Jun 08

Today’s News 8th June 2018

  • Taiwan Holds Massive Live-Firing War Drill Simulating Chinese Invasion

    Earlier this week, Taiwanese newspapers published reports that Taiwan’s military would be conducting a massive five-day live-fire war drill starting Monday. As of Thursday, the military exercise is currently underway and is featuring joint operations of its air force, navy, and ground troops in simulating an attack by China.

    The Han Kuang war drill has been carried out annually since the mid-1980s, and its function is used to prepare the Taiwanese military for an invasion via Beijing.

    Even though the live-fire military drill began with the deadly crash of a General Dynamics F-16 Fighting Falcon jet on the first day, the exercise continued across the island as scheduled throughout the week.

    Taiwan simulated repulsing an invading force on Thursday at the Ching Chuan Kang air force base near the central city of Taichung. The live-fire field training exercise featured soldiers in red helmets playing the role of People’s Liberation Army (PLA) troops invading the airbase with helicopters while Taiwanese special forces were deployed with tanks and clashed on the airfield. There were even reports of fighter jets and attack helicopters overhead while paratroopers jumped from Lockheed C-130 Hercules planes.

    Military tanks take part in the annual Han Kuang exercises at an air base in Taichung County, Taiwan. (Source: Chiang Ying-ying, AP)

    Soldiers from Taiwan’s special forces fight with soldiers simulated invasion from rival China during the annual Han Kuang exercises at an air base in Taichung County, Taiwan. (Source: Chiang Ying-ying, AP)

    Taiwanese Air Force’s F-16 fighters launch flares during the annual Han Kuang exercises at an air base in Taichung County, Taiwan. (Source: Chiang Ying-ying, AP)

    A military tank advances during the annual Han Kuang exercises at an air base in Taichung County, Taiwan. (Source: Chiang Ying-ying, AP)

    Military tanks run from smoke during the annual Han Kuang exercises at an air base in Taichung County, Taiwan. (Source: Chiang Ying-ying, AP)

    Taiwanese airborne soldiers jump off from a C-130 Hercules cargo plane during the annual Han Kuang exercises at an air base in Taichung County, Taiwan. (Source: Chiang Ying-ying, AP)

    A Taiwan’s AH-1W Cobra Attack Helicopter launches flares during the annual Han Kuang exercises at an air base in Taichung County, Taiwan. (Source: Chiang Ying-ying, AP)

    President Tsai Ing-wen arrived at the Jiupeng military base Thursday to watch the air defense missile launches as part of the annual military exercises, reported Taiwan News.

    Local reports said the military fired domestic-manufactured missiles, including the Tien Kung I and II, respectively middle- and long-range surface-to-air missiles, which are critical components to the islands missile shields.

    The firing of a Tien Kung 1 missile during the Han Kuang military exercise.(Source: Ministry of National Defense/ Central News Agency)

    President Tsai also spectated the launch of U.S.-made MIM-104 Patriot missiles and the supersonic anti-ship Hsiung Feng III missiles designed to destroy the People’s Liberation Army Navy’s (PLAN) military vessels.

    The firing of a MIM-104 Patriot missile during the Han Kuang military exercise. (Source: Ministry of National Defense/ Central News Agency)

    The Central News Agency reported that several other exercises Thursday simulated air assaults by the People’s Liberation Army Air Force (PLAAF).

    President Tsai told reporters, “the solid strength of our national army and I am very confident that our military forces have capabilities to fulfill the task of making effective use of deterrence and defense.”

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    “The strength of our national army is the guarantee of national security, the foundation of social prosperity, and the staunch backing of the values of democracy and freedom,” Tsai added.

    The Han Kuang war drill is designed to show the military’s willingness and ability to thwart an invasion from China, which claims the self-governing island democracy as its own territory, and as of recent, China has launched a series of live-fire exercises off Taiwan’s coast. Taiwan and China split amid civil war in 1949, however, it now seems as the region could be the next geopolitical flashpoint

  • Pepe Escobar: How Singapore, Astana, & St.Petersburg Preview A New World Order

    Authored by Pepe Escobar via The Asia Times,

    Key economic forums in cities across Eurasia point the way to new power structures rising to challenge Western dominance…

    Ahead of the crucial Shanghai Cooperation Organization (SCO) summit in Qingdao this coming weekend, three other recent events have offered clues on how the new world order is coming about.

    The Astana Economic Forum in Kazakhstan centered on how mega-partnerships are changing world trade. Participants included the president of the Asian Infrastructure Investment Bank (AIIB) Jin Liqun; Andrew Belyaninov from the Eurasian Development Bank; former Italian Prime Minister and president of the EU Commission Romano Prodi; deputy director-general of the WTO Alan Wolff; and Glenn Diesen from the University of Western Sydney.

    Diesen, a Norwegian who studied in Holland and teaches in Australia, is the author of a must-read book, Russia’s Geoeconomic Strategy for a Greater Eurasia, in which he analyzes in excruciating detail how Moscow is planning “to manage the continent from the heartland by enhancing collective autonomy and influence, and thus evict US hegemony directed from the periphery.”

    In parallel, as Diesen argues, Moscow aims “to ensure the sustainability of an integrated Eurasia by establishing a balance of power or ‘balance of dependence’ to prevent the continent from being dominated by one power, with China being the most plausible candidate.”

    In a nutshell; this New Great Game installment revolves around “Russia’s strategy to enhance its bargaining power with the West by pivoting to the East.”

