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Debt Rattle June 25 2026

Jun 252026
 
 June 25, 2026  Posted by at 10:17 am Finance Tagged with: , , , , , , , , ,  6 Responses »


M.C. Escher Dream 1935


• Iran Calls MoU Deal A ‘US Defeat’ (ZH)
• Trump Threatened Netanyahu With ‘Divorce’, NYT Reporters Say In New Book (RT)
• The Democrat Party Is Dead (Matt Margolis)
• ‘Occupy Wall Street’ Now Officially Controls the Democrat Party (CTH)
• Mamdani-backed Candidates Sweep Democratic Primaries In NYC (Guardian)
• Can Anyone Govern Britain — Or America? (Daniel McCcarthy)
• Brent Falls To Pre-War Levels (ZH)
• ‘Customers Are Being Gouged’: Trump Tells DOJ To Look Into Gasoline Prices (ZH)
• An AI Cyber Apocalypse Is ‘Months, Not Years’ Away, Five Eyes Warns (Moran)
• US To Set Up Testing Ranges Mimicking Ukraine Battlefield (RT)
• US Carmakers Could Produce Missiles – Trump (RT)
• Journal Under Fire for Retracting Article Challenging Claims of Racism (Turley)
• Investigation Launched Into Von der Leyen Over Secret Chat With Zelensky (TASS)
• Sweltering Heat As Europe Heatwave Spreads (BBC)

 


 

 


 


The more they give in, the stronger their claims.

• Iran Calls MoU Deal A ‘US Defeat’ (ZH)

“The war is going very well. As you know, we’re winning by a lot. Iran is making very big concessions,” Trump told reporters at the Capitol. “We’ll see what happens — but it has been very, very, very powerful,” the US President added. Tehran has remained insistent it never agreed to allow nuclear inspector access, and that the Strait of Hormuz is opening on its terms. Meanwhile, the latest on the Lebanon tenuous ceasefire and crisis:


Tehran Provokes Trump: Deal to End War a ‘Declaration of US Defeat’. The post-war narrative battle between Washington and Tehran intensified Wednesday after Iranian Parliament Speaker Mohammad Bagher Ghalibaf claimed the recently signed Islamabad Memorandum of Understanding (MoU) – and confirmed in Switzerland – amounted to nothing less than a US capitulation. Speaking in Baku during a gathering of parliaments from member states of the Organization of Islamic Cooperation (OIC), Ghalibaf argued that the agreement validated Iran’s long-held position that negotiations only succeed when foreign powers abandon coercion and recognize the Islamic Republic’s rights.

“The Islamabad memorandum of understanding became a declaration of the US defeat,” Ghalibaf said. The remarks underscore the widening disconnect between how Washington and Tehran are portraying the agreement. While the Trump administration has presented the MoU as evidence that its pressure campaign forced concessions from Iran, Iranian officials continue to frame the deal as proof that the United States ultimately backed away from attempts to dictate terms.

Ghalibaf further suggested that the agreement demonstrated dialogue can only produce results when the opposing side ceases efforts to impose its will and instead accepts Iran’s sovereign rights. Iran has lately stated that it asserted its red lines through ‘action’.

Energy Secretary: 72 Ships Have Exited Strait in Last Day
Several vessels have already navigated the Strait of Hormuz utilizing a fresh evacuation framework established by the United Nations’ shipping agency, an official confirmed on Wednesday. More via newswires:US Energy Secretary Wright says roughly 72 ships have exited Strait of Hormuz in last 24 hours. “Ships have already begun to pass under the plan,” stated a spokesperson for the UN’s International Maritime Organization (IMO), though they opted not to disclose specific details regarding the transiting vessels.

According to the latest LSEG ship-tracking data Wednesday, at least two dry bulk carriers and one cargo vessel successfully crossed the strait under the new program within a 12-hour window. An additional analysis of ship movements by Reuters, utilizing data from LSEG and MarineTraffic, indicated that at least 35 other commercial vessels – primarily dry bulk, cargo, and container ships – are gearing up to make the passage. Brent crude oil prices fell below $75 a barrel late yesterday, marking the first time the global benchmark has traded under that level since the outbreak of the Trump-initiated Iran conflict. The drop in crude prices could provide relief for consumers and businesses by easing pressure on fuel costs and inflation, a desired Washington outcome of the MoU signing – for which Trump has come under severe criticism from hawks at home. Speaking of escalating, we have another early morning Trump Truth Social statement, openly contradicting the consistent stated position of Tehran leaders.

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“The US president reportedly said “all the Jews” are tired of the Israeli prime minister..”

• Trump Threatened Netanyahu With ‘Divorce’, NYT Reporters Say In New Book (RT)

US President Donald Trump claimed that “all the Jews” are tired of Benjamin Netanyahu and threatened the Israeli prime minister with “divorce” between the close allies during a phone call, according to a new book by New York Times journalists Maggie Haberman and Jonathan Swan. The account comes from ‘Regime Change: Inside the Imperial Presidency of Donald Trump’, excerpts of which were cited by media outlets on Tuesday. The heated exchange reportedly took place in September 2025, when Trump was pushing Israel to accept his peace plan for Gaza. He spoke with Netanyahu in the presence of US presidential envoy Steve Witkoff and his son-in-law, Jared Kushner.


“Everybody’s sick of you, Bibi. All the Jews are sick of you. Even the two Jews on this call are sick of you,” Trump reportedly told Netanyahu, according to the Times of Israel. “Everybody hates you, and I’ve stood by you,” Trump said, warning that Israel’s refusal to accept the deal would result in “a divorce” between the countries, according to The Independent. Trump and Netanyahu praised their close cooperation during the opening weeks of the US-Israeli war against Iran, which was launched on February 28. Trump became increasingly critical of Israel as efforts to subdue Iran faltered and peace talks stalled.

Trump condemned Israeli strikes in Lebanon after Iran threatened to pull out of negotiations, at one point arguing that Netanyahu has “no f**king judgment” and reportedly calling him “f**king crazy.” According to the Washington Post, US intelligence agencies recently warned Trump that Netanyahu is likely to attempt to undermine efforts to secure a lasting peace with Iran. Both leaders have faced criticism at home, with opponents arguing that the interim agreement signed by the US and Iran last week failed to achieve their stated war aims.

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The system makes the Dems live on as zombies. You need two parties, and it’s -practically, not theoretically- impossible to add a third one.

• The Democrat Party Is Dead (Matt Margolis)

New York just gave America a preview of who’s actually running the Democrat Party, and it isn’t Hakeem Jeffries. On Tuesday, all three socialist candidates endorsed by socialist Mayor Zohran Mamdani swept their targeted congressional primaries. Three races, three wins, zero exceptions. Three Democrat incumbents in safe districts all lost. “Their positions are some of the most extreme & far left Dems have seen,” Fox News correspondent Bill Melugin said on X. Trust me, he’s not exaggerating.


Darializa Avila Chevalier took NY-13 on a platform built around abolishing prisons, abolishing ICE, abolishing borders, defunding the police, and opposing the deportation of every illegal immigrant, including violent criminals. Claire Valdez won NY-7, promising citizenship and voting rights for people who broke into this country illegally, taxpayer-funded transgender medical treatments, and the elimination of private health insurance for every American. These aren’t fringe positions anymore. They’re the new mainstream of the Democrat Party, and voters in these districts chose them enthusiastically.


And no Democrat is safe. Just look at NY-10, where Brad Lander demolished Rep. Dan Goldman, grabbing nearly 65% of the vote. Goldman was one of the loudest anti-Trump voices in Congress, and he led impeachment efforts against President Trump. None of that mattered. His support for Israel and his refusal to endorse Mamdani are the reasons he lost. Lander, meanwhile, ran on abolishing ICE, forgiving almost $2 trillion in student loans, and packing the Supreme Court.= That’s the candidate Democrat primary voters preferred over a guy who spent years trying to remove Trump from office.

The Democrat establishment knows exactly what happened, and it’s terrified. “Tonight wasn’t just a bad night for so-called ‘Leader’ Hakeem Jeffries. It was the night the Democrat establishment officially surrendered to Zohran Mamdani and the socialist wing of their party,” NRCC spokesman Mike Marinella said in a statement. “Every House Democrat, in safe and competitive districts alike, will now answer to the radicals calling the shots. And Americans should be terrified by where the Democrat Party is headed.” Even CNN’s Van Jones couldn’t spin his way out of this one. “This is a battle between the establishment and this insurgency,” Jones said. “And the roof is collapsing on the Democratic party establishment tonight.”

Here’s the reality nobody on the left wants to say out loud: the Democrat Party as it existed even a few years ago is finished. The socialist wing didn’t build a new party from scratch. It crawled inside the old one and took it over from the inside, like the zombie fungus controlling a dead ant. The Democrat Party is the corpse. The Socialist Party is what’s controlling it now. This should terrify the establishment because it makes it impossible to keep hiding what the party has become. This is going to terrify independent voters, who are watching candidates run on abolishing borders and prisons while still calling themselves Democrats. They’ll have no choice but to vote Republican to stop the radicals from taking over.

The socialist takeover isn’t slowing down. It’s accelerating, and every safe-district Democrat in Congress now has to answer to it. And now Republicans have been handed an opening most political parties only dream of. “That’s what the left is putting out. It’s these radical leftists that are being elected. They’re being inspired by Mamdani, AOC, Bernie Sanders. They’re running all across the country, and the only good news is in a lot of these districts where it’s actually competitive districts. If they’re putting up these radicals, we’re getting a lot of favorable matchups,” RNC Chairman Joe Gruters said on Newsmax. “It’s the mainstream. This is what’s happened to their Party. They’ve gone so far to the left. This is normal. But the people are going to reject this at the polls.”

Gruters argues the math looks really good for the GOP. “There’s 18 toss-up seats,” he pointed out. “We’re at 212. I think we have a chance to defy history and win these midterms. It’s because the left has gone so far to the left. It’s really the choices are crazy versus normal, and what do people want?”

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”IDEOLOGY: Capitalism is bad. Law enforcement are pigs. Policy should support emotions. The collective should rule every decision.”

• ‘Occupy Wall Street’ Now Officially Controls the Democrat Party (CTH)

It did not happen last night folks. It took them another 15 years after they installed Obama to become the legitimate heirs to the political party formerly known as Democrats.mThe progressive movement is now branded as “Democrat Socialists of America” (DSA), but those who have followed the arc of this group well understand every single member within DSA is from the Occupy Wall Street / Anarchy movement that preceded it. Fingers are being pointed toward New York as the epicenter of the new Democrat Party Headquarters of DSA, which is a fitting location of focus given the OWS origin.


The front line of the DSA movement consists of 18 to 30-year-olds, mostly white, urban, upper-middle-income activists, carrying Macbooks with anarchist stickers and physical attire resembling a blend of hipster ‘grunge’ and skateboard beanie resistance. They don’t shower much and love to talk about AOC and Bernie on Social Media. Don’t belittle them, they are authentic. They don’t misunderstand things; they bought into the nonsense and genuinely believe the popular narrative sold to them since High School that capitalism is horrible and Communism or Socialism is the preferred system of government.

Individually, not one of them would shed a tear if their collective comrades broke into their parent’s houses tomorrow and murdered the elders. When joined in group assemblies, their emotions are controlled by the sensibility of the group. This is the Mao generation, repeating and rhyming. IDEOLOGY: Capitalism is bad. Law enforcement are pigs. Policy should support emotions. The collective should rule every decision. Democrat socialists believe all dissent must be squashed unless they actually lose a popular election – then, the system is oppressing them. Speech that argues against their belief system is ‘violence’. However, violence that supports their belief system is ‘speech’.

Democrat Socialists of America are factually Occupy Wall Street activists. The traditional mechanisms of self-controlling morality do not apply to this group of generational ideologues. The haves -vs- have nots is their religion. They never cede power and elections do not remove them. Go look at history, the only thing that has ever stopped Socialism is physical violence. You may have read the stories of multi-billionaires building bunkers. The predictable DSA is why. People who say, “violence is not the answer” are pretending they don’t know history.

POLITICO – […] Fresh off sweeping victories across New York City that showcased the growing power of the anti-establishment progressive left inside the Democratic Party, Democratic Socialists of America leaders, eager to capitalize on their momentum, are already plotting their next act: making sure one of their own is on the presidential primary debate stage, whether the party wants them or not. “What DSA represents is a real contrast to Democrats who have run the last couple of elections on fear,” DSA national co-chair Megan Romer said. “You can’t run on that. You have to offer an alternative. And it’s really important that we be involved in that conversation in 2028. It’s important that we have somebody saying sensible things.”

Their search process is already underway. This summer, DSA is dispatching surveys to all 250 of its chapters, asking members to weigh who they want to back and why, and return their findings to national leadership by Sept. 15, details the group first shared with POLITICO. DSA expects to receive a stack of 20-page to 40-page dossiers from chapters coast to coast weighing in on who should carry the democratic socialist banner into 2028.The organization plans to hold national discussions, including with leaders like New York Mayor Zohran Mamdani and Sen. Bernie Sanders (I-Vt.), who is 84 and not expected to run in 2028, with a formal vote expected at the group’s 2027 convention next year — though leaders say they could move faster if the primary timeline demands it.

“We’re going to be talking about millions of hours knocking doors for 2028 — so when we decide to really run somebody, people have to feel like they had a say,” Romer said. Mamdani-backed candidates swept three closely watched New York congressional primaries Tuesday, with Claire Valdez, Brad Lander and Darializa Avila Chevalier all defeating more establishment-aligned rivals — including two incumbents. It was a major show of force for Mamdani’s political operation, and fresh evidence of the left’s growing muscle heading into 2028. “They ask, ‘Who do you want to run in 2028?’ Then they ask, ‘When does the race for 2028 begin?’ It starts now. It starts on Tuesday,” Mamdani said at a Brooklyn rally last week.

The elephant in the room for the group, of course, is Rep. Alexandria Ocasio-Cortez.

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Jerry Nadler, George Conway et al, as in: The anti-Trump field.

“JFK’s grandson Jack Schlossberg fails to advance in election to replace Jerry Nadler in Manhattan district. “

• Mamdani-backed Candidates Sweep Democratic Primaries In NYC (Guardian)

Zohran Mamdani’s growing influence over the Democratic party was on show in New York City on Tuesday as three congressional candidates endorsed by New York’s democratic socialist mayor won closely watched primaries, while voters in Maryland, Utah and South Carolina cast ballots in primaries and runoffs.Brad Lander, the former New York City comptroller who also ran for mayor last year before endorsing Mamdani, won his race comfortably, defeating the Democratic representative Dan Goldman.


