May 082023
 


Paul Cézanne Village derrière des arbres, Île-de-France 1879

 

The Prighozin File: Twilight of the Gods or Maskirovka? (Pepe Escobar)
Wagner Promised ‘As Much Ammo As We Need’ – Prigozhin (RT)
China, The Peacemaker? – McCoy (IC)
Kiev Counteroffensive To ‘Pave The Way’ For Dialogue With Russia – WSJ (TASS)
Kissinger Makes Ukraine Peace Prediction (RT)
EU Defenseless Against China – Berlusconi (RT)
US Anti-Russia Actions Push Humanity Towards World War, Malaysia ex-PM (TASS)
Kamala Harris To Run AI Taskforce (RT)
Fauci’s Never-Ending Victory Tour (Pierre Kory)
Tucker Carlson Squaring Off Against Fox – Axios (RT)
Rep. Comer Urges DOJ To Hold Possible Hunter Biden Indictment (Fox)
Close to 190 US Banks Could Collapse, According To Study (USAT)
A Credit Crunch Is Inevitable (Lacalle)
China And Its Trading Allies Are Well Placed To Topple The Dollar (Münchau)
MSM Doesn’t Care That the CIA May Have Helped Cause 9/11 (Marcetic)
Ex-Russian Space Boss Questions US Moon Landing (RT)

 

 

 

 

VDB

 

 

 

 

Assange

 

 

 

 

JFK Vietnam

 

 

Bowie Lennon

 

 

 

 

 

 

 

 

Pepe on Twitter: “written on Thursday, BEFORE Prighozin’s deal with Kadyrov to wrap up Artemyovsk. Confirmed to me by top Donbass politico: fierce competition Wagner-MoD.”

The Prighozin File: Twilight of the Gods or Maskirovka? (Pepe Escobar)

There’s no question: if Prighozin is essentially telling the truth, this is – literally – nuclear. Either Prighozin knows everything nearly everyone doesn’t, or this is a spectacular maskirovka. Yet facts on the ground since February 2002 seem to support his main accusation: the Russian army can’t properly fight because of a completely corrupt bureaucratic gang right at the very top of the MoD, all the way to Shoigu, all of them only interested in making a financial killing. And it gets worse: under a rigidly bureaucratized environment, commanders at the frontlines have no autonomy to take decisions and quickly adapt, and need to wait for orders from far away. That should be the main reason for the Kiev counter-offensive standing a chance of imposing dramatic upsets.

Prighozin is definitely not alone among Russian patriots in voicing his analysis. In fact there’s nothing new: he was just more forceful this time. Strelkov has been saying the exact same thing since the start of the war. That even coalesced into an “Angry Patriots Club” releasing an explosive video on April 19. So here we have a small but very vocal group bearing impeccable patriotic credentials sounding a serious alarm bell: Russia runs the risk of losing this proxy war entirely unless dramatic changes take place right away. Or, once again, this could be brilliant maskirovka – leaving the enemy totally misdirected. If that’s the case, it’s working like a charm. Kiev propaganda outlets triumphantly adopted Strelkov’s accusations with headlines such as “Russia is on the brink of defeat, Strelkov threatens the Kremlin with a coup.”

Strelkov keeps doubling down, insisting that the Russian state really does not take this war seriously and is planning to make a deal without really fighting, even ceding territory in Ukraine. His evidence: the “corrupt” (Prighozin) Russian army did not make any serious effort to prepare the economy, or public opinion, for an offensive – in terms of training and logistics. And that’s because the elites in the Kremlin and the army do not rally believe in this war, nor want it; they’d rather go back to the pre-war status quo. So here we go again. Maskirovka? Or a sort of Revenge of the MoD against Wagner? It’s a fact that at the start of the SMO the Russian army didn’t exactly get its act together, they really needed Wagner on the ground. But now it’s a different ball game, and the MoD may be engaged in gradually reducing Wagner’s role so Prighozin’s men do not capture all the blazes of glory when Russia starts going for the jugular.

And then right in the middle of this incandescent confrontation, we have the irruption in the dead of night of a couple of puny kamikaze drones over the Kremlin. This was no attempt to assassinate Putin: rather a cheap PR stunt. Russian intel must have pieced the whole story by now: the drones were probably launched from inside Moscow or its suburbs, by Ukrainian strike cells dressed in civilian clothing and sporting fake IDs. There will be more such PR stunts – anything from car bombs and booby traps to improvised landmines. Russia will have to step up internal security towards a real war footing. But what about the “response” to – in Kremlin terminology – a “terrorist attack”? Elena Panini from Russtrat.ru has offered a priceless, non-hysterical appraisal: “The purpose of the night strike, judging by the video footage, was not the Kremlin itself and not even the dome of the Senate Palace, but the flagpole on the dome with a duplicate of the standard of the President of the Russian Federation.

The game of symbolism is already purely British stuff. A kind of ‘reminder’ from London on the eve of the coronation of Charles III that the conflict in Ukraine is still developing according to the Anglo-Saxon scenario and within the framework set by them.” So yes: those neo-Nazi mutts in Kiev are just tools. The orders that matter always come from Washington and London – especially when it comes to breaching red lines. Panini argues it’s time for the Kremlin to seize the definitive strategic initiative. That should include upgrading the SMO to the status of a real war; declare Ukraine as a terrorist state; and implement what is already being discussed in the Duma: the transition to the use of “weapons that are capable of stopping and destroying the Kiev terrorist regime.” The puny double drone attack – a combined Anglo-Saxon neocon provocation – has offered Moscow the perfect gift: an unmistakable casus belli.

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Putin?! No more withdrawal.

Wagner Promised ‘As Much Ammo As We Need’ – Prigozhin (RT)

The Russian private military company Wagner Group, which is fighting Ukrainian troops in the Donbass city of Artyomovsk (Bakhmut), has been promised enough ammunition to continue the battle, the company’s head, Yevgeny Prigozhin said on Sunday.The statement comes after Prigozhin warned that his fighters would be forced to pull out of the city on May 10 unless ammunition shortages are addressed by Russia’s Defense Ministry. In a voice message posted on his Telegram channel, Prigozhin said that Wagner received “a military instruction … in which we were promised as much ammunition and weapons as we need to continue our activities.” “We were told that we can carry out activities in Artyomovsk as we deem necessary,” Prigozhin added.


He also said that Army General Sergey Surovikin, the deputy commander of Russia’s military operation in Ukraine, was tasked with “making all decisions related to the military activities of Wagner PMC in coordination with the Defense Ministry.” On Friday, Prigozhin said that Wagner personnel were suffering heavy losses because of what he described as a 70% shortage of ammunition. He later announced that the positions held by Wagner would be handed over to Akhmat, an elite unit from Russia’s Chechnya. The fierce and bloody battle for the mining city of Artyomovsk, known to Ukrainians as Bakhmut, has been raging for several months. Prigozhin claims his forces have taken control of nearly all of the city, while the Ukrainians are holding out in a small area in the western part. Capturing Artyomovsk, an important logistical hub, would allow Russian forces to make further advances in Donbass.

Bakhmut

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“..China the dominant economic presence of the Eurasian landmass..”

China, The Peacemaker? – McCoy (IC)

China has, in the last ten years, according to latest figures, expended a little over a trillion dollars in massive development loans. And they’ve done two things: They’ve laid a steel grid across the Eurasian landmass, for the first time actually overcoming that distance, and unifying Europe and Asia. So that, really, we shouldn’t speak of them as separate continents anymore; they were only divided by that great distance in the center. China has filled that distance with a steel grid of pipelines and rail links. And then, they’ve also ringed the whole world-island — that tricontinental world island of Europe, Asia, and Africa — with 40 ports, stretching from Sri Lanka, around the coast of Africa, and then ringing Europe, all the way from Piraeus in Greece to Hamburg in Germany.

And then, here we have to get almost metaphysical, a little bit mystical, OK? Because everybody talks about geopolitics. You know, you can pick up The Washington Post and New York Times and, probably, in every issue find the word “geopolitics” popping up all over the place. What is geopolitics? What might geopolitics mean? How might geopolitics actually make a difference? What’s the relationship between geographical formations and political events? And here’s what I think is happening, OK? That geopolitics is kind of like a substrate beneath the visible, tangible surface of events. Now, China has changed the Eurasian politics by investing this trillion dollars and laying down this infrastructure, so that China has an infrastructure for dominance of Eurasia. And then what happens? It’s kind of like the grinding of the tectonic plates beneath the earth’s surface that periodically manifests themselves in earthquakes or volcanic eruptions. When the liquid rock breaks through the earth’s surface and you get an enormous eruption, and then, suddenly, you realize that the tectonic plates are shifting.

Well, that’s what’s happened. China has changed the substrate of Eurasia’s geopolitics. And now, just now, after — It’s only been ten years that China’s been doing this. They started this in 2013, we’re in 2023. It’s [been] ten years. That’s not a long time. But they’ve done it fast, and they’ve done it, actually, pretty well, despite what you might read in the U.S. press about white elephant investments and all the rest. And so, there are all these manifestations. One was the U.S. withdrawal from Afghanistan in 2021. I mean, what China did was, they ran a geopolitical squeeze play around the U.S. position in Afghanistan. They signed very lucrative development deals with the six countries ringing Afghanistan, particularly Pakistan. And mind you, how does the U.S. military fight? We have troops on the ground and we have air support. And it’s that combination that’s absolutely central to all U.S. warfighting strategy. No planes, then no soldiers on the ground.

And where’d those planes come from? The nearest air base that they could fly from after this geopolitical squeeze play was the Persian Gulf. They had to fly 2,000 miles, which means their ability to loiter over the battlefield and provide close air support was very limited. They could refuel, of course, but it was impossibly inefficient, and it was dangerous for the troops on the ground. And that meant, bang, we had to get out of there as fast as we could. The next manifestation we saw which, you know, seemed to be absolutely unrelated — But, again, think of that substrate and the periodic eruption. The next eruption was this sectarian division, as deep as the history of Islam, over a thousand years between Sunni and Shia —Shia, Iran, Sunni, Saudi Arabia — locked in the confrontation. But China signed a $480 billion development deal with Iran, and China’s top source of oil — and it’s the world’s leading oil importer — was Saudi Arabia. And so, China suddenly was in a position, because of this change in the geopolitical substrate that makes China the dominant economic presence of the Eurasian landmass. They could mediate between them.

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“.. the US Department of State and the CIA are skeptical of the idea and would like to see the result of the potential Ukrainian counteroffensive before taking any diplomatic steps..”

Kiev Counteroffensive To ‘Pave The Way’ For Dialogue With Russia – WSJ (TASS)

The Kiev regime’s ostensibly possible counteroffensive may “pave the way” for peace talks between Russia and Ukraine by the end of the year with China being one of the mediators, the Wall Street Journal reported on Sunday citing European officials. According to the newspaper, key representatives from the US National Security Council support the idea of holding the negotiations between Kiev and Moscow. That said, the US Department of State and the CIA are skeptical of the idea and would like to see the result of the potential Ukrainian counteroffensive before taking any diplomatic steps. The Wall Street Journal also points out that this “shift in Western thinking” is occurring amid Western countries’ serious concern that they won’t be able to maintain the necessary level of military aid to the Kiev regime in the future.


That said, some Western states want to see whether China is capable of defusing the conflict which also indicates a change in the way the West sees Beijing’s role. Media conjecture about a potential counteroffensive by Ukrainian troops has been rife for several months running, with various potential trigger dates being publicly mooted. Earlier, the Russian Foreign Ministry highlighted that such open speculation within Western countries about expectations for an upcoming Ukrainian counteroffensive only serves to confirm these countries’ direct involvement in the conflict. On April 23, Ukrainian National Security and Defense Council Secretary Alexey Danilov rejected calls for dialogue on settling the conflict with Russia demanding more weapons from the West. Earlier, Russian Foreign Minister Sergey Lavrov said that Moscow always supported holding negotiations but dialogue on the situation around Ukraine is possible only if Russia’s legitimate interests and concerns are taken into account.

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“Now that China has entered the negotiation, it will come to a head, I think by the end of the year..”

