Sep 162019
 
 September 16, 2019  Posted by at 9:20 am Finance Tagged with: , , , , , , , , , , ,  21 Responses »


Pablo Picasso Night fishing at Antibes 1939

 

Oil Explodes 20% Higher, Biggest Jump On Record (ZH)
Trump Says US ‘Locked And Loaded’ As Iran Blamed For Saudi Attack (AP)
Netanyahu Approves New West Bank Settlement 2 Days Before Polls (AFP)
Liquidity Dies in Darkness (Rivelle)
‘Very Difficult’ For China’s Economy To Grow 6% Or Faster: Premier Li
China’s August Industrial Output Growth Grinds To 17.5-Year Low (R.)
General Motors Faces Strike By Almost 50,000 Staff (BBC)
OxyContin Maker Purdue Pharma Files For Bankruptcy Protection (R.)
Industrialized Militaries Are A Big Part Of The Climate Emergency (IC)
Farming Subsidies Destroy The World (G.)
The World’s Most Important Political Prisoner (Craig Murray)

 

 

It went down a little after, but then the war threats started.

Oil Explodes 20% Higher, Biggest Jump On Record (ZH)

Shanghai Oil futures are halted limit up.


Source: Bloomberg

With traders in a state of near-frenzy, with a subset of fintwit scrambling (and failing) to calculate what the limit move in oil would be (hint: there is none for Brent), moments ago brent reopened for trading in the aftermath of Saturday’s attack on the “world’s most important oil processing plant”, and exploded some 20% higher, to a high of $71.95 from the Friday $60.22 close, its biggest jump since futures started trading in 1988. As Bloomberg notes, “for oil markets, it’s the single worst sudden disruption ever, surpassing the loss of Kuwaiti and Iraqi petroleum supply in August 1990, when Saddam Hussein invaded his neighbor. It also exceeds the loss of Iranian oil output in 1979 during the Islamic Revolution, according to data from the U.S. Department of Energy.”

Furthermore, in light of news that the Saudi outage could last for months, this could be just the start. As a reminder, according to Morningstar research director, Sandy Fielden, “Brent could go to $80 tomorrow, while WTI could go to $75… But that would depend on Aramco’s 48-hour update. The supply problem won’t be clear right away since the Saudis can still deliver from inventory.” Of course, should Aramco confirm that the outage – which has taken some 5.7mmb/d in Saudi output after 10 drones struck the world’s biggest crude-processing facility in Abqaiq and the kingdom’s second-biggest oil field in Khurais – will last for weeks, expect the crude juggernaut to continue until the price hits $80, and keeps moving higher.


Source: Bloomberg

Read more …

Does any of this make any sense to you?

Trump Says US ‘Locked And Loaded’ As Iran Blamed For Saudi Attack (AP)

The U.S. government produced satellite photos showing what officials said were at least 19 points of impact at two Saudi energy facilities, including damage at the heart of the kingdom’s crucial oil processing plant at Abqaiq. Officials said the photos show impacts consistent with the attack coming from the direction of Iran or Iraq, rather than from Yemen to the south. Iraq denied Sunday that its territory was used for an attack on the Kingdom and U.S. officials said a strike from there would be a violation of Iraq’s sovereignty. The U.S. officials said additional devices, which apparently didn’t reach their targets, were recovered northwest of the facilities and are being jointly analyzed by Saudi and American intelligence.

The officials, who spoke on condition of anonymity to discuss intelligence matters, did not address whether the drone could have been fired from Yemen, then taken a round-about path, but did not explicitly rule it out. The attacks and recriminations are increasing already heightened fears of an escalation in the region, after a prominent U.S. senator suggested striking Iranian oil refineries in response to the assault, and Iran warned of the potential of more violence. “Because of the tension and sensitive situation, our region is like a powder keg,” said Iranian Brig. Gen. Amir Ali Hajizadeh. “When these contacts come too close, when forces come into contact with one another, it is possible a conflict happens because of a misunderstanding.”

[..] “Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world’s energy supply,” Pompeo wrote. “There is no evidence the attacks came from Yemen.” [..] U.S. officials previously alleged at least one recent drone attack on Saudi Arabia came from Iraq, where Iran backs Shiite militias. Those militias in recent weeks have been targeted themselves by mysterious airstrikes, with at least one believed to have been carried out by Israel. Iranian Foreign Ministry spokesman Abbas Mousavi on Sunday dismissed Pompeo’s remarks as “blind and futile comments.” “The Americans adopted the ‘maximum pressure’ policy against Iran, which, due to its failure, is leaning toward ‘maximum lies,’” Mousavi said in a statement.

Read more …

We can only hope they don’t give him his majority.

Netanyahu Approves New West Bank Settlement 2 Days Before Polls (AFP)

Israeli Prime Minister Benjamin Netanyahu’s government approved a new settlement in the occupied West Bank on Sunday, two days ahead of a closely fought election as he seeks to boost turnout among his right-wing base. The approval came as Netanyahu and his main opponent Benny Gantz vied to mobilise supporters. Netanyahu has made a flurry of announcements in recent days as part of his efforts to continue his reign as Israel’s longest-serving prime minister. On Sunday, the cabinet agreed to turn the wildcat settlement of Mevoot Yericho in the Jordan Valley into an official settlement, the premier’s office said.