Another Mamdani ally, Claire Valdez, a state lawmaker and former union organizer, defeated Antonio Reynoso, the preferred successor of retiring Democratic Representative Nydia Velázquez in New York’s seventh district, encompassing parts of Brooklyn and Queens. And in a stunning upset, the public defense investigator Darializa Avila Chevalier toppled Representative Adriano Espaillat, the powerful five-term incumbent who chairs the Congressional Hispanic caucus, in the state’s diverse 13th congressional district, which covers Upper Manhattan and parts of the Bronx.

“What a glorious time to be a New Yorker,” Lander declared at this election night party in Brooklyn, where he was joined by the mayor. Mamdani then appeared at a watch party for Valdez, where he told a jubilant crowd: “The old politics that got us into this crisis is not the politics that’s going to get us out of this crisis.” It was a clean sweep for Mamdani, who waded into the House primaries earlier this year, spending his political capital to boost three leftwing allies – a gamble that would test his popularity and his influence. With his slate of candidates all but certain to be elected to Congress in November, Mamdani has left his stamp on the state’s congressional delegation and expanded his ascendant progressive movement.

Elsewhere in the city, Jack Schlossberg, the grandson of John F Kennedy, was unsuccessful in his bid to revive the political legacy of the US’s most vaunted political family. In a House race that attracted outsized national attention, Schlossberg, 33, had hoped to parlay his huge social media presence and charisma into a Congressional seat, but he came up short in a crowded field of Democrats hoping to succeed the long-serving representative Jerry Nadler. Micah Lasher, a longtime New York politician and self-described “nerd”, won the primary in New York’s 12th district, a deep-blue district whose voters tend to identify as liberal rather than left-wing.

The race also included the prominent anti-Trump critic George Conway and state assembly-member Alex Bores, whose candidacy became the fulcrum for what observers described as an “AI civil war”. Lasher will be the heavy favorite to win the safely Democratic district in the November midterm election. Late on Tuesday night, Queens-born Donald Trump celebrated the defeat of both Goldman and Conway in a pair of social media posts. “Weak and pathetic Congressman Dan Goldman just lost, BIG! I guess people didn’t like him illegally targeting President TRUMP,” the president said of the congressman, who served as the lead counsel to House Democrats during the Trump’s first impeachment. Of Conway, whose ex-wife was a top adviser to the president during his first term, Trump gleefully predicted that he would “end up at about 5% of the vote in a rather weak field of young and aggressive Communists”.

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UK: No

US: Trump is doing it.

• Can Anyone Govern Britain — Or America? (Daniel McCcarthy)

As Britain gets ready for its seventh prime minister in just 10 years, it’s time to ask whether the parliamentary system itself is broken. That might explain not only why landslide election victories don’t translate into stable leadership in Britain but also why America’s Congress is so feckless. Is representative government an idea whose time has passed? In Europe as well as America, leftists prefer that judges and bureaucrats wield permanent power, as supposedly impartial experts who know best how to stop the weather from changing and how many genders there are.


Britain’s Labour party started out as a vehicle for the working class, in theory. It was closely connected to the country’s major industrial unions — but Britain in the 21st century has lost most of its hard industry, and Labour is now led by the same kind of socially left-wing, technocratic wonks that make up the “inner party” of the Democrats in this country. Brexit, passed by the British people in a referendum 10 years ago this week, proved Labour had lost the working class — the party elite favored remaining in the European Union, but working-class voters themselves cast their ballots for “leave.”

Unfortunately, the Conservative party’s elite also favored “remain” — Prime Minister David Cameron himself did, and losing the Brexit referendum compelled him to resign. Yet Cameron was followed by another Conservative PM, Theresa May, who had also been a remainer. It took a third Tory PM, Boris Johnson, to follow through on the voters’ mandate, but Johnson proved to be Britain’s Joe Biden where immigration was concerned, unleashing the “Boriswave” of mass migration, which flooded Britain with some 4 million newcomers from places like India, China, Pakistan and Nigeria.

Personal scandals forced Johnson from office before the scale of the damage his policies did came to light — but bond markets didn’t tolerate Johnson’s successor, Liz Truss, for long. That left Rishi Sunak to lead the Conservatives in 2024 to their first general election defeat in 14 years. In that time, Conservatives had given Britain same-sex marriage, bigger government, deeper debt, more green-energy regulation and record-high immigration. Labour more than doubled its number of seats in Parliament with Keir Starmer leading the party into the election, yet the landslide didn’t translate into any mandate for him.

His popularity soon slid and polls indicated the Reform party would win the next election, making Nigel Farage prime minister. Labour is now gambling its problems are personal, not political, and once Starmer has made way for a new PM — virtually certain to be Andy Burnham — its majority will be salvageable. Burnham is even more left-wing than Starmer: at least as far left on social issues and even more enthusiastic about nationalizing industry. Farage is wagering Starmer wasn’t the millstone around Labour’s neck — the party’s politics are.

But even as traditional parties of the left and right elsewhere in Europe have decayed in ways much like those of Britain’s Tories and Labour, new populist parties have struggled to win and maintain power. Farage has to contend not only with Labour and what’s left of the Conservatives, but also with a small but vociferous insurgency to his right, the Restore party. All this suggests Burnham or Farage can’t count on enjoying a tenure longer than Starmer’s or Sunak’s. Parliamentary elections haven’t produced a stable British government by anyone in the last 16 years. What are the odds the next election, which has to be held by August 2029, will do so? [..]

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“Trump is also asserting that Iran will allow IEAE inspectors in, something the Islamic Republic is also vehemently rejecting.”

• Brent Falls To Pre-War Levels (ZH)

Brent crude oil prices fell below $75 a barrel late yesterday, marking the first time the global benchmark has traded under that level since the outbreak of the Trump-initiated Iran conflict. The drop in crude prices could provide relief for consumers and businesses by easing pressure on fuel costs and inflation, a desired Washington outcome of the MoU signing – for which Trump has come under severe criticism from hawks at home. Speaking of escalating, we have another early morning Trump Truth Social statement, openly contradicting the consistent stated position of Tehran leaders.


Since the Switzerland high level talks led by Vance, there’s been a series of issues where Tehran and Washington have issued clearly contradictory statements. Trump says in the fresh statement that Iran informed the United States that there would be “NO TOLLS, NO INSURANCE COSTS, & NO OTHER CHARGES OF ANY KIND” imposed on vessels traveling through the strategic waterway. Trump as is typical criticized media reports that had suggested Iran could seek payments from ships using the route, calling such coverage “Fake News.” He added that if the information provided by Iran proved inaccurate, ongoing negotiations between the two sides would end “immediately.”

The president also denied reports that the United States had provided funds directly to Iran or released Iranian assets without conditions. “No money has been given to Iran, or released from their money to them, by the U.S.,” he said. However, Trump stated that Washington plans to make some Iranian funds available for agricultural purchases. According to the president, the money would be used to buy US farm products, including “Corn, Wheat, Soybeans, and more.” But Iranian leadership has vehemently rejected this narrative too.

“Food is desperately needed in Iran,” Trump said, adding that the purchases would be made “exclusively from the United States. The Strait of Hormuz remains one of the world’s most important energy shipping routes, and any disruption or additional costs imposed on vessels passing through the channel could have significant implications for global trade and oil markets. It is officially ‘open’ in the wake of the MoU signing – but the next few days and weeks will be telling.Meanwhile, some new developments on the Hormuz opening front, and Qatar LNG:

Qatar’s prime minister said establishing a hotline between the US and Iran is essential to prevent rogue actors impeding the reopening of the Strait of Hormuz, as he predicted that the Gulf state would resume normal liquefied natural gas production “within a few weeks”. –FT. Trump is also asserting that Iran will allow IEAE inspectors in, something the Islamic Republic is also vehemently rejecting.

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Exactly like the old Lou Reed tune:

They’re never early, they’re always late.

First thing you learn is that you always gotta wait.

• ‘Customers Are Being Gouged’: Trump Tells DOJ To Look Into Gasoline Prices (ZH)

President Trump said on Wednesday that he had instructed the Department of Justice (DOJ) to open an investigation into oil companies over high gasoline prices. In a Truth Social post, Trump said that oil companies have not lowered their prices at the pump despite a recent decline in crude prices following the U.S.–Iran preliminary agreement. “Those prices are dropping like a rock! In other words, customers are being ‘gouged,’” he said. “Gasoline prices better start going down a lot faster than what I’m seeing!” Brent crude futures fell below $75 per barrel on Wednesday (back near pre-war levels), while U.S. West Texas Intermediate futures dropped to $72.29, amid the resumption of shipping traffic in the Strait of Hormuz.


Bloomberg’s energy guru, Javier Blas, remarked after President Trump’s post: “US President Trump, all political theatre, has just discovered the refining (and marketing) margin.” The national average price for regular gasoline stood at $3.93 per gallon on June 23, according to the American Automobile Association (AAA), down from $4.04 the previous week. The gas price was $4.53 per gallon a month ago. Of course, given the supply/refinery chain, it takes time (two weeks) for crude prices to ripple through to pump prices… AAA said it observed that gas prices remain above the levels before the conflict with Iran erupted in February.

The national average price for regular gas was $2.98 on Feb. 28, the day when the United States and Israel launched military operations against Iran, triggering the war. “Getting prices back down to prewar levels will take longer because of the time it takes to resume shipping and production,” Marie Dodds, public affairs director for AAA Oregon/Idaho, said in a statement. As Aldgra Fredly reports for The Epoch Times, US and Iran signed a memorandum of understanding last week to end the war. Under the agreement, the Strait of Hormuz would be fully reopened, and Tehran would not procure or develop a nuclear weapon. The United States also agreed to waive sanctions on Iranian oil for 60 days.

U.S. Secretary of Energy Chris Wright told ABC News on June 21 that commercial shipping traffic through the Strait of Hormuz had returned to normal levels, and that Americans should expect further declines in oil, gasoline, and other energy prices as traffic resumed. “Flows of oil and natural gas through the straits have already returned to normal, and they will continue that way whatever happens with the negotiations with the Iranians,” he said.

Arsenio Dominguez, secretary-general of the International Maritime Organization, said on June 23 that more than 11,000 seafarers stranded in the region due to war would be evacuated under a coordinated effort with Iran, Oman, other coastal states in the region, the United States, and the maritime industry following the U.S.–Iran preliminary deal. “We have secured the necessary safety guarantees and have thoroughly verified the conditions for safe navigation to support these operations,” Dominguez said in a statement. Iran had previously blocked traffic in the Strait of Hormuz—a critical waterway through which a significant share of global oil and gas shipments passes—in response to the U.S. and Israeli attacks on its nuclear and military sites.

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“Frontier AI models are anticipated to exceed current industry expectations, fundamentally transforming both offensive and defensive cyber capabilities.”

• An AI Cyber Apocalypse Is ‘Months, Not Years’ Away, Five Eyes Warns (Moran)

The Five Eyes intelligence group, comprising the United States, United Kingdom, Canada, Australia, and New Zealand, is warning governments and corporations that AI models capable of launching devastating cyber attacks that could overwhelm their defenses are months, not years away. They are urging nations and companies to “act now” to improve cyber defenses.


This is a highly unusual warning from the normally circumspect intelligence group. The Five Eyes alliance typically operates with deep, classified sharing. They do not issue public joint statements lightly. When they align to release a unified message directly to the public and business leaders, it signals that the threat landscape has shifted in a way that regular, incremental IT adjustments cannot handle. In short, Five Eyes doesn’t do “hype.” When it releases a joint warning, it’s to alert governments and corporations to a real, imminent threat.

Usually, the group’s intelligence warnings paint a picture of cybersecurity risks across a multi-year window. This warning explicitly breaks from that convention, shifting the perspective from years to just “months.””While AI will help us improve cyber defense over time, it also accelerates the speed, scale, and sophistication of cyber threats,” the group notes. “Frontier AI models are anticipated to exceed current industry expectations, fundamentally transforming both offensive and defensive cyber capabilities. The timeline is not years; it is months.”

The writing has been on the wall for the last few months regarding an increase in urgency in the potency and capabilities of newer AI models. For instance, earlier this month, the U.S. government took the unusual step of ordering the AI startup Anthropic to suspend access to its powerful Mythos and Fable 5 models for foreign nationals. Policymakers expressed severe national security concerns that these specific models possess unprecedented capabilities to independently identify code vulnerabilities, potentially resulting in a “vulnerability tsunami” if misused by hostile actors.

From the Five Eyes Statement:

Cyber risk can no longer be treated as a purely technical issue. This is a core business risk and leadership responsibility. Boards and executives should ensure cyber resilience is in place and works under pressure. It is not enough to have controls. Leaders must be confident those controls will perform during a real incident. This requires reassessing long-standing trade-offs and using AI deliberately to strengthen defense – not just improve efficiency.

Core principles:
• Secure-by-design and secure-by-default must become standard practice not an aspiration.
• Resilience cannot depend on a single solution or technology.Defense in depth remains essential.
• As AI systems evolve, new and previously unknown vulnerabilities will emerge, including zero day vulnerabilities.
• Breaches will occur. Preparedness helps you contain them quickly and prevent escalation into major operational and financial crises.

Rather than targeting IT administrators with technical alerts, it directly holds boards and corporate executives accountable, framing AI-driven cyber risk as a fundamental threat to business continuity and trust. It demands that leaders move past treating cybersecurity as an IT standalone department and actively use AI defensively to outpace adversaries.”

“What it was saying is that in an age of AI, breaches will occur. It’s not a matter of if, but when, so it’s important to get prepared now,” Olivia Shen, director of the Strategic Technologies Program at the University of Sydney, told CNN. “Sophisticated businesses, usually your large corporations, they already invest in cybersecurity, and they’ll be better prepared,” Shen said. “The ones who are more exposed will be those small and medium-sized businesses who maybe have under invested so far, and they’ll basically be like sitting ducks.”

The speed with which these cyber threats are materializing is putting a damper on some efforts to place significant guardrails on AI. This month, several dozen cybersecurity researchers, AI entrepreneurs, and corporate executives signed an open letter urging the Trump administration to commit to “an open, scientific and transparent process of handling AI risk assessments” and said it was “essential” for security teams to “find and fix flaws in their own newly-written as well as decades of legacy code faster than our adversaries.”

“We know these technologies can be used for both defensive and offensive purposes, and we need a few more guardrails about how we can maximize the benefits for defensive cyber security, while gate keeping it away from potential cyber adversaries and scammers and cyber criminals,” Shen said. When the first major breaches happen, perhaps then we’ll get more serious about the speed with which AI development is outpacing our ability to adequately control it.

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Drones.. US lags behind.

