacks they launched their 3rd wave will destroy Dubai and Haifa.#iran #Soleimani #war
— Ali Arouzi (@aliarouzi) January 8, 2020
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Update 11: According to CNN, the White House is making plans for Trump to address the nation from the Oval Office tonight, although according to the NYT this won’t happen:
.@pressec confirms no address.
— Maggie Haberman (@maggieNYT) January 8, 2020
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Meanwhile, according to Iran’s Mehr news agency and other sources, if still unconfirmed officially, the Iranian air-force has been has been deployed.
Separately, social media sources report that according to the Pentagon, the Iranian missile attack resulted in casualties among Iraqis only.
Pentagon states that the Iranian missile attack resulted in casualties among Iraqis only
— Danny Makki (@Dannymakkisyria) January 8, 2020
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Update 10: Amid reports from VoA that a total of 3 US locations have been hit in Iraq by Iran cruise missiles – Al Asad, Erbil and Taji – we now wait for the US counter-response: just after 730pm, US Defense Secretary Mark Esper and Secretary of State Mike Pompeo arrived at the White House, as did the Chairman of Joint Chiefs. In short, Trump’s entire war cabinet is now at the White House.
US Defense Secretary seen carrying large bag arriving at White House moments ago. All top security officials are currently in West Wing with President Trump preparing response on Iran. pic.twitter.com/lRsj8hSzSK
— Israel Breaking (@IsraelBreaking) January 8, 2020
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Meanwhile, in addition to what is clearly a military operation out of Iran, moments ago the Iraqi PMF announced the start of military operation “overwhelming response.”
Breaking: Iraqi PMF announces the start of military operation “overwhelming response”
— Danny Makki (@Dannymakkisyria) January 8, 2020
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And here is the clearest footage yet of the Iran ballistic missile launch against US targets in Iraq:
FOOTAGE:
Clearest footage from Iran showing the moment when IRGC launched the missiles against the US targets in Iraq pic.twitter.com/S1nXkOvMD6
— Ragıp Soylu (@ragipsoylu) January 8, 2020
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Update 9: According to Iran’s semi-official news agency Tasnim, a “second wave” of attacks targeting an unidentified US base in Iraq. Meanwhile, the Iran Revolutionary Guard Corps, or IRGC, has issued a statement urging U.S. people to call back American soldiers from the region. The IRGC statement adds that more details of the missile attack will be published later.
* * *
Update 8: The Pentagon has released a full statement on the attacks, claiming that more than a dozen missiles were fired from within Iran, and that at least two Iraqi military bases hosting US troops were targeted.
Statement from Assistant to the Secretary of Defense for Public Affairs Jonathan Hoffman
At approximately 5:30 p.m. (EST) on January 7, Iran launched more than a dozen ballistic missiles against U.S. military and coalition forces in Iraq. It is clear that these missiles were launched from Iran and targeted at least two Iraqi military bases hosting U.S. military and coalition personnel at Al-Assad and Irbil.
We are working on initial battle damage assessments.
In recent days and in response to Iranian threats and actions, the Department of Defense has taken all appropriate measures to safeguard our personnel and partners. These bases have been on high alert due to indications that the Iranian regime planned to attack our forces and interests in the region.
As we evaluate the situation and our response, we will take all necessary measures to protect and defend U.S. personnel, partners, and allies in the region.
Due to the dynamic nature of the situation, we will continue to provide updates as they become available.
Meanwhile, more footage of the attacks has appeared on social media:
Translated: #Iraqi soldiers in #Anbar, monitor & film moment of missiles landing on #AinalAssad military base. https://t.co/HZ5ndTX4Hh
— Hala Jaber (@HalaJaber) January 8, 2020
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Another video of the attack on Ayn Al Asad. pic.twitter.com/XXhJhCZf0A
— WW3 Updates (@ww3updates) January 8, 2020
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US F-35s have been scrambled from bases in Turkey and the UAE.