    Concerning Astana, Diesen told me that the AIIB’s Liqun “took the hardest stance in defense of diversifying financial instruments, while Belyaninov was very critical of anti-Russian sanctions.”

    Diesen argues that: “The emergence of economic mega-blocks actually improves economic relations by creating more symmetry. For example, China’s CIPS (Cross-Border Interbank Payment System) undermined the ability of SWIFT (Society for Worldwide Interbank Financial Telecommunication) to be used for economic coercion, while CIPS and SWIFT still cooperate. Similarly, the EAEU [Eurasia Economic Union] gets its strength from the ability to integrate with other regions as opposed to isolating itself.”

    And here’s the clincher: “China’s cooperation with the EAEU mitigates Russian concerns about asymmetries, and enables greater EAEU-BRI [Belt and Road Initiative] integration under the stewardship of the SCO. Also, unlike the EU, the EAEU provides great benefit to non-members (non-zero sum) by creating an effective transportation corridor with harmonized tariffs, standards, etc.”

    Diesen remarked how Liqun, a key character in the whole game, “is very positive about the Eurasian Economic Union and insistent on the positive-sum game of integration of regions.” Liqun is “direct, honest and forceful” and does not refrain from criticizing the Trump administration, arguing “there is not a trade war between the US and China, it is a US trade war against the world.”

    Add to the debate the crucial Astana headline, ignored by Western corporate media: Iran signed a provisional free-trade-zone agreement with the EAEU, lowering or abolishing customs duties, and opening the way for a final deal in 2021. For Iran, that will be a golden ticket to do business way beyond Southwest Asia, integrating it further with Russia and also Kazakhstan, which happens to be a key member of the Belt and Road Initiative (BRI).

    All about Eurasian integration

    The St. Petersburg International Economic Forum (SPIEF) is the annual Russian equivalent of Davos. Predictably, coverage on Western media was appalling – at best rehashing bits and pieces of the joint press conference held by presidents Vladimir Putin and Emmanuel Macron.

    There was no mention, as Asia Times previously reported, of how Moscow was instrumental in ironing out differences between North and South Korea at the Far East summit in Vladivostok last September, impressing the need for a win-win regional business plan; the integration of the Trans-Siberian with a future Trans-Korean railway, a key plank of Eurasia integration.

    When it comes to tracking Eurasia integration, SPIEF is invaluable. The St Petersburg get-together has also been a traditional forum for key SCO discussions. One panel illustrated how the Shanghai forum is fast advancing on the trade and economic front; new members India and Pakistan are now very much active in the SCO Business Council. The discussion of the business, industrial and technological agenda for observer states was also important; that’s where Iran, a future full SCO member, fits in.

    Eurasia integration also featured on another panel about new logistical routes opened by international transport corridors – very much the stuff BRI and the EAEU are made of.

    And the BRICS revival was also part of the picture, as attested by this panel on the BRICS in Africa “leveraging the Fourth Industrial Revolution” for economic development, featuring the president of the BRICS’s New Development Bank (NDB), Kundapur Kamath, and Jiakang Sun, the executive vice-president of Chinese giant COSCO Shipping Corp.

    Yet the clincher in terms of possible game-changing relations between Russia and Europe came from Finance Minister and first deputy Prime Minister Anton Siluanov: “As we see, restrictions imposed by the American partners are of an extraterritorial nature. The possibility of switching from the US dollar to the euro in settlements depends on Europe’s stance toward Washington’s position.”

    So once again the EU was on the spot – on both crucial fronts, Iran and Russia. Siluanov left the door wide open: “If our European partners declare their position unequivocally, we could definitely see a way to use the European common currency for financial settlements, such as payments for goods and services, which today are often subject to restrictions.”

    Siluanov did not fail to mention that Russia, as much as China and Iran, is already bypassing the US dollar. That accounts for three crucial nodes of Eurasian integration, and that’s the way to go for BRI, EAEU, SCO and BRICS.

    The Indo-Pacific enigma

    Meanwhile, the Shangri-La Dialogue in Singapore has been the top venue for defense diplomacy debate in the Asia-Pacific since 2001.

    With the “Indo-Pacific” concept is hyped to the extreme, it was up to Indian Prime Minister Narendra Modi, the keynote speaker, to strike a deft balancing act.

    Even as Modi said the Indo-Pacific should not develop as an exclusive club, he took pains to stress that “Asia and the world will have a better future when India and China work together in trust and confidence. No other relationship of India has as many layers as our relationship with China.”

    China’s Foreign Minister Wang Yi dismissed the “Indo-Pacific” push as an “attention-grabbing idea” that will “dissipate like ocean foam,” as he hopes that the Quad – US, India, Japan, Australia – does not focus on targeting China, like the previous Obama administration “pivot to Asia.”

    The problem is the Indo-Pacific focus, in practice, amounts to a military counterpunch to BRI, with no wide-ranging economic cooperation dimension apart from sketchy plans for a “new global infrastructure.” Compare it, for instance, with China financing over 130 projects within the Lancang-Mekong Cooperation framework, integrating Cambodia, Laos, Myanmar, Thailand and Vietnam into the Chinese economy.

    BRI is a multi-trillion-dollar, multinational, decades-long, inclusive project. As Wang Yiwei, a senior research fellow at the Chongyang Institute for Financial Studies of the Renmin University of China, said “All SCO members are participating in BRI, and this organization [SCO] is the initiative’s security guarantee.”

    Yet when it comes to the Indo-Pacific sphere, the US, Japan and Australia are not SCO members. And India still refuses to acknowledge the SCO is interlinked with BRI.