• US To Set Up Testing Ranges Mimicking Ukraine Battlefield (RT)

The US will set up at least two domestic testing ranges that mimic battlefield conditions in Ukraine, Army Secretary Dan Driscoll said on Tuesday. Driscoll said defense contractors will have access to the sites, where the Army and industry “can start to do much more aggressive testing,” according to DefenseScoop. The US has been struggling to keep pace with rapidly evolving drone technology used extensively by both Russia and Ukraine. “You can have a kind of electronic warfare and all of the contested environment created, and you can have drone manufacturers and counter-drone tool-builders engaging together,” Driscoll told reporters at an Army-hosted industry event.


“Then, we also want soldiers to be able to go there so that they can strengthen their skills and work hand-in-hand with developers,” he added. According to the Washington Post, the Pentagon is actively seeking companies capable of producing 300,000 low-cost kamikaze drones and is prepared to spend $54.6 billion next year on an expanded drone warfare program. The widespread use of surveillance and attack drones in the Ukraine conflict has created vast ‘kill zones’ along the front line, with both sides using UAVs to repel mechanized assaults and carry out strikes deep inside enemy territory. Russian Deputy Prime Minister Denis Manturov said earlier this month that domestic companies now have the capacity to produce more than 15,000 FPV drones per day, up from around 15,000 per month in 2023.

Moscow has warned that Western supplies of drone technology and other weapons to Kiev make NATO a de facto participant in the conflict and risk further escalation. Ukraine frequently uses drones to strike civilian targets. Last month, UAVs destroyed a college dormitory in Starobelsk, Russia, killing 21 students. On June 3, a Ukrainian drone struck a commuter bus in Enakievo, killing eight passengers. Two weeks later, a drone hit a bus carrying a youth football team from Belarus near the Russian village of Nelzhichi, killing a pregnant woman and injuring eight people, including six children.

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“Washington wants to expand weapons production after reportedly depleting key stockpiles in the Iran war and Ukraine”..

• US Carmakers Could Produce Missiles – Trump (RT)

US automakers could begin producing missiles and other weapons as Washington moves to expand military output and replenish its arsenals, President Donald Trump has said. Speaking to reporters at the White House on Monday, Trump said car companies with spare factory capacity are discussing deals to manufacture weapons, including Patriot air-defense missiles and Tomahawk cruise missiles. ”They’re dealing with General Motors. They’re dealing with Ford,” Trump said. “I know General Motors is all excited about building weapons now.”


He added that some plants belonging to the two carmakers are expected to be converted to military production, describing the shift as part of a “big strong economic push” to produce arms. His remarks come after the Wall Street Journal reported in April that the Pentagon had approached General Motors, Ford, GE Aerospace, and Oshkosh about retooling civilian factories to produce munitions and other military equipment. The talks were reportedly part of an effort to put US industry on what Defense Secretary Pete Hegseth has called a “wartime footing,” echoing the World War II-era conversion of Detroit factories to military production.

The push comes amid mounting concern over the state of US weapons stockpiles after years of arms deliveries to Ukraine under former President Joe Biden and heavy missile use during the recent US-Israeli war against Iran. US media and think-tanks have warned that Washington burned through large quantities of critical munitions during the Iran campaign, including Tomahawk cruise missiles, Patriot interceptors, THAAD missiles, and other advanced systems.

Reuters has also reported that depleted inventories could delay US arms deliveries to fellow NATO members. Trump has downplayed shortage concerns, saying the US has “quite a few” missiles but wants to keep larger reserves. His administration has requested a record military budget of around $1.5 trillion for the 2027 fiscal year, with much of the increase expected to go towards replenishing stockpiles and expanding production.

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“..psychology as a field is a tool of white power..”

• Journal Under Fire for Retracting Article Challenging Claims of Racism (Turley)

We have previously discussed academic journals canceling publications that challenge the orthodox views of mainstream scholars. The latest such example can be found in the Journal of the New Zealand College of Clinical Psychologists, which pulled the 2025 article of Arna Mitchell who questioned claims that psychology as a field is a tool of white power. The editors reportedly declared that such conclusions are inconsistent with the publication’s values.


Dr. Kumari Valentine, a psychologist and former editor of the journal, wrote an article raising concerns over the retraction: The reason given for the removal was not research fraud, plagiarism, ethical misconduct, or factual error. Rather, the NZCCP Council determined that retaining the article was inconsistent with the values of the College and could perpetuate harm to Maori. The article, He Wero Ano: Don’t Just Tell Me, Show Me How Science and Psychology Are Racist in New Zealand, took issue with the broad, unsubstantiated claims of systemic racism in psychology across all levels of the discipline, including that science itself is a social construct of white Europeans and white power.

Mitchell, a Maori woman herself, also took issue with the view that tribal ways of knowing should be given equal weight to scientific ways of knowing in the training and practice of psychologists in New Zealand. One would think that such a viewpoint, particularly from a Maori woman, would, at a minimum, be welcomed as a provocative and interesting perspective. However, various readers were less interested in reading it or even responding to it. They campaigned to cancel it.

Some did respond, saying they felt the critique was based on a misunderstanding of Kaupapa Maori psychology. That should also be a welcome perspective in allowing a free exchange of viewpoints on the subject. Some faculty have cried foul, calling the cancellation raw censorship. This is reminiscent of the controversy at the Emory Law Journal and the firing of an editor at JAMA. These controversies are a reflection of the viewpoint intolerance that has taken hold of much of academia, supporting groups, and journals.

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Nice pair.

• Investigation Launched Into Von der Leyen Over Secret Chat With Zelensky (TASS)

European Ombudsman Teresa Anjinho has launched an investigation into European Commission President Ursula von der Leyen over a secret chat involving German Chancellor Friedrich Merz, French President Emmanuel Macron, Italian Prime Minister Giorgia Meloni, British Prime Minister Keir Starmer, and Vladimir Zelensky, the Berliner Zeitung newspaper reported. Anjinho notified the European Commission of the investigation last week. She is examining whether the EC violated transparency rules by refusing to grant the Dutch organization Follow the Money (FTM) access to the correspondence.


The European Commission justified its refusal by stating that publishing the chat data could “complicate the international relations of the European Union (and its member states) with third countries.” “I have decided to launch a probe into the European Commission’s actions regarding the applicant’s request in accordance with EU regulations concerning public access to documents,” Anjinho wrote to the FTM organization. She expects to meet with EC representatives by mid-July.

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Places are hot that were not built for it. 40 people drowned in France alone in a few days.

• Sweltering Heat As Europe Heatwave Spreads (BBC)

France is bracing for another day of exceptionally hot weather, with more than half the country remaining under a red heat alert on Wednesday. Tens of thousands of homes have been left without power in western Brittany, while a major wildfire was brought under control overnight in the Maine-et-Loire region. It comes after the country experienced its hottest June day since records began on Tuesday, with an average temperature of 29.8C (85.54F) recorded.


The heatwave is expected to spread to other parts of western Europe on Wednesday, with an orange alert for dangerous weather in place for parts of the Netherlands. Temperatures are expected to peak in the Netherlands and Belgium on Friday, while Germany is expected to see the mercury rise to 40C (104F) over the weekend. The heatwave is also expected to spread to eastern Europe over the next few days, with severe heat warnings issued for countries including Poland, Croatia and Hungary for later in the week.

So far, France, Spain and Italy have been hardest hit by the heatwave. Forty people have drowned in heatwave-related incidents in France since last Thursday, according to the prime minister.

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M.C. Escher Dream 1935


• Iran Calls MoU Deal A ‘US Defeat’ (ZH)
• Trump Threatened Netanyahu With ‘Divorce’, NYT Reporters Say In New Book (RT)
• The Democrat Party Is Dead (Matt Margolis)
• ‘Occupy Wall Street’ Now Officially Controls the Democrat Party (CTH)
• Mamdani-backed Candidates Sweep Democratic Primaries In NYC (Guardian)
• Can Anyone Govern Britain — Or America? (Daniel McCcarthy)
• Brent Falls To Pre-War Levels (ZH)
• ‘Customers Are Being Gouged’: Trump Tells DOJ To Look Into Gasoline Prices (ZH)
• An AI Cyber Apocalypse Is ‘Months, Not Years’ Away, Five Eyes Warns (Moran)
• US To Set Up Testing Ranges Mimicking Ukraine Battlefield (RT)
• US Carmakers Could Produce Missiles – Trump (RT)
• Journal Under Fire for Retracting Article Challenging Claims of Racism (Turley)
• Investigation Launched Into Von der Leyen Over Secret Chat With Zelensky (TASS)
• Sweltering Heat As Europe Heatwave Spreads (BBC)

 


 

https:/twitter.com/Adams_Tech_AI/status/2069412440140325371?s=20

 


 


The more they give in, the stronger their claims.

• Iran Calls MoU Deal A ‘US Defeat’ (ZH)

“The war is going very well. As you know, we’re winning by a lot. Iran is making very big concessions,” Trump told reporters at the Capitol. “We’ll see what happens — but it has been very, very, very powerful,” the US President added. Tehran has remained insistent it never agreed to allow nuclear inspector access, and that the Strait of Hormuz is opening on its terms. Meanwhile, the latest on the Lebanon tenuous ceasefire and crisis:


Tehran Provokes Trump: Deal to End War a ‘Declaration of US Defeat’. The post-war narrative battle between Washington and Tehran intensified Wednesday after Iranian Parliament Speaker Mohammad Bagher Ghalibaf claimed the recently signed Islamabad Memorandum of Understanding (MoU) – and confirmed in Switzerland – amounted to nothing less than a US capitulation. Speaking in Baku during a gathering of parliaments from member states of the Organization of Islamic Cooperation (OIC), Ghalibaf argued that the agreement validated Iran’s long-held position that negotiations only succeed when foreign powers abandon coercion and recognize the Islamic Republic’s rights.

“The Islamabad memorandum of understanding became a declaration of the US defeat,” Ghalibaf said. The remarks underscore the widening disconnect between how Washington and Tehran are portraying the agreement. While the Trump administration has presented the MoU as evidence that its pressure campaign forced concessions from Iran, Iranian officials continue to frame the deal as proof that the United States ultimately backed away from attempts to dictate terms.

Ghalibaf further suggested that the agreement demonstrated dialogue can only produce results when the opposing side ceases efforts to impose its will and instead accepts Iran’s sovereign rights. Iran has lately stated that it asserted its red lines through ‘action’.

Energy Secretary: 72 Ships Have Exited Strait in Last Day
Several vessels have already navigated the Strait of Hormuz utilizing a fresh evacuation framework established by the United Nations’ shipping agency, an official confirmed on Wednesday. More via newswires:US Energy Secretary Wright says roughly 72 ships have exited Strait of Hormuz in last 24 hours. “Ships have already begun to pass under the plan,” stated a spokesperson for the UN’s International Maritime Organization (IMO), though they opted not to disclose specific details regarding the transiting vessels.

According to the latest LSEG ship-tracking data Wednesday, at least two dry bulk carriers and one cargo vessel successfully crossed the strait under the new program within a 12-hour window. An additional analysis of ship movements by Reuters, utilizing data from LSEG and MarineTraffic, indicated that at least 35 other commercial vessels – primarily dry bulk, cargo, and container ships – are gearing up to make the passage. Brent crude oil prices fell below $75 a barrel late yesterday, marking the first time the global benchmark has traded under that level since the outbreak of the Trump-initiated Iran conflict. The drop in crude prices could provide relief for consumers and businesses by easing pressure on fuel costs and inflation, a desired Washington outcome of the MoU signing – for which Trump has come under severe criticism from hawks at home. Speaking of escalating, we have another early morning Trump Truth Social statement, openly contradicting the consistent stated position of Tehran leaders.

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“The US president reportedly said “all the Jews” are tired of the Israeli prime minister..”

• Trump Threatened Netanyahu With ‘Divorce’, NYT Reporters Say In New Book (RT)

US President Donald Trump claimed that “all the Jews” are tired of Benjamin Netanyahu and threatened the Israeli prime minister with “divorce” between the close allies during a phone call, according to a new book by New York Times journalists Maggie Haberman and Jonathan Swan. The account comes from ‘Regime Change: Inside the Imperial Presidency of Donald Trump’, excerpts of which were cited by media outlets on Tuesday. The heated exchange reportedly took place in September 2025, when Trump was pushing Israel to accept his peace plan for Gaza. He spoke with Netanyahu in the presence of US presidential envoy Steve Witkoff and his son-in-law, Jared Kushner.


“Everybody’s sick of you, Bibi. All the Jews are sick of you. Even the two Jews on this call are sick of you,” Trump reportedly told Netanyahu, according to the Times of Israel. “Everybody hates you, and I’ve stood by you,” Trump said, warning that Israel’s refusal to accept the deal would result in “a divorce” between the countries, according to The Independent. Trump and Netanyahu praised their close cooperation during the opening weeks of the US-Israeli war against Iran, which was launched on February 28. Trump became increasingly critical of Israel as efforts to subdue Iran faltered and peace talks stalled.

Trump condemned Israeli strikes in Lebanon after Iran threatened to pull out of negotiations, at one point arguing that Netanyahu has “no f**king judgment” and reportedly calling him “f**king crazy.” According to the Washington Post, US intelligence agencies recently warned Trump that Netanyahu is likely to attempt to undermine efforts to secure a lasting peace with Iran. Both leaders have faced criticism at home, with opponents arguing that the interim agreement signed by the US and Iran last week failed to achieve their stated war aims.

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The system makes the Dems live on as zombies. You need two parties, and it’s -practically, not theoretically- impossible to add a third one.

• The Democrat Party Is Dead (Matt Margolis)

New York just gave America a preview of who’s actually running the Democrat Party, and it isn’t Hakeem Jeffries. On Tuesday, all three socialist candidates endorsed by socialist Mayor Zohran Mamdani swept their targeted congressional primaries. Three races, three wins, zero exceptions. Three Democrat incumbents in safe districts all lost. “Their positions are some of the most extreme & far left Dems have seen,” Fox News correspondent Bill Melugin said on X. Trust me, he’s not exaggerating.


Darializa Avila Chevalier took NY-13 on a platform built around abolishing prisons, abolishing ICE, abolishing borders, defunding the police, and opposing the deportation of every illegal immigrant, including violent criminals. Claire Valdez won NY-7, promising citizenship and voting rights for people who broke into this country illegally, taxpayer-funded transgender medical treatments, and the elimination of private health insurance for every American. These aren’t fringe positions anymore. They’re the new mainstream of the Democrat Party, and voters in these districts chose them enthusiastically.


And no Democrat is safe. Just look at NY-10, where Brad Lander demolished Rep. Dan Goldman, grabbing nearly 65% of the vote. Goldman was one of the loudest anti-Trump voices in Congress, and he led impeachment efforts against President Trump. None of that mattered. His support for Israel and his refusal to endorse Mamdani are the reasons he lost. Lander, meanwhile, ran on abolishing ICE, forgiving almost $2 trillion in student loans, and packing the Supreme Court.= That’s the candidate Democrat primary voters preferred over a guy who spent years trying to remove Trump from office.