Meanwhile, Iran claims that a “second wave” of attacks targeting an unidentified US base in Iraq is beginning, according to semi-official news agency Tasnim. The IRGC is also threatening to attack any other countries that host US troops.
* * *
Update 7: This is about to go to ’11’.
US jets are reportedly “in the air” and leaving Turkey as stocks extend their decline, and oil futures continue to climb. Reports are claiming that shelling has stopped at Al Asad Air Base, and that roughly 35 rounds hit the base.
White House spokeswoman Stephanie Grisham: “We are aware of the reports of attacks on US facilities in Iraq. The President has been briefed and is monitoring the situation closely and consulting with his national security team,” White House spokeswoman Stephanie Grisham said in a statement.”
The Pentagon has confirmed that more than a dozen missiles were launched from Iran. “It is clear that these missiles were launched from Iran.” But others claim there appears to be some doubt.
Some media reports noted that the base has been visited by President Trump in the past, giving the attack a special significance. US military sources are saying that troops at the base are still in lockdown, though the attack is said to be over.
Initial reports on NBC Nightly News claimed US officials are looking into whether the attacks originated from within Iranian territory, a question that was also explored immediately following the Aramco attack late last year.
Iranian TV is already threatening “more violent responses” if the US retaliates for these latest attacks.
And so, Iran’s promised “historic nightmare” has begun.
* * *
Update 6: The drop in S&P futures is accelerating as more senior US military officials confirm that a US army base in Iraq is under ballistic missile attack. The drop in S&P futures is accelerating as US and Iranian sources report attacks “all over the country.”
Brent futures have extended their gains to 3% on the news, which seems to suggest that the crisis between the US and Iran over the killing of Suleimani is far from over.
While details on casualties are still unclear, experts are saying that the weapons used were either cruise missiles, or short-range ballistic weaponry, or possibly a mix.
From senior US military source in Iraq:
“Under missile attack from Iran. These are either cruise missiles or short range ballistic missiles. All over the country.”— Jennifer Griffin (@JenGriffinFNC) January 7, 2020
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And we now have a statement from the IRGC claiming responsibility for the attacks: “The brave soldiers of IRGC’s aerospace unit have launched a successful attack with tens of ballistic missiles on Al Assad military base in the name of martyr Gen. Qasem Soleimani.”
Looking ahead, many are wondering if the fighting will reach Baghdad.
Meanwhile, it is quite calm here in #Baghdad, but not expected to stay for long.. It is the WAR
— Feras Kilani فراس كيلاني (@FerasKilaniBBC) January 7, 2020
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And the White House has confirmed that President Trump has been briefed on the attacks, and is monitoring the situation closely with his national security team at the White House.
Given the severity of the situation, it’s still strange that the US was slow to confirm the initial reports. A reporter for CNN is reporting that the Pentagon was slow to respond because officials were “sent home early for what was supposed to be a major snowstorm” in DC.
Nancy Pelosi was reportedly briefed about the attacks during a steering meeting. Her response to her fellow members? Pray….
Multiple members tell reporters that Pelosi received a note during the steering meeting informing her of the attack in Iraq. Her message to her members in the room? Pray.
— Lauren Fox (@FoxReports) January 7, 2020
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Iranian sources are claiming that the operation has a name: ‘Operation Martyr Suileimani’.
#IRGC has launched ‘Operation Martyr Soleimani’ by firing missiles at the base in #Iraq, according to Tasnimnews_Fa.
— Steve Herman (@W7VOA) January 7, 2020
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Update 5: Bloomberg has now confirmed WaPo’s reporting, adding that at least nine rockets have now hit Al-Asad Airbase. There have also been reports of IRGC commanders claiming to have launched “tens of missiles” at the base.
Al Mayadeen TV has also confirmed.
And just like that, ES is sliding, and Brent is spiking…
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Update 4: Confirmation at last.
After hours of vague and unconvincing reports about a string of attacks on US buildings in Iraq, the Washington Post has apparently confirmed that at least one of the attacks – the most recent to be reported – is real.