All settlements are viewed as illegal under international law, but Israel distinguishes between those it has approved and those it has not. Around 30 families live in the outpost, which was established in 1999. [..] Palestinian president Mahmud Abbas’s spokesman Nabil Abu Rudeineh dismissed the entire cabinet meeting as illegal and called on the international community to “stop the Israeli madness aimed at destroying all the foundations of the political process”. Israeli anti-settlement NGO Peace Now said: “The government continues to show blatant disregard for reaching a two-state conflict-ending agreement with the Palestinians.”

Read more …

“Trouble is, while loanable funds can be created without limit, the things that can be purchased with these funds is finite.”

Liquidity Dies in Darkness (Rivelle)

If democracy dies in darkness, so does liquidity in that embodiment of economic democracy, i.e., the capital markets. When information is scarce, investors must color in between the lines. That which is not known nor well quantified must be assumed or modeled. The door is therefore open to different investors reaching quite different conclusions about the underlying value of an asset leading, of course, to illiquidity. More so perhaps than any other in history, this cycle is the wellspring of the theories and actions of the central bankers who, in their infinite wisdom, determined that they could model interest rates better than markets could price them. Central banks have flooded the system with what they call “liquidity” but which are actually nothing more–nor less–than electronically conjured “loanable funds.”


Under the banner of “doing whatever it takes,” trillions in loanable funds were created so that now $17 trillion in global debt is priced to yield less than nothing. The magic trick of inverting economic logic with negative rates results from the capacity of the central banks to create unlimited quantities of loanable funds at no cost. Trouble is, while loanable funds can be created without limit, the things that can be purchased with these funds is finite. But, “free money” not only makes loans cheap, it also erodes the capacity of lenders to ask for such reasonable terms as traditional loan covenants and basic financial disclosure.

Read more …

Preparing the people for bad news?!

‘Very Difficult’ For China’s Economy To Grow 6% Or Faster: Premier Li

Chinese Premier Li Keqiang said it is “very difficult” for China’s economy to grow at a rate of 6% or more because of the high base from which it was starting and the complicated international backdrop. The world’s No.2 economy faced “certain downward pressure” due to slowing global growth as well as the rise of protectionism and unilateralism, Li said in an interview with Russian media which was published on the Chinese government’s website, gov.cn. China’s GDP grew 6.3% in the first half of the year, and Li said the economy was “generally stable” in the first eight months of the year.


“For China to maintain growth of 6% or more is very difficult against the current backdrop of a complicated international situation and a relatively high base, and this rate is at the forefront of the world’s leading economies,” Li was quoted as saying. Analysts say China’s economic growth has likely cooled further this quarter from a near 30-year low of 6.2% in April-June. Morgan Stanley says it is now tracking the lower end of the government’s full-year target range of around 6-6.5%.

Read more …

4.4% it is.

China’s August Industrial Output Growth Grinds To 17.5-Year Low (R.)

The slowdown in China’s factory and consumer sectors deepened in August, with industrial production growing at the weakest pace in 17-1/2 years, a sign of increasing weakness in an economy lashed by trade headwinds and soft domestic demand. Production rose 4.4% in August year-on-year, slower than the 4.8% growth in July. Analysts polled by Reuters had forecast output would rise 5.2%. August’s data is the slowest growth since February 2002. [..] The data also showed retail sales growth at 7.5%, below the 7.9% expected in a Reuters poll and the 7.6% increase in July.


Fixed-asset investment for the first eight months of the year rose 5.5%, according to data published by the National Bureau of Statistics, compared with a 5.6% rise forecast by analysts. Data last week showed factory-gate prices fell at their fastest pace in three years and analysts predict that producer deflation will continue to worsen in the coming months. It also follows a factory survey that showed activity shrank for the fourth straight month as the U.S. trade war dragged on. China’s imports of unwrought copper also fell 3.8% year-on-year in August, a metal with wide use in infrastructure, power and consumption.

Read more …

America’s dying unions.

General Motors Faces Strike By Almost 50,000 Staff (BBC)

Almost 50,000 General Motors workers have been called out on strike after the car giant failed to reach a pay and conditions deal with the United Auto Workers union (UAW). “We do not take this lightly. This is our last resort,” UAW vice-president Terry Dittes told reporters in Detroit. The sides had set a Saturday night deadline to reach agreement. The strike – from midnight (04:00 GMT) on Monday – is the first at GM, America’s biggest carmaker, since 2007. In that strike, a two-day stoppage cost $300m (£240m). The union’s previous four-year contract with GM expired this weekend, and the two sides had been holding negotiations on wide-ranging issues, including wages, healthcare, profit sharing, and job security.

Read more …

Right after the Sackler family had transferred their billions to safe locations.

OxyContin Maker Purdue Pharma Files For Bankruptcy Protection (R.)