Kissinger Makes Ukraine Peace Prediction (RT)

Former US Secretary of State Henry Kissinger has told CBS News that the conflict in Ukraine may be approaching a turning point, and that Chinese-brokered peace talks could begin by the end of 2023. “Now that China has entered the negotiation, it will come to a head, I think by the end of the year,” the 99-year-old diplomat told CBS in an interview broadcast on Sunday. By that time, he continued, “we will be talking about negotiating processes and even actual negotiations. With the release of its ‘Position on the Political Settlement of the Ukraine Crisis’ in February, China put itself forward as a potential mediator between Moscow and Kiev. The Chinese plan was rejected outright by the US and EU, while Russian President Vladimir Putin described some of its 12 points as “in tune” with Moscow’s position, and Ukrainian President Vladimir Zelensky welcomed only a handful of its points, but maintains that Kiev will not compromise with Russia in any way.

Zelensky’s refusal to negotiate with Putin’s government – the Ukrainian leader banned contact with the Kremlin in a decree last October – is just one stumbling block faced by China or any other potential middleman. Russia considers the conflict in Ukraine a proxy war between itself and NATO, and Russian Foreign Minister Sergey Lavrov said on Friday that any negotiations would not be held “with Zelensky, who is a puppet in the hands of the West, but directly with his masters.” In Washington, the administration of President Joe Biden publicly claims that it is up to Ukraine to decide when to seek peace. Zelensky has been offered no incentives by the US to do so, with Biden offering to continue supplying him with weapons “for as long as it takes” to achieve his war aims.


Among these aims is the capture of Crimea, a Russian territory since 2014. American military leaders have publicly admitted that the chances of this happening are slim to none. Kissinger drew the ire of Kiev last year when he suggested that Ukraine should accept a return to the “status quo ante,” or relinquish its territorial claims to Crimea and grant autonomy to the Donetsk and Lugansk People’s Republics, in the name of peace. He has since suggested that these territories become the basis of negotiations after a ceasefire and Russian withdrawal. Moscow has repeatedly said that it is open to talks with Kiev but only if Ukraine “recognizes the reality on the ground,” including the new status of the regions of Donetsk, Lugansk, Kherson, and Zaporozhye as parts of Russia. Otherwise, the Kremlin has stated, Russia will settle the conflict by military means.

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“The best thing we could do would be to go to school to study Chinese..”

EU Defenseless Against China – Berlusconi (RT)

Former Italian Prime Minister Silvio Berlusconi warns that the EU would be unable to defend itself if China decided to attack one of its member states. The veteran politician urged Brussels to adopt a robust military strategy and invest heavily in defense. Berlusconi made the remarks in a video interview recorded on Friday by Sky TG24 news channel. He is currently in the San Raffaele hospital in Milan and is being treated for leukemia, which was diagnosed in early April. The former prime minister said the EU is hardly a force to be reckoned with in the international arena, and should China decide to “occupy Italy, and maybe some other European country, we would absolutely not be able to counter it.” “The best thing we could do would be to go to school to study Chinese,” he added.

To improve its standing, Berlusconi said, the EU needs to adopt a “single military policy, with strong cooperation between the armed forces of all European countries.” He also advocated an increase in defense spending and the establishment of a 300,000-strong “emergency corps.” Politically, Berlusconi said he would like to see a “truly united continent” – something which would be more achievable if the bloc dropped its ‘unanimity principle’ in voting in favor of an 80-85% majority, he argued. He went on to stress that the EU can and must play a greater role in the world, including standing up to what Berlusconi described as “Chinese imperialism. Last month, Bloomberg reported that the current prime minister, Giorgia Meloni, was considering withdrawing from China’s Belt and Road infrastructure project.


According to sources cited in the article, however, there is a lack of consensus on the matter within the ruling coalition. Speaking in late March ahead of her visit to China, European Commission President Ursula von der Leyen said that while “decoupling” from Beijing is not in the EU’s interests, Brussels should become “bolder” in its relations with China – which is growing “more repressive at home and more assertive abroad,” she added. Commenting on Von der Leyen’s remarks, the Chinese ambassador to the EU, Fu Cong, said her message was incoherent and contradictory, while calling out the “misrepresentation and misinterpretation of Chinese policies and Chinese positions,” and advising the European Commission chief to find better speechwriters.

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”..if Ukraine doesn’t join NATO, I think Russia will feel less threatened, and there will be no confrontation. But once the process is started, Russia will take preemptive action,..

US Anti-Russia Actions Push Humanity Towards World War, Malaysia ex-PM (TASS)

The US authorities push humanity towards a world war by contributing to emergence of two hostile blocs, says Former Prime Minister of Malaysia Mahathir Mohamad. “The US will try to get other countries to join in the action against Russia, and Russia will also have to find friendly countries which will support it,” Mahathir, 97, said in an interview for the Global Times. “There will be confrontation between the Eastern bloc and Western bloc. And this will escalate and become a world war.” The expert noted that the conflict in Ukraine, provoked by the West, has already affected the entire world. He noted that the complicated situation has led to increased spending for essential goods around the world, negatively affecting grain shipments.


“The invitation to Ukraine to join NATO is a provocation. In fact, if Ukraine doesn’t join NATO, I think Russia will feel less threatened, and there will be no confrontation. But once the process is started, Russia will take preemptive action,” Mahathir said. He pointed out that NATO states are not directly involved in the Russian-Ukrainian conflict et, because Ukraine is not a member of the alliance. However, according to the ex-Prime Minister, the standoff with Russia harms NATO member states greatly. “In the end, they [Russia and Ukraine] will have to find some settlement. It is better for them to talk to each other, to discuss, to negotiate,” Mahathir said.

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Feel safer?

Kamala Harris To Run AI Taskforce (RT)

US Vice President Kamala Harris has been appointed to head a new artificial intelligence initiative in partnership with leading companies in the field, the White House announced in a press release on Thursday. Harris and other senior officials in the administration of President Joe Biden will meet with the CEOs of Alphabet, Anthropic, Microsoft, and OpenAI to remind them of their “responsibility to make sure their products are safe before they are deployed or made public.” The meeting is intended to keep the companies on track toward “driving responsible, trustworthy and ethical innovation with safeguards that mitigate risks and potential harms to individuals and our society,” according to the White House, which referenced recent executive orders and official statements reminding tech companies that their products were subject to civil rights law and other protections against unlawful discrimination.

The four companies, along with Hugging Face, NVIDIA, and Stability AI, will also submit to a public evaluation of their capabilities by thousands of industry experts and other curious members of the public at DEFCON 31, the Las Vegas hacking convention that has repeatedly put the insecurity of the US’ voting machines on display by giving children a chance to hack them. The White House also announced the creation of seven new National AI Research Institutes focusing on climate, agriculture, energy, public health, education, and cybersecurity, explaining the new institutes would “support the development of a diverse AI workforce” with $140 million in funding from the National Science Foundation. The administration is also giving the public the chance to weigh in on government AI policy starting this summer, according to the press release.


Tasked with stemming the flow of migrants over the US’ southern border upon taking office in 2021, Harris instead presided over a record amount of illegal immigration, earning her the lowest approval rating of any modern US vice president. Last year, she was assigned with developing a blueprint for fighting “disinformation,” harassment and abuse online despite having no experience in the technology sector. While hundreds of experts in the AI field have called for a moratorium on, or at least a dramatic slowdown of, AI development until internationally agreed-upon safety measures can be put in place, the US has thus far shied away from issuing any strong statements about the technology. Last month, Biden met with his Council of Advisors on Science and Technology to discuss the “risks and opportunities” in the field but declined to address the experts’ warnings while admitting AI “could be” dangerous.

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“For all his faults, Fauci is no fool. One does not spend 54 years ensconced in the federal government without learning how to play politics.”

Fauci’s Never-Ending Victory Tour (Pierre Kory)

What a dystopian nightmare watching “America’s Doctor” try to continue his Covid victory tour. It is both shocking and unsurprising that he would do this despite leaving a generation of children with lower IQ scores, a US life expectancy which dropped three years in the span of two, hundreds of thousands of deaths from the vaccines amongst working-age Americans (threatening the life insurance industry), millions of vaccine injured, skyrocketing disability rates, an explosion of cancers, and suddenly plummeting birth rates. So I went after him. Again. Maybe he will get the memo this time, particularly in light of the frosty receptions he has received of late from normally kid-gloved, obsequious interviewers. Enjoy. Dr. Anthony Fauci left government in December, but his media tour is going strong, albeit with a different tone and tenor.

The fawning adulation and questions about his exercise regimes and bobbleheads have been replaced by skepticism and outright doubt from outlets who never dared question the all-knowing man once dubbed “America’s doctor” by the New Yorker. Fauci recently appeared on CNN to complain about, “a personification of me as a person who essentially closed everything down.” He was responding to a lengthy sitdown with the New York Times where he declared, “Show me a school that I shut down and show me a factory that I shut down. Never. I never did. I gave a public-health recommendation that echoed the C.D.C.’s recommendation, and people made a decision based on that.” For all his faults, Fauci is no fool. One does not spend 54 years ensconced in the federal government without learning how to play politics.

Three years removed from the worst of the COVID pandemic, the longtime director of the National Institute of Allergy and Infectious Diseases knows the policy decisions guided by his medical recommendations are looking worse by the day. Herein lies his problem. When his ideas were in vogue, Fauci had no problem claiming responsibility. Now that the ugly consequences are coming due, he is eager to wash his hands. In the face of plummeting math and reading scores between 2020 and 2022, Fauci is especially quick to deny his role in the school shutdowns. Last fall, Fauci raised eyebrows for denying that school lockdowns, “forever irreparably damaged anyone.” Yet as late as September 2020, Fauci recommended that schools only open back up once the virus is “under control.”

Earlier in the year, he had chastised Florida Governor Ron DeSantis, warning that premature reopening “likely” led to widespread student infection. Today, even left-leaning sources concede that, “kids are safe. They always have been.” Then came the vaccines. From the outset, Fauci’s entire COVID mitigation strategy was based on an experimental vaccine rushed to market under the branding “warp speed.” There had never been an mRNA-approved vaccine before, and now it was being pushed non-stop from the White House podium with the full support of the pharmaceutical industry. It was always highly illogical to deploy a static vaccine toward a mutagenic and constantly changing coronavirus. Then came the checks the vaccines couldn’t write. Fauci told us they would stop transmission. He implored us to “follow the science.”

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“..knows where a lot of bodies are buried, and is ready to start drawing a map..”

Tucker Carlson Squaring Off Against Fox – Axios (RT)

Conservative commentator Tucker Carlson is ready to go on the attack against Fox News if the network does not release him from his contract, Axios reported on Sunday, citing sources close to the pundit. Fox fired its number-one host last month just hours before he was scheduled to go on air, but has not released Carlson from his $20 million annual contract, which forbids him to work elsewhere in the industry until January 2025. While Carlson has made no public statement on his departure or his future plans, aside from a two-minute Twitter video promising his viewers that he would see them “soon,” he has retained entertainment lawyer Bryan Freedman to negotiate an exit to the contract. Sources claiming to be close to the newsman say he is losing patience with the network.

“His team is preparing for war. He wants his freedom,” a “close Carlson friend” told Axios, noting that Carlson had previously said he wanted to “get this done quiet and clean” but his team was now “going from peacetime to Defcon 1.” The conservative icon “knows where a lot of bodies are buried, and is ready to start drawing a map,” another insider source agreed. Carlson’s allies in the media are supposedly prepared to go on the offensive against Fox, and outlets including video platform Rumble and cable network Newsmax have reportedly offered to pay him even more than his previous employer. Even billionaire Twitter CEO Elon Musk is reportedly interested, though the two have not discussed the details of any arrangement. “The idea that anyone is going to silence Tucker and prevent him from speaking to his audience is beyond preposterous,” Freedman told Axios.


The network lost almost half of its audience in Carlson’s 8pm time slot in the week following his firing, and ratings for the network’s other shows have also declined precipitously – especially in the 25-54 age demographic desirable to advertisers. Carlson’s show drew over 3 million viewers per night, far more than the next most popular show. The exact reason for Carlson’s ouster has not been made public. Media critics including the New York Times point to leaked text messages from the anchor, specifically one in which Carlson admitted enjoying watching footage of an antifa protester being beaten by a group despite this not being “how white men fight,” then acknowledging the protester’s humanity. Other leaked texts revealed Carlson did not believe the claim that Dominion Voting Systems was flipping votes for Democrat Joe Biden. Fox settled Dominion’s defamation lawsuit for $787 million just days before firing the anchor.

https://twitter.com/i/status/1654966139074539520

https://twitter.com/i/status/1655321469541285889

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“We’re going to disclose many of the different LLCs, many of the different transactions that all these different Biden family members have gotten from our adversaries around the world..”