Reporter Dan Lamothe described his source as “very credible.”
U.S. defense official confirms that Al Asad air base in Iraq’s Anbar province has been hit by at least six rockets tonight. Additional details unclear. But very credible source.
— Dan Lamothe (@DanLamothe) January 7, 2020
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Video of alleged Iranian rockets raining down on the American base has just hit Twitter.
BREAKING VIDEO: Suspected Iranian originating rockets seen being launched toward military base housing US forces in Iraq moments ago. pic.twitter.com/qxnBlV0Kgx
— Israel Breaking (@IsraelBreaking) January 7, 2020
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So it looks like this really is the Iranian retaliation that we’ve been waiting for.
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Update 3: And the stream of strange reports of attacks and sirens at US bases and consulates around the Middle East continues, as a reporter for Al-Monitor, a credible English-language source of news and analysis on the Middle East region, claims another missile attack has been reported, this time at Al-Asad airbase in Anbar Province.
Reports claim that more than 30 missiles have been launched at the base, and still more are coming in.
NEW: Defense official tells me that Al-Asad airbase that houses US & coalition troops in Iraq has been hit with 6 rockets. Not clear if there are any casualties.
— Jack Detsch (@JackDetsch_ALM) January 7, 2020
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Following reports of a siren heard at the US consulate in Erbil, Iraqi TV is reporting that flights into the local airport have been suspended.
Once again, Iranian media is reporting the attacks, though we must admit, the photo below doesn’t exactly look genuine.
🚨 #فوری| انتقام سخت به وقوع پیوست/ برخی منابع خبر از شلیک موشکهای بالستیک ایرانی به سمت پایگاه عینالاسد در عراق که محل استقرار نیروهای آمریکایی است، میدهند. pic.twitter.com/qbfPYmFXri
— خبرگزاری فارس (@FarsNews_Agency) January 7, 2020
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The mainstream American press and Pentagon are still eerily quiet.
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Update 2: The UK tabloid Daily Mail is now reporting at “siren test” at Taji military base in Iraq, which it says is host to British and American troops. The report appears to have verified claims that at least five rockets have hit the base, and that sirens have been heard ringing out at consulates around the area, including Erbil, which we noted below.
Critically, the paper notes that some reports suggest that the missile strike might simply be a drill. It also noted that the alleged strike is unfolding just hours after a flurry of US airstrikes on militia bases in Western Iraq and Syria, targeting the Iran-backed Popular Mobilization Units.
One local journalist reports that his sources say the “attack” was merely just a drill, and that the base is “calm tonight.”
According to my sources, #Taji camp is calm tonight and no attacks occurred. I will keep you updated.
— Barzan Sadiq (@BarzanSadiq) January 7, 2020
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More unconfirmed reports are trickling in, this time from Australia-based cleric Imam Tawhidi.
#BREAKING: US air defence put on high alert, anticipating a bigger attack by Iran or their militias in Iraq. 5 rockets fired on Camp #Taji, Iraq, minutes ago. pic.twitter.com/hwdBSlIwLd
— Imam of Peace / Pray for Peace… (@Imamofpeace) January 7, 2020
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#NEW: Pictures of US forces leaving Camp Taji to exit Iraq’s territories.
(These pictures were taken a few hours ago and the surroundings cannot identify their location/direction anyway. Safe to post). pic.twitter.com/wXlQzubF6B
— Imam of Peace / Pray for Peace… (@Imamofpeace) January 7, 2020
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The Military COALITION base in #Taji is not empty. Anywhere the rockets land will cause significant harm. We hope that all US forces have left already. (If the US forces are no longer there, the militias will stop firing rockets at soldiers from other countries). pic.twitter.com/tfm2v9ip4f
— Imam of Peace / Pray for Peace… (@Imamofpeace) January 7, 2020
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And a video purporting to depict a warning at the base advising personnel to “shelter in place” – though there’s no way of telling whether it is authentic.
A video from the Taji base, north of Baghdad, where American forces are present, warning of missile strikes.