OxyContin maker Purdue Pharma LP filed for bankruptcy protection Sunday night, succumbing to pressure from more than 2,600 lawsuits alleging the company helped fuel the deadly U.S. opioid epidemic. Purdue’s board met Sunday evening to approve the long-expected bankruptcy filing, which the company is pursuing to restructure under terms of a proposal to settle the widespread litigation. Purdue, which filed for Chapter 11 protection in a federal bankruptcy court in White Plains, New York, reached a tentative deal to resolve lawsuits with 24 states and five U.S. territories, as well as lead lawyers for more than 2,000 cities, counties and other plaintiffs, the company said.


Two dozen states remain opposed or uncommitted to the proposed settlement, setting the stage for contentious legal battles over who bears responsibility for a public health crisis that has claimed the lives of nearly 400,000 people between 1999 and 2017, according to the latest U.S. data. Thousands of cities and counties, along with nearly every state, have sued Purdue and, in some cases, its controlling Sackler family. The lawsuits, seeking billions of dollars in damages, claim the company and family aggressively marketed prescription painkillers while misleading doctors and patients about their addiction and overdose risks.

Read more …

I’d rather have a look at overall pollution, not just emissions.

Industrialized Militaries Are A Big Part Of The Climate Emergency (IC)

A British doctor who co-authored two studies on the environmental impact of U.S. military operations in Fallujah said that the city’s population suffers “the highest rate of genetic damage in any population ever studied.” Much of this impact can be blamed on the use of depleted uranium munitions by U.S. forces. Despite vowing to cease their use, a study by the independent monitoring group Airwars and Foreign Policy Magazine found that the military continued to use the toxic munitions during its most recent bombing campaign in Syria. The fact that fossil fuel emissions have been the major driver of climate change adds another grim irony to these wars.


For decades, the heavy U.S. military footprint in the Middle East has been justified by the need to preserve access to the region’s oil reserves. The industrial extraction of those same reserves has been one of the major drivers of global carbon dioxide emissions. In other words, we have been killing, dying, and polluting to ensure our access to the same toxic resource most responsible for our climate disruption. It took this perfect symmetry between industrial warfare and industrial exploitation of the earth to bring about the unspeakable emergency we now face.

Read more …

$1 million every minute. And look at the sugary crap we’re eating.

Farming Subsidies Destroy The World (G.)

The public is providing more than $1m per minute in global farm subsidies, much of which is driving the climate crisis and destruction of wildlife, according to a new report. Just 1% of the $700bn (£560bn) a year given to farmers is used to benefit the environment, the analysis found. Much of the total instead promotes high-emission cattle production, forest destruction and pollution from the overuse of fertiliser. The security of humanity is at risk without reform to these subsidies, a big reduction in meat eating in rich nations and other damaging uses of land, the report says. But redirecting the subsidies to storing carbon in soil, producing healthier food, cutting waste and growing trees is a huge opportunity, it says.

The report rejects the idea that subsidies are needed to supply cheap food. It found that the cost of the damage currently caused by agriculture is greater than the value of the food produced. New assessments in the report found producing healthy, sustainable food would actually cut food prices, as the condition of the land improves. “There is incredibly small direct targeting of [subsidies at] positive environment outcomes, which is insane,” said Jeremy Oppenheim, principal at the Food and Land Use Coalition (Folu), the collaboration of food, farming and green research groups that produced the new report. “We have got to switch these subsidies into explicitly positive measures.”

He said the true global total was likely to be $1tn a year, as some subsidies are difficult to quantify precisely: “That trillion dollars of public funding is available and is a massive, massive lever to incentivise the farming community across the world to act differently.”

Read more …

“..all the excuses for Assange’s imprisonment which so-called leftists and liberals in the UK have hidden behind will evaporate.”

The World’s Most Important Political Prisoner (Craig Murray)

We are now just one week away from the end of Julian Assange’s uniquely lengthy imprisonment for bail violation. He will receive parole from the rest of that sentence, but will continue to be imprisoned on remand awaiting his hearing on extradition to the USA – a process which could last several years. At that point, all the excuses for Assange’s imprisonment which so-called leftists and liberals in the UK have hidden behind will evaporate. There are no charges and no active investigation in Sweden, where the “evidence” disintegrated at the first whiff of critical scrutiny. He is no longer imprisoned for “jumping bail”.

The sole reason for his incarceration will be the publishing of the Afghan and Iraq war logs leaked by Chelsea Manning, with their evidence of wrongdoing and multiple war crimes. In imprisoning Assange for bail violation, the UK was in clear defiance of the judgement of the UN Working Group on arbitrary Detention, which stated:

“Under international law, pre-trial detention must be only imposed in limited instances. Detention during investigations must be even more limited, especially in the absence of any charge. The Swedish investigations have been closed for over 18 months now, and the only ground remaining for Mr. Assange’s continued deprivation of liberty is a bail violation in the UK, which is, objectively, a minor offense that cannot post facto justify the more than 6 years confinement that he has been subjected to since he sought asylum in the Embassy of Ecuador. Mr. Assange should be able to exercise his right to freedom of movement in an unhindered manner, in accordance with the human rights conventions the UK has ratified,”

In repudiating the UNWGAD the UK has undermined an important pillar of international law, and one it had always supported in hundreds of other decisions. The mainstream media has entirely failed to note that the UNWGAD called for the release of Nazanin Zaghari-Ratcliffe – a source of potentially valuable international pressure on Iran which the UK has made worthless by its own refusal to comply with the UN over the Assange case. Iran simply replies “if you do not respect the UNWGAD then why should we?”