Rep. Comer Urges DOJ To Hold Possible Hunter Biden Indictment (Fox)

House Oversight Committee Chair James Comer, R-Ky., urged the Justice Department to hold on a potential Hunter Biden indictment until after Republicans hold a press conference unveiling additional details surrounding the Biden family’s business dealings. Comer warned officials to wait to charge the first son until they hear from congressional leaders, arguing that the possible indictment could be just a “slap on the wrist” compared to their upcoming revelations. “My message to the Department of Justice is very loud and clear. Do not indict Hunter Biden before Wednesday,” Comer said during “Sunday Morning Futures.” “When you have the opportunity to see the evidence that the House Oversight Committee will produce with respect to the web of LLCs, with respect to the number of adversarial countries that this family influence peddled in, and this is not just about the president’s son.

This is about the entire Biden family, including the President of the United States. So we believe there are a whole lot of tips that the IRS and the DOJ don’t know about because we don’t believe they’ve done a whole lot of digging in this, and we have.” “By all accounts from the media reports that we’re getting, what they’re looking at charging Hunter Biden on is a slap on the wrist. It’s a drop in the bucket,” he continued. “So Wednesday will be a very big day for the American people in getting the facts presented to them so that they can know the truth, and then the Department of Justice can finally do what they should have done years ago.” Federal prosecutors are reportedly nearing a decision on a potential Hunter Biden indictment stemming from a years-long probe into possible tax and gun-related violations.


But Republicans are set to hold a press conference on Wednesday presenting the American people with additional information on the Biden family’s bank records, a briefing that Comer argued will provide additional information into the investigation led by U.S. Attorney David Weiss. Comer warned the evidence they have further implicates the Biden family in a broader, criminal “pay-for-play” bribery scheme. “We’re going to present to the American people all the information that we’ve received thus far pertaining to bank records. We’re going to disclose many of the different LLCs, many of the different transactions that all these different Biden family members have gotten from our adversaries around the world,” he said. “We don’t believe this was just a coincidence that all these Biden family members were receiving money from these this Web of LLC into their personal bag.”

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“uninsured depositor runs”

Close to 190 US Banks Could Collapse, According To Study (USAT)

With the failure of three regional banks since March, and another one teetering on the brink, will America soon see a cascade of bank failures? Bloomberg reported Wednesday that San Francisco-based PacWest Bancorp is mulling a sale. Last week, First Republic Bank became the third bank to collapse, the second-largest bank failure in U.S. history after Washington Mutual, which collapsed in 2008 amid the financial crisis. After the demise of Silicon Valley Bank and Signature Bank in March, a study on the fragility of the U.S. banking system found that 186 more banks are at risk of failure even if only half of their uninsured depositors (uninsured depositors stand to lose a part of their deposits if the bank fails, potentially giving them incentives to run) decide to withdraw their funds.

Uninsured deposits are customer deposits greater than the $250,000 FDIC deposit insurance limit. Regional banks are failing because the Federal Reserve’s aggressive interest rate hikes to tamp down inflation have eroded the value of bank assets such as government bonds and mortgage-backed securities. Most bonds pay a fixed interest rate that becomes attractive when interest rates fall, driving up demand and the price of the bond. On the other hand, if interest rates rise, investors will no longer prefer the lower fixed interest rate paid by a bond, thus driving down its price. Many banks increased their holdings of bonds during the pandemic, when deposits were plentiful but loan demand and yields were weak. For many banks, these unrealized losses will stay on paper.


But others may face actual losses if they have to sell securities for liquidity or other reasons, according to the Federal Reserve Bank of St. Louis. “The recent declines in bank asset values very significantly increased the fragility of the U.S. banking system to uninsured depositor runs,” economists wrote in a recent paper published on the Social Science Research Network Of course, this scenario would play out only if the government did nothing. “So, our calculations suggest these banks are certainly at a potential risk of a run, absent other government intervention or recapitalization,” the economists wrote.

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“What will generate a credit crunch is the destruction of capital in the asset base of most lenders.”

A Credit Crunch Is Inevitable (Lacalle)

Federal Reserve data shows $98 billion of deposits left the banking system in the week after the Silicon Valley Bank collapse. Most of the money went to money-market funds, as the Bloomberg data shows that assets in this class rose by $121 billion in the same period. The data shows the challenges of the banking system in the middle of a confidence crisis. However, as many analysts point out, this is not necessarily the main factor that dictates the risk of a credit crunch. Deposit flight is certainly an important risk. Many regional banks will have to cut lending to families and businesses as deposits shrink, but in the United States bank loans are less than 19 percent of corporate credit according to the IMF, while in the euro area it is more than 80 percent. What will generate a credit crunch is the destruction of capital in the asset base of most lenders.

The slump in mark-to-market valuations of all asset classes from loans to investments is what will ultimately drive an inevitable credit contraction. Credit standards have tightened significantly already, and the credit impulse of the economy, both in the US and euro area, has deteriorated rapidly, according to the respective Bloomberg indices. Both are below the March 2021 low. We must remember that credit standards’ tightening was already a reality before the Silicon Valley Bank demise. But the reality check of capital destruction in the financial system’s asset base is far from done. Start-ups will most likely see the most severe crunch in financing as the tech bubble burst adds to the asset base capital destruction in private equity and venture capital firms, who have delayed all they could the required write-downs and face a sobering reality check.


Our internal estimate of capital destruction in the asset base of banks and private equity firms is between a 15 to 25 percent wipeout, which is consistent with the average decline in market value over the October 2021–March 2023 period. Real estate investments all over the US and Europe require a significant reevaluation now that real estate has underperformed the market for eighteen months, according to Morgan Stanley. The optimistic valuations of real estate and corporate investments in banks’ balance sheets will require a significant analysis and subsequent write-off that leads to much tighter credit standards and stringent investment conditions.

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“..shifting at least part of its $3.2trn worth of foreign reserves held in dollars into other currencies. All of this would take a long time – one or two decades, perhaps.”

China And Its Trading Allies Are Well Placed To Topple The Dollar (Münchau)

The dollar is the foundation of US global leadership, and the future of the dollar is therefore intricately linked to the debate about geopolitical fragmentation. Brazil’s president, Luiz Inácio Lula da Silva, asked during his recent visit to China: “Why should every country have to be tied to the dollar for trade?… Who decided the dollar would be the [world’s] currency?” These are good questions. The perhaps surprising answer is that he himself made that decision, together with the former leaders of the other “Brics” group of nations: Brazil, Russia, India, China and South Africa. Their economic-development models have succeeded but have also critically depended on the US dollar. During the period of hyperglobalisation – which I date from 1990 to 2020 – the US became the global importer of last resort, and let its trade deficit against the rest of the world increase.

China and many other fast-developing economies built up savings in the currency they were paid in – the US dollar. They invested those savings into US bonds and other assets. The willingness of the US to absorb the world’s savings surpluses was the engine of globalisation. It ensured that the dollar would maintain its status as the world’s leading currency. This mechanism explains what happened in the last 20 years, but it won’t tell us what will happen in the next 20. Yet the dollar fans assume that the geopolitical and geo-economic environment will stay broadly the same. f the five Brics countries wanted to end their dependence on the dollar, they would have to do more than just choose another currency to trade in. It is not a menu choice, as Lula suggested during the same speech. He and his fellow Brics leaders would have to change how they interact with the rest of the world, and with one another.

China is key. In 2021, the country derived 43 per cent of its GDP from investment. This is approximately twice the level of the US and other Western countries. If China managed to shift some of its GDP to consumption, it would reduce its external trade surplus, as consumers tend to buy more imported goods. If you wanted to be less reliant on the US dollar, this is where you would have to start. As a second step, China and the other Brics countries could start trading more with each other, become more self-reliant in their supply chains, and set up their own financial infrastructure. hanging economic models is hard. Three years after Brexit, the UK is still struggling to move away from a model that depended on close integration with the EU.

Germany is finding it hard to maintain competitiveness without cheap Russian gas and with impaired global supply. It takes decades to build industrial production lines and supply chains. In China, there are an awful lot of vested political interests at the regional level, which rely on the investment boom continuing. If President Xi Jinping was really keen to extricate China from the US dollar, he would need to impose policies that would meet with resistance from regional leaders. In parallel, China would also have to start a long process of shifting at least part of its $3.2trn worth of foreign reserves held in dollars into other currencies. All of this would take a long time – one or two decades, perhaps.

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“Several former agents recalled being blocked by the agency from sharing intelligence about the hijackers with the rest of the FBI.”

MSM Doesn’t Care That the CIA May Have Helped Cause 9/11 (Marcetic)

For all the ways the September 11 attacks continue to shape US culture and foreign policy, the event is still shrouded in a surprising amount of mystery. A recently unearthed bombshell court filing offers some possible clarity on the questions that continue to surround the attacks and their aftermath — and yet, like similar bombshells in recent years, it’s been studiously ignored by the media and political establishment. First reported by Rolling Stone contributing editor Seth Hettena on the Substack SpyTalk, the media project run by veteran former Newsweek national security reporter Jeff Stein, those potential answers come in the form of a signed affidavit from Guantanamo military commission investigator Don Canestraro. The affidavit outlines the findings of a 2016 investigation by Canestraro, a longtime veteran of the Drug Enforcement Administration (DEA), into Saudi and CIA complicity in the terrorist attacks, findings that are squarely at odds with the story given to the public in their wake.

Relaying the information gathered from dozens of interviews he conducted with former FBI and CIA personnel, members of the 9/11 Commission, and US government officials, Canestraro’s affidavit outlines a sequence of events that, if true, suggest a botched and illegal domestic CIA operation was at the heart of the intelligence failure that enabled the attacks. More than that, it suggests there was a concerted cover-up of the grave blunder after the fact by both the CIA and the George W. Bush administration. The affidavit outlines the overlapping claims of numerous agents that the CIA impeded law enforcement efforts that could have prevented the attacks. Several former agents recalled being blocked by the agency from sharing intelligence about the hijackers with the rest of the FBI.


The CIA knew from wiretaps that two of the hijackers, Nawaf al-Hazmi and Halid al-Mindhar, had multiple entry visas letting them travel to the United States, one former agent said, but didn’t pass it on to the bureau. Two other agents alleged that the CIA withheld information about the two men’s connection to the planner of the October 2000 al-Qaeda bombing of the USS Cole, which, if known, would have turned the case into a criminal investigation for the FBI to pursue. One of those agents recalled a meeting with the CIA in which they were shown photos of three suspected terrorists, two of which would turn out to be future hijackers al-Hazmi and al-Mindhar. When the agent, referred to in the affidavit as CS-12, asked who was placing border crossing alerts on the suspects, which would have notified law enforcement about their entry into the United States, they were told no one was.

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“..he still cannot believe that the US was able to pull off the feat, but is now unable to..”

Ex-Russian Space Boss Questions US Moon Landing (RT)

The former head of Russia’s Roscosmos space agency, Dmitry Rogozin, has expressed doubt that the US Apollo 11 mission really landed on the Moon in 1969, saying he has yet to see conclusive proof. In a post on his Telegram channel on Sunday, Rogozin said he began his personal quest for the truth “about ten years ago” when he was still working in the Russian government, and that he grew skeptical about whether the Americans had actually set foot on the Moon when he compared how exhausted Soviet cosmonauts looked upon returning from their flights, and how seemingly unaffected the Apollo 11 crew was by contrast. Rogozin said he sent requests for evidence to Roscosmos at the time.

All he received in response was a book featuring Soviet Cosmonaut Aleksey Leonov’s account of how he talked to the American astronauts and how they told him they had been on the Moon. The former official wrote that he continued with his efforts when he was appointed head of Roscosmos in 2018. However, according to Rogozin, no evidence was presented to him. Instead, several unnamed academics angrily criticized him for undermining the “sacred cooperation with NASA,” he claimed. The former Roscosmos chief also said he had “received an angry phone call from a top-ranking official” who supposedly accused him of complicating international relations.