#Iraq_Rocking pic.twitter.com/NyE3zsbuUj@ELINTNews— صدى العراق | Sada Al-Iraq (@SADA_IRAQ) January 7, 2020
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Update: The Jerusalem Post has apparently picked up reports from Iran’s Fars news agency claiming that at least five rockets have hit Taji, potentially placing the lives of American troops in peril.
That means the reports of the attack, which were first circulated by unconfirmed accounts, have now been vetted by the mainstream press. Though some on social media claim that people on the ground in the area don’t see any signs of the attack, and are skeptical that this might be another Iranian attempt at disruptive media hacking.
#BREAKING At least 4 rockets hit #Iraq‘s Taji base that hosts #American troops, according to reports. https://t.co/zbymG4rNxe
— The Jerusalem Post (@Jerusalem_Post) January 7, 2020
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CONFIRMED: Taji base housing US troops hit with 5 rockets. No word on damage done and the type of missiles used. pic.twitter.com/4zACbEgf5G
— WW3 Updates (@ww3updates) January 7, 2020
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And, as we noted below, markets are taking the news seriously.
Get ready for more hysteria about the dawn of WWIII.
Meanwhile, in reference to a separate incident, local media reports that alarms that sounded at the US consulate in Erbil were a test.
Iraq: Al-Mayadeen Corespondent: Sirens that sounded at the U.S Consulate in Erbil were a test.
— FXHedge (@Fxhedgers) January 7, 2020
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Erbil is nowhere near Camp Taji
— FXHedge (@Fxhedgers) January 7, 2020
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If these reports are true, it’s also notable that President Trump appeared to back away from threats to attack Iranian cultural sites during an “exchange” with reporters int he Oval Office ahead of his meeting with Greek Prime Minister Kyriakos Mitsotakis Tuesday afternoon, per the Washington Post.
Though, in typical Trump style, Trump also defended the strike against Suleimani and suggested he wasn’t happy about restraining his rhetoric toward Iran.
“They’re allowed to blow up everything that we have and there’s nothing that stops them,” he said. “And we are, according to various laws, supposed to be very careful with their cultural heritage. And you know what, if that’s what the law is, I like to obey the law.”
Asked about the future of US troops in Iraq, Trump said the US would like to get out “at some point.”
“At some point, we want to get out, but this isn’t the right point,” he said, adding that the United States would want to be reimbursed for costs related to fighting the Islamic State militant group.
* * *
Following four days of increasingly belligerent threats from Iran and its leadership, unconfirmed reports claim 5 missiles have just struck a US base in Iraq.
The base is called Taji camp, and it’s situated about 17 miles north of Baghdad. Notably, US troops are housed at the camp.
If this is an Iranian attack, it’s notable that it’s coming at the end of the four days of mourning for General Qasem Suleimani, who was killed last week in an audacious drone strike ordered by President Trump while Suleimani was attending a meeting in Baghdad.
Ominously, the heavily-followed (though not official) twitter account @Iran, tweeted a threatening message a few hours ago…
Waiting for tonight,
We’ve dreamed of this for so long
Waiting for tonight…#SvereRevenge #Iran— Iran (@Iran) January 7, 2020
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Though the reports are unconfirmed, news of what could be the beginning of Iran’s threatened retaliation for the killing of General Qasem Suilemani inspired a slight pop in crude futures.
Gold jumped…
…while stocks are unhappy.
Tyler Durden
Tue, 01/07/2020 – 18:12 -
- Krieger: The Final Chapter In The Decline Of US Imperial Dominance Has Begun
Krieger: The Final Chapter In The Decline Of US Imperial Dominance Has Begun
Authored by Mike Krieger via Liberty Blitzkrieg blog.
Another Stupid War
All I wanted to do this week was work on part 2 of my localism series, but circumstances quickly got the best of me. The assassination of Iran’s top general Qassem Soleimani was an event of such historical significance, I feel obligated to detail my thoughts on what it means and how things unfold from here, especially given how much of a role geopolitics and questions of empire have played in my writings.