Read more …

 

 

 

 

 

Sep 152019
 
 September 15, 2019  Posted by at 2:17 pm Finance Tagged with: , , , , , , , , , , ,  5 Responses »


Pavel Filonov The Kolkhoznik (Member of a Collective Farm) 1931

 

Those winds just keep on shifting, no matter that the western press either doesn’t see them shift, doesn’t recognize them for what they are, or chooses to ignore them. But these winds bring tidings of a tectonic plate-shaking shift in the global political climate.

The fires in Saudi oil installations, whether they were caused by drones or missiles, and whoever fired those, are a major story, and rightly so, because they could shake up economies in drastic ways. But they may still, not be the biggest story after all.

Last Tuesday, Israeli Prime Minister Benjamin Netanyahu announced his intention to annex the Jordan Valley (already occupied territory, 65,000 Palestinians and 11,000 Israeli settlers live there). He did that to steal votes from the far right in next Tuesday’s (Sep. 17) Knesset election. “Bibi” also called Donald Trump his “friend” every second word for that same purpose. Trump responded in kind. He may come to regret that. Choose your friends wisely. Bit of background from RT:

 

US, Israel Talk About Mutual Defense Treaty – Trump

The US and Israel are discussing a mutual defense treaty that would further cement the already “tremendous” alliance between the two countries, President Donald Trump has revealed. “I had a call today with Prime Minister Netanyahu to discuss the possibility of moving forward with a Mutual Defense Treaty, between the United States and Israel, that would further anchor the tremendous alliance between our two countries,” Trump tweeted.

Trump voiced not-that-veiled support for Benjamin Netanyahu ahead of the upcoming parliamentary elections in Israel. “I look forward to continuing those discussions after the Israeli Elections when we meet at the United Nations later this month!” Trump wrote. The support surely comes in handy, as Netanyahu’s backing appears to be quite shaky. The September 17 polls are the second snap legislative elections this year after Netanyahu failed to form the government back in April.

The outcome of the upcoming vote is hard to predict, as Netanyahu’s party, Likud, has almost equal support as their main opponent the Blue and White led by Benny Gantz, opinion polls show. Netanyahu was quick to respond to Trump’s announcement, lauding the prospects of the alliance and managing to call the US president a “friend” twice in a single tweet.

[..] Israel was one of the first major non-Nato ally (MNNA), a designation that goes with a whole set of benefits, such as generous loans, a priority in delivery of various military surplus, possession of war reserve stocks of Pentagon-owned hardware outside US military bases (Israel is said to have at least six sites) and others.

Yet in 2014 the US enshrined Israel into a new class of ally – a major strategic partner. The new designation, which is a step above MNNA, was basically established specifically for Israel. It greatly expanded the US wartime stockpiles in Israel from $200 million in value to a whopping $1.8 billion. Under the Trump administration, the trend has continued, and in 2017, the US established its first permanent military base – an air defense facility – in Israel.

A second thing Bibi is trying to do to win Tuesday’s elections is intimidating the prosecutors who are on his tail for three different cases or fraud. He has a grand plan to become immune from this prosecution (basically, become King Bibi), but he must win the election to execute it. Haaretz is Israel’s oldest newspaper, but it’s not Bibi’s biggest fan(club):

 

Netanyahu’s Plan to Escape Trial, in His Own Words: ‘Time for Them to Be Frightened’

Immediately after the last election, Prime Minister Benjamin Netanyahu outlined to members of his inner circle a plan to extract him from facing trial. The plan was based on obtaining immunity from the Knesset and passing legislation to prevent the High Court of Justice from removing that immunity. If his bloc wins 61 Knesset seats next week, Netanyahu will presumably resort to this rescue plan. For him it will be the Day of Judgment.

“Stop being frightened. It’s time for them to be frightened,” Netanyahu told his confidants, referring to justice officials, headed by Attorney General Avichai Mendelblit and State Prosecutor Shai Nitzan, who have decided to indict him in three cases, subject to a hearing. Netanyahu told his confidants why he insisted on his destructive plan, telling them he had lost all confidence in the legal system on all levels – the attorney general’s office, the state prosecutor and the court system.

“They want me in prison,” he told one of his cronies, noting that if he were indicted that would indeed be the result – not because he had crossed a red line, but merely due to the jurists’ collective hostility toward him and his ideology. Netanyahu appears to wholeheartedly believe himself to be a victim, framed by prosecutors and that Mendelblit, who is weak, doesn’t believe in them at all, but couldn’t withstand the pressure.