    Moreover, everything about BRI cannot but clash front-on with the depth and reach of the US across Asia. So the security stress is inevitable. The 10-nation ASEAN, caught in the middle, is adopting at best a “wait and see” strategy. Indonesia at least is venturing a step ahead, promoting a non-confrontational “Indo-Pacific cooperation concept.”

    The bottom line is that China’s relentless drive to multiply Chinese-organized solutions in international relations is unstoppable. As in Wang Yi’s discreet but forceful diplomacy leading to Kim Jong-un’s first visit to China; President Xi solidifying his role as the go-to leader of globalization 2.0; and the Chinese leadership as a whole arguing that the future of Asia-Pacific security cannot be hostage to a Cold War 2.0 mentality.

    US Defense Secretary James Mattis’ warning to China in Singapore of “much larger consequences” if its sovereignty expansion across virtually the whole South China Sea is not contained may be an idle threat. Beijing has no intention to restrict freedom of navigation in the South China Sea; for a mercantile giant, that would be counter-productive. The whole game is about high-stakes geopolitical control. Even the new head of the renamed US Indo-Pacific Command, Admiral Philip Davidson, had to admit to the US Senate that short of war between China and the US, Beijing will prevail in the South China Sea.

    Welcome to the post-Westphalian world

    In his latest, avowedly “provocative” slim volume, Has the West Lost It?former Singaporean ambassador to the UN and current Professor in the Practice of Public Policy at the National University, Kishore Mahbubani frames the key question: “Viewed against the backdrop of the past 1,800 years, the recent period of Western relative over-performance against other civilizations is a major historical aberration. All such aberrations come to a natural end, and that is happening now.”

    It is enlightening to remember that at the Shangri-la Dialogue two years ago, Professor Xiang Lanxin, director of the Centre of One Belt and One Road Studies at the China National Institute for SCO International Exchange and Judicial Cooperation, described BRI as an avenue to a ‘post-Westphalian world.’

    That’s where we are now.

    Western elites cannot but worry when central banks in China, Russia, India and Turkey actively increase their physical gold stash; when Moscow and Beijing discuss launching a gold-backed currency system to replace the US dollar; when the IMF warns that the debt burden of the global economy has reached $237 trillion; when the Bank for International Settlements (BIS) warns that, on top of that there is also an ungraspable $750 trillion in additional debt outstanding in derivatives.

    Mahbubani states the obvious: “The era of Western domination is coming to an end.” Western elites, he adds, “should lift their sights from their domestic civil wars and focus on the larger global challenges. Instead, they are, in various ways, accelerating their irrelevance and disintegration.”

    Meanwhile, Eurasian integration, as depicted in Diesen’s book, is slowly but surely redefining the future.

  • Pre-Dossier Carter Page: Russian Spy … or FBI Honor Scout?

    Authored by Paul Sperry via RealClearInvestigations.com,

    The FBI’s interview with Carter Page in March 2016 is one of the seminal events of the Trump-Russia probe. Democrats have long pointed to it as evidence of the bureau’s longstanding fears that Page might be a Russian spy and to downplay the role of the Clinton-financed dossier compiled by ex-British spy Christopher Steele in securing a FISA surveillance warrant against Page. 

    Carter Page at a Moscow press conference in December 2016.

    “The FBI interviewed Page multiple times about his Russian intelligence contacts, including in March 2016,” Rep. Adam Schiff and other Democrats on the House Intelligence Committee argued in their 10-page memo defending the Obama Justice Department’s monitoring of Page. “The FBI’s concern about and knowledge of Page’s activities therefore long predate the FBI’s receipt of Steele’s information.” 

    Rep. Adam Schiff of California, ranking Democrat on the House intelligence panel.

    But new information challenges that account.

    In an interview with RealClearInvestigations, Page insists that the interview in question – held at then-U.S. attorney Preet Bharara’s office in New York — had “absolutely nothing” to do with the Trump campaign or Russian collusion. Instead of being grilled about shadowy ties, he says he answered questions “related to events in 2013, in a case where I had served as a witness in support of the FBI.” 

    In 2013, a Russian national working as an unregistered foreign agent at a Russian bank in Manhattan sought information from Page, a longtime energy consultant, related to U.S. efforts to develop alternative energy resources, according to court papers filed by the FBI. Although Page thought the man was a legitimate banker after meeting him at an energy symposium in New York City, he was a Russian agent under federal investigation. He was later caught on surveillance dismissing Page as an “idiot.” 

    The FBI informed Page in 2013 that the Russians might be trying to recruit him.

    Evgeny Buryakov, center, in a sketch of the 2016 courtroom proceeding where he pleaded guilty. Carter Page helped convict him.

    A U.S. Naval Academy alumnus, Page cooperated as a witness in that case, which was coordinated with the bureau’s Counterespionage Section Chief Peter Strzok in Washington, and he helped the government convict the Russian spy. Evgeny Buryakov pleaded guilty to espionage-related charges on March 11, 2016. FBI agents, as well as federal prosecutors, huddled with Page around that time to tie up loose ends, he said.

    “It had absolutely nothing to do with the election interference story, which surfaced months later,” Page said. 

    Court records appear to back him up. Buryakov was sentenced in May 2016 and deported to Russia early last year. Schiff maintains that Page “remained on the radar of Russian intelligence and the FBI” due to the prior case, which gave them grounds to spy on him “independent” of the dossier.