Rogozin concluded by saying he still cannot believe that the US was able to pull off the feat, but is now unable to, despite the incredible progress in technology since the late 1960s. What he claims to have found out, however, was that Washington has “its people in [the Russian] establishment.” Apollo 11 was the first manned mission to the Moon, with Neil Armstrong and Buzz Aldrin going down in history as the first humans to walk on the lunar surface. The flight was preceded by the unmanned Soviet Luna 2 program, which blazed the trail for Moon exploration. Last April, President Vladimir Putin pledged to resume Russia’s lunar program.

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A husky next to a wolf. Although wolf-like in appearance, huskies are no more closely related to wolves than poodles and bulldogs are. And the size says it all.

 

 

Kiss whale
https://twitter.com/i/status/1655267089551183875

 

 

Aqua puppy
https://twitter.com/i/status/1655210878101340167

We love little guy

 

 


The rainbow starfrontlet (Coeligena iris) is a species of hummingbird in the “brilliants” tribe Heliantheini. Males have a glittering yellow-green forecrown that transitions through golden yellow to blue on the crown Jorge Luis Cruz Alcivar

 

 

Chick
https://twitter.com/i/status/1655043864279785473

A video of a giant Squid. This specimen, found in Toyama Bay, measured approximately 3.7 meters in length. However, estimates place their maximum size at about 12-13 meters.

 

 


Secretary bird

 

 

 

 

Support the Automatic Earth in virustime with Paypal, Bitcoin and Patreon.

 

 

 

 

 

Apr 052023
 


Albert Cuyp Cows in a river 1650

 

Trump Condemns Arrest In Mar-a-Lago Speech (RT)
The Fall Of America’s Benevolent Empire (Fazi)
The Tragic U.S. Choice to Prioritize War Over Peacemaking (NC)
US General Points To Risk Ahead Of Next Big War (RT)
Ministers of 9 NATO Countries Ask US To Strengthen Borders With Ukraine (Az.)
Russian Top Spy Warns Of Polish Land Grab (RT)
Russia To Respond To Finland’s Accession To NATO In Due Time (TASS)
Finland Has Lost Its ‘Special Status’ – Moscow (RT)
Russia’s Silent Opposition At War With Own People – Medvedev (TASS)
Russia Has Military Resources, Willpower To Defend Sovereignty – MFA (TASS)
A Credit Crunch Is Inevitable (Lacalle)
Joe Biden Moved and Stored Unguarded Classified Documents in China Town (GP)
Brook Jackson To Appeal As Judge Dismisses Lawsuit Alleging Pfizer Fraud (CHD)
RSF Barred From Vetted Prison Visit To Julian Assange (RSF)

 

 

There are only two ways to live your life. One is as though nothing is a miracle. The other is as though everything is a miracle.
– Albert Einstein

 

 

 

 

Tucker Trump
https://twitter.com/i/status/1643406886887211009

 

 

 

 

3rd term

 

 

Hilton

 

 

TikTok Ban

 

 

Jesse Jackson

 

 

LAVROV: “…how to stop this conflict should not be addressed to Iran, Russia, or China, but to those Western figures…which say daily…it is impossible… …Mr. Blinken recently said that…a ceasefire should not be allowed. What’s the basis for such shallow analysis?”

 

“Having turned their currency into an instrument of political pressure on other states, the Americans, unwittingly, launched a worldwide movement to overthrow the dollar king. Complete de-dollarization will not happen overnight, but this is clearly an irreversible movement,” – Le Figaro columnist, expert in geopolitics, Renaud Girard.

 

 

 

 

Note: The judge did *not* issue a gag order but “requested” he stay off social media.

Trump Condemns Arrest In Mar-a-Lago Speech (RT)

In a speech from his Mar-a-Lago resort in Florida, former President Donald Trump railed against New York prosecutors after pleading not guilty to 34 criminal counts, also accusing Democrats of political persecution and “fraudulent investigations.” Trump delivered the address to a live audience on Tuesday night, insisting there is “no case” against him after returning home from New York, where he was arraigned on charges of falsifying business records earlier in the day. “I never thought anything like this could happen in America… The only crime that I have committed is to fearlessly defend our nation from those who seek to destroy it,” he said, adding that the latest case is part of an “onslaught of fraudulent investigations” brought by Democrats.

https://twitter.com/i/status/1643411071829520385

Trump argued that since his rivals “can’t beat us at the ballot box,”they have tried to “beat us through the law,” reiterating some of his previous claims of widespread election fraud in the 2020 presidential race. He rejected the charges against him as “fake,”saying their purpose is to “interfere with the upcoming 2024 election”and should be “dropped immediately.” Taking the tone of a presidential candidate, the former leader went on to fire a litany of criticisms at Democrats and President Joe Biden, slamming them for high inflation “crippling” the US economy, “raging crime statistics” and “open borders” immigration policies. He warned that Biden could lead the country into “an all-out nuclear World War III,” apparently referring to US involvement in the conflict in Ukraine.

The Manhattan’s District Attorney’s office has accused Trump of arranging a hush-money payment to adult film actress Daniels in order to keep her from going public about an alleged affair, and later attempting to cover up the transfer through falsified records. Prosecutors also claim he knowingly tried to conceal other crimes using the falsified documents, providing a basis for felony charges rather than misdemeanors. Trump has denied all wrongdoing, calling the indictment a “witch hunt” and “political persecution” by Manhattan DA Alvin Bragg, who he described as a “radical left George Soros-backed prosecutor” during his speech on Tuesday night. The DA’s office has said it expects to produce most of its evidence for discovery in the next 65 days, while Trump’s defense has until early August to file any motions against the case. Though Judge Juan Merchan has scheduled the next in-person hearing for December 4, attorneys for Trump say they hope to get the case dismissed before it can go to trial.

Watters

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Feels like the fall of Europe comes first.

The Fall Of America’s Benevolent Empire (Fazi)

In spite of the largesse and generosity usually associated with the European Recovery Program, as it was officially called, between 1948 and 1951 the funds actually only amounted to about 3% of the combined GDP of the recipient countries, accounting for a direct increase in GDP growth of less than 0.5%. Some authors have credited the Marshall Plan with having a much larger indirect effect on the recovery, through the promotion of a macroeconomic environment conducive to growth, but such analyses are largely speculative. Overall, its contribution to Europe’s recovery was relatively modest. Much of the money also flowed back to the US in the form of purchases of American goods and services, including oil, while many of the materials and equipment used to rebuild Europe were supplied by American companies, creating jobs and profits for American businesses.

Regardless of the actual economic impact of the Marshall Plan, there is no doubt that it was a resounding political success for America — to the extent that it secured US geopolitical influence and control over Western Europe. Part of the logic was that more prosperous societies would be less amenable to communist and Soviet influence — though, as we have seen, it’s questionable whether the programme had much of an impact on economic and social gains during the post-war boom. An arguably more important channel through which the Marshall Plan consolidated US influence was through the funds it channelled to those European centre-right parties which stood to gain from being integrated into the nascent American empire. This included covert CIA funds to ensure their electoral success — especially in Italy and France — at the expense of communist rivals. As the historian Sallie Pisani shows in her book The CIA and the Marshall Plan, under the guise of the Marshall Plan, the US used “massive foreign aid and non-military covert operations to reshape war-torn Europe in the image of the US”.

Just as crucially, the Marshall Plan was also a key catalyst for the formation of Nato, through which the US exerted its military control over Western Europe — in addition to dozens of military bases, especially in the defeated nations, many of which still exist today. The Marshall Plan also played an important role in fostering European integration, by creating new intergovernmental institutions to administer and coordinate the programme. These included the OEEC, the precursor to the OECD, and most importantly the Schuman Plan, which led to the European Coal and Steel Community, then the European Economic Community and ultimately the European Union. The Americans also played a crucial role in promoting, also financially, the cause of European federalism through the American Committee on United Europe (ACUE), founded in 1948, whose first chairman was the former head of the Office of Strategic Services (OSS) William Joseph Donovan. The vice-chairman was Allen Welsh Dulles, who would later become the head of the CIA.

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By Medea Benjamin and Nicolas J. S. Davies, the authors of War in Ukraine: Making Sense of a Senseless Conflict.

The Tragic U.S. Choice to Prioritize War Over Peacemaking (NC)

For the past 25 years, administrations of both parties have caved to the “crazies” at every turn. Albright and the neocons’ exceptionalist rhetoric, now standard fare across the U.S. political spectrum, leads the United States into conflicts all over the world, in an unequivocal, Manichean way that defines the side it supports as the side of good and the other side as evil, foreclosing any chance that the United States can later play the role of an impartial or credible mediator. Today, this is true in the war in Yemen, where the U.S. chose to join a Saudi-led alliance that committed systematic war crimes, instead of remaining neutral and preserving its credibility as a potential mediator. It also applies, most notoriously, to the U.S. blank check for endless Israeli aggression against the Palestinians, which doom its mediation efforts to failure.

For China, however, it is precisely its policy of neutrality that has enabled it to mediate a peace agreement between Iran and Saudi Arabia, and the same applies to the African Union’s successful peace negotiations in Ethiopia, and to Turkey’s promising mediation between Russia and Ukraine, which might have ended the slaughter in Ukraine in its first two months but for American and British determination to keep trying to pressure and weaken Russia. But neutrality has become anathema to U.S. policymakers. George W. Bush’s threat, “You are either with us or against us,” has become an established, if unspoken, core assumption of 21st century U.S. foreign policy. The response of the American public to the cognitive dissonance between our wrong assumptions about the world and the real world they keep colliding with has been to turn inward and embrace an ethos of individualism. This can range from New Age spiritual disengagement to a chauvinistic America First attitude.

Whatever form it takes for each of us, it allows us to persuade ourselves that the distant rumble of bombs, albeit mostly American ones, is not our problem. The U.S. corporate media has validated and increased our ignorance by drastically reducing foreign news coverage and turning TV news into a profit-driven echo chamber peopled by pundits in studios who seem to know even less about the world than the rest of us. Most U.S. politicians now rise through the legal bribery system from local to state to national politics, and arrive in Washington knowing next to nothing about foreign policy. This leaves them as vulnerable as the public to neocon cliches like the ten or twelve packed into Albright’s vague justification for bombing Iraq: freedom, democracy, the American way of life, stand tall, the danger to all of us, we are America, indispensable nation, sacrifice, American men and women in uniform, and “we have to use force.”

Orban

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They’re prepping us: We’re in terrible danger, so spend, spend, spend!

US General Points To Risk Ahead Of Next Big War (RT)

The ‘just-in-time’ supply chain that provides the parts used to make America’s F-35 fighter jets could jeopardize the ability of US forces to keep the aircraft in service during the country’s next major war, the officer in charge of the program has reportedly claimed. The F-35 program will need “a more resilient supply chain to ensure the military can keep it flying in a future, highly contested war,” Defense News reported on Monday, citing comments by US Air Force Lieutenant General Michael Schmidt. Speaking at the Navy League’s Sea Air Space conference on Monday in Maryland, Schmidt warned that parts shortages could lead to disaster in a major conflict.

“When you have that [just-in-time] mentality, a hiccup in the supply chain, whether it be a strike . . . or a quality issue, becomes your single point of failure,” the program chief said. “We need to look at, what does ‘right’ look like in the future, to give us more resilience in a combat environment.” ‘Just in time’ refers to a distribution strategy used by businesses to maximize profitability by keeping inventory costs to a minimum. The idea is to have supplies ready and in place just when they’re needed, rather than being set aside in a warehouse for future use. Such a system works well in the private sector, Schmidt said, but for a military fighting a war in “highly contested environments,” it can have disastrous consequences.

Bridget Lauderdale, general manager of the F-35 program for defense contractor Lockheed Martin, said the company has focused more on forecasting demand for the jet so it can anticipate its parts needs more accurately. “A lot of those materials take lead time to prepare, even when you do have funding and even when you have repair capacity,” she said. Schmidt predicted that there will be between 500 and 600 F-35s operating in Europe within the next few years, and fewer than 100 will belong to the US military. “What a huge opportunity that is to leverage each other’s logistics and maintenance environments.”