The Democrat establishment knows exactly what happened, and it’s terrified. “Tonight wasn’t just a bad night for so-called ‘Leader’ Hakeem Jeffries. It was the night the Democrat establishment officially surrendered to Zohran Mamdani and the socialist wing of their party,” NRCC spokesman Mike Marinella said in a statement. “Every House Democrat, in safe and competitive districts alike, will now answer to the radicals calling the shots. And Americans should be terrified by where the Democrat Party is headed.” Even CNN’s Van Jones couldn’t spin his way out of this one. “This is a battle between the establishment and this insurgency,” Jones said. “And the roof is collapsing on the Democratic party establishment tonight.”

Here’s the reality nobody on the left wants to say out loud: the Democrat Party as it existed even a few years ago is finished. The socialist wing didn’t build a new party from scratch. It crawled inside the old one and took it over from the inside, like the zombie fungus controlling a dead ant. The Democrat Party is the corpse. The Socialist Party is what’s controlling it now. This should terrify the establishment because it makes it impossible to keep hiding what the party has become. This is going to terrify independent voters, who are watching candidates run on abolishing borders and prisons while still calling themselves Democrats. They’ll have no choice but to vote Republican to stop the radicals from taking over.

The socialist takeover isn’t slowing down. It’s accelerating, and every safe-district Democrat in Congress now has to answer to it. And now Republicans have been handed an opening most political parties only dream of. “That’s what the left is putting out. It’s these radical leftists that are being elected. They’re being inspired by Mamdani, AOC, Bernie Sanders. They’re running all across the country, and the only good news is in a lot of these districts where it’s actually competitive districts. If they’re putting up these radicals, we’re getting a lot of favorable matchups,” RNC Chairman Joe Gruters said on Newsmax. “It’s the mainstream. This is what’s happened to their Party. They’ve gone so far to the left. This is normal. But the people are going to reject this at the polls.”

Gruters argues the math looks really good for the GOP. “There’s 18 toss-up seats,” he pointed out. “We’re at 212. I think we have a chance to defy history and win these midterms. It’s because the left has gone so far to the left. It’s really the choices are crazy versus normal, and what do people want?”

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”IDEOLOGY: Capitalism is bad. Law enforcement are pigs. Policy should support emotions. The collective should rule every decision.”

• ‘Occupy Wall Street’ Now Officially Controls the Democrat Party (CTH)

It did not happen last night folks. It took them another 15 years after they installed Obama to become the legitimate heirs to the political party formerly known as Democrats.mThe progressive movement is now branded as “Democrat Socialists of America” (DSA), but those who have followed the arc of this group well understand every single member within DSA is from the Occupy Wall Street / Anarchy movement that preceded it. Fingers are being pointed toward New York as the epicenter of the new Democrat Party Headquarters of DSA, which is a fitting location of focus given the OWS origin.


The front line of the DSA movement consists of 18 to 30-year-olds, mostly white, urban, upper-middle-income activists, carrying Macbooks with anarchist stickers and physical attire resembling a blend of hipster ‘grunge’ and skateboard beanie resistance. They don’t shower much and love to talk about AOC and Bernie on Social Media. Don’t belittle them, they are authentic. They don’t misunderstand things; they bought into the nonsense and genuinely believe the popular narrative sold to them since High School that capitalism is horrible and Communism or Socialism is the preferred system of government.

Individually, not one of them would shed a tear if their collective comrades broke into their parent’s houses tomorrow and murdered the elders. When joined in group assemblies, their emotions are controlled by the sensibility of the group. This is the Mao generation, repeating and rhyming. IDEOLOGY: Capitalism is bad. Law enforcement are pigs. Policy should support emotions. The collective should rule every decision. Democrat socialists believe all dissent must be squashed unless they actually lose a popular election – then, the system is oppressing them. Speech that argues against their belief system is ‘violence’. However, violence that supports their belief system is ‘speech’.

Democrat Socialists of America are factually Occupy Wall Street activists. The traditional mechanisms of self-controlling morality do not apply to this group of generational ideologues. The haves -vs- have nots is their religion. They never cede power and elections do not remove them. Go look at history, the only thing that has ever stopped Socialism is physical violence. You may have read the stories of multi-billionaires building bunkers. The predictable DSA is why. People who say, “violence is not the answer” are pretending they don’t know history.

POLITICO – […] Fresh off sweeping victories across New York City that showcased the growing power of the anti-establishment progressive left inside the Democratic Party, Democratic Socialists of America leaders, eager to capitalize on their momentum, are already plotting their next act: making sure one of their own is on the presidential primary debate stage, whether the party wants them or not. “What DSA represents is a real contrast to Democrats who have run the last couple of elections on fear,” DSA national co-chair Megan Romer said. “You can’t run on that. You have to offer an alternative. And it’s really important that we be involved in that conversation in 2028. It’s important that we have somebody saying sensible things.”

Their search process is already underway. This summer, DSA is dispatching surveys to all 250 of its chapters, asking members to weigh who they want to back and why, and return their findings to national leadership by Sept. 15, details the group first shared with POLITICO. DSA expects to receive a stack of 20-page to 40-page dossiers from chapters coast to coast weighing in on who should carry the democratic socialist banner into 2028.The organization plans to hold national discussions, including with leaders like New York Mayor Zohran Mamdani and Sen. Bernie Sanders (I-Vt.), who is 84 and not expected to run in 2028, with a formal vote expected at the group’s 2027 convention next year — though leaders say they could move faster if the primary timeline demands it.

“We’re going to be talking about millions of hours knocking doors for 2028 — so when we decide to really run somebody, people have to feel like they had a say,” Romer said. Mamdani-backed candidates swept three closely watched New York congressional primaries Tuesday, with Claire Valdez, Brad Lander and Darializa Avila Chevalier all defeating more establishment-aligned rivals — including two incumbents. It was a major show of force for Mamdani’s political operation, and fresh evidence of the left’s growing muscle heading into 2028. “They ask, ‘Who do you want to run in 2028?’ Then they ask, ‘When does the race for 2028 begin?’ It starts now. It starts on Tuesday,” Mamdani said at a Brooklyn rally last week.

The elephant in the room for the group, of course, is Rep. Alexandria Ocasio-Cortez.

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Jerry Nadler, George Conway et al, as in: The anti-Trump field.

“JFK’s grandson Jack Schlossberg fails to advance in election to replace Jerry Nadler in Manhattan district. “

• Mamdani-backed Candidates Sweep Democratic Primaries In NYC (Guardian)

Zohran Mamdani’s growing influence over the Democratic party was on show in New York City on Tuesday as three congressional candidates endorsed by New York’s democratic socialist mayor won closely watched primaries, while voters in Maryland, Utah and South Carolina cast ballots in primaries and runoffs.Brad Lander, the former New York City comptroller who also ran for mayor last year before endorsing Mamdani, won his race comfortably, defeating the Democratic representative Dan Goldman.


Another Mamdani ally, Claire Valdez, a state lawmaker and former union organizer, defeated Antonio Reynoso, the preferred successor of retiring Democratic Representative Nydia Velázquez in New York’s seventh district, encompassing parts of Brooklyn and Queens. And in a stunning upset, the public defense investigator Darializa Avila Chevalier toppled Representative Adriano Espaillat, the powerful five-term incumbent who chairs the Congressional Hispanic caucus, in the state’s diverse 13th congressional district, which covers Upper Manhattan and parts of the Bronx.

“What a glorious time to be a New Yorker,” Lander declared at this election night party in Brooklyn, where he was joined by the mayor. Mamdani then appeared at a watch party for Valdez, where he told a jubilant crowd: “The old politics that got us into this crisis is not the politics that’s going to get us out of this crisis.” It was a clean sweep for Mamdani, who waded into the House primaries earlier this year, spending his political capital to boost three leftwing allies – a gamble that would test his popularity and his influence. With his slate of candidates all but certain to be elected to Congress in November, Mamdani has left his stamp on the state’s congressional delegation and expanded his ascendant progressive movement.

Elsewhere in the city, Jack Schlossberg, the grandson of John F Kennedy, was unsuccessful in his bid to revive the political legacy of the US’s most vaunted political family. In a House race that attracted outsized national attention, Schlossberg, 33, had hoped to parlay his huge social media presence and charisma into a Congressional seat, but he came up short in a crowded field of Democrats hoping to succeed the long-serving representative Jerry Nadler. Micah Lasher, a longtime New York politician and self-described “nerd”, won the primary in New York’s 12th district, a deep-blue district whose voters tend to identify as liberal rather than left-wing.

The race also included the prominent anti-Trump critic George Conway and state assembly-member Alex Bores, whose candidacy became the fulcrum for what observers described as an “AI civil war”. Lasher will be the heavy favorite to win the safely Democratic district in the November midterm election. Late on Tuesday night, Queens-born Donald Trump celebrated the defeat of both Goldman and Conway in a pair of social media posts. “Weak and pathetic Congressman Dan Goldman just lost, BIG! I guess people didn’t like him illegally targeting President TRUMP,” the president said of the congressman, who served as the lead counsel to House Democrats during the Trump’s first impeachment. Of Conway, whose ex-wife was a top adviser to the president during his first term, Trump gleefully predicted that he would “end up at about 5% of the vote in a rather weak field of young and aggressive Communists”.

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UK: No

US: Trump is doing it.

• Can Anyone Govern Britain — Or America? (Daniel McCcarthy)

As Britain gets ready for its seventh prime minister in just 10 years, it’s time to ask whether the parliamentary system itself is broken. That might explain not only why landslide election victories don’t translate into stable leadership in Britain but also why America’s Congress is so feckless. Is representative government an idea whose time has passed? In Europe as well as America, leftists prefer that judges and bureaucrats wield permanent power, as supposedly impartial experts who know best how to stop the weather from changing and how many genders there are.


Britain’s Labour party started out as a vehicle for the working class, in theory. It was closely connected to the country’s major industrial unions — but Britain in the 21st century has lost most of its hard industry, and Labour is now led by the same kind of socially left-wing, technocratic wonks that make up the “inner party” of the Democrats in this country. Brexit, passed by the British people in a referendum 10 years ago this week, proved Labour had lost the working class — the party elite favored remaining in the European Union, but working-class voters themselves cast their ballots for “leave.”

Unfortunately, the Conservative party’s elite also favored “remain” — Prime Minister David Cameron himself did, and losing the Brexit referendum compelled him to resign. Yet Cameron was followed by another Conservative PM, Theresa May, who had also been a remainer. It took a third Tory PM, Boris Johnson, to follow through on the voters’ mandate, but Johnson proved to be Britain’s Joe Biden where immigration was concerned, unleashing the “Boriswave” of mass migration, which flooded Britain with some 4 million newcomers from places like India, China, Pakistan and Nigeria.

Personal scandals forced Johnson from office before the scale of the damage his policies did came to light — but bond markets didn’t tolerate Johnson’s successor, Liz Truss, for long. That left Rishi Sunak to lead the Conservatives in 2024 to their first general election defeat in 14 years. In that time, Conservatives had given Britain same-sex marriage, bigger government, deeper debt, more green-energy regulation and record-high immigration. Labour more than doubled its number of seats in Parliament with Keir Starmer leading the party into the election, yet the landslide didn’t translate into any mandate for him.

His popularity soon slid and polls indicated the Reform party would win the next election, making Nigel Farage prime minister. Labour is now gambling its problems are personal, not political, and once Starmer has made way for a new PM — virtually certain to be Andy Burnham — its majority will be salvageable. Burnham is even more left-wing than Starmer: at least as far left on social issues and even more enthusiastic about nationalizing industry. Farage is wagering Starmer wasn’t the millstone around Labour’s neck — the party’s politics are.

But even as traditional parties of the left and right elsewhere in Europe have decayed in ways much like those of Britain’s Tories and Labour, new populist parties have struggled to win and maintain power. Farage has to contend not only with Labour and what’s left of the Conservatives, but also with a small but vociferous insurgency to his right, the Restore party. All this suggests Burnham or Farage can’t count on enjoying a tenure longer than Starmer’s or Sunak’s. Parliamentary elections haven’t produced a stable British government by anyone in the last 16 years. What are the odds the next election, which has to be held by August 2029, will do so? [..]

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“Trump is also asserting that Iran will allow IEAE inspectors in, something the Islamic Republic is also vehemently rejecting.”

• Brent Falls To Pre-War Levels (ZH)

Brent crude oil prices fell below $75 a barrel late yesterday, marking the first time the global benchmark has traded under that level since the outbreak of the Trump-initiated Iran conflict. The drop in crude prices could provide relief for consumers and businesses by easing pressure on fuel costs and inflation, a desired Washington outcome of the MoU signing – for which Trump has come under severe criticism from hawks at home. Speaking of escalating, we have another early morning Trump Truth Social statement, openly contradicting the consistent stated position of Tehran leaders.


Since the Switzerland high level talks led by Vance, there’s been a series of issues where Tehran and Washington have issued clearly contradictory statements. Trump says in the fresh statement that Iran informed the United States that there would be “NO TOLLS, NO INSURANCE COSTS, & NO OTHER CHARGES OF ANY KIND” imposed on vessels traveling through the strategic waterway. Trump as is typical criticized media reports that had suggested Iran could seek payments from ships using the route, calling such coverage “Fake News.” He added that if the information provided by Iran proved inaccurate, ongoing negotiations between the two sides would end “immediately.”

The president also denied reports that the United States had provided funds directly to Iran or released Iranian assets without conditions. “No money has been given to Iran, or released from their money to them, by the U.S.,” he said. However, Trump stated that Washington plans to make some Iranian funds available for agricultural purchases. According to the president, the money would be used to buy US farm products, including “Corn, Wheat, Soybeans, and more.” But Iranian leadership has vehemently rejected this narrative too.

“Food is desperately needed in Iran,” Trump said, adding that the purchases would be made “exclusively from the United States. The Strait of Hormuz remains one of the world’s most important energy shipping routes, and any disruption or additional costs imposed on vessels passing through the channel could have significant implications for global trade and oil markets. It is officially ‘open’ in the wake of the MoU signing – but the next few days and weeks will be telling.Meanwhile, some new developments on the Hormuz opening front, and Qatar LNG:

Qatar’s prime minister said establishing a hotline between the US and Iran is essential to prevent rogue actors impeding the reopening of the Strait of Hormuz, as he predicted that the Gulf state would resume normal liquefied natural gas production “within a few weeks”. –FT. Trump is also asserting that Iran will allow IEAE inspectors in, something the Islamic Republic is also vehemently rejecting.

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Exactly like the old Lou Reed tune:

They’re never early, they’re always late.

First thing you learn is that you always gotta wait.