First off, we need to understand the U.S. is now at war with Iran. It’s an undeclared, insane and unconstitutional war, but it is war nonetheless. There is no world in which one government intentionally assassinates the top general of another government and that not be warfare. You can argue the U.S. and Iran were already engaged in low-level proxy wars, and that’s a fair assessment, but you can’t say we aren’t currently in far more serious a state of war. We are.
Soleimani was not only a powerful general, he was a popular figure within Iran. Unlike other blows the U.S. and Iran have inflicted upon one another, this cannot be walked back. There’s no deescalation from here, only escalation. Even if you want to pretend this didn’t happen and turn back the clock, it’s impossible. This is a major event of historical proportions and should be seen as such. Everything has been turned up a notch.
Before discussing what happens next and the big picture implications, it’s worth pointing out the incredible number of blatant lies and overall clownishness that emerged from U.S. officials in the assassination’s aftermath. It started with claims from Trump that Soleimani was plotting imminent attacks on Americans and was caught in the act. Mass media did its job and uncritically parroted this line, which was quickly exposed as a complete falsehood.
CNN anchor uncritically repeating government lies.
This is what mass media does to get wars going. https://t.co/QK1JET7TIj— Michael Krieger (@LibertyBlitz) January 6, 2020
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It’s incredibly telling that CNN would swallow this fact-free claim with total credulity within weeks of discovering the extent of the lies told about Syrian chemical attacks and the Afghanistan war. Meanwhile, when a reporter asked a state department official for some clarification on what sorts of attacks were imminent, this is what transpired.
When asked by a reporter for details about what kinds of imminent attacks Soleimani was planning, the State Dept. responds with:
“Jesus, do we have to explain why we do these things?”
Totally normal. pic.twitter.com/FDWtpfItEp
— Michael Krieger (@LibertyBlitz) January 6, 2020
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Naturally, we learned soon after from the Iraqi PM himself that Soleimani was in Iraq as part of a diplomatic effort to de-escalate tensions. In other words, he was apparently lured to Baghdad under false pretenses so he’d be a sitting duck for a U.S. strike. Never let the truth get in the way of a good story.
Iraqi Prime Minister AbdulMahdi accuses Trump of deceiving him in order to assassinate Suleimani. Trump, according to P.M. lied about wanting a diplomatic solution in order to get Suleimani on a plane to Baghdad in the open, where he was summarily executed. https://t.co/HKjyQqXNqP
— Joshua Landis (@joshua_landis) January 5, 2020
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As you’d expect, some of the most ridiculous propaganda came from Mike Pompeo, a man who genuinely loves deception and considers it his craft.. For example:
Pompeo on CNN says US has “every expectation” that people “in Iran will view the American action last night as giving them freedom.”
— Josh Lederman (@JoshNBCNews) January 3, 2020
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Then there’s what actually happened.
Absolutely massive crowds on the streets of Mashhad awaiting the arrival of Qassem Suleimani.
“We are ready for war.” pic.twitter.com/ZK4O8KQB17
— Sam (@sonofnariman) January 5, 2020
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Iran’s Supreme Leader Ayatollah Ali Khamenei and Qassem Soleimani’s daughter Zeinab were among the hundreds of thousands mourning Soleimani in Tehran today. Iranian state TV put the crowd size at ‘millions,’ though that number could not be verified. https://t.co/R6EbKh6Gow
— CBC News Alerts (@CBCAlerts) January 6, 2020
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Moving on to the really big question: what does this assassination mean for the future role of the U.S. in the Middle East and American global hegemony generally? A few important things have already occurred. For starters, the Iraqi parliament passed a resolution calling for U.S. troops to leave. Even more important are the comments and actions of Muqtada al-Sadr.
WOW,
Iraqi Shiite leader Muqtada al-Sadr orders the return of “Mahdi Army” in response the American strike that killed Suleimani.
Mahdi Army fought against the US troops during the invasion in 2003. Sadr disbanded the group in 2008.