Maintenance is a key concern for America’s latest fighter jet, given the Pentagon’s struggles to keep the aircraft in service. Schmidt acknowledged last week that on any given day in February, an average of just 29% of the US F-35 fleet was “fully mission capable.” Just last month, the Pentagon’s F-35 Joint Program Office ordered a global recall for the aircraft to fix an engine problem linked to at least one crash. US lawmakers have estimated that it will cost $1.3 trillion to sustain the nation’s F-35 fleet, partly because of poor reliability.

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America moves east with NATO.

Ministers of 9 NATO Countries Ask US To Strengthen Borders With Ukraine (Az.)

Ministers from nine NATO countries have called on the US to strengthen its borders with Ukraine by sending them air defense systems, Romanian Foreign Minister Bogdan Aurescu said on the NTV channel, Report informs. “We must work to increase the US presence in our region on the eastern flank in terms of troops and equipment,” he said. Ministers from Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia called on the US to strengthen its border territories.

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“Once Kiev is ultimately defeated by Moscow, Poland could grab the lands that it lost to the Soviet Union in the 1940s..”

Russian Top Spy Warns Of Polish Land Grab (RT)

Warsaw’s military assistance to Kiev is a secret plan aimed at destroying Ukrainian statehood, the head of Russia’s Foreign Intelligence Service (SVR), Sergey Naryshkin, said on Tuesday. Once Kiev is ultimately defeated by Moscow, Poland could grab the lands that it lost to the Soviet Union in the 1940s, he suggested. “Seizing control of the western territories of modern Ukraine, the so-called Kresy [‘borderlands’ in Polish], is the coveted dream of the Polish nationalists,” Naryshkin claimed. The Polish government cannot simply drop this element of its national ideology, he added. Warsaw sees “the collapse of Ukrainian statehood after a military defeat as a condition for implementing this idea,” the official said. ‘Kresy’ is the name of certain territories that historically belonged to the Polish-Lithuanian Commonwealth.

The Russian Empire gained control of some parts of Poland during the 18th century partitions, but its collapse after the Russian Revolution allowed Warsaw to regain independence. During World War I, the British proposed the so-called Curzon Line as a Russian-Polish border, but Warsaw rejected the idea and took control of some lands to the east of the proposed demarcation. Decades later, the line served as the basis of the post-World War II settlement, with Poland gaining some German lands as compensation for ceding territory to the Soviet Union. These lands are currently controlled by Ukraine and Belarus. The Polish government “opposes peaceful settlement [of the conflict in Ukraine] and assures that it will provide steady military assistance to the Kiev regime” because of its territorial aspirations, Naryshkin stated. “This situation certainly worsens the conditions for Ukraine and the Ukrainian people.”

The Russian official argued that Poland was not above an opportunistic land grab, recalling its role in the split of Czechoslovakia just before World War II. The 1938 Munich Agreement signed by the UK and France with Hitler’s Germany and Mussolini’s Italy allowed Berlin to occupy large parts of Poland, which annexed the region of Trans-Olza in the process. Naryshkin has previously raised the possibility that Warsaw had designs on Ukrainian territory, but Warsaw has denied harboring any such plans and branded the Russian official’s claim an information warfare operation. The intelligence chief issued his new warning during a visit to Minsk, where he met President Alexander Lukashenko. The Belarusian leader voiced his own suspicions about Warsaw’s intentions for Ukraine and for his nation last May.

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“We will calmly disclose what we will do in response when the time is ripe.”

Russia To Respond To Finland’s Accession To NATO In Due Time (TASS)

Russia does not intend to hurry its response to Finland’s accession to NATO and it will make the countermeasures public in a calm manner and in due time, Russia’s Deputy Foreign Minister Sergey Ryabkov said on the Rossiya-24 TV channel on Tuesday. “We don’t want to get ahead of ourselves here. Why should we?” he said. “We will calmly disclose what we will do in response when the time is ripe.” Ryabkov pointed to what he described as “curious statements by official representatives in some Western media, including those in the US,” who “all of a sudden decided for some reason that there will be no reaction from the Russian side.” “They are deeply mistaken,” Ryabkov stressed. “A reaction will follow.”

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Finland became a minor NATO member without the possibility to influence any decisions. It has lost its ability to have a say in international affairs..”

Finland Has Lost Its ‘Special Status’ – Moscow (RT)

Helsinki’s decision to join the NATO alliance will have a “negative effect” on its ties with Russia, the Russian Foreign Ministry has said. On Tuesday, Finland finalized its accession process, becoming the 31st member of the US-led military bloc. The move will inevitably invoke Moscow’s response, the ministry said, adding that Russia continues to see the bloc’s expansion as a direct threat to its national security interests. “As we have warned on multiple occasions, the Russian Federation will have to respond with military-technical, as well as other measures in order to address national security threats arising from Finland joining NATO,” the ministry said in a statement.

So far, Moscow has refrained from announcing any concrete steps it will take in response to Finland’s NATO accession. The response will depend “on the specific terms on which Finland joins NATO, including the deployment of NATO’s military infrastructure and offensive weapons on its territory,” the ministry explained. The latest expansion of the bloc has greatly damaged the security situation in the whole of Northern Europe, which for decades “used to be one of the most stable regions in the world,” the ministry went on. “The line of contact between NATO and the Russian Federation’s border has more than doubled,” it added, referring to the length of direct land borders between Russia and NATO’s member-states.

Apart from that, Helsinki’s move has done harm to Finland’s own international stance, Russian diplomats asserted. By joining NATO, Finland “has given up on its unique identity and lost its independence,” forfeiting the “special status in international affairs” stemming from its decades-long policy of non alignment. “Finland became a minor NATO member without the possibility to influence any decisions. It has lost its ability to have a say in international affairs,” the ministry concluded. “Make no mistake, Finland’s accession to NATO will have a negative effect on the bilateral relations between Russia and Finland.”

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Medvedev uses language that Putin never would.

Russia’s Silent Opposition At War With Own People – Medvedev (TASS)

Members of Russia’s silent opposition are now engaged in terrorism, executing their fellow countrymen, Russian Security Council Deputy Chairman Dmitry Medvedev said on Tuesday. He made the statement as he was commenting on Telegram on the terrorist attack that took place in St. Petersburg on April 2. The official also said that it is the forces that the West had recently regarded as the best people of the time and the opponents of the “authoritarian regime,” the fearless knights of justice and fight against corruption that are engaged in terrorism. “Here’s the creme de la creme of our non-systemic opposition: It’s waging war on its own people, it’s engaged in explosions and assassinations,” Medvedev said.

According to the official, “these scum not only wish for Russia to be defeated,” but also “execute their countrymen.” Medvedev said members of the silent opposition murdered an unarmed reporter, wounded several dozens of innocent spectators at his event, opened fire on a car with children that were going to a village school, and blew up a car with a female reporter and a researcher. “History has come full circle. This swine has taken its final place in the chronicles of our country,” he said. The Security Council official called attention to the fact that the perpetrators of the terrorist attacks say they were used. “This is probably true,” he said.

But, he said, the perpetrators of terrorist attacks will be duly punished. “But, so far, the main scum who fed and financed the killers, who dictated their plans remain unpunished,” he wrote on his Telegram channel. “Various FBK (recognized as an extremist organization in Russia) and MBK (recognized as a foreign agent — TASS), the Navalny, Volkov, Ponomarev and Khodorkovsky outfits have become petty terrorists and murderers” and “have pledged their allegiance to evil and terror, along with the murderers of their kindred Kiev Nazi regime.” “There can be no talks with terrorists. They will be exterminated like rabid dogs foaming at the mouth. No need to sugarcoat it. As soon as possible. Even if it takes years. They deserve no mercy or forgiveness. This is what supreme justice is all about,” he said.

Tony Kevin
https://twitter.com/i/status/1643176170844741633

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“Because otherwise something may happen that for now can be discussed only hypothetically..”

Russia Has Military Resources, Willpower To Defend Sovereignty – MFA (TASS)

Russia has both the military potential and willpower to defend its sovereignty and ward off any threats, Deputy Foreign Minister Sergey Ryabkov said on the Rossiya-24 TV channel on Tuesday. “We have – let me emphasize this – both the military resources and the political will. We have determination. Our society is consolidated on the platform of guaranteed protection of our sovereignty for warding off any threats and preventing encroachments on our territorial integrity,” he said. “As for the use of nuclear weapons, we have gone over this many times already. We are not mincing words here, either. Our adversaries simply have to be realistic about what is going on around them, and to refrain from any escalation or provocations against us. Because otherwise something may happen that for now can be discussed only hypothetically,” Ryabkov said.

He stressed that the deployment of tactical nuclear weapons in Belarus was a natural response to the growing challenges and risks for Russian security. “There should be no illusions. Russia has a very wide range of forces and means to ensure its own security in any situation. Nuclear deterrence has always been and is still present in our system of military planning and in the general concept of deterring our adversaries,” Ryabkov said. According to the senior diplomat, the West ignored the opportunity for building a guaranteed system of global security.

“There has been much talk in recent years about Russia placing greater emphasis on so-called non-nuclear deterrence. But the US-led collective West has not just ignored all these warnings, signals, and calls for using the opportunities to build a guaranteed security system on a different basis. It has dismissed them outright,” Ryabkov continued. “Now we are in a situation of military confrontation. A hybrid war is being waged against Russia. And its forms are such that it is difficult to find parallels in the past. In some aspects they simply do not exist. We cannot be indifferent about this.”

Ukr Salaries

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“..capital destruction in the asset base of banks and private equity firms is between a 15% to 25% wipe-out..”

A Credit Crunch Is Inevitable (Lacalle)

Federal Reserve data shows $98 billion of deposits left the banking system in the week after the Silicon Valley Bank collapse. Most of the money went to money-market funds, as the Bloomberg data shows that assets in this class rose by $121 billion in the same period. The data shows the challenges of the banking system in the middle of a confidence crisis. However, as many analysts point out, this is not necessarily the main factor that dictates the risk of a credit crunch. Deposit flight is certainly an important risk. Many regional banks will have to cut lending to families and businesses as deposits shrink, but in the United States bank loans are less than 19% of corporate credit according to the IMF, while in the euro area it is more than 80%. What will generate a credit crunch is the destruction of capital in the asset base of most lenders.

The slump in mark-to-market valuations of all asset classes from loans to investments is what will ultimately drive an inevitable credit contraction. Credit standards have tightened significantly already, and the credit impulse of the economy, both in the US and euro area, has deteriorated rapidly, according to the respective Bloomberg indices. Both are below the March 2021 low. We must remember that credit standards’ tightening was already a reality before the Silicon Valley Bank demise. But the reality check of capital destruction in the financial system’s asset base is far from done. Start-ups will most likely see the most severe crunch in financing as the tech bubble burst adds to the asset base capital destruction in private equity and venture capital firms, who have delayed all they could the required write-downs and face a sobering reality check.

Our internal estimate of capital destruction in the asset base of banks and private equity firms is between a 15% to 25% wipe-out, which is consistent with the average decline in market value over the October 2021- March 2023 period. Real estate investments all over the US and Europe require a significant re-evaluation now that real estate has underperformed the market for eighteen months, according to Morgan Stanley. The optimistic valuations of real estate and corporate investments in banks’ balance sheets will require a significant analysis and subsequent write-off that leads to much tighter credit standards and stringent investment conditions.

Read more …

No, focus on Trump!

Joe Biden Moved and Stored Unguarded Classified Documents in China Town (GP)

Another day, another falsification. As The Gateway Pundit’s Brian Lupo reported earlier, Joe Biden’s former assistant as Vice President, Kathy Chung, testified today to the House Oversight Committee about the mishandling of classified documents by Joe Biden since his time as Vice President. Today we learned that as he left the White House, he took “boxes containing classified documents, vice presidential records, and other items” and had them stored in three separate locations throughout Washington D.C.: an office near the White House, an office in Chinatown, and, eventually, the Penn Biden Center. After Chung’s testimony today to the House Oversight Committee, Rep. James Comer put out the following statement:

“Today we learned that when Joe Biden left the vice presidency, boxes containing classified documents, vice presidential records, and other items were stored in three different locations around the Washington D.C. area, including an office near the White House, an office in Chinatown, and eventually the Penn Biden Center. At some point, the boxes containing classified materials were transported by personal vehicle to an office location. The boxes were not in a ‘locked closet’ at the Penn Biden Center and remained accessible to Penn Biden employees as well as potentially others with access to the office space. We need to find out who had access to these documents.” Later today House Oversight Chairman James Comer told Jesse Watters that Joe Biden was storing his boxes in China Town. What?