• ‘Customers Are Being Gouged’: Trump Tells DOJ To Look Into Gasoline Prices (ZH)

President Trump said on Wednesday that he had instructed the Department of Justice (DOJ) to open an investigation into oil companies over high gasoline prices. In a Truth Social post, Trump said that oil companies have not lowered their prices at the pump despite a recent decline in crude prices following the U.S.–Iran preliminary agreement. “Those prices are dropping like a rock! In other words, customers are being ‘gouged,’” he said. “Gasoline prices better start going down a lot faster than what I’m seeing!” Brent crude futures fell below $75 per barrel on Wednesday (back near pre-war levels), while U.S. West Texas Intermediate futures dropped to $72.29, amid the resumption of shipping traffic in the Strait of Hormuz.


Bloomberg’s energy guru, Javier Blas, remarked after President Trump’s post: “US President Trump, all political theatre, has just discovered the refining (and marketing) margin.” The national average price for regular gasoline stood at $3.93 per gallon on June 23, according to the American Automobile Association (AAA), down from $4.04 the previous week. The gas price was $4.53 per gallon a month ago. Of course, given the supply/refinery chain, it takes time (two weeks) for crude prices to ripple through to pump prices… AAA said it observed that gas prices remain above the levels before the conflict with Iran erupted in February.

The national average price for regular gas was $2.98 on Feb. 28, the day when the United States and Israel launched military operations against Iran, triggering the war. “Getting prices back down to prewar levels will take longer because of the time it takes to resume shipping and production,” Marie Dodds, public affairs director for AAA Oregon/Idaho, said in a statement. As Aldgra Fredly reports for The Epoch Times, US and Iran signed a memorandum of understanding last week to end the war. Under the agreement, the Strait of Hormuz would be fully reopened, and Tehran would not procure or develop a nuclear weapon. The United States also agreed to waive sanctions on Iranian oil for 60 days.

U.S. Secretary of Energy Chris Wright told ABC News on June 21 that commercial shipping traffic through the Strait of Hormuz had returned to normal levels, and that Americans should expect further declines in oil, gasoline, and other energy prices as traffic resumed. “Flows of oil and natural gas through the straits have already returned to normal, and they will continue that way whatever happens with the negotiations with the Iranians,” he said.

Arsenio Dominguez, secretary-general of the International Maritime Organization, said on June 23 that more than 11,000 seafarers stranded in the region due to war would be evacuated under a coordinated effort with Iran, Oman, other coastal states in the region, the United States, and the maritime industry following the U.S.–Iran preliminary deal. “We have secured the necessary safety guarantees and have thoroughly verified the conditions for safe navigation to support these operations,” Dominguez said in a statement. Iran had previously blocked traffic in the Strait of Hormuz—a critical waterway through which a significant share of global oil and gas shipments passes—in response to the U.S. and Israeli attacks on its nuclear and military sites.

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“Frontier AI models are anticipated to exceed current industry expectations, fundamentally transforming both offensive and defensive cyber capabilities.”

• An AI Cyber Apocalypse Is ‘Months, Not Years’ Away, Five Eyes Warns (Moran)

The Five Eyes intelligence group, comprising the United States, United Kingdom, Canada, Australia, and New Zealand, is warning governments and corporations that AI models capable of launching devastating cyber attacks that could overwhelm their defenses are months, not years away. They are urging nations and companies to “act now” to improve cyber defenses.


This is a highly unusual warning from the normally circumspect intelligence group. The Five Eyes alliance typically operates with deep, classified sharing. They do not issue public joint statements lightly. When they align to release a unified message directly to the public and business leaders, it signals that the threat landscape has shifted in a way that regular, incremental IT adjustments cannot handle. In short, Five Eyes doesn’t do “hype.” When it releases a joint warning, it’s to alert governments and corporations to a real, imminent threat.

Usually, the group’s intelligence warnings paint a picture of cybersecurity risks across a multi-year window. This warning explicitly breaks from that convention, shifting the perspective from years to just “months.””While AI will help us improve cyber defense over time, it also accelerates the speed, scale, and sophistication of cyber threats,” the group notes. “Frontier AI models are anticipated to exceed current industry expectations, fundamentally transforming both offensive and defensive cyber capabilities. The timeline is not years; it is months.”

The writing has been on the wall for the last few months regarding an increase in urgency in the potency and capabilities of newer AI models. For instance, earlier this month, the U.S. government took the unusual step of ordering the AI startup Anthropic to suspend access to its powerful Mythos and Fable 5 models for foreign nationals. Policymakers expressed severe national security concerns that these specific models possess unprecedented capabilities to independently identify code vulnerabilities, potentially resulting in a “vulnerability tsunami” if misused by hostile actors.

From the Five Eyes Statement:

Cyber risk can no longer be treated as a purely technical issue. This is a core business risk and leadership responsibility. Boards and executives should ensure cyber resilience is in place and works under pressure. It is not enough to have controls. Leaders must be confident those controls will perform during a real incident. This requires reassessing long-standing trade-offs and using AI deliberately to strengthen defense – not just improve efficiency.

Core principles:
• Secure-by-design and secure-by-default must become standard practice not an aspiration.
• Resilience cannot depend on a single solution or technology.Defense in depth remains essential.
• As AI systems evolve, new and previously unknown vulnerabilities will emerge, including zero day vulnerabilities.
• Breaches will occur. Preparedness helps you contain them quickly and prevent escalation into major operational and financial crises.

Rather than targeting IT administrators with technical alerts, it directly holds boards and corporate executives accountable, framing AI-driven cyber risk as a fundamental threat to business continuity and trust. It demands that leaders move past treating cybersecurity as an IT standalone department and actively use AI defensively to outpace adversaries.”

“What it was saying is that in an age of AI, breaches will occur. It’s not a matter of if, but when, so it’s important to get prepared now,” Olivia Shen, director of the Strategic Technologies Program at the University of Sydney, told CNN. “Sophisticated businesses, usually your large corporations, they already invest in cybersecurity, and they’ll be better prepared,” Shen said. “The ones who are more exposed will be those small and medium-sized businesses who maybe have under invested so far, and they’ll basically be like sitting ducks.”

The speed with which these cyber threats are materializing is putting a damper on some efforts to place significant guardrails on AI. This month, several dozen cybersecurity researchers, AI entrepreneurs, and corporate executives signed an open letter urging the Trump administration to commit to “an open, scientific and transparent process of handling AI risk assessments” and said it was “essential” for security teams to “find and fix flaws in their own newly-written as well as decades of legacy code faster than our adversaries.”

“We know these technologies can be used for both defensive and offensive purposes, and we need a few more guardrails about how we can maximize the benefits for defensive cyber security, while gate keeping it away from potential cyber adversaries and scammers and cyber criminals,” Shen said. When the first major breaches happen, perhaps then we’ll get more serious about the speed with which AI development is outpacing our ability to adequately control it.

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Drones.. US lags behind.

• US To Set Up Testing Ranges Mimicking Ukraine Battlefield (RT)

The US will set up at least two domestic testing ranges that mimic battlefield conditions in Ukraine, Army Secretary Dan Driscoll said on Tuesday. Driscoll said defense contractors will have access to the sites, where the Army and industry “can start to do much more aggressive testing,” according to DefenseScoop. The US has been struggling to keep pace with rapidly evolving drone technology used extensively by both Russia and Ukraine. “You can have a kind of electronic warfare and all of the contested environment created, and you can have drone manufacturers and counter-drone tool-builders engaging together,” Driscoll told reporters at an Army-hosted industry event.


“Then, we also want soldiers to be able to go there so that they can strengthen their skills and work hand-in-hand with developers,” he added. According to the Washington Post, the Pentagon is actively seeking companies capable of producing 300,000 low-cost kamikaze drones and is prepared to spend $54.6 billion next year on an expanded drone warfare program. The widespread use of surveillance and attack drones in the Ukraine conflict has created vast ‘kill zones’ along the front line, with both sides using UAVs to repel mechanized assaults and carry out strikes deep inside enemy territory. Russian Deputy Prime Minister Denis Manturov said earlier this month that domestic companies now have the capacity to produce more than 15,000 FPV drones per day, up from around 15,000 per month in 2023.

Moscow has warned that Western supplies of drone technology and other weapons to Kiev make NATO a de facto participant in the conflict and risk further escalation. Ukraine frequently uses drones to strike civilian targets. Last month, UAVs destroyed a college dormitory in Starobelsk, Russia, killing 21 students. On June 3, a Ukrainian drone struck a commuter bus in Enakievo, killing eight passengers. Two weeks later, a drone hit a bus carrying a youth football team from Belarus near the Russian village of Nelzhichi, killing a pregnant woman and injuring eight people, including six children.

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“Washington wants to expand weapons production after reportedly depleting key stockpiles in the Iran war and Ukraine”..

• US Carmakers Could Produce Missiles – Trump (RT)

US automakers could begin producing missiles and other weapons as Washington moves to expand military output and replenish its arsenals, President Donald Trump has said. Speaking to reporters at the White House on Monday, Trump said car companies with spare factory capacity are discussing deals to manufacture weapons, including Patriot air-defense missiles and Tomahawk cruise missiles. ”They’re dealing with General Motors. They’re dealing with Ford,” Trump said. “I know General Motors is all excited about building weapons now.”


He added that some plants belonging to the two carmakers are expected to be converted to military production, describing the shift as part of a “big strong economic push” to produce arms. His remarks come after the Wall Street Journal reported in April that the Pentagon had approached General Motors, Ford, GE Aerospace, and Oshkosh about retooling civilian factories to produce munitions and other military equipment. The talks were reportedly part of an effort to put US industry on what Defense Secretary Pete Hegseth has called a “wartime footing,” echoing the World War II-era conversion of Detroit factories to military production.

The push comes amid mounting concern over the state of US weapons stockpiles after years of arms deliveries to Ukraine under former President Joe Biden and heavy missile use during the recent US-Israeli war against Iran. US media and think-tanks have warned that Washington burned through large quantities of critical munitions during the Iran campaign, including Tomahawk cruise missiles, Patriot interceptors, THAAD missiles, and other advanced systems.

Reuters has also reported that depleted inventories could delay US arms deliveries to fellow NATO members. Trump has downplayed shortage concerns, saying the US has “quite a few” missiles but wants to keep larger reserves. His administration has requested a record military budget of around $1.5 trillion for the 2027 fiscal year, with much of the increase expected to go towards replenishing stockpiles and expanding production.

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“..psychology as a field is a tool of white power..”

• Journal Under Fire for Retracting Article Challenging Claims of Racism (Turley)

We have previously discussed academic journals canceling publications that challenge the orthodox views of mainstream scholars. The latest such example can be found in the Journal of the New Zealand College of Clinical Psychologists, which pulled the 2025 article of Arna Mitchell who questioned claims that psychology as a field is a tool of white power. The editors reportedly declared that such conclusions are inconsistent with the publication’s values.


Dr. Kumari Valentine, a psychologist and former editor of the journal, wrote an article raising concerns over the retraction: The reason given for the removal was not research fraud, plagiarism, ethical misconduct, or factual error. Rather, the NZCCP Council determined that retaining the article was inconsistent with the values of the College and could perpetuate harm to Maori. The article, He Wero Ano: Don’t Just Tell Me, Show Me How Science and Psychology Are Racist in New Zealand, took issue with the broad, unsubstantiated claims of systemic racism in psychology across all levels of the discipline, including that science itself is a social construct of white Europeans and white power.

Mitchell, a Maori woman herself, also took issue with the view that tribal ways of knowing should be given equal weight to scientific ways of knowing in the training and practice of psychologists in New Zealand. One would think that such a viewpoint, particularly from a Maori woman, would, at a minimum, be welcomed as a provocative and interesting perspective. However, various readers were less interested in reading it or even responding to it. They campaigned to cancel it.

Some did respond, saying they felt the critique was based on a misunderstanding of Kaupapa Maori psychology. That should also be a welcome perspective in allowing a free exchange of viewpoints on the subject. Some faculty have cried foul, calling the cancellation raw censorship. This is reminiscent of the controversy at the Emory Law Journal and the firing of an editor at JAMA. These controversies are a reflection of the viewpoint intolerance that has taken hold of much of academia, supporting groups, and journals.

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Nice pair.

• Investigation Launched Into Von der Leyen Over Secret Chat With Zelensky (TASS)

European Ombudsman Teresa Anjinho has launched an investigation into European Commission President Ursula von der Leyen over a secret chat involving German Chancellor Friedrich Merz, French President Emmanuel Macron, Italian Prime Minister Giorgia Meloni, British Prime Minister Keir Starmer, and Vladimir Zelensky, the Berliner Zeitung newspaper reported. Anjinho notified the European Commission of the investigation last week. She is examining whether the EC violated transparency rules by refusing to grant the Dutch organization Follow the Money (FTM) access to the correspondence.


The European Commission justified its refusal by stating that publishing the chat data could “complicate the international relations of the European Union (and its member states) with third countries.” “I have decided to launch a probe into the European Commission’s actions regarding the applicant’s request in accordance with EU regulations concerning public access to documents,” Anjinho wrote to the FTM organization. She expects to meet with EC representatives by mid-July.

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Places are hot that were not built for it. 40 people drowned in France alone in a few days.

• Sweltering Heat As Europe Heatwave Spreads (BBC)

France is bracing for another day of exceptionally hot weather, with more than half the country remaining under a red heat alert on Wednesday. Tens of thousands of homes have been left without power in western Brittany, while a major wildfire was brought under control overnight in the Maine-et-Loire region. It comes after the country experienced its hottest June day since records began on Tuesday, with an average temperature of 29.8C (85.54F) recorded.


The heatwave is expected to spread to other parts of western Europe on Wednesday, with an orange alert for dangerous weather in place for parts of the Netherlands. Temperatures are expected to peak in the Netherlands and Belgium on Friday, while Germany is expected to see the mercury rise to 40C (104F) over the weekend. The heatwave is also expected to spread to eastern Europe over the next few days, with severe heat warnings issued for countries including Poland, Croatia and Hungary for later in the week.

So far, France, Spain and Italy have been hardest hit by the heatwave. Forty people have drowned in heatwave-related incidents in France since last Thursday, according to the prime minister.