    “In order to understand the context in which the FBI sought a FISA warrant for Carter Page, it is necessary to understand … what the FBI knew about Page prior to making application to the court — including Page’s previous interaction with Russian intelligence operatives,” Schiff said. 

    The Democrat’s narrative, which hinges on the suggestion that the bureau interviewed Page because of his role in Trump’s campaign, is also challenged by the fact that the meeting took place several days before Trump publicly named Page as an adviser, on March 21, 2016.

    Records indicate the FBI never viewed him as a potential foreign intelligence agent for Moscow. Court documents also show that Page fully cooperated with the FBI as soon as he learned he had been duped by Russian agents. In his sworn 2015 complaint against Buryakov, FBI special agent Gregory Monaghan portrays Page — referring to him as “Male-1” — as a guileless victim, and described how Buryakov and other Russian agents tried to take advantage of the American businessman, who was unaware he was dealing with foreign spies.

    The FBI agent further attested that the Russians never told Page they were “connected to the Russian government,” and that Page was only “interested in business opportunities in Russia,” where he had worked for years for Merrill Lynch and as an independent energy consultant.

    In the end, the Russians were unable to recruit Page and never received any state secrets from him. Monaghan did not recommend espionage or any other charges against Page, who by all accounts acted as a reliable and trusted witness in the case. Far from being a Russian spy, Page was characterized to the court as someone who helped the FBI catch Russian spies.

    But the government’s attitude toward Page turned cold after Trump publicly announced his name along with other members of his foreign policy team. Only then was Page treated as a possible national security threat. Not long after Trump’s March 21, 2016, announcement, FBI Director James Comey and his deputy, Andrew McCabe, held a meeting with Attorney General Loretta Lynch to discuss the news of Page joining the Trump campaign and how he may be “compromised” by the Russians, according to a recently declassified memo.

    Then, sometime in the “late spring” of 2016, Comey held an unusual briefing concerning Page, and the alleged risk he posed, with the Obama administration’s highest-ranking national-security officials, who, in addition to Lynch, included National Security Adviser Susan Rice, CIA Director John Brennan, and National Intelligence Director James Clapper.

    By autumn, in the heat of the presidential election campaign, the FBI had Page under constant surveillance, vacuuming up all his text messages and emails and listening in on his phone calls, including communications with Trump officials. The surveillance was predicated chiefly on an unverified allegation in the dossier, quoting third-hand sources claiming that Page traveled to Moscow in July 2016 to hatch an election plot with Kremlin officials.

    Page has denied under oath ever meeting with the two Kremlin officials named in the dossier, and says he was in Moscow at the time to give a commencement address at a university, the New Economic School, where President Obama had previously spoken. The charge, attributed to anonymous sources, was written in the dossier by ex-British intelligence officer Steele, who was paid $168,000 by the Clinton camp to gather derogatory information on Trump from Russian sources.

    Former FBI director James Comey. Carter Page says Comey never replied to his letter of complaint of a “witch hunt.”

    After the still-unsubstantiated rumor was leaked to the press in September 2016, along with reports the FBI was taking it seriously, Page wrote a letter to Comey complaining he was the subject of a “witch hunt” and demanding he “look into this matter.”

    He also volunteered to meet with FBI agents to put the rumors to rest.

    “Although I have not been contacted by any member of your team in recent months, I would eagerly await their call to discuss any final questions they might possibly have in the interest of helping them put these outrageous allegations to rest,” Page wrote. Comey never responded to his Sept. 25, 2016, letter.

    “I didn’t hear from the FBI again until over five months later, in March 2017 — after the FISA warrant application and first renewal had already been submitted,” he said. He said the “dodgy dossier was the foundation of their questions.” Page noted that the FBI agents who contacted him then were not the same ones he worked with earlier on the Buryakov case.

    In April 2017, as the Justice Department was renewing its FISA warrant on Page for a second time, it publicly identified Page as the anonymous witness in the 2013-2015 Russian case involving Buryakov.

    “On April 3, 2017,” Page said, “reporters at ABC News and BuzzFeed requested to meet in order to inform me that U.S. government operatives had unlawfully disclosed my identity as Male-1 in this 2015 case.”

    The media leak came just weeks after Bharara, an Obama appointee, was fired by Attorney General Jeff Sessions. Bharara, who formerly served as Democratic Sen. Chuck Schumer’s aide, could not be reached for comment.

    As surveillance warrants on Page continued to be renewed, the FBI also shadowed him using a confidential human source. The informant, Stefan Halper – who reportedly reached out to other Trump campaign figures including George Papadopoulos and Sam Clovis — befriended Page. They struck up a relationship that lasted, Page said, until September 2017 — the same month the fourth and final FISA spy warrant against the former Trump aide expired.

    In their rebuttal, Democrats stated that the FBI and Justice Department “cited multiple sources to support the case for surveilling Page.” It’s not immediately clear if Halper is named in any of the four FISA warrant applications submitted on Page. The documents remain classified.

    Page disagrees.

    “There was no basis for their FISA warrants,” he asserted, adding that the Obama Justice Department “abused” its authority to obtain such warrants, which are the most intrusive means of collecting information on U.S. citizens.

    Schiff’s office said it would have no comment beyond the “minority memo” defending the monitoring of Page.

    Some former federal prosecutors and FBI investigators who have worked counterintelligence cases say Page has a valid grievance. They argue that the FISA warrants lacked the requisite “probable cause” to spy on an American citizen like Page, which requires the Justice Department to not only show the citizen is knowingly engaging in clandestine activities on behalf of a foreign power, but it must also demonstrate probable cause that such activities involve a violation of federal criminal law. 