In his interviews with the police Netanyahu acted like a hunted man. “It’s a wacky conception,” he told national fraud squad chief Koresh Bar-Nur in January 2017. Bar-Nur came to Netanyahu’s residence with a team of investigators to question him under caution on Case 2000, involving a bribery deal Netanyahu allegedly negotiated with Yedioth Ahronoth publisher Arnon “Noni” Mozes.

 

And that wasn’t all. To court the right wing vote, Bibi also planned to bomb locations in Syria controlled by “Iran-backed” Assad troops, right about right now. And he needed permission from Vladimir Putin to do that. So he flew to Moscow, did a bunch of photo-ops with Putin to show Israeli voters he’s an important statesman, but all he got was a big load of coal in his stocking. Putin said: we’l shoot you out of the skies if you dare. And do note: this is not the first time.

In other words, Bibi was deeply humiliated one week before the election he so deperately needs to him to stay out of jail. Now tell me, which western paper or TV channel did you read or watch the news about this in/on? Remember, this happened before Trump announced his Mutual Defense Treaty with Bibi. By the way, what does that “Mutual” mean anyway, that Israel will save America? This is from Zero Hedge:

 

Israeli Attacks On Syria Halted After Russian Threat To Shoot Down Jets

According to reports in both Israeli and Arabic regional media, Israel this past week was preparing to expand major airstrikes against “Iran-backed” targets in Syria, but Moscow imposed its red line. The Independent has published a story describing that Russia’s military in Syria threatened to shoot down any invading Israeli warplanes using fighter jets or their S-400 system.

The Jerusalem Post, citing sources in the UK Independent (Arabia), writes just after the latest meeting in Sochi between Prime Minister Benjamin Netanyahu and Russian President Vladimir Putin: “According to the report, Moscow has prevented three Israeli airstrikes on three Syrian outposts recently, and even threatened that any jets attempting such a thing would be shot down, either by Russian jets or by the S400 Anti-aircraft missiles.

The source cited in the report claims a similar situation has happened twice, and that during August, Moscow stopped an airstrike on a Syrian outpost in Qasioun, where a S300 missile battery is placed.” Netanyahu’s hasty trip to meet with Putin on Thursday – even in the final days before Tuesday’s key election – was reportedly with a goal to press the Russian president on essentially ignoring Israel’s attacks in Syria.

Citing further sources in the British-Arabic Independent Arabia, The Jerusalem Post continues: According to the Russian source, Putin let Netanyahu know that his country will not allow any damage to be done to the Syrian regime’s army, or any of the weapons being given to it… Israel sources cited by the Arabic newspaper described Netanyahu’s attempts to persuade Putin as “a failure”. This in spite of Netanyahu telling reporters after the meeting that his relations with Moscow were stronger than ever.

[..] The Russian source said: “Putin has expressed his dissatisfaction from Israel’s latest actions in Lebanon” and even emphasized to Netanyahu that he “Rejects the aggression towards Lebanon’s sovereignty”, something which has never been heard from him.

Putin further stated that someone is cheating him in regards to Syria and Lebanon and that he will not let it go without a response. According to him, Netanyahu was warned not to strike such targets in the future.

 

 

This is where and how the winds -and with them the tectonic plates- have shifted. And don’t underestimate it. Bibi can presumably count on Trump more than any other US President in his time, and the US is supposedly this almighty force, also in the Middle East, but today Putin just tells him “don’t you dare!” Putin refuses to let him touch Assad’s territory and -Russian- weapons.

The clincher is those weapons have become so sophisticated that Bibi, Trump support or not, puts his tail between his legs and flies back, hoping nobody notices what shape he’s in. And in that humiliation, Lebanon is the cherry that Putin puts on top of the pie. “Now that you’re here, I want you to stop harassing Lebanon too. Yes, now you may go.” Lebanon must have stunned Bibi.

What these shifting winds tell us is that the shots in that part of the world, Syria, Lebanon, Israel, (I wouldn’t go as far as including Iran and Saudi Arabia just yet) are no longer called by Bibi or the US. The main reason, as we’ve mentioned often before, is that Russian weapons have become so powerful.

Because as also previously discussed, Russian arms may well be -far- superior to American ones, which in turn in due to the US arms industry developing weapons for profit, vs Russia producing them to defend itself. Putin outright humiliating Bibi Netanyahu may be the first real obvious consequence of that.

This is something that will play out over a long time, but it may change the global political climate dramatically very rapidly. Mike Pompeo can try to blame Iran for whatever it is that happened to Saudi oil facilities, but for the US to attack Iran, which may be the reason for that blame game, it would need to ask Putin for permission, just like Netanyahu did.

And why would Putin give that permission? That’s a real good question. Mind you, Netanyahu may on Tuesday get the Knesset seats he needs to stifle the investigations against him, and to annex the Jordan Valley, but he will still have to ask permission if he has big dreams. And neither Trump nor Jared Kushner nor anyone else can help him there.

The US neocons have been talking about a New World Order for decades. Well, now they got one.