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Debt Rattle January 6 2015

Jan 062015
 
 January 6, 2015  Posted by at 11:27 am Finance Tagged with: , , , , , , , ,  3 Responses »


DPC Unloading bananas, New Orleans 1903

• Oil Below $49 As Sector Faces Its ‘Hunger Games’ (CNBC)
• Brent Falls Below $52 As Oil Hits New Five And A Half Year Lows (Reuters)
• Oil Drama Drives Shares Lower In Asia And Europe (Reuters)
• Some Traders Are Betting On $20 Oil (MarketWatch)
• Caterpillar Is Latest Victim Of Sliding Oil Price (MarketWatch)
• Saudi Slashes Monthly Oil Prices To Europe; Trims US., Ups Asia (Reuters)
• Saudi Arabia Raises Price of Main Oil Grade for Asian Buyers (Bloomberg)
• Oil Below $55 May Force Norway to Cut Rates Again (Bloomberg)
• Oilfield Writedowns Loom as Market Collapse Guts Drilling Values (Bloomberg)
• Greece vs Europe: Who Will Blink First? (AEP)
• The Black Hole Theory Of The Eurozone (Coppola)
• As Goes Greece, So Goes the Euro (Bloomberg ed.)
• A New Year, A New Europe? Don’t Count On It (CNBC)
• Goldman Says JPMorgan Should Break Itself Into Pieces (Bloomberg)
• China Fast-Tracks $1 Trillion in Projects to Spur Growth (Bloomberg)
• Venezuelan Leader Maduro Seeks Economic Help On Tour (BBC)
• The Demise of UK’s Lucky Years Pits Winners Against Losers (Bloomberg)
• The Economics (and Nostalgia) of Dead US Shopping Malls (NY Times)
• Forecast 2015 – Life in the Breakdown Lane (Jim Kunstler)
• 2015: Grounds for Optimism (Dmitry Orlov)
• The People Pushed Out Of Ethiopia’s Fertile Farmland (BBC)
• Does CNN Really Have A Video Ready For The Apocalypse? (BBC)

“.. a dystopian post-apocalyptic future where the main protagonists battle each other to survive.”

• Oil Below $49 As Sector Faces Its ‘Hunger Games’ (CNBC)

Oil’s dramatic fall in price will have serious effects on revenues and spending in the sector, according to some industry analysts, with one investment firm predicting a sector-wide “recession” that will last for several years. Both U.S. crude and Brent futures fell to fresh 5-1/2-year lows on Tuesday, with the former slipping below $49. Weak global demand and booming U.S. oil production are seen as the key reasons behind the price plunge, as well as OPEC’s reluctance to cut its output. This sector slump will lead to a fight to the death for oil firms, according to analysts at Bernstein Research. The research firm likened the current environment to the Hollywood movie “The Hunger Games”, which portrays a dystopian post-apocalyptic future where the main protagonists battle each other to survive.

“Our research convinces us an oil services recession is largely unavoidable at even $80 a barrel…The Hunger Games have begun,” Nicholas Green, a senior analyst at the company, said in a note on Tuesday morning. Bernstein’s Green believes that offshore activity will also face a “structural recession.” He predicts that there will be only half of the new work available in 2015, compared to last year, and forecasts no material recovery before 2017. Other possible casualties of the sector’s struggle for survival are the high-risk and reward exploration and oil production companies (E&P), ratings agency Moody’s said Tuesday. If oil prices average $75 a barrel in 2015, then North American E&P companies would likely reduce their capital spending by around 20% from last year, according to Moody’s.

It could even be cut by 40% it oil starts at below $60 a barrel, it added. Oilfield services companies, or OFS, are companies that provide services to the E&P industry, and could face an earnings crunch of 12% to 17% if oil averages $75 a barrel in 2014, according to Moody’s. An average price below $60 a barrel in 2015 could drive earnings down by 25 to 30%, it added. Meanwhile, midstream operators – which are involved in the transportation of oil – would come under significant earnings pressure if this spending is cut, according to the ratings agency.

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“When the Saudis are cutting prices, the markets are not going to go higher.”

• Brent Falls Below $52 As Oil Hits New Five And A Half Year Lows (Reuters)

Oil prices sank to fresh 5-1/2-year lows on Tuesday, extending losses after a 5% plunge in the previous session as worries over a global supply glut intensified. Brent crude fell by 3% to below $52 a barrel as cuts to monthly oil selling prices for European buyers by top OPEC producer Saudi Arabia heightened worries about oversupply. “Saudi Arabia is showing no signs of pulling back,” said Bjarne Schieldrop, chief commodity analyst with SEB in Oslo. “Stocks are continuing to build, and there is an increase in contango.” While Saudi Arabia increased its selling price to Asia, some analysts said the cuts to Europe reflect the kingdom’s deepening defense of market share. This added to bearish data over the weekend showing that Russia’s 2014 oil output hit a post-Soviet-era high and exports from Iraq, OPEC’s second-largest producer, reached their highest since 1980.

On Tuesday, the UAE’s Abu Dhabi National Oil Company set the December retroactive selling price for its benchmark Murban crude at $60.65 a barrel, its lowest level since May 2009. “It’s hard to pinpoint a specific downward pressure,” Schieldrop said. Brent crude fell as low as $51.23 a barrel on Tuesday, its lowest level since May 2009. It was trading at $51.31 at 0942 GMT (0442 ET), down $1.80. U.S. crude was at $48.54, down $1.50, after falling to $48.47, its lowest since April 2009. Jitters over political uncertainty in Greece added to an already faltering eurozone economy, raising questions about energy demand in Europe and compounding the bearish sentiment. A slew of factors was keeping up the downward pressure on prices, analysts said, pointing to concerns about the Greek economy, high oil output from Russia, Iraq and the United States, and a stronger dollar. “The weak euro should be one of the reasons,” said Tamas Varga of PVM, adding: “When the Saudis are cutting prices, the markets are not going to go higher.”

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As I said yesterday, this oil thing is the real deal.

• Oil Drama Drives Shares Lower In Asia And Europe (Reuters)

European shares sank for a third day on Tuesday as a slide in oil prices showed no sign of easing off, supporting traditional safe-haven assets such as top-rated government bonds, the Japanese yen and the Swiss franc. Asian shares had slumped overnight after another day of drama on oil markets that drove U.S. crude to less than $50 a barrel for the first time since the first half of 2009 and handed Wall Street its worst losses in three months. The resulting bid for safety drove the average of yields on German, U.S. and Japanese 10-year debt to less than 1% for the first time. Also hit by a poor reading from a purchasing managers’ survey in Italy, all of Europe’s major exchanges were in negative territory an hour into morning trade.

“Global risk sentiment has been hurt by sliding stocks and oil prices. That is leading to a perception that there is a lack of demand and that has implications for global growth,” said Jeremy Stretch, head of currency strategy at CIBC World Markets. The FTSEuroFirst 300 index of leading shares, along with France’s CAC40 and Germany’s DAXI, were all down 0.8%. Britain’s oil and gas heavy FTSE index lost 1.3%. Japan’s Nikkei dropped 3%, its largest fall in almost 10 months while South Korean shares fell 1.7% to a 1-1/2-year low. Even high-flying mainland Chinese shares pulled back after hitting 5-1/2-year highs earlier in the session.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.4%. The slide in oil prices has shown little sign of abating in the new year, plunging as much as 6% on Monday as investors continue to reprice for broadly lower global demand and the impact of heavy U.S. shale drilling. Brent crude fell by another 1.5% to less than $53 after data showed Russian oil output at post-Soviet era highs and Iraqi oil exports near 35-year peaks. “Falls in oil prices are going beyond many people’s expectations. This will put pressure on the earnings of U.S. energy firms,” said Hirokazu Kabeya, senior strategist at Daiwa Securities in Tokyo.

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“.. the pickup in interest in far out-of-the money calls is noteworthy for what it says about market psychology.”

• Some Traders Are Betting On $20 Oil (MarketWatch)

Here’s how bearish some traders are getting on oil these days. Even before Nymex WTI crude futures on Monday dipped below $50 a barrel in the latest stage of the crude rout, Stephen Schork, editor of the widely followed Schork Report, took note of trading in well out-of-the-money put options (puts give you the right, but not the obligation, to sell the underlying futures contract at a specific strike price). Unsurprisingly, open interest (the number of open contracts) in $50 strike-price puts on the February WTI futures contract had risen to 22,537 as of Friday’s close from 193 contracts at the beginning of December. Open interest on $45 puts rose from 8 to 36,113, while open interest in $40 puts rose from 1 to 9,864.

Here’s where it gets interesting: Open interest on $30 puts on the March futures contract rose to 2,127 from 34, while $30 puts on the June contract rose from 35 to 51,252. In addition, there has even been some light trading in June $20 puts, with open interest at 176 as of Friday’s close. “In other words, bets on sub-$30 crude oil in June are now 1.7 times greater than physical inventory at the Nymex terminal complex in Cushing,” Schork said in a note, referring to the Oklahoma delivery point for WTI oil. Of course, a trader can make money on a put even if the price of the underlying contract doesn’t fall below the strike price. The value of the option can rise as the price of the commodity declines. But the pickup in interest in far out-of-the money calls is noteworthy for what it says about market psychology.

Is it a sign that market sentiment has moved to an extreme, setting the stage for a rebound? The economics of the oil market are effectively “broken” and that’s left “psychology” to drive price action, Schork said. Even though the market is oversold according to technical measures, that’s been the case for the past three months, he said. “We could get a rebound to $70, but we could see $30 before we see $70, so why do you risk $20 to win $20,” he said. “So no picking the bottom here.”

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All suppliers hurt. A lot.

• Caterpillar Is Latest Victim Of Sliding Oil Price (MarketWatch)

Caterpillar shares tumbled Monday as the company became the latest victim of the sliding price of oil. Caterpillar’s stock umbled almost 6% after J.P. Morgan downgraded it to underweight from neutral on concerns about the company’s direct exposure to oil and gas, and indirect exposure to mining, U.S. construction and emerging markets. The maker of diggers and dozers’ direct exposure to the sector is equal to about $6.5 billion, or 12% of revenue, while its indirect exposure may be as much as 15% of revenues, analysts wrote in a note. That means almost 30% of its total revenue is facing pressure in 2015 and 2016.

Caterpillar supplies turbines to offshore rigs, as well as reciprocating engines and transmissions for on-site drilling. It also provides construction equipment that is used in infrastructure development, along with aftermarket and other services. “Its indirect exposure may be greater than anticipated,” said the note. “Our analysis suggests that since 2010 U.S. construction equipment demand has been strongly correlated with the expansion of fracking and, as a result, we would expect to see a slowdown in equipment demand in 2015.” The North American construction market accounts for about 17% of Caterpillar’s revenue, and about 5% of its total revenue may be tied to oil and gas states.

Caterpillar also has exposure to Canadian Oil Sands, which is likely to experience a significant slowdown in demand. Emerging markets and the Middle East are other key markets that are expected to be hurt by the falling oil price. “Finally, the stronger dollar may also weigh on [Caterpillar’s] competitiveness against its international competitors and, given that senior executive compensation is based partly on market share, we would expect pricing to come under increasing pressure as we go forward,” said the note. Shares of the Dow Jones Industrial Average component have fallen 5.6% in the last three months, while the Dow has gained 2.9%.

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This is how Reuters reports the Saudi move, scroll down to see how Bloomberg does it.

• Saudi Slashes Monthly Oil Prices To Europe; Trims US., Ups Asia (Reuters)

Saudi Arabia made deep cuts to its monthly oil prices for European buyers on Monday, a move some analysts said reflects the kingdom’s deepening defense of market share, although it also hiked prices in Asia from record lows. State oil firm Saudi Aramco cut the official selling price (OSP) for its Arab Light crude to Northwest Europe, a region that buys only a small proportion of Saudi Arabia’s crude, by $1.50 a barrel for February, putting it at a discount of $4.65 a barrel to the Brent Weighted Average (BWAVE), the lowest since 2009. However, Aramco also raised its February price for its Arab Light grade for customers for Asia – the largest of its major markets, accounting for more than half of its exported crude – by 60 cents a barrel versus January to a discount of $1.40 a barrel to the Oman/Dubai average.

The $2 discount to Asia in January was the largest in records going back more than a decade, but traders had been expecting Aramco to hike prices by at least 20 to 30 cents due to the narrowing spread in the Dubai market. The Arab Light OSP to the United States, the fifth consecutive monthly cut, was set at a premium of 30 cents a barrel to the Argus Sour Crude Index (ASCI) for February, down 60 cents from the previous month. The Kingdom’s move to cut its OSPs has been perceived by many traders as a signal of its decision to abandon efforts to shore up falling crude oil prices and, instead, focus on maintaining its share of key markets.

“The moves are reinforcing that the Saudis just don’t intend to do anything to rebalance (price) levels,” said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut. Benchmark Brent oil prices held on to earlier deep losses following the publication of the Saudi OSPs on Monday, trading at around $53.50 a barrel, down $3 on the day. Some analysts, however, have said they see the changes in monthly differentials as a simple reflection of deteriorating market conditions, not an indicator of policy. One trader said that the cuts to Europe may be a result of trying to price out West African barrels from Europe.

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Bloomberg intentionally cherrypicks ithe headline, but does state in the article: “It decreased 11 prices globally and increased six ..” Journalism? You tell me.

• Saudi Arabia Raises Price of Main Oil Grade for Asian Buyers (Bloomberg)

Saudi Arabia raised the cost of its oil sales to Asia in February, prompting speculation the world’s biggest exporter is retreating from using record price discounts to defend market share. Saudi Arabian Oil will sell its Arab Light grade for $1.40 a barrel less than a regional average next month, the company said yesterday in a statement. That’s a narrowing from January, when the discount was $2, the biggest in at least 14 years. It decreased 11 prices globally and increased six. Brent oil fell 5.9% yesterday.

Oil prices collapsed 32% since OPEC decided to maintain its output target on Nov. 27, amid signs Saudi Arabia and other members are determined to let North American shale drillers and other producers share the burden of reducing an oversupply. When Aramco lowered prices for November it prompted speculation the nation was seeking to preserve market share. “They’re putting the brakes on a little bit,” Leo Drollas, a London-based independent consultant and former chief economist at the Centre for Global Energy Studies, said by phone. “It’s a little message that maybe prices are going down too far too quickly, and this is a little signal that they’re looking at things.”

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Not doing so well.

• Oil Below $55 May Force Norway to Cut Rates Again (Bloomberg)

As oil drops below $55 a barrel, speculation is growing that the central bank of western Europe’s biggest crude producer will need to cut rates again. A 54% slump in Brent crude since a June high has pummeled the offshore industry in Norway, where oil and gas make up 22% of gross domestic product. Over the same period the krone has lost about 20% against the dollar and 8% against the euro. The OBX benchmark stock index is down about 12%. The central bank delivered a surprise rate cut last month it said was triggered by plunging crude prices. Since then the oil price development has proven even worse than the central bank anticipated. In an interview yesterday, Governor Oeystein Olsen said $55 oil is “clearly lower” than expected in December.