    Page filed a Freedom of Information Act request with the Justice Department on May 21, 2017 seeking the FISA applications and “all information gathered pursuant to the warrants” authorizing his electronic surveillance issued by the FISA court, as well as the warrants themselves. He also seeks all communications between Justice Department officials and employees of the Clinton campaign related to him. 

    He says he has received no relevant documents in the year since he sent the FOIA request by certified mail.

    Page can only speculate about how political forces seem to have transformed him from a cooperating witness into a possible Russian spy. But he says he is firmly convinced that “until DOJ discloses full information about the dodgy dossier, amends their court filings that led to extensive abuse of process, and discloses details on the other sources of their lies, it will be impossible for Americans to fully trust them again.”

  • More Than Half Of American Homes Are Overvalued, CoreLogic Warns

    A history of economic cycles dating back to the mid-1800s reveals a troubling outlook for today’s Central Bank induced bull market of hopes and dreams, which could be in the later innings.

    It is quite evident that Americans have quit saving as their gig-economy jobs have left them in financial ruin – now being squeezed by the higher cost of living.

    The charades of economic stability could continue for a little longer, with President Trump’s stealth quantitative easing program to Wall Street via debt-financed tax reform, which has induced a massive wave of more than $2.5 trillion in stock buybacks — a gift to corporate America.

    No matter where one looks, the valuation of many financial assets are overextended, and new evidence today from CoreLogicshows this troubling picture very late into an economic cycle: More than half of U.S. residential real estate markets were overvalued in April.

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    CoreLogic reports that residential real estate prices nationwide increased 6.9 percent year over year from April 2017 to April 2018. The firm’s Home Price Index (HPI) also shows a 1.2 percent rise on the month-over-month basis from March to April 2018. This has certainly sparked the debate of housing affordability across the nation with many millennials struggling to achieve the American dream.

    CoreLogic Market Condition Indicators showed that 40 percent of the 100 largest metropolitan areas were overvalued in April, compared to 28 percent undervalued, and 32 percent in line with valuations.

    The report uncovers a shocking discovery that of the nation’s top 50 largest residential real estate markets, 52 percent were overvalued in April.

    CoreLogic’s methodology behind overvalued housing markets “as one in which home prices are at least 10 percent higher than the long-term, sustainable level, while an undervalued housing market is one in which home prices are at least 10 percent below the sustainable level.”

    “Affordability” must increase ASAP or housing is in big trouble up here. It will happen, but not thru a wholesale credit easing like 2003. (Source: @MrMarkHanson)

    Home Price to Income Ratio Near 2008 Bubble Levels

    Historically a house in the US cost around 3 to 4 times the median annual income. During the housing bubble of 2007 the ratio surpassed 5 – in other words, the median price for a single-family home in the United States cost more than 5 times the US median annual household income. According to Mikey Maloney, this ratio is heavily influenced by interest rates. When interest rates go down the affordability of a house goes up, so people spend more money on a house. Interest rates have now been falling since 1981 when they peaked at 15.32% (for a 10-year US treasury bond).

    “The best antidote for rising home prices is additional supply,” said Dr. Frank Nothaft, chief economist for CoreLogic.

    “New construction has failed to keep up with and meet new housing growth or replace existing inventory. More construction of for-sale and rental housing will alleviate housing cost pressures,” Nothaft added.

    In a recent op-ed piece via The Wall Street Journal, Paul Kupiec and Edward Pinto place the blame on the government for creating another real estate bubble through “loose mortgage terms pushing home prices up.” They claim that mortgage underwriters need to tighten standards.

    Home prices are booming. So far, 2018 has posted the strongest growth since 2005. “About 60% of all U.S. metros saw an acceleration in the rate of price increases through February this year,” according to Housing Wire. Since mid-2012, real home prices have increased 28%, according to data from the American Enterprise Institute. Entry-level home prices are up about double that rate. In contrast, over the same period household income has barely kept pace with inflation. The current pace of home-price inflation is increasing the risk of another housing bubble.

    The root of the problem is declining underwriting standards. In April Freddie Macannounced an expansion of its 3% down-payment mortgage, the better to compete with the Federal Housing Administration and Fannie Mae . Such moves propel home prices upward. Because government agencies guarantee about 80% of all home-purchase mortgages, their underwriting standards guide the market.

    Making lending even more dangerous, CNBC recently reported that “credit scores may go up” because new regulatory guidance allows delinquent taxes to be excluded when calculating credit scores. These are only some of the measures that “expand the credit box” and qualify ever-shakier borrowers for mortgages.

    During the last crisis, easy credit led home prices to rise at an unsustainable pace, leading marginally qualified borrowers to stretch themselves thin. Millions of Americans’ dreams became nightmares when the housing market turned. The lax underwriting terms that helped borrowers qualify for a mortgage haunted many households for the next decade.

    To sum up, the current unsustainable pace of overvalued home-price appreciation throughout more than half of the nation’s top real estate markets could soon hit serious resistance, as affordability becomes a more significant concern and the overall central bank induced bull market nears its later innings. So what does this mean for millennials who have recently purchased a home? You likely bought near the top.

  • Yellowstone Eruption Fears Spike As Largest Geyser Erupts For The 8th Time

    Authored by Mac Slavo via SHTFplan.com,

    Yellowstone caldera eruption fears have spiked as the supervolcano’s largest geyser erupted for the eight time.  So far, scientists aren’t certain why the Steamboat geyser continues to erupt, adding to the fears.