James Comer: We brought Kathy Chung in today for a transcribed interview, and I want to thank Ms. Chung puggleki for working and cooperating with our committee and answering questions. We learned a lot. First of all, we learned that the documents didn’t just start mysteriously moving around in December of 2022 or November of 2022, like the White House has alleged. She said this dates back to May of 2022, that the documents were moved from the vice presidency to at least three different locations in a personal vehicle. And why they were in three different locations, we don’t know. They weren’t stored behind any lock. One of the locations was in Chinatown. Another location was in the Penn Biden Center, which might as well have been Chinatown.

Read more …

“The Court does not opine on the likelihood of success with respect to asserting retaliation under a different statute.”

Brook Jackson To Appeal As Judge Dismisses Lawsuit Alleging Pfizer Fraud (CHD)

A federal judge in Texas has dismissed a lawsuit alleging Pfizer and two of its contractors manipulated data and committed other acts of fraud during Pfizer’s COVID-19 clinical trials. Brook Jackson, a former employee of the Ventavia Research Group — which conducted some of the clinical trials for the Pfizer-BioNTech COVID-19 vaccine — in January 2021 sued Pfizer, Ventavia and ICON PLC, another Pfizer contractor, alleging the companies committed numerous violations of the False Claims Act (FCA) during the clinical trials. According to Jackson’s complaint, the three companies “deliberately withheld crucial information from the United States that calls the safety and efficacy of their vaccine into question,” and as a result, they defrauded the U.S. government which purchased the vaccines.

The FCA allows the government or a party suing on its behalf, such as Jackson, to attempt to recover money for false claims made by parties in order to secure payment from the government. Those parties can be held liable under the FCA if they knowingly made a false claim or used a false record or statement in order to secure payment. Also under the FCA, whistleblowers can be rewarded for confidentially disclosing fraud that results in a financial loss to the federal government. In February 2022, the federal government declined to intervene in the lawsuit on Jackson’s behalf. In his March 31 ruling, U.S. District Judge Michael Truncale of the U.S. District Court for the Eastern District of Texas-Beaumont Division ruled Jackson had not proved the companies violated the FCA.

However, in a footnote accompanying his decision, Judge Truncale left the door open for Jackson and her legal team to file an appeal, stating: “The Court observes, however, that while Ms. Jackson has failed to state a claim for retaliation under the FCA, she may be able to bring her claim under another statute. “The Court does not opine on the likelihood of success with respect to asserting retaliation under a different statute.” In a statement posted on Twitter, Jackson sharply criticized Truncale’s ruling, writing: “The dismissal of Pfizer’s case is a despicable & heinous betrayal of justice, a slap in the face to vaccine injured and whistleblowers, a blatant example of corruption, incompetence and cowardice, a declaration that the powerful are above the law.”

Jackson, who had over 15 years of experience working with clinical trials, claimed she “repeatedly informed her superiors of poor laboratory management, patient safety concerns and data integrity issues” during the approximately two weeks she was employed by Ventavia in September 2020. She also gave The BMJ a cache of internal company documents, photos and recordings highlighting alleged wrongdoing by Ventavia. Ventavia, which describes itself as the largest privately owned clinical research company in Texas, operated several sites where it conducted clinical trials on behalf of Pfizer.

Read more …

They work for Reporters Without Borders, everything’s been OK’d, and at the last minute the prison “received intelligence” that they were journalists, so no go.

RSF Barred From Vetted Prison Visit To Julian Assange (RSF)

Reporters Without Borders (RSF) Secretary-General Christophe Deloire and Director of Operations Rebecca Vincent have been barred access to visit Wikileaks publisher Julian Assange in Belmarsh prison despite receiving confirmation that a visit would be permitted. On 4 April, Deloire and Vincent were prevented from entering Belmarsh prison, despite having been vetted in advance and receiving confirmation that a visit with Julian Assange would be possible at 9:15 am. His wife, Stella Assange, was permitted to enter as scheduled. Prison officials told the RSF representatives that they had “received intelligence” that they were journalists, and would therefore not be allowed in, per a decision of Belmarsh Prison Governor Jenny Louis. The Governor did not respond to urgent requests to meet Deloire and Vincent or to otherwise intervene to allow their access.

https://twitter.com/i/status/1643323285332021251

“We are deeply disappointed by the arbitrary decision of the Belmarsh Prison Governor to prevent us from visiting Julian Assange, despite following all relevant prison procedures and rules. Julian Assange has the right to receive visitors in prison, and we are legitimate to visit him as a press freedom NGO. We call for an urgent reversal of this decision and to be allowed visitation access without further delay.” Christophe Deloire – RSF Secretary-General.“This is the latest in a long series of ludicrous obstacles that we have faced over the past three years in campaigning for the release of Julian Assange. At every level, British authorities have defaulted to secrecy and exclusion rather than allowing normal engagement around this case – from refusing to accept RSF petitions, to making it nearly impossible to access court, and now this. What do they have to hide? Regardless, we continue our campaign to #FreeAssange unabated.”: -Rebecca Vincent – RSF Director of Operations and Campaigns”.

RSF would have been the first NGO to gain access to Assange in Belmarsh prison, who has had only a handful of visitors beyond his immediate family during the nearly four years he has been incarcerated. Deloire and Vincent intended to assess Assange’s conditions and to speak with him about his case, as an NGO actively campaigning for his release – not as journalists. Deloire would have visited in his capacity as Secretary-General of the NGO, and Vincent as Director of Operations and Campaigns. Vincent has never worked as a journalist or held a press card. Deloire had previously visited Assange on three occasions during his period at the Ecuadorian embassy.

This move comes in the aftermath of RSF facing extensive barriers in monitoring each stage of the extradition proceedings against Assange in London courts, for precisely the opposite reason, as RSF’s representatives were attending as NGO observers, and were not permitted to register for accreditation, as journalists would. RSF therefore could access court only via the public gallery, and was the only NGO that fought for this access at every stage of proceedings from 2020 to 2022.

Read more …

 

 

 

 

 

 

G4S

 

 

 

 

Fosun
https://twitter.com/i/status/1643223084952846340

 

 

 

 

Wulong

 

 

Sleepy
https://twitter.com/i/status/1643494434405863431

 

 

 

 

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Dec 292013
 
 December 29, 2013  Posted by at 2:55 pm Finance Tagged with: , , ,  11 Responses »


National Photo Co. Roller Coaster Dips, Montgomery County, Maryland 1928

There is a crisis a-brewing in China that evolves around interest rates, with interbank rates as, let’s say, the initial center piece. The underlying cause of the crisis is that both official banks and the shadow banking system seek to escape the restrictions placed on the financial system by the government and the central People’s Bank of China (PBoC), who in essence want to set all interest rates and all policies. At the very moment the regulators recently decided to let markets set some interest rates, a move intended to cool things down, money market rates went up so fast that more action by the PBoC, after an initial refusal, was deemed necessary.

The PBoC has set the interest people can get on their deposits with banks so low they’re actually losing money. Many Chinese have bought newly built empty apartments as an investment, which can’t be rented out because that would make them no longer “new”, and hence less valuable. But people are still looking for other investment opportunities. And so are the banks, who are trying to prevent a mass outflow of deposits.

One major, relatively new, option banks offer are WMPs, or Wealth Management Products. And it all gets shady right off the bat here. Banks are not allowed to lend out money directly to real estate developers and local government financing platforms (LGFPs), which therefore pay higher interest rates. Trust companies, though, are free to lend to these parties. So what do the banks do? They (co-)create trust companies, or establish business deals with them, and repackage old loans, CDO-like, into WMPs, all of which sees them move very close to, if not enter, the shady territory shadow banking operates in.

Banks conduct complex reverse repurchase transactions, or repo’s, with the trust companies, which enables the latter to lend out to real estate and local governments, at 12+%. They move this entire process through WMPs, which allows the banks to offer their clients/investors a 6% interest on deposits, and divide the remaining 6+% between themselves and the trusts. Financial innovation of the kind that would make a Chinese Alan Greenspan proud.

But, you guessed it, there is a problem here (quite a few actually). Most importantly, there is a growing liquidity risk due to the different durations of WMPs and trust loans. Two thirds of WMPs have a three months or less duration, while durations of trust loans to real estate developers or local governments are often as long as a few years. Ergo, banks have a hard time recovering funds from trust loans quickly enough to repay maturing WMPs, which leads to a lack of capital. And the PBoC eventually caved in to pressure and conducted “short-term liquidity operations” (SLOs) to make sure banks had capital. That only helped up to a point: money market rates are still quite a bit higher than before. That has a lack of “trust” and “confidence” written all over it.

The essence, and this is something I haven’t really seen being discussed at all, is that what we’re looking at is a – pretty much ordinary – power struggle. The closest I saw anyone get was Patrick Chovanec, who was quoted at BI as saying:

“The investment led growth model has made it so it’s almost like the PBoC has ceded control of monetary policy to the shadow banks.”

The current overall understanding, both in Beijing and abroad, is still that the Chinese state, the Communist Party, owns the banks and dictates all policies, both through government offices and through the central People’s Bank of China. But what the government in China is learning in crash course fashion is that the “wealthier” a nation becomes, especially if that “wealth” is realized through large increases in credit/debt created in and sloshing through its economy, the harder it is to maintain not just control over the economy, but political control in general.

The shadow banking system makes up a huge chunk of the Chinese domestic economy (JPMorgan estimated it at $5.86 trillion, or 69% of GDP, earlier this year), and nobody really knows how risky and leveraged its “capital” is. The PBoC, from its own point of view, is right to put its foot on the break in order to lower the risk inherent in the system, but if that foot comes down too heavily, the entire economic machinery might seize up. Trying to lower the risk is a risky move. That’s a Catch 22 that greatly limits the real control Beijing has over China’s financial markets.

In order to achieve the growth it has seen recently, the leadership has relied heavily on the shadow banking system, and the credit it creates through leverage, to grease the wheels of the economy. Now that it wants to rein in that system, it finds that’s very hard to do. It wants to rein it in not just for political power reasons, but also because it fears the effects the high leverage levels and high risk in the “underground economy” can have on economical and social stability. The Chinese economy as a whole would likely start showing serious cracks if growth moves below 7% per year, and without shadow banking, it appears to have gotten practically impossible to maintain that growth rate.

It looks like Beijing has embarked its economy on a 7+% growth train, but neglected to include any brakes in the design of that train. When it tries to rein in the underground economy, it risks crumbling the walls of the Forbidden City, if you permit me the poetic licence, and thereby its own power, i.e. the political control of the country by the Communist Party.

Many party leaders are undoubtedly acutely aware of how this resembles what happened in the developed world, Europe, Japan, US, where once, like in China, the state owned the banks, but where now, effectively, the banks – financial institutions-, whether they are “official” or “shadow”, own the state (though we’re good at fooling ourselves that it’s not true, an illusion that serves just about everyone on all sides of the equation). Moreover, instead of fighting that development, most of the leaders will opt to jockey for position, to wiggle and scheme all they can in order to build and improve their own personal positions in this “new” world.

It is a universal truth that when you allow money to enter into politics, money will inevitable end up purchasing, and owning, the political system. This is no different in China than it is in the west. It’s no longer about actual power anymore (that’s largely been decided), but about individual politicians’ positions in the “new world”, about who gets most outside funding.

For a while longer, some, especially at the very top, will resist the new division of powers, simply because they feel, rightly or not, that that’s the best course of action for their own particular positions. And there lies a big risk. The men at very top may have less control over the economy than they think and/or desire, but they sure still control the army, and may well feel they have the right to use that army to defend their positions. That could lead China down a long and bloody road.


I can’t resist including a lengthy quote from an email Mish posted yesterday that made me laugh, sent to him by Michael Pettis, who like Patrick Chovanec works in China and brings an equally unique perspective. Although I’m sure this was in no way Pettis’s intention, the more I read of his mail, the more I was thinking: you can just about 1 on 1 replace “China” with “The US” here; same problems, same causes. The timing is off at times, for obvious reasons, and the US has no obvious manufacturing overcapacity, sort of for the same reasons: it’s further along in the whole process, but the role played by credit and leverage surely is eerily reminiscent, to the point where it gets to be outright funny.