At Norway’s biggest bank, DNB, economists say Olsen will need to reduce rates again in June from 1.25%. “The weaker krone buys Norges Bank some time before they make another cut,” Kjersti Haugland, an analyst at DNB, said by phone. After lowering rates for the first time in almost three years on Dec. 11, Olsen said he sees a “50-50 chance” of more easing this year. Nordea Bank, Scandinavia’s biggest bank, says that means another two reductions, bringing the benchmark deposit rate to 0.75%. The central bank, which also oversees Norway’s $850 billion sovereign wealth fund, plans to provide more detail on how oil prices will shape its policy in March, Olsen said. Brent crude will need to trade above $70 a barrel before pressure on monetary policy abates, Olsen said in a Dec. 12 interview. Since then, the price of oil has dropped 14% to its lowest level in more than five years.

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Slaughterhouse.

• Oilfield Writedowns Loom as Market Collapse Guts Drilling Values (Bloomberg)

Tumbling crude prices will trigger a flood of oilfield writedowns starting this month after industry returns slumped to a 16-year low, calling into question half a decade of exploration. With crude prices down more than 50% from their 2014 peak, fields as far-flung as Kazakhstan and Australia are no longer worth pumping, said a team of Citigroup analysts led by Alastair Syme. Companies on the hook for risky, high-cost projects that don’t make sense in a $50-a-barrel market include international titans such as Royal Dutch Shell and small wildcatters like Sanchez Energy. The impending writedowns represent the latest blow to an industry rocked by a combination of faltering demand growth and booming supplies from North American shale fields.

The downturn threatens to wipe out more than $1.6 trillion in earnings for producing companies and nations this year. Oil explorers already are canceling drilling plans and laying off crews to conserve cash needed to cover dividend checks to investors and pay back debts. “The mid-cap and small-cap operators are going to be hardest hit because this is all driven by their cost to produce,” said Gianna Bern, founder of Brookshire Advisory, who also teaches international finance at the University of Notre Dame. An index of 43 U.S. oil and gas companies lost about one-fourth of its value since crude began its descent from last year’s intraday high of $107.73 a barrel on June 20. The price dipped below $50 on Jan. 5, the lowest since April 2009.

The decline represents a $4.4 billion drop in daily revenue for oil producers, which equates to $1.6 trillion on an annualized basis, Citigroup researchers led by Edward Morse said in a Jan. 4 note to clients. The oil-market rout is exposing projects dating as far back as 2009 that were either poorly executed or bad ideas to begin with, Syme’s team said in a note to clients. Shell, Europe’s largest energy producer, may have as much as 5% of its capital tied up in money-losing projects. For U.K.-based BG Group, the figure could be as high as 8%, according to the Citi analysts. The biggest swath of asset writedowns probably will happen among U.S. explorers such as Sanchez, Matador and Clayton Williams that don’t have the same financial discipline as bigger producers such as Marathon Oil, Bern said.

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Very true, Ambrose: “Mr Draghi can hardly agree to buy Greek bonds three days before the likely election of a party that has vowed to repudiate that same debt.”

• Greece vs Europe: Who Will Blink First? (AEP)

There is a whiff of 1914 to the latest Balkan showdown. Everybody thinks everybody else is bluffing, all of them betting that a calamitous chain reaction will be averted. In Germany, Der Spiegel reports that Angela Merkel thinks Greece can be ejected safely from the euro, if the rebel Syriza party wins the elections on January 25 and carries out its pledge to tear up Greece’s hated “memorandum” with the EU-IMF “Troika”. The German Chancellor’s team are blanketing the airwaves in what looks like a campaign to drive the threat home. “We are past the days when we still have to rescue Greece,” said Michael Fuchs, the parliamentary leader of Mrs Merkel’s Christian Democrats. “The situation has completely changed. It is entirely different from three years ago when we didn’t have the backstop defences in place. Greece is no longer ‘systemically relevant’ for the euro.” He added wickedly that the single currency might actually be stronger without the Balkan troublemaker.

It was revealed last week that Germany offered Greece a “friendly” return to the drachma in 2011. Months later, Mrs Merkel was prepared to eject Greece from EMU altogether. Tim Geithner, the former US Treasury Secretary, said the Europeans seemed determined to teach Greece a lesson: “They lied to us, and we’re going to crush them,” was the gist of it. Mrs Merkel retreated only after it became clear that Spain and Italy would be engulfed by contagion if Greece was thrown out. This time, Berlin seems almost eager to finish the job. Yet Syriza’s ice-cool leader, Alexis Tsipras, is equally convinced that the EU elites will back down, knowing that they have invested too much political capital in Greece’s salvation to walk away. After all, the sums involved now are tiny compared to the €245 billion in loans already dispersed since the crisis erupted in May 2010. Surely, after having claimed so confidently that the crisis was essentially over, Mrs Merkel can hardly admit that her strategy has failed?

Syriza itself is a neo-Marxist mélange, an ideological work in progress. Mr Tsipras no longer has a picture of Che Guevara in his office and has quickly mastered the Brussels vernacular – so much so that EU leaders and City economists presume, rightly or wrongly, that his rhetoric is just for domestic consumption. Yet the ultra-Left Aristeri Platforma still holds the biggest bloc of votes on Syriza’s central committee, and has stated that the movement must “be ready to implement its progressive programme outside the eurozone” if the EU refuses to yield. Mr Tsipras clearly wants Greece to remain in the euro. But he continues to insist on terms that negate that. He says: “We will cancel austerity. Under a Syriza government Greece will exit the bailout. This is not negotiable.” Twisting his knife into the German psyche, he wants the same level of debt relief – 50% – that Germany secured in 1953, which Greece signed up to despite the death of some 300,000 of its citizens under Nazi occupation.

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“.. if markets have already priced in QE, why would actually doing QE make any difference?”

• The Black Hole Theory Of The Eurozone (Coppola)

Jean Pisani-Ferry tells the ECB to get a grip:

On the face of it, the ECB has many reasons to launch QE. For two years, inflation has consistently failed to reach the 2% target. In November, the annual price growth was just 0.3%, while the recent collapse in oil prices will generate further downward pressure in the coming months. Even more important, inflation expectations have started to de-anchor: forecasters and investors expect the undershooting of the target to persist over the medium term. Low inflation is already a serious obstacle to economic recovery and rebalancing within the eurozone. Outright deflation would be an even more dangerous threat.

So far, so good. Deflation risk is a legitimate reason for a central bank to loosen monetary policy. The ECB has already pushed funding rates close to zero and deposit rates into negative territory, as well as throwing money at banks and buying ABS and MBS in an attempt to get banks to lend. All this appears to have done is slow the rate at which M3 lending is falling (in a credit-money economy, I regard M3 lending as the best indicator of future NGDP growth). It’s hard to argue that the ECB has done anything like enough to counter deflationary pressures and restore growth. But I’m really not sure about this. He seems to think that the ECB must do QE because it has already been priced in by markets:

Should the ECB disappoint expectations, bond and foreign-exchange markets would confront an abrupt and damaging unwinding of positions: long-term interest rates would rise, stock markets would sink, and the exchange rate would appreciate.

A failure to deliver what markets expect is a central bank failure, is it? Really? More importantly, if markets have already priced in QE, why would actually doing QE make any difference? The price effects are already there, and yet M3 lending is falling, unemployment remains stubbornly high, manufacturing PMI is on the floor and so are inflation expectations. I can accept Pisani-Ferry’s argument that the ECB must now do QE because otherwise things will get much worse, but I can’t see how it is going to reverse the current deflationary trend unless it is far larger than the programme the market has already priced in. “Shock and awe” is needed. Where is the political will for this?

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“Any country exiting the euro would throw the common currency’s continued existence into doubt.”

• As Goes Greece, So Goes the Euro (Bloomberg ed.)

German Chancellor Angela Merkel is said to view Greece’s exiting the euro as a manageable risk that would pose no existential crisis for the common currency. That opinion, if she indeed holds it, is misguided at best and dangerous at worst. It’s true that Greece poses a less naked financial risk to the rest of the euro region than it did in 2009, when revelations about the true size of its deficit triggered the ongoing crisis. Today, only about a fifth of Greek government debts are owed to the private sector, thanks to the country’s bailout by the European Union, the European Central Bank and the International Monetary Fund. And borrowing by Greek private companies accounts for less than 1% of loans made by Europe’s biggest banks, according to JPMorgan.

So it’s true that, if Greek elections later this month produce a new government prepared to default on its debts rather than continue with austerity, the financial repercussions will be limited. That says little, however, about the chaos that could accompany the country’s departure from the euro. Contagion is never predictable. Once inclusion in the euro is shown to be ephemeral – despite the EU treaty’s insistence that membership is “irrevocable” – then other of the currency’s weaker members will be vulnerable to speculation about their staying power. Investors may be driven to short the bonds of Italy, Portugal or Spain – no matter how strong the economic or political arguments against their leaving the currency union – driving their borrowing costs to levels they can’t afford.

To be sure, Der Spiegel’s report about Merkel’s intentions might not accurately reflect Germany’s attitude to a Greek exit. Joachim Poss, a German coalition lawmaker, said today that the consequences would be “incalculable.” And German government spokesman Steffen Seibert noted the region’s policy is “to stabilize and strengthen the euro area, the euro area with all of its members, including Greece.” Nevertheless, the mere discussion of a potential fracture in the euro zone should be a warning to European leaders that their path to ever-closer union is anything but assured. The euro has slumped to its weakest value against the dollar since 2006. Although there are other factors involved, it is a reminder that investors aren’t keen on putting their money into a currency with an uncertain future. Make no mistake: No matter how much some politicians might claim that they’ve contained a potential Greek crisis, they have not. Any country exiting the euro would throw the common currency’s continued existence into doubt.

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“.. even if Draghi does unveil what the market is anticipating, the question is, will further easing measures be the solution to Europe’s economic malaise?

• A New Year, A New Europe? Don’t Count On It (CNBC)

A new year is upon us and that means investors will take a fresh look at European stocks. Unfortunately, Europe’s gloomy picture hasn’t changed. Not enough growth. Inflation is too low. And unemployment is still too high in parts of Europe. Enter stage right: Mario Draghi. Arguably the most powerful European official, investors are betting on the European Central Bank President to unveil a full-blown program of quantitative easing to stimulate the region’s stagnant economy. “Will the ECB join in the fun? If yes – then that should bring stability to the Eurozone and help investors feel better – if not then watch out as global markets [to] adjust,” said Kenneth Polcari, Director at O’Neil Securities. The decision on full blown QE could come at the next governing council meeting on January 22th.

If the ECB does not join the party, then markets could be set for a steep decline. Already financial markets have been moving on the expectation that Draghi will deliver the goods. But if this is a classic –overpromise and underdeliver – something Draghi is quite good at, then traders say expect markets to react negatively. But even if Draghi does unveil what the market is anticipating, the question is, will further easing measures be the solution to Europe’s economic malaise? Sure, it worked in the U.S. but does that mean it will work in Europe? Some traders say no. An economic recovery takes more than just quantitative easing. Each individual economy needs to work on structural reform – policies to help revive their own respective countries. And while each country says it’s working on a plan – some analysts say more work can be done.

Less reliance on ECB and more action from individual country leaders is needed, they say. Despite what is most likely going to be a slow and drawn-out path to recovery, there are some investors who are bullish on Europe. In fact, Morgan Stanley writes that it is positive on European equities for 2015. Analysts there expect a pick-up in economic momentum, and 10% earnings per share (EPS) growth. One of the factors that should help earnings this year is a weaker euro. The single currency is currently trading at a multi-year low against the US dollar. “A key component in our 10% EPS forecast is the likely currency tailwinds that European companies will enjoy next year. Our foreign exchang strategists expect EUR/USD to reach 1.12 by the end of 2015,” writes Graham Secker, Morgan Stanley’s Chief European Equity Strategist.

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All big banks should be broken up.

• Goldman Says JPMorgan Should Break Itself Into Pieces (Bloomberg)

JPMorgan Chase’s parts are probably worth more to investors than the whole after regulators proposed tougher rules penalizing firms for size and complexity, according to Goldman Sachs. JPMorgan could unlock value by splitting its four main businesses or dividing into consumer and institutional companies, Goldman Sachs analysts led by Richard Ramsden wrote today in a research note. Units of New York-based JPMorgan trade at a discount of 20% or more to stand-alone peers, they wrote. “Our analysis suggests that a breakup into two or four parts could unlock value in most scenarios, although the range of outcomes we assessed is wide, at 5% to 25% potential upside,” the analysts wrote. The move would reverse much of Chief Executive Officer Jamie Dimon’s work since taking over JPMorgan in 2006.

Under Dimon, 58, the firm grew to become the largest U.S. lender by assets and the world’s biggest investment bank after acquiring ailing firms during the 2008 financial crisis. Dimon has said the firm’s size creates opportunities to cross-sell products and better serve clients. “Each of our four major businesses operates at good economies of scale and gets significant additional advantages from the other businesses,” Dimon wrote in a letter to shareholders last year. “This is one of the key reasons we have maintained good financial performance.” The logic of a breakup would rely on the consumer business, commercial bank, investment bank and asset management unit being valued closer to so-called pure-play financial companies, the Goldman Sachs analysts wrote.

The parts probably could operate with lower capital levels as stand-alone firms, resulting in higher returns on equity, they wrote. The maneuver would risk some of the $6 billion profit JPMorgan says it makes tied to synergies between businesses, though a split into halves would preserve much of those benefits, the analysts wrote. The Federal Reserve laid out a plan last month that may require JPMorgan to add more than $20 billion to its capital by 2019. The rules could get even stricter, prompting banks to consider new business models, the Goldman Sachs analysts wrote. “JPMorgan – and other money centers – would strongly consider strategic alternatives, providing shareholders with a breakup ‘put option’ if capital requirements get tougher,” they wrote.

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It’s going to need the shadow banking system to make this work, the very same it’s trying to curb.

• China Fast-Tracks $1 Trillion in Projects to Spur Growth (Bloomberg)

China is accelerating 300 infrastructure projects valued at 7 trillion yuan ($1.1 trillion) this year as policy makers seek to shore up growth that’s in danger of slipping below 7%. Premier Li Keqiang’s government approved the projects as part of a broader 400-venture, 10 trillion yuan plan to run from late 2014 through 2016, said people familiar with the matter who asked not to be identified as the decision wasn’t public. The National Development and Reform Commission, which will oversee the projects, didn’t respond to a faxed request for comment. The move illustrates concern among officials that China’s planned shift to a domestic-consumption driven economy has yet to produce enough growth momentum.

The yuan rose, halting a two-day decline, and Australia’s dollar – a proxy for China – climbed after the news. “It’s part of China’s efforts to stabilize growth, and the news will help to boost market confidence,” said Julia Wang, a Hong Kong-based economist with HSBC. “Infrastructure investment will continue to be a major driver for China’s economic growth.” The approvals contrast with past moves to boost growth via infrastructure in which the government gave the green-light to projects individually. They are part of efforts to respond to weak output, according to the people. The projects will be funded by the central and local governments, state-owned firms, loans and the private sector, said the people.