    After years of silence, Yellowstone’s Steamboat geyser, a better show than Old Faithful, has spewed boiling water hundreds of feet in the air eight times since March.  Steamboat, the tallest geyser in the vast Yellowstone National Park, isn’t reliable at all, unlike the more famous Old Faithful that belches steam with regularity. But the fact is, Steamboat has been more faithful, at least lately, spewing eight times since March 14, after being silent for nearly four years. But that regularity is terrifying and puzzling scientists.

    Until this recent series of eruptions, the last time Steamboat blew was in September 2014. Steamboat’s latest eruption was Monday morning when the geyser shot boiling hot water hundreds of feet into the air. Steam billowed from the geyser for hours longer. Steamboat is located in the Norris Geyser Basin, known to have the hottest and most changeable thermal area in nearly 3,500-square-mile wilderness park that sits on a volcanic hot spot called a caldera. That accounts for the geyser’s towering columns of steam (it’s very, very hot underground) but leaves a major fear-provoking question unanswered: Why now, and is it a sign the giant volcano is waking up?

    Scientists don’t know why the Steamboat geyser has become more active, but they still insist that no major eruption is on the horizon. “It is a spectacular geyser,” Michael Poland, the U.S. Geological Survey’s scientist in charge of the Yellowstone Volcano Observatory, wrote to CNN in an email. “When it erupts, it generally has very big eruptions.”

    Data collected so far suggests a pattern to the eruptions within the series. If it all “proves out,” the days surrounding June 11-12 are good dates to potentially see the Steamboat geyser erupt, Forbes reported. “Most geysers erupt infrequently, unlike Old Faithful, so Steamboat is not enigmatic in that regard. But Steamboat has a mystique about it because it is the tallest active geyser in the world. It gets attention because of this, and rightly so,” Poland said.

    The day of the first eruption, park staff detected activity on nearby seismometers, thermal gauges, and water discharge on a US Geological Survey stream gauge. Yellowstone National Park staff arrived in time to observe steam from the geyser but no water column. According to the Geological Survey, this is a usual occurrence after a vigorous water eruption. The steam phase can last several hours.

    Scientists consider Yellowstone to be a “‘supervolcano,” which refers to volcano capable of an eruption of more than 240 cubic miles of magma,” according to the National Park Service. This distinction is based on massive eruptions over 600,000 years ago. Although the caldera is considered active, scientists believe that it is unlikely to erupt in the next thousand years.

    There doesn’t seem to be a direct relationship between these eruptions and the supervolcano, Poland wrote. “The geyser is reflecting processes that are occurring in the shallowest part of the system — tens to perhaps a few hundreds of meters deep, whereas the magmatic system starts about 5 km down. Geysers are supposed to erupt, and so what we’re seeing is normal behavior.” So once again, we are being told this is all normal abnormal activity.

  • Top Senate Intel Staffer Arrested In Leak Probe; NYT Journo's Records Seized

    Longtime former director of security for the Senate Intelligence Committee, James A. Wolfe, was indicted and arrested Thursday night on charges of giving false statements to FBI agents in 2017 about repeated contacts with three reporters, according to the Washington Examiner.

    Jim Wolfe, a longtime former director of security at the Senate Intelligence Committee, was indicted and arrested Thursday night for giving false statements to F.B.I. agents during their investigation into leaks of classified information to the media.

    According to the Department of Justice, Wolfe lied to F.B.I. agents back in 2017 “about his repeated contacts with three reporters, including through his use of encrypted messaging applications.”

    Wolfe is also accused of making false statements about providing “non-public information related to matters occurring before the [Senate Intelligence Committee]” to two additional reporters. –Washington Examiner

    Wolfe, 57, is a former Army intelligence analyst who worked for the Senate for over 30 years. He stopped performing work for the committee in December and retired last month. More from the NYT:

    Court documents describe Mr. Wolfe’s communications with four reporters, using encrypted messaging applications. It appeared that the F.B.I. was investigating how Ms. Watkins learned that Russian spies in 2013 had tried to recruit Carter Page, a former Trump foreign policy adviser. She published an article for BuzzFeed News on April 3, 2017, about the attempted recruitment of Mr. Page in which he confirmed the contacts.

    In another case, the indictment said, Mr. Wolfe used an encrypted messaging app to alert another reporter in October 2017 that he had served Mr. Page with a subpoena to testify before the committee. The reporter, who was not named, published an article disclosing that Mr. Page had been compelled to appear. After it was published, Mr. Wolfe wrote to the journalist to say, “Good job!” and, “I’m glad you got the scoop,” according to court papers.

    The same month, Mr. Wolfe reached out to a third reporter on the same unidentified app to offer to serve as an unnamed source, the documents said.

    Mr. Wolfe also communicated with a fourth reporter, using his Senate email account, from 2015 to 2017, prosecutors said. They said he denied those contacts.

    “Mr. Wolfe’s alleged conduct is a betrayal of the extraordinary public trust that had been placed in him. It is hoped that these charges will be a warning to those who might lie to law enforcement to the detriment of the United States,” said Assistant Attorney General John. Demers

    See the indictment here: 

    Ex-girlfriend’s communications seized

    News of Wolfe’s arrest follows an article by the New York Times which claims that the Department of Justice “secretly seized years’ worth of a New York Times reporter’s phone and email records,” in connection with an investigation into classified leaks.