 

 

 

 

Sep 152019
 
 September 15, 2019  Posted by at 9:26 am Finance Tagged with: , , , , , , , , , , , , , ,  9 Responses »


Marcel Duchamp About young sister 1911

 

Israeli Attacks On Syria Halted After Russian Threat To Shoot Down Jets (ZH)
US, Israel Talk About Mutual Defense Treaty – Trump (RT)
Netanyahu’s Plan to Escape Trial (Haaretz)
US Blames Saudi Oil Strikes On Iran, Not Houthis (BBC)
Global Spare Oil Capacity In US Hands After Saudi Outage (R.)
US Stands Ready To Tap Emergency Oil Reserve After Saudi Attacks (R.)
London Upper Tribunal Rejects La Repubblica’s Assange Docs Appeal (Maurizi)
Johnson Is A Liar Who Only Backed Leave To Help His Career – Cameron (G.)
US To Hit EU With Billions In Tariffs After Victory In Airbus Case (Pol.eu)
Italy’s New Government Lets Charity Ship Head To Italian Port (R.)
World ‘Losing Battle Against Deforestation’ (BBC)
The Spy Who Failed (Ritter)

 

 

What Putin tells Netanyahu, he also tells Trump at the same moment. A red line in the sand. This is the new world order.

Israeli Attacks On Syria Halted After Russian Threat To Shoot Down Jets (ZH)

According to reports in both Israeli and Arabic regional media, Israel this past week was preparing to expand major airstrikes against “Iran-backed” targets in Syria, but Moscow imposed its red line. The Independent has published a story describing that Russia’s military in Syria threatened to shoot down any invading Israeli warplanes using fighter jets or their S-400 system. The Jerusalem Post, citing sources in the UK Independent (Arabia), writes just after the latest meeting in Sochi between Prime Minister Benjamin Netanyahu and Russian President Vladimir Putin: “According to the report, Moscow has prevented three Israeli airstrikes on three Syrian outposts recently, and even threatened that any jets attempting such a thing would be shot down, either by Russian jets or by the S400 Anti-aircraft missiles.


The source cited in the report claims a similar situation has happened twice, and that during August, Moscow stopped an airstrike on a Syrian outpost in Qasioun, where a S300 missile battery is placed.” Netanyahu’s hasty trip to meet with Putin on Thursday – even in the final days before Tuesday’s key election – was reportedly with a goal to press the Russian president on essentially ignoring Israel’s attacks in Syria. Citing further sources in the British-Arabic Independent Arabia, The Jerusalem Post continues: According to the Russian source, Putin let Netanyahu know that his country will not allow any damage to be done to the Syrian regime’s army, or any of the weapons being given to it… Israel sources cited by the Arabic newspaper described Netanyahu’s attempts to persuade Putin as “a failure”. This in spite of Netanyahu telling reporters after the meeting that his relations with Moscow were stronger than ever.

Read more …

Israel is going to defend the US?

US, Israel Talk About Mutual Defense Treaty – Trump (RT)

The US and Israel are discussing a mutual defense treaty that would further cement the already “tremendous” alliance between the two countries, President Donald Trump has revealed. “I had a call today with Prime Minister Netanyahu to discuss the possibility of moving forward with a Mutual Defense Treaty, between the United States and Israel, that would further anchor the tremendous alliance between our two countries,” Trump tweeted. Trump voiced not-that-veiled support for Benjamin Netanyahu ahead of the upcoming parliamentary elections in Israel. “I look forward to continuing those discussions after the Israeli Elections when we meet at the United Nations later this month!” Trump wrote.


The support surely comes in handy, as Netanyahu’s backing appears to be quite shaky. The September 17 polls are the second snap legislative elections this year after Netanyahu failed to form the government back in April. The outcome of the upcoming vote is hard to predict, as Netanyahu’s party, Likud, has almost equal support as their main opponent the Blue and White led by Benny Gantz, opinion polls show. Netanyahu was quick to respond to Trump’s announcement, lauding the prospects of the alliance and managing to call the US president a “friend” twice in a single tweet.

Read more …

Netanyahu wanted to bomb Syria to support himself in the Sep 17 Knesset elections. Putin said we’ll shoot down your jets.

Netanyahu needs victory in the election to keep himself out of jail. He may be indicted by mid-October. Trump might want to reconsider who he’s friends with.

Netanyahu’s Plan to Escape Trial (Haaretz)

Immediately after the last election, Prime Minister Benjamin Netanyahu outlined to members of his inner circle a plan to extract him from facing trial. The plan was based on obtaining immunity from the Knesset and passing legislation to prevent the High Court of Justice from removing that immunity. If his bloc wins 61 Knesset seats next week, Netanyahu will presumably resort to this rescue plan. For him it will be the Day of Judgment. “Stop being frightened. It’s time for them to be frightened,” Netanyahu told his confidants, referring to justice officials, headed by Attorney General Avichai Mendelblit and State Prosecutor Shai Nitzan, who have decided to indict him in three cases, subject to a hearing.

Netanyahu told his confidants why he insisted on his destructive plan, telling them he had lost all confidence in the legal system on all levels – the attorney general’s office, the state prosecutor and the court system. “They want me in prison,” he told one of his cronies, noting that if he were indicted that would indeed be the result – not because he had crossed a red line, but merely due to the jurists’ collective hostility toward him and his ideology. Netanyahu appears to wholeheartedly believe himself to be a victim, framed by prosecutors and that Mendelblit, who is weak, doesn’t believe in them at all, but couldn’t withstand the pressure.