Lines like

“China’s astonishing growth during the past three decades is partly the result of a system that subsidized growth with hidden transfers from the household sector.” or

“Debt matters, and the only time it can be safely ignored is when debt levels are so low, and the borrower is so credible, that it creates no financial distress costs and has a negligible impact on demand.” or

“The failure of many economists to recognize that wasted investment has a cost – even as they recognize that investment has been wasted – has caused them both to misunderstand the relationship between wealth creation and GDP and to understate the future impact of this overstated GDP.”

… they make me chuckle out loud when realizing this applies to the US every bit as much as it does to China.

Pettis on Debt, Malinvestments, Hidden Losses, and China’s GDP

It is widely acknowledged that perhaps the most important reason to change the Chinese growth model is its excessive reliance on debt to generate growth. Debt has soared in recent years, to the point where many economists simply look at credit growth in the current quarter in order to determine what GDP growth over the next few quarters are likely to be.

But as China deleverages, growth in demand must drop sharply. After all, if economic growth over the past several years has been goosed by rapid credit expansion, deleveraging must have the opposite effect. It is strange that economists who acknowledge that the current growth model is overly dependent on debt have failed to understand that its reversal will have the opposite impact. If it did not, it is hard to explain why anyone would consider debt to be a problem in the first place.

If China currently has wasted significant amounts of investment spending, it is clear that much of the accompanying bad debt has not been written down correctly. Bad loans are almost non-existent in the banking system – that is they have not been recognized in the form of reserves or write-downs.

But the failure to recognize the loss does not mean that the loss does not exist. The losses implicit in the bad loans must (and will) be written down over the future, either explicitly, in which case they will result in a direct deduction to GDP growth, or implicitly, in which case they will require implicit and hidden transfers from one part of the economy or another (usually the household sector) to cover the gap between the “real” cost of capital and the nominal (subsidized) cost of capital. This transfer must reduce future growth.

The point here is that if credit is a problem in China – something no one doubts – it must be a problem because of wasted investment that has yet to be recognized, otherwise it would have resulted in negative GDP growth today. Failure to recognize the investment losses will, of course, artificially boost GDP growth today, but it must also artificially reduce GDP growth tomorrow as the recognition of those losses is simply postponed, not eliminated. The failure of many economists to recognize that wasted investment has a cost – even as they recognize that investment has been wasted – has caused them both to misunderstand the relationship between wealth creation and GDP and to understate the future impact of this overstated GDP.

Debt matters, and the only time it can be safely ignored is when debt levels are so low, and the borrower is so credible, that it creates no financial distress costs and has a negligible impact on demand. Neither condition applies in China, and so any prediction that ignores debt is likely to be hopelessly muddled. In fact I would like to propose a simple rule. Any model that predicts China’s future GDP growth must include, if it is to be valid, a variable that reflects estimates of the amount of hidden losses buried in the banks’ balance sheets. If it does not, it cannot possibly be a valid model to describe China’s economy, and its predictions are useless.

China’s astonishing growth during the past three decades is partly the result of a system that subsidized growth with hidden transfers from the household sector. These transfers are at the root of the current imbalances, and once reversed, so that China can rebalance its economy towards healthier and more sustainable sources of demand, the very processes that turbocharged growth will no longer do so.

If growth has been healthy and sustainable, there would be no need for Beijing to change its growth model – in fact it would be foolish to do so. If growth has not been healthy and sustainable, this is almost certainly because it has been artificially propped up, and if the reforms are aimed at unwinding the mechanisms that artificially propped up growth, then subsequent growth rates must be substantially lower.

Low interest rates, low wages, an undervalued currency, nearly unlimited access to credit for state-owned enterprises, a relaxed attitude to environmental degradation, and other related conditions were both the source of China’s ferocious growth as well as of China’s unprecedented economic imbalances. Reversing these conditions will rebalance the economy, but will do so while lowering growth in the obverse way that these conditions had accelerated growth.

One of the most obvious places in which to see this is in excess capacity in a wide range of businesses. It is clear that Beijing recognizes the problem of excess capacity. Here is Xinhua on the subject: “Tackling excess capacity will be one of the top tasks on China’s economic agenda in 2014, as the issue becomes a major challenge to maintaining the pace and quality of economic growth”. “The Chinese economy still faces downward pressure next year,” the Central Economic Work Conference pointed out on Friday, citing the capacity issue weighing down some sectors as one of the major challenges facing the world’s second-largest economy.

It should be obvious that building excess manufacturing capacity, like building up inventory, is a way of propping up growth numbers today at the expense of tomorrow’s growth numbers. Closing down excess manufacturing capacity must be negative for growth in the same way that building it was positive.

These three conditions, which are the automatic consequences of the reform process – deleveraging, writing down unrecognized investment losses, and reversing policies that goosed growth rates – must lead to much slower growth. In theory these conditions can be counterbalanced by an explosion in productivity unleashed by the reforms.

But this is unlikely to be the case. For the net impact of the reforms on growth to leave China’s GDP growth unchanged, or even to accelerate, the amount of productivity that must be unleashed by the reforms is implausibly, even extraordinarily, high. What is more, the positive impact on productivity must emerge almost immediately. Longer-term productivity improvements – for example those generated by education, land, and hukou reforms, or reforms to the one-child policy, or a speedier and more efficient urbanization process – do not count.

I am so convinced that the implementing of these reforms must result in slower growth – if only because it is impossible to find a single relevant case in history in which the adjustment following a growth miracle did not include an unexpectedly sharp slowdown in growth – that I would propose that we can judge the forceful implementation of the reforms inversely with GDP growth. If China is able to impose an orderly adjustment quickly, its GDP growth rate will slow substantially for several years.

GDP growth rates of 7% or more, on the other hand, will suggest that credit is still rising too quickly and that China has otherwise been unable to implement the reforms, in which case China is likely to reach debt capacity constraints more quickly. Growth of 7% for the next few years, in other words, is almost prima facie evidence that China is not adjusting.

Yeah, the taper. I hear you, loud and clear. I can’t help thinking that what connects the taper (or QE in general) and the China squeeze is, more than anything else, the role each plays in the control a financial system seizes over a society and its political system. At least, since it hasn’t been settled yet, the Chinese can still hope for a voice in the battle for that control. Not that that is necessarily something to be envious of: these battles can be very nasty. But, then so are battles to seize it back once it’s been lost.

I don’t pretend to know how the battle over credit will run, or even end, in China. Other than to say that money is power. It’s all a matter of who ends up with most. Still, I’m not sure that 2014 will be a good year for overt absolute power, that looks a bit outdated. There’s a reason why real political control in the west is exerted from behind a curtain: it works better that way. And I’ve long said that visibility doesn’t rhyme with power. With that in mind, the Communist Party may have exhausted its options. But that doesn’t mean it’s ready to give up. Absolute power is a powerful drug.

Nicole will be teaching, along with Albert Bates, Marisha Auerbach and Christopher Nesbitt, on a Permaculture Design Certificate course in Belize in 2014. The course will be the 9th annual event held at Maya Mountain Research Farm between Feb 10-22nd. Click here for details and registration.

This article addresses just one of the many issues discussed in Nicole Foss’ new video presentation, Facing the Future, co-presented with Laurence Boomert and available from the Automatic Earth Store. Get your copy now, be much better prepared for 2014, and support The Automatic Earth in the process!


Dec 262013
 
 December 26, 2013  Posted by at 2:12 pm Finance Tagged with: , , ,  19 Responses »


Lewis Wickes Hine Indianapolis Market 1908

Despite the media talking up optimism and recovery, people are not seeing the supposed good news playing out in their own lives. As we have discussed here many times before, the squeeze continues on Main Street, while QE has generated asset bubbles at the top of the financial food chain. Complacency reigns, but this is the endgame. Increasingly delusional collective optimism, based on illusory wealth for the few, has ben the driving force for 2013, even as the smart money has been selling everything not nailed down for most of the year – cheerfully handing the empty bag to a public that demands it. It’s been a five year long party, where, demonstrably, no lessons were learned from the excesses preceding the previous peak, and the consequences that followed from it.

Now, as a result of throwing caution to the wind again (mostly with other people’s money of course), we face another set of consequences, but this time the hangover will be worse. Timely warnings are rarely credible, as they contradict the prevailing wisdom of the time, but it is exactly at this time that warnings are most needed – when we are collectively irrationally exuberant on a grand scale. We need to understand the situation we are facing, in order to see why this period of global excess will resolve itself as a global credit implosion, what this means for ourselves and our societies, and what we can hope to do about it, both in terms of preparing in advance and mitigating the impact once we are confronted with a new, sobering, reality.

We are facing an acute liquidity crunch, not the warning shot across the bow that was the financial crisis of 2008/2009, but a full-blown implosion of the house of cards that is the global credit pyramid. Not that it’s likely to disappear all at once, but over the next few years, credit will undergo a relentless contraction, punctuated by periods of both rapid collapse and sharp counter-trend rallies, in a period of exceptionally high volatility. The primary impact will stem from the collapse of the money supply, the vast majority of which is credit – a mountain of IOUs constituting the virtual wealth of the world.

This has happened before, albeit not on this scale. Since humanity reached civilizational scale we have lived through cycles of expansion and contraction. We tend to associate these with the rise and fall of empire, but they typically have a monetary component and often involve a credit boom. Bust follows boom as the credit ponzi scheme collapses. Mark Twain commented on one such episode in 1873:

“Beautiful credit! The foundation of modern society. Who shall say that this is not the golden age of mutual trust, of unlimited reliance upon human promises? That is a peculiar condition of society which enables a whole nation to instantly recognize point and meaning in the familiar newspaper anecdote, which puts into the mouth of the speculator in lands and mines this remark: — ”I wasn’t worth a cent two years ago, and now I owe two million dollars.””

Few recognized at the time that the ensuing financial panic of 1873, at the culmination of a period of speculative excess, was going to lead to a long and grinding depression. The signs were there, as they are today, but few connected the dots in advance and understood what was about to unfold and why. Few ever do at comparable points in time.

Unfortunately, humans are not good at remembering, let alone learning from, and applying, the lessons of history. The information is available for those who care to look – far more information than people had access to at previous junctures – but not in the mainstream media. The media’s role is to reflect and amplify the mood of the time, spinning events in accordance with it in a self-reinforcing feedback loop. Real information – the kind we need if we are to face a future more challenging than anything most of us have ever experienced – is found elsewhere, with independent voices contradicting received wisdom when it most needs to be contradicted. That has been our task at The Automatic Earth for the last six years. We cover the events of the day, placing them in the context of the bigger picture we have developed since January 2008.

We aim to make complexity comprehensible, so that people can identify the most immediate and most significant threats and prepare themselves to face them. At the present time, the threat people most need to appreciate is a liquidity crunch, hence this is a major focus of our most recent Video Download release – Facing the Future. It is well underway in some parts of the world already and many more countries will find themselves affected in the not too distant future.

Essentially, a liquidity crunch creates a situation of artificial scarcity. People hold on to what money they have when they are unsure when they might earn any more of it, as makes perfect sense from an individual perspective. However, when a large number of people do so, the amount of money in circulation falls sharply, leaving an insufficient supply to sustain anything like the same amount of economic activity. Not just actual unemployment, but the fear of future unemployment can be enough to cause spending to plummet, drastically reducing money in circulation. When money is not available to change hands in exchange for goods and services, those goods and services are not exchanged. In the Great Depression of the 1930s, observers noted that “they had everything but money”. The people and resources were still there, but were not able to connect.

As an artificial construct, one might think that a loss of money would have little impact if other factors remained, but this is not the case. As we have explained before, finance is the global operating system, and crashing the operating system has severe consequences in terms of disrupting supply chains – with cascading effect – at both local and global levels. Since this is the major risk we face, and the consequences are likely to be severe, we need to take steps to prepare ourselves and our communities.

The more cohesive and close-knit a community, the better it is likely to be able to withstand external shocks, so all manner of community-building initiatives can be extremely valuable. In our new Facing the Future Video Download series, Laurence Boomert describes a wide range of demonstrably effective possibilities in considerable detail, explaining how and why they work. Such efforts address a liquidity crunch indirectly, through increased resilience.