    NYT national security reporter Ali Watkins – formerly of Buzzfeed and Politico, came under investigation as part of a DOJ inquiry into Wolfe. FBI agents approached Watkins about her relationship with Wolfe while investigating unauthorized leaks – the first known instance of the Justice Department seizing a reporter’s data under President Trump. 

    Ali Watkins

    Watkins claims that Wolfe was not a source of classified information during their relationship. 

    A prosecutor notified Ms. Watkins on Feb. 13 that the Justice Department had years of customer records and subscriber information from telecommunications companies, including Google and Verizon, for two email accounts and a phone number of hers. Investigators did not obtain the content of the messages themselves. The Times learned on Thursday of the letter, which came from the national security division of the United States attorney’s office in Washington. –New York Times

    Attorney General Jeff Sessions said last year that the DOJ was aggressively pursuing around three timx as many leak investigations as were open at the end of Obama’s second term – while Obama’s DOJ prosecuted more leaks than all previous administrations combined. 

    The seizure — disclosed in a letter to the reporter, Ali Watkins — suggested that prosecutors under the Trump administration will continue the aggressive tactics employed under President Barack Obama.

    …

    When law enforcement officials obtained journalists’ records during the Obama administration, members of Congress in both parties sounded alarms, and the moves touched off such a firestorm among advocates for press freedom that helped prompt the Justice Department to rewrite its relevant guidelines. -NYT

    In early 2013, for example, the Obama DOJ led by Attorney General Eric Holder secretly obtained the home and cell phone numbers of individual AP journalists, in what the news agency called a “serious interference with AP’s constitutional rights to gather and report the news.” 

    “It’s always disconcerting when a journalist’s telephone records are obtained by the Justice Department — through a grand jury subpoena or other legal process,” said Ms. Watkins’s personal lawyer, Mark J. MacDougall to The Times. “Whether it was really necessary here will depend on the nature of the investigation and the scope of any charges.”

    The Senate Intelligence Committee hinted at the leak investigations on Wednesday, noting that it was cooperating with the DOJ “in a pending investigation,” while the Senate had earlier voted unanimously to adopt a resolution to share committee information with the DOJ “in connection with a pending investigation arising out of the unauthorized disclosure of information.” 

    Press advocates have long considered the idea of mining a journalist’s records to be an intrusion of First Amendment freedoms – one which federal prosecutors at the DOJ acknowledge must be dealt with delicately. “Freedom of the press is a cornerstone of democracy, and communications between journalists and their sources demand protection,” said Eileen Murphy, a Times spokeswoman.

    Developing…

  • Trump Lashes Out At Macron, Trudeau Ahead Of "G6+1" Summit

    Tomorrow’s G7, or rather G6+1 meeting, is shaping up to be one for the ages.

    As we reported previously, chancellor Merkel already was setting the ground for the Toronto showdown among the world’s top political leaders, vowing to challenge Donald Trump on virtually every issue, from trade to climate, and warning that the lack of room for compromise means leaders may fail to agree on a final statement, an unprecedented event at a summit of the world’s 7 most advanced nations.

    Then, earlier today, in comments made alongside Canada PM Justin Trudeau in Ottawa, French President Emmanuel Macron said that no head of state is “eternal” and that he stands ready to work with the six other Group of Seven members if U.S. wants to stand alone.

    “You say President Trump doesn’t care. Maybe. But none of us are eternal and our countries, the commitments taken, go beyond us. None of us who have been elected by the people can say ‘all prior commitments disappear.’ It’s just not true, there is a continuity in state affairs at the heart of international laws. Sometimes we’ve inherited some commitments that weren’t core to our beliefs, but we stuck to them, because that is how it works for nations. And that will be the case for the United States – like for every great democracy”, Macron said quoted by Bloomberg.

    The common theme: the rest of the world is desperate to show just how united it is again Trump, perhaps in hopes of subduing him and quashing his opposition.

    Good luck with that.

    Shortly after the constant barrage of anti-Trump rhetoric out of the G6, Trump on Thursday was quick to take even more jabs at Canada and France on the eve of the G-7 summit.

    In a tweet, Trump accused the U.S. allies of levying “massive tariffs” and creating “non-monetary barriers.”

    https://platform.twitter.com/widgets.js

    Trump’s comment was in response to French President Emmanuel Macron’s tweet in which he echoed Merkel’s threat to exclude U.S. from a joint statement issued every year at the G-7 summit.

    “The American President may not mind being isolated, but neither do we mind signing a 6 country agreement if need be. Because these 6 countries represent values, they represent an economic market which has the weight of history behind it and which is now a true international force,” Macron tweeted.

    Later on Thursday, Trump attacked Trudeau over Canada’s dairy industry, claiming that Canada is “killing” U.S. agriculture.

    https://platform.twitter.com/widgets.js

    As CNBC notes, Canada bought 31% of U.S. milk exports and 5.3% of its cheese exports in 2016, according to data from MIT’s Observatory of Economic Complexity.

    Trump then pivoted back the EU, asking its progressive, liberal leaders “Why isn’t the European Union and Canada informing the public that for years they have used massive Trade Tariffs and non-monetary Trade Barriers against the U.S. Totally unfair to our farmers, workers & companies. Take down your tariffs & barriers or we will more than match you!”

    https://platform.twitter.com/widgets.js

    Tensions between the U.S. and many of its allies were already high after the Trump administration decided late last month to impose tariffs on imports from Canada, Mexico and the European Union, citing national security concerns. Trudeau responded that it’s offensive for the Trump administration to claim that Canada poses a security threat to the United States, given the “the thousands of Canadians who have fought and died alongside their American brothers in arms.”