— Ragıp Soylu (@ragipsoylu) January 3, 2020
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Unmentioned in the above tweet, but extremely significant, is the fact al-Sadr has been a vocal critic of both the American and Iranian presence in Iraq. He doesn’t want either country meddling in the affairs of Iraqis, but the Soleimani assassination clearly pushed him to focus on the U.S. presence. This is a very big deal and ensures Iraq will be far more dangerous for U.S. troops than it already was.
Going forward, Iran’s response will be influenced to a great degree by what’s already transpired. There are three things worth noting. First, although many Trump supporters are cheering the assassination, Americans are certainly nowhere near united on this, with many including myself viewing it as a gigantic strategic blunder. Second, it ratcheted up anti-American sentiment in Iraq to a huge degree without Iran having to do anything, as highlighted above. Third, hardliners within Iran have been given an enormous gift. With one drone strike, the situation went from grumblings and protests on the ground to a scene where any sort of dissent in the air has been extinguished for the time being.
Exactly right, which is why Iran will go more hardline if anything and more united.
If China admitted to taking out Trump even Maddow wouldn’t cheer. https://t.co/zqaEDIoWH1— Michael Krieger (@LibertyBlitz) January 6, 2020
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Iranian leadership will see these developments as important victories in their own right and will likely craft a response taking stock of this much improved position. This means a total focus on making the experience of American troops in the region untenable, which will be far easier to achieve now.
If that’s right, you can expect less shock and awe in the near-term, and more consolidation of the various parties that were on the fence but have since shifted to a more anti-American stance following Soleimani’s death. Iran will start with the easy pickings, which consists of consolidating its stronger position in Iraq and making dissidents feel shameful at home. That said, Iran will have to publicly respond with some sort of a counterattack, but that event will be carefully considered with Iran’s primary objective in mind — getting U.S. troops out of the region.
This means no attacks on U.S. or European soil, and no attacks targeting civilians either. Such a move would be as strategically counterproductive as Assad gassing Syrian cities after he was winning the war (which is why many of us doubted the narrative) since it would merely inflame American public opinion and give an excuse to attack Iran in Iran. There is no way Iranian leadership is that stupid, so any such attack must be treated with the utmost skepticism.
It’s impossible to know exactly what will happen in the short-term, but in the much bigger picture I have a strong view of what this means. The assassination of Soleimani kicks off the beginning of the final chapter in the decline of U.S. imperial dominance. It will likely play out over the course of the first part of this decade (2020-2025), and by the time it’s over it’ll be undeniable that the U.S. is no longer the global hegemon it once was. The world at that stage will be unmistakably multi-polar.
The signs are everywhere.
Welcome to America’s two political parties:
If you’re a Democrat you must become brain dead about Russia and blame everything bad on it.
If you’re a Republican you must become brain dead about Iran and blame everything bad on it.
This is what empire in decline looks like.
— Michael Krieger (@LibertyBlitz) January 7, 2020
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Do empires fall because a superior military force beats them in a conventional war, or do they fall due to decades of debt, corruption and military entanglements on the periphery.
Worth contemplating.
— Michael Krieger (@LibertyBlitz) January 3, 2020
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Death to America this, Death to America that. The arrogance of the Iranians is astounding. They will never be as good at destroying America as America.
— Starfish Considering Taking Up Day Drinking (@IRHotTakes) January 5, 2020
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This is not a time for despair, as there can be a huge silver lining to all of this. A singular focus on imperial hegemony has been terrible for most Americans. It has made us weak, it has destroyed the middle class, and it has entrenched a small subset of sociopaths into positions of total, unaccountable power.
The energy and spirit of the American people have been pushed aside and smothered so a bunch of defense contractors, politicians and finance criminals can play a game of RISK at the public’s expense. The transition is likely to be quite traumatic and fraught with danger, but empire has been a curse and has hollowed out the country. Shaking off empire at least gives us a shot at a revival.
* * *
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Tyler Durden
Tue, 01/07/2020 – 18:05
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