In his interviews with the police Netanyahu acted like a hunted man. “It’s a wacky conception,” he told national fraud squad chief Koresh Bar-Nur in January 2017. Bar-Nur came to Netanyahu’s residence with a team of investigators to question him under caution on Case 2000, involving a bribery deal Netanyahu allegedly negotiated with Yedioth Ahronoth publisher Arnon “Noni” Mozes.

Read more …

Trump was talking about lifting sanctions on Iran and then this happens?! That smells like Assad attacking his own people with chlorine just as things were getting better.

US Blames Saudi Oil Strikes On Iran, Not Houthis (BBC)

US Secretary of State Mike Pompeo has blamed Iran for Saturday’s drone attacks on Saudi oil facilities. He dismissed a claim by Yemeni Houthi rebels that they had attacked the two facilities, run by state-owned company Aramco. Saudi Arabia’s energy minister said the strikes had reduced crude oil production by 5.7 million barrels a day – about half the kingdom’s output. Correspondents say they could have a significant impact on world oil prices. TV footage showed a huge blaze at Abqaiq, site of Aramco’s largest oil processing plant, while a second drone attack started fires in the Khurais oilfield. The Saudis lead a Western-backed military coalition supporting Yemen’s government, while Iran backs the Houthi rebels.


If the rebels were responsible for the attacks, their drones would have had to fly hundreds of miles from Yemen into central Saudi Arabia. Meanwhile experts are investigating whether the attacks could have been carried out from the north – either by Iran or its Shia allies in Iraq – using cruise missiles rather than drones, the Wall Street Journal reports. Tensions between the US and Iran have escalated in recent months. since US President Donald Trump abandoned a deal limiting Iran’s nuclear activities last year and reinstated sanctions. In a tweet, Mr Pompeo said there was “no evidence” the drones came from Yemen. He described the attack as “an unprecedented attack on the world’s energy supply”.

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The US and Saudi Aramco (its IPO is near) stand to gain most if oil prices shoot up.

Global Spare Oil Capacity In US Hands After Saudi Outage (R.)

An attack on Saudi oil facilities on Saturday is believed to have disrupted half the country’s production capacity, making the United States the only real holder of the global supply cushion via its ability to raise own output or to soften sanctions against other major oil producers. Saudi Arabia has yet to comment on the extent of damage on its oil production but industry sources have said some 5-6 million barrels per day (bpd) or 5-6% of global supply have been affected. Saudi Arabia, the Organization of the Petroleum Exporting Countries’ de-facto leader and largest producer, has been long seen as the custodian of the world’s spare oil capacity.

Spare capacity is the extra oil a producing country can bring onstream and sustain at short notice, providing global markets with a cushion in the event of natural disaster, conflict or any other cause of an unplanned supply outage. Industry sources have said Saudi Arabia will be able to restore supply within days. A prolonged supply outage will have a major bullish impact on oil prices, which in turn will spur further gains in U.S. shale production. The United States has briefly overtaken Saudi Arabia as the world largest crude exporter this year, only a few years after removing a ban on oil exports because of large needs at home as the world’s largest oil consumer.

Analysts have repeatedly underestimated U.S. output growth gains with the country now producing around 15% of global supply. Besides the United States, the only countries which have significant spare capacity are Iran and Venezuela.

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Only to replace it with much more expensive oil?

US Stands Ready To Tap Emergency Oil Reserve After Saudi Attacks (R.)

The Trump administration is prepared to tap U.S. emergency oil reserves if necessary after drone attacks shut oil output in Saudi Arabia, the world’s largest crude exporter, a Department of Energy spokeswoman said. Energy Secretary Rick Perry “stands ready to deploy resources from the Strategic Petroleum Oil Reserves if necessary to offset any disruptions to oil markets as a result of this act of aggression,” spokeswoman Shaylyn Hynes said. Yemen’s Iran-aligned Houthi group claimed credit for Saturday’s attacks on two plants at the heart of Saudi Arabia’s oil industry, including the world’s biggest petroleum processing facility Abqaiq.


Perry directed department leaders to work with the Paris-based International Energy Agency (IEA) “on potential available options for collective global action if needed,” Hynes said. The IEA said on Twitter earlier in the day that it was in contact with Saudi authorities and other major oil-producing nations, and that markets for now are well-supplied. The United States has occasionally coordinated with the IEA on collective draw downs of oil from international reserves. The SPR, held in heavily-guarded underground storage caverns on the Texas and Louisiana coasts, currently holds nearly 645 million barrels, or about the amount the United States consumes in a month.

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Where are the British people protesting this?

London Upper Tribunal Rejects La Repubblica’s Assange Docs Appeal (Maurizi)

The press does not have the right to access the full set of documents on the Julian Assange case. That is what judge Edward Mitchell finally ruled in an appeal taken to the London Upper Tribunal by la Repubblica, after we have spent the last four years trying to access the full documentation to investigate the Assange case and factually reconstruct it.