    Later it emerged that in a phone conversation, Trump blamed Canada for burning down the White House in 1812, an escalation which Larry Kudlow said was nothing more than a “family quarrel.”

    Over the weekend, in the G7 meeting for finance ministers, the world’s top economic leaders asked Treasury Secretary Steven Mnuchin to relay their “unanimous concern and disappointment” over the tariffs on steel and aluminum imports.

    It appears the relaying had no impact, and what’s more there is no desire on either side to spend more time in Toronto than is absolutely required. According to Bloomberg’s Jennifer Epstein, Trump is getting to the G-7 summit late (11:15 tomorrow morning, while other leaders are already in Charlevoix) and leaving early (roughly 23 hours after his arrival, ahead of an afternoon of meetings).

    Commenting on what to expect tomorrow, Eurasia’s Ian Bremmer said “the meeting this week will be by far the most dysfunctional G-7. The old order is over. What we are fighting over now, as the new order emerges, is whether the U.S. wants to have the most important seat at the table or not. Right now the answer is no.”

    Perhaps: for the full answer tune in tomorrow for what promises to be the most exciting G6+1 meeting ever.

  • How To Reduce Your Risk Of Death By Gun Violence

    Authored by Jim Cox via The Foundation for Economic Education,

    Do you want to reduce your risk of death by gun violence?

    If so, consider these 10 common sense ways to do so. These are things one can implement fully and immediately with no permission or agreement from anyone else but are entirely in the control of any individual.

    Marching to persuade politicians is a very indirect way of reducing anyone’s risk from gun violence. And considering their track record on so many issues, politicians may end up putting us all at further risk when all is said and done.

    1. Don’t commit suicide. This is the most common gun-related death, being about 63% of all firearm deaths in the US.

    2. Adopt a policy of not escalating any road rage situations. If someone does something offensive on the highways have it pre-settled in your mind to react by de-escalating the situation (refrain from responding in kind) and back off to allow the heat of the moment to cool.

    3. Do not join a gang. Violence is the accepted norm among gang members, resulting in many becoming victims of gun violence.

    4. Do not buy or sell illegal drugs. Yes, I do know that it’s the drug laws more than the drugs themselves that leads to gun violence among drug buyers and sellers. But, people already on the wrong side of the law are more likely to commit gun violence than the law-abiding population.

    5. Do not get involved with abusive people. Someone who previously has physically abused a partner is more likely to do so than are those who have never engaged in such abuse.

    6. Implement a personal curfew. The safest place anyone can be at 2am is at home in bed. Roaming the streets in the middle of the night exposes one to gangs, drug sellers, and other dangerous people.

    7. Stay away from Gun-Free Zones. One study showed that 98% of all mass shootings happen in these places. Gun Free Zone signs tell violent people this is a spot where the picking will be easy. As for everywhere else, these predators may be deterred since they have to wonder if there’s already a good guy with a gun on the property.

    8. Do not associate with convicted criminals. Like the abuser, violent criminals out of prison are likely to continue their habits.

    9. Be aware of your surroundings. Make it a habit to look around and assess any situation you are in. Most victims of gun violence have no warning of the impending danger, the old saying “to be forewarned is to be forearmed” is pertinent here. So, no staring at your cell phone!

    10. Avoid people who handle guns in an irresponsible manner. Anyone who casually or even unknowingly points a gun at someone or who does not exercise good gun safety such as carefully checking to see that a gun is unloaded is someone to be avoided.

    11. Bonus Suggestion: Do not be a predator. A significant number (about 700 each year) of gun deaths are justifiable homicide wherein a victim successfully defends themselves from criminal assault.

    Thankfully, the odds of anyone in the U.S. dying from gun violence each year is exceedingly low. Implementing the suggestions here will reduce those odds even further.

  • George Soros Wastes Millions Backing Losing Candidates In California DA Races

    George Soros-backed candidates for district attorney in Sacramento, San Diego and Alameda counties lost to their conservative opponents in midterm elections on Tuesday, handing the “Open Society” billionaire a handful of embarrassing defeats in the most progressive state in the US.

    Soros and several other like-minded donors – the American Civil Liberties Union, for example – poured millions into four DA races across California in hopes of electing reform-minded DAs. Instead, the judges running against Soros’s candidates won by comfortable margins.

    Soros

    Conservative Sacramento incumbent Anne Marie Schubert won with 64% of the vote.

    Incumbent Republican Summer Stephan received 64% of the vote in San Diego.

    And Alameda County incumbent District Attorney Nancy O’Malley also won her race with 60% of the vote.

    In each case, Soros’s team had thought the incumbents were vulnerable to a challenge given the supposed anti-Republican backlash caused by Trump.

    Another Soros-backed candidate, Contra Costa County District Attorney Diana Becton, won, but may face a runoff in the November general election if she fails to win more than 50% of the votes in a recount that is ongoing, according to the Daily Caller. 

    Since 2014, Soros has spent more than $2.7 million in DA races in California alone, helping more liberal candidates catch up with their conservative counterparts. And since 2014, he has spent some $16 million in 17 races in other states, with his candidates winning 13 of them.

    The losses in this cycle were so bracing, that Michael Smolens, a columnist with the San Diego Tribune, questioned whether “these are mere speed bumps or is the political pendulum swinging against Soros and his progressive coalition?”

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