The investment will be in seven industries including oil and gas pipelines, health, clean energy, transportation and mining, according to the people. They said the NDRC is also studying projects in other industries in case the government needs to provide more support for growth. The NDRC’s spokesman, Li Pumin, said last month China would encourage investment in those areas. The Economic Observer newspaper reported Dec. 26 on its website that an official from the NDRC’s Zhejiang provincial bureau said the government had approved more than 420 infrastructure projects needing investment of more than 10 trillion yuan.

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China will step in.

• Venezuelan Leader Maduro Seeks Economic Help On Tour (BBC)

Venezuelan President Nicolas Maduro is beginning an international tour to try to stem the impact of falling oil prices and a deepening recession. Mr Maduro goes first to China – a major source of loans for Venezuela – for talks with the Chinese President, Xi Jinping. He will then travel to various Opec member countries to press for cuts in oil output that would boost prices. Venezuelan oil prices have dropped by half since June. The country gets most of its foreign currency from oil exports and is estimated to have the largest oil reserves in the world. Before he left Venezuela Mr Maduro announced a number of new mechanisms aimed at addressing the country’s economic crisis.

He said he would create a strategic reserve, appoint a new board to run the organisation that manages currency exchange controls, and create new agencies to manage the distribution of commodities. President Maduro has said his country is suffering the consequences of an economic war launched by US President Barack Obama “to destroy” the oil producers’ cartel, OPEC. He has also accused the US of flooding the markets with oil as part of an economic war against Russia. The Venezuelan opposition blames the country’s economic crisis and shortages of many staples, such as corn oil and milk, on the socialist policies of Mr Maduro and his late predecessor, Hugo Chavez.

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“Across the U.K., real weekly earnings – adjusted for inflation – dropped by 10.3% on average between 2008 and 2014 ..”

• The Demise of UK’s Lucky Years Pits Winners Against Losers (Bloomberg)

Out shopping one winter weekday morning in the southern English town of Eastleigh, 58-year-old Steve Fryer has reason to smile. Hired at 16 by J Sainsbury Plc, he stayed with the retailer for four decades, ascending from the shop floor to management. With a pension that generates more than his final salary at retirement two years ago, he’s paid off his mortgage, owns a second home in a nearby coastal resort and is helping the last of three daughters on to the property ladder. Asked if he could secure the same prosperity starting out today, Fryer shakes his head. “I got through by hard work, but I was also working in the lucky years,” he says. “I don’t see a light at the end of the tunnel for the younger ones.” It’s an indictment heard across the U.K. four months from a general election that threatens to redraw the British political landscape.

As Prime Minister David Cameron campaigns for a second term on the U.K.’s economic recovery, his chances of re-election are undermined by a sense that things aren’t getting better for many voters after more than 4 1/2 years of austerity under the Conservative-led coalition. Take John Harcourt. At 21, he’s hunting for work in Eastleigh to lift him off welfare benefits before he goes to university later this year. He’s chosen to study motor-vehicle engineering, in part to avoid what he says is a lackluster labor market and to secure the skills he thinks he’ll need if he’s to find long-term employment. “It’s very difficult as there’s just not much turnover in jobs,” he says. “I’m happy to do anything. I’d do administration, retail, flip burgers.” You don’t have to walk far in Eastleigh, a town of about 125,000, to run into the two faces of the modern-day British economy.

Those at the end of their work life with a pension and property are coping with the tepid recovery from the 2008-2009 recession, while those starting out struggle to be hired, then face low wage growth once they have a job. Across the U.K., real weekly earnings – adjusted for inflation – dropped by 10.3% on average between 2008 and 2014, according to the Office for National Statistics. The opposition Labour Party says that equates to the biggest drop in real incomes since the time of Queen Victoria and the advent of industrialization more than a century ago. [..] Four years since Cameron declared “we’re all in this together,” the economic divide is not simply geographical but increasingly defines the country. While the government boasts of the fastest economic growth of any major developed nation, an Ipsos MORI poll in November found that eight in 10 Britons say they’ve felt little, if any, impact on their standard of living. [..]

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I’ve always thought that if a community’s center evolves around shopping, it has negative value.

• The Economics (and Nostalgia) of Dead US Shopping Malls (NY Times)

Inside the gleaming mall here on the Sunday before Christmas, just one thing was missing: shoppers. The upbeat music of “Jingle Bell Rock” bounced off the tiles, and the smell of teriyaki chicken drifted from the food court, but only a handful of stores were open at the sprawling enclosed shopping center. A few visitors walked down the long hallways and peered through locked metal gates into vacant spaces once home to retailers like H&M, Wet Seal and Kay Jewelers. “It’s depressing,” Jill Kalata, 46, said as she tried on a few of the last sneakers for sale at the Athlete’s Foot, scheduled to close in a few weeks. “This place used to be packed. And Christmas, the lines were out the door. Now I’m surprised anything is still open.” The Owings Mills Mall is poised to join a growing number of what real estate professionals, architects, urban planners and Internet enthusiasts term “dead malls.”

Since 2010, more than two dozen enclosed shopping malls have been closed, and an additional 60 are on the brink, according to Green Street Advisors, which tracks the mall industry. Almost one-fifth of the nation’s enclosed malls have vacancy rates considered troubling by real estate experts — 10% or greater. Over 3% of malls are considered to be dying — with 40% vacancies or higher. That is up from less than 1% in 2006. Premature obituaries for the shopping mall have been appearing since the late 1990s, but the reality today is more nuanced, reflecting broader trends remaking the American economy. With income inequality continuing to widen, high-end malls are thriving, even as stolid retail chains like Sears, Kmart and J. C. Penney falter, taking the middle- and working-class malls they anchored with them.

“It is very much a haves and have-nots situation,” said D. J. Busch, a senior analyst at Green Street. Affluent Americans “will keep going to Short Hills Mall in New Jersey or other properties aimed at the top 5 or 10% of consumers. But there’s been very little income growth in the belly of the economy.” At Owings Mills, J. C. Penney and Macy’s are hanging on, but other midtier emporiums like Sears, Lord & Taylor, and the regional department store chain Boscov’s have all come and gone as anchors. Having opened in 1986 with a renovation in 1998, Owings Mills is young for a dying mall. And while its locale may have contributed to its demise, other forces played a crucial role, too, like changing shopping habits and demographics, experts say. “I have no doubt some malls will survive, but major segments of our society have gotten sick of them,” said Mark Hinshaw, a Seattle architect, urban planner and author.

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“Stock buybacks boost share prices, of course, but they don’t represent any real increased value in a given company. They’re just snakes eating their own tails.”

• Forecast 2015 – Life in the Breakdown Lane (Jim Kunstler)

As 2014 closed out, that kit-bag of frauds, swindles, Ponzis, grifts, bait-and-switches, and three-card-monte scams is looking at least as wobbly as it did in 2007 when Wall Street was busy manufacturing booby-trapped MBSs and CDOs. Except we know the true aggregate risk at stake has only grown larger and more hazardous due to all the strenuous efforts by authorities since the panic of 2008 to evade any natural process for clearing mal-investment and debt gone bad. A lot of that stank was simply shoveled into the Federal Reserve’s basement, where it sits to this day, composting steamily. As to be expected (and averred to in my previous books and blogs) financial repression, market intervention, and statistical distortion will produce ever more financial perversity.

That is the hazard in decoupling truth from reality. Imposed dishonesty will always express itself in unexpected ways. Who expected the price of oil to fall by nearly half in a few months? These days, perversity expresses itself in a morbidly obese dollar gorging on junk while bulimic currencies elsewhere projectile-vomit their value away as the economies attached to them die of malnutrition. Perhaps this comes as a surprise to central bankers standing at their control panels like recording engineers at the soundboard, tweaking all the dials and slides expecting to achieve a perfect repressive inflation rate of 2%+ so they can melt away the onerous debt of sovereign balance sheets and Too Big To Fail banks — incidentally squeezing the citizenry of purchasing power in small annual increments that add up, after a while, to worthless money.

They did manage to extend the inflation of stock market indexes another year, which the public is supposed to interpret as “prosperity.” Half a trillion dollars in stock buybacks of S&P companies were executed in 2014, much of it done with money, i.e. “leverage,” borrowed at zero interest. Stock buybacks boost share prices, of course, but they don’t represent any real increased value in a given company. They’re just snakes eating their own tails.

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“3. The United States is still quite powerful and can cause massive damage on its way down.”

• 2015: Grounds for Optimism (Dmitry Orlov)

To my mind, the really interesting development of 2014 is that the world as a whole (with a few minor exceptions) has become quite lucid on the topic of what the United States, as a global empire, is and stands for. It is now very commonly and completely understood that: 1. The United States is an evil empire, attempting not so much to rule the world as to disrupt it to its short-term advantage, 2. The United States is failing, as an empire and as a country, and no amount of fraud, mayhem, torture and murder is going to save it, 3. The United States is still quite powerful and can cause massive damage on its way down. This damage must be contained, while plans are drawn up for an international arrangement that will arise upon its demise.

Looking back on 2013 and before, such sentiments were already being expressed, but on the fringes and quietly. The difference is that in 2014 they became commonplace knowledge, and their expressions thundered from presidential podiums. What’s more, there just isn’t that much of a counterargument being voiced. I don’t hear a single voice out there arguing that the US is a benevolent force that is on the up-and-up, would never hurt a fly and is the permanent center of the universe. Yes, some people can still think that, but it’s hard to see value in such “thought.” There are still a few holdouts: the UK, Canada and Australia especially. But even there the true picture is being distorted because of their Murdockified national media.

Judging from what I hear from the people there, they are almost uniformly nauseated by the subservient pro-US antics of their national leaders. As for the EU, the image of political uniformity presented by Brussels is largely a fiction. In the core countries of Western Europe, business leaders are almost uniformly in favor of close cooperation with Russia and against sanctions. Along the fringe, entire countries appear to be on the verge of switching sides. Hungary—never a friend of Russia—now seems more pro-Russian than ever. Bulgaria, which has had a love/hate attitude toward Russia for centuries now, seems to be edging back closer to love. Even the Poles are scratching their heads and wondering if close cooperation with the US is in their national interest.

Another major shift I have observed is that a significant percentage of the thinking people in the US no longer trusts their national media. There is a certain pattern to the kinds of messages that can go viral and spread wildly via tweets and social media. Fringe messages must, by definition, stay on the fringe. And yet last year something snapped: a few times I ran a story in an attempt to plug a gaping hole in the US mass media’s coverage of events in the Ukraine, and the response was overwhelming, with hundreds of thousands of new readers showing up. What’s more, a lot of them have kept coming back for more. I take this to mean that what I have to say, while by no means mainstream, is no longer on the fringe, and that bloggers have an increasingly important role in helping plug the giant holes in national media coverage.

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We’ll keep going till there’s nothing left.

• The People Pushed Out Of Ethiopia’s Fertile Farmland (BBC)

The construction of a huge dam in Ethiopia and the introduction of large-scale agricultural businesses has been controversial – finding out what local people think can be hard, but with the help of a bottle of rum nothing is impossible. After waiting several weeks for letters of permission from various Ethiopian ministries, I begin my road trip into the country’s southern lowlands. I want to investigate the government’s controversial plan to take over vast swathes of ancestral land, home to around 100,000 indigenous pastoralists, and turn it into a major centre for commercial agriculture, where foreign agribusinesses and government plantations would raise cash crops such as sugar and palm oil. After driving 800km (497 miles) over two days through Ethiopia’s lush highlands I begin my descent into the lower Omo valley.

Here, where palaeontologists have discovered some of the oldest human remains on earth, some ancient ways of life cling on. Some tourists can be found here seeking a glimpse of an Africa that lives in their imagination. But the government’s plan to “modernise” this so-called “backward” area has made it inaccessible for journalists. As my jeep bounces down into the valley, I watch as people decorated in white body paint and clad in elaborate jewellery made from feathers and cow horn herd their cows down the dusty track. I arrive late in the afternoon at a village I won’t name, hoping to speak to some Mursi people – a group of around 7,000 famous for wearing huge ornamental clay lip plates. The Mursi way of life is in jeopardy. They are being resettled to make way for a major sugar plantation on their ancestral land – so ending their tradition of cattle herding.

Meanwhile, a massive new dam upstream will reduce the Omo River, ending its seasonal flood – and the food crops they grow on its banks. It is without doubt one of the most sensitive stories in Ethiopia and one the government is keen to suppress. Human rights groups have repeatedly criticised schemes like this, alleging that locals are being abused and coerced into compliance. I’d spoken to local senior officials in the provincial capital of Jinka, before travelling into the remote savannah. The suspicion is palpable as the chief of the south Omo zone lectures me. Local people and the area’s reputation have been greatly harmed by the negative reports by foreigners, he says. Eventually a frank exchange takes place and I secure verbal permission to report on the changes taking place in the valley.

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How crazy would you like it?

• Does CNN Really Have A Video Ready For The Apocalypse? (BBC)

If the end of the world arrives, chances are you aren’t going to be watching CNN. But just in case you are, the cable news network has a video ready for the Big Sign-off. That’s according to blogger Michael Ballaban who posted the purported footage online. The clip isn’t much, really – just low-res footage of a US Army band playing a mournful rendition of Nearer My God to Thee, which takes a little over a minute. Then fade, presumably, to the rapture, apocalypse, giant comet impact or whatever coup de grace fate has in store for our little blue marble. Writing on the Jalopnik blog, Ballaban says he first heard about the video from a college professor who worked at CNN. He was then able to confirm its existence when he was an intern at the network in 2009. The video, he reports, is available on CNN’s MIRA archiving system under the name “TURNER DOOMSDAY VIDEO” – the lingering legacy, it seems, of now-departed CNN founder Ted Turner.

Of course, it’s existence shouldn’t be a total shock. Mr Turner has said that the same tune that serenaded the doomed passengers of the sinking Titanic would usher the world’s population into the great hereafter. Still, Ballaban writes, he was a bit sceptical. “It sounded mostly like a mythic joke, the kind of thing that Ted Turner, the all-around ‘eccentric billionaire’ archetype, would mention offhand. Bison ranches, the America’s Cup, four girlfriends at once, the last word on the last day on earth – why not?” he writes. Just in case there is any confusion, the video clip is marked, in bright red letters, with an HFR – “hold for release” – warning: “HFR till end of the world confirmed.” “CNN, once ever so thorough in its fact-checking, knew that the last employee alive couldn’t be trusted to make a call as consequential as one from the Book of Revelation,” Ballaban writes. “The end of the world must be confirmed.”

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