However, there are also means to address the scarcity of money directly, and these are likely to have a very important role to play. Alternative currencies can go some distance towards filling the void left by a lack of money in circulation, albeit at a local level. These have been used in many places faced with an economic seizure at the national level, notably Austria, during the Great Depression of the 1930s, Argentina, following the financial crisis of 2001, and Greece today. They are very likely to arise spontaneously in times of crisis, but have the potential to be more effective more quickly if established in advance. A range of them is covered in our new Facing the Future Video Download material.



Nicole Foss and Laurence Boomert with Peak Moment TV’s Janaia Donaldson (center) in Vancouver, Canada

The best known, and arguably most effective, example of local currency in action is the Austrian town of Wörgl in the early 1930s. In the depths of the depression, with over 30% unemployment, the mayor, Michael Unterguggenberger, did not have the funds to cover projects he wanted to build to put his constituents back to work. Rather than use his reserves of 40,000 schillings, he deposited these in the bank and in 1932 issued local stamp scrip backed by his reserves. The scrip required a stamp each month, at a cost of 1% of its face value (a feature called demurrage), hence there was an incentive to spend the money rather than to hoard it. Although the incentive was small, the psychological effect was disproportionately large, keeping the money in circulation at a substantial rate. Although only a small quantity of scrip was issued, it circulated quickly enough to support a great deal of economic activity in a town previously caught in the grip of an economic seizure:

They not only re-paved the streets and rebuilt the water system and all of the other projects on Mayor Unterguggenberger’s long list, they even built new houses, a ski jump and a bridge with a plaque proudly reminding us that ‘This bridge was built with our own Free Money’. Six villages in the neighborhood copied the system, one of which built the municipal swimming pool with the proceeds. Even the French Prime Minister, Édouard Dalladier, made a special visit to see first hand the “miracle of Wörgl.”

It is essential to understand that the majority of this additional employment was not due directly to the mayor’s projects…..The bulk of the work was provided by the circulation of the stamp scrip after the first people contracted by the mayor spent it. In fact, every one of the schillings in stamp scrip created between 12 and 14 times more employment than the normal schillings circulating in parallel. The anti-hoarding device proved extremely effective as a spontaneous work-generating device.



The use of scrip enabled approximately 100,000 schillings worth of local government spending to occur on projects without the need to deplete reserves of national currency at all. In addition, a multiple of this amount in private spending occurred, even though only some 8000 schillings worth of scrip was ever in circulation. Altogether, it has been estimated that some 2.5 million schillings worth of economic activity was financed in one year.

As the stamp scrip was a creation of local government, people were allowed to pay their taxes using it. As there were substantial tax arrears, this was an effective tool for encouraging the acceptance of the currency. People were, in fact, paying their taxes early in order to avoid the 1% monthly loss due to the stamp fee:

On July 31, 1932 the town administrator purchased the first lot of Bills from the Welfare Committee for a total face value of 1,800 Schillings and used it to pay wages. These first wages paid out were returned to the community on almost the same day as tax payments. By the third day it was thought that the Bills had been counterfeited because the 1000 Schillings issued had already accounted for 5,100 Schillings in unpaid taxes. Michael Unterguggenberger knew better, the velocity of money had increased and his Wörgl money was working.

Mayor Unterguggenberger understood the nature of the crisis he was addressing and how is stamp scrip acted to mitigate it. Each Wörgl note was printed with the following justification:

“To all whom it may concern! Sluggishly circulating money has provoked an unprecedented trade depression and plunged millions into utter misery. Economically considered, the destruction of the world has started. – It is time, through determined and intelligent action, to endeavour to arrest the downward plunge of the trade machine and thereby to save mankind from fratricidal wars, chaos, and dissolution. Human beings live by exchanging their services. Sluggish circulation has largely stopped this exchange and thrown millions of willing workers out of employment. – We must therefore revive this exchange of services and by its means bring the unemployed back to the ranks of the producers. Such is the object of the labour certificate issued by the market town of Wörgl: it softens sufferings dread; it offers work and bread.”

It was not necessary for the stamp scrip to replace the national currency, only to supplement it. Local currency in Wörgl was always exchangeable for Austrian schillings, at a cost of 2%, but the scrip was so well accepted that few sought to covert it. One observer, Claude Bourdet, master engineer from the Zürich Polytechnic, reported on the success of the stamp scrip at the time:

“I visited Wörgl in August 1933, exactly one year after the launch of the experiment. One has to acknowledge that the result borders on the miraculous. The roads, notorious for their dreadful state, match now the Italian Autostrade. The Mayor’s office complex has been beautifully restored as a charming chalet with blossoming gladioli. A new concrete bridge carries the proud plaque: “Built with Free Money in the year 1933.” Everywhere one sees new streetlights, as well as one street named after Silvio Gesell [originator of the concept of Freigeld, or Free Money]. The workers at the many building sites are all zealous supporters of the Free Money system. I was in the stores: the Bills are being accepted everywhere alongside with the official money. Prices have not gone up.”

Local goods and services could be purchased with scrip, allowing scarce national currency to be used for non-local essentials and national taxes. If spread widely enough, this model could potentially have protected both local and national supply chains, at least to some extent. However, the central bank decided to assert its money monopoly, shutting down the Wörgl experiment in late 1933 after 13 months. The town then sank back into economic depression. The deprivation across the country set the stage for an unfortunate choice of ‘solutions’:

Only a central authority saviour can help people who are not allowed to help themselves locally. And as all economists will point out, when there is enough demand, supply always manifests in some way. Even if you have to import it. During the Anschluss of 1938, a large percentage of the population of Austria welcomed Adolf Hitler as their economic and political saviour. The rest is well known history.

The power inherent in a money monopoly is tremendous. As far back as the late eighteenth century, the patriarch of the Rothschild banking family, Mayer Amschel Rothschild, acknowledged the extent of power over money in saying ,”Permit me to issue and control the money of a nation, and I care not who makes its laws!” This was acknowledged in the early days of the United states, when debt enslavement was recognized as the power to conquer. Thomas Jefferson wrote of his concern in 1816:

“And I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property — until their children wake-up homeless on the continent their fathers conquered.”

We have had the inflation, in the form of a money supply expansion, largely based on credit creation, that has proceeded virtually uninterrupted for decades. Now we stand of the verge of the deflation that follows all credit expansions as night follows day.

Given its significance, it is no surprise to find the power of money monopoly defended. The ability to do so depends, however, on being able to project power at a distance through strong central control. As this in turn depends on the extent of chaos, the state of supply lines and the availability of sufficient energy, defence will not always be possible, and a money monopoly is not likely to stand the test of time. We will need to develop alternative trading arrangements, both for the present and for the future, as we will be faced with rebooting our financial operating system.



Given the potential for local currencies to mitigate the coming liquidity crunch, it is very much worth the effort to create one. They exist in many locations already, some with a history measured in decades. Emergency currencies have also been recently created in order to address the liquidity crisis already hitting the European periphery. For instance, the Greek town of Volos holds a market where all goods and serviced are denominated in TEM (Τοπική Εναλλακτική Μονάδα, meaning Alternative Monetary Unit):

In this bustling port city at the foot of Mount Pelion, in the heart of Greece’s most fertile plain, locals have come up with a novel way of dealing with austerity – adopting their own alternative currency, known as the Tem. As the country struggles with its worst crisis in modern times, with Greeks losing up to 40% of their disposable income as a result of policies imposed in exchange for international aid, the system has been a huge success. Organisers say some 1,300 people have signed up to the informal bartering network.

For users such as Ioanitou, the currency – a form of community banking monitored exclusively online – is not only an effective antidote to wage cuts and soaring taxes but the “best kind of shopping therapy”. “One Tem is the equivalent of one euro. My oil and soap came to 70 Tem and with that I bought oranges, pies, napkins, cleaning products and Christmas decorations,” said the mother-of-five. “I’ve got 30 Tem left over. For women, who are worst affected by unemployment, and don’t have kafeneia [coffeehouses] to go to like men, it’s like belonging to a hugely supportive association.”

Greece’s deepening economic crisis has brought new users. With ever more families plunging into poverty and despair, shops, cafes, factories and businesses have also resorted to the system under which goods and services – everything from yoga sessions to healthcare, babysitting to computer support – are traded in lieu of credits. “For many it plays a double role of supplementing lost income and creating a protective web at this particularly difficult moment in their lives,” says Yiannis Grigoriou, a UK-educated sociologist among the network’s founders.

Such networks clearly have significant social value in bringing people together to face hard times. Much can be gained through mitigating the psychological effects of deprivation in isolation, and the resulting relationships of trust can be enduring. Providing the ability to purchase goods and services, including essential staples, without the requirement for scarce euros, is also critical for those without any other means of support:

Back at the market, I’m told the TEM network in Volos is growing quickly. More than 1,000 people have joined or are waiting to join in this city of 150,000. Katarina, who joined a month and half ago, is selling homemade liqueurs, jams and sweets. For her, the network isn’t just about creating an alternative social structure. It’s about survival. She uses her credits to buy staples – vegetables, fruits and eggs – from others in the network. She said she wishes the TEM network were bigger – she wants to be able to buy things like olive oil and meat. Katarina said she’s been unemployed for five months now. When I asked if she’s received any help from the local government, she laughed. “The state is completely absent.”



The Greek government approves of this limited form of monetary creativity and has passed legislation encouraging “entrepreneurship and local development” as a substitute for the welfare state it is no longer able to provide. So far nothing more ambitious that might challenge the money monopoly has been attempted. The TEM system of electronic barter only goes so far, as it does not involve local government and cannot be used as a means to meet tax obligations. Local government has only been able to offer moral support:

The city has been hit hard by the crisis, said Volos Mayor Panos Skotiniotis. When construction fell off, the region’s cement and metal industries suffered. Unemployment is rising, and local funding from the Greek state is down 40 percent over the past three years. Skotiniotis said the municipality can’t support the TEM network in any official way. But he certainly sees its value. “It goes without saying that this currency is not substituting for the official state currency, the euro,” said the mayor. “But it’s a supplement for people who can’t meet their own needs.”

It is probably only a matter of time before a more ambitious form of alternative currency, along the lines of the Wörgl experiment, is tried in some of the regions of the European periphery where suffering is particularly acute. This may occur before or after these countries give up their doomed attempt to stay in the eurozone, but would probably be more successful if tried during a transition away for the euro, as this would amount to less of a direct challenge to the global money monopoly. Experiences gained in such an experiment would be valuable if communicated to other locations, many of which will be facing similar difficulties in their turn.

An alternative currency interchangeable with the national currency and usable for local tax obligations, as in Wörgl, is not necessarily a panacea, nor even a permanent solution, but it can make a significant difference mitigating the effects of a liquidity crunch in the short to medium term. Had the Wörgl experiment been allowed to continue, it is possible it would have run its natural course before the local economy could have become self-sustaining:

The activity would not have been sustainable. Once the taxes in arrears were completely paid and when people had paid enough taxes in advance to feel safe and comfortable (at some point they would stop paying forward), the scrip would lose a key part of its attractiveness. One way a government can ensure the demand for its currency is to mandate that taxes be paid in the government-issued currency. The other way is through monopoly legal tender laws. Wörgl could not legislate or enforce monopoly legal tender, so the demand for the scrip is partially attributable to the need to pay taxes.

Nevertheless, the monetary experiment allowed for many municipal projects to be completed and for local economic activity to be supported for a period of time. This was clearly beneficial. As with the TEM currency in Greece, part of the effect of local initiatives like this is psychological – alleviating a prevailing sense of isolated deprivation and brining a community together. This has value in its own right, independent of the monetary effect. Such a course of action should be tried again, and permitted to run for longer, but it is not clear that this will happen once we find ourselves facing widespread economic depression again. The money monopoly is even more powerful today than it was in the 1930s, and even more likely to defend its powerbase, at least while it remains capable of doing so.

Alternative currency can mitigate a situation of artificial scarcity caused by a liquidity crunch, but there are other limits that are not artificial. We were not facing resource limits, or a skills shortage, in the 1930s, but we are today. For a time, money will be the limiting factor, and local currencies may come into their own if allowed to do so, but beyond that financial crunch we will have to face physical curbs to growth. Energy will probably be the next hurdle we have to address. The future will be challenging and we must face it fully informed.



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