In an extremely technical judgement just made public and which the judge himself characterises as “unusually long”, Mitchell rejects our legal arguments and states that he believed public knowledge of Mr Assange’s case would not have increased if it was known that the CPS held information from the US State Department or Department of Justice. A rather incredible argument considering that the entire Assange case revolves around the role of the United States authorities, who want to get their hands on the WikiLeaks founder, extradite him to the US and jail him for life: establishing whether the British and US authorities discussed this possibility from the very beginning is crucial.

[..]Our attempt to access the documents has been hindered and hugely delayed in every jurisdiction. However, the very few documents we have obtained so far have allowed us to unearth crucial information. They provide indisputable evidence of the UK’s role in helping to create the legal and diplomatic quagmire which kept Julian Assange arbitrarily detained since 2010, as established by the United Nations Working Group on Arbitrary Detention (UNWGAD). In fact, it was the UK Crown Prosecution Service which advised the Swedish prosecutors against the only judicial strategy that could have brought the Swedish rape investigation to a quick closure: questioning Assange in London, rather than trying to extradite him to Stockholm. It was the Crown Prosecution Service which tried to dissuade the Swedish prosecutors from dropping the case in 2013. Finally, it was the Crown Prosecution Service that wrote to its Swedish counterpart: “Please do not think that the case is being dealt with as just another extradition request” and destroyed crucial documents, even though the case is still ongoing and very controversial.

When we tried to shed light on these facts, to understand why the British authorities acted this way and why the Assange case was not “just another extradition request”, we ran up against a true rubber wall, so much so that we were forced to sue the Crown Prosecution Service. Our first appeal to the London First-tier Tribunal was rejected: the judge established that the press has no right to access the documentation, because the need for the British authorities to protect the confidentiality of the extradition process outweighs the public interest of the press to know. Today, Judge Edward Mitchell has rejected our appeal to the Upper Tribunal. At this point it is not clear who will be able to introduce some transparency and oversight in the Assange case, considering that the press is not allowed to do so.

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Selling a book.

Johnson Is A Liar Who Only Backed Leave To Help His Career – Cameron (G.)

Boris Johnson is a liar who only backed the Leave campaign to help his career and Michael Gove was a “foam-flecked Faragist” whose “one quality” was disloyalty, David Cameron writes in his memoirs. The former prime minister poured vituperation on both his former colleagues Priti Patel, the current home secretary, and Dominic Cummings, the No 10 adviser, in extracts from the book published on Sunday. In what may be Cameron’s most explosive allegation yet, he effectively accused Boris Johnson of mounting a racist election campaign by focusing on Turkey and its possible accession to the EU. “It didn’t take long to figure out Leave’s obsession,” he writes. “Why focus on a country that wasn’t an EU member?


“The answer was that it was a Muslim country, which piqued fears about Islamism, mass migration and the transformation of communities. It was blatant.” Then Cameron echoes the explicitly racist Conservative campaign slogan used in Smethwick in 1964: “They might as well have said: ‘If you want a Muslim for a neighbour, vote “remain”.’” In Smethwick, Peter Griffiths had been elected as Conservative MP on the slogan “If you want a n**** for a neighbour, vote Labour.” Cameron writes that Johnson’s claims of concerns about British sovereignty were “secondary to another concern for Boris: what was the best outcome for him?”

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Get ready for more fun.

US To Hit EU With Billions In Tariffs After Victory In Airbus Case (Pol.eu)

The United States has gotten the green light to impose billions of euros in punitive tariffs on EU products in retaliation for illegal subsidies granted to European aerospace giant Airbus. Four EU officials told POLITICO that the World Trade Organization ruled in favor of the U.S. in the long-running transatlantic dispute and sent its confidential decision to Brussels and Washington on Friday. The decision means that U.S. President Donald Trump will almost certainly soon announce tariffs on European products ranging from cheeses to Airbus planes. One official said Trump had won the right to collect a total of between €5 billion and €8 billion. Another said the maximum sum was close to $10 billion.


The decision sets the stage for a showdown between Europe and Washington just as the EU is transitioning to new leadership under incoming Commission President Ursula von der Leyen and Trade Commissioner-designate Phil Hogan. In unveiling her team on Tuesday, von der Leyen signaled a robust approach to transatlantic disputes on trade and other issues with the Trump administration. aWashington has previously announced it would follow through with tariffs if it won the case in Geneva and has prepared a list of EU exports worth a total of $21 billion. The U.S. can choose products from that list and then tax them at different rates in order to claw back the total amount of damage resulting from the EU subsidies.

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After EU nations agreed to take the refugees.

Italy’s New Government Lets Charity Ship Head To Italian Port (R.)

Italy’s new government allowed a French charity ship to bring ashore 82 migrants on Saturday in an apparent reversal of the uncompromising, closed-door policy of the previous administration. However, Foreign Minister Luigi Di Maio, who heads the 5-Star Movement in the governing coalition, said the Ocean Viking was only being given access to the southern island of Lampedusa because other European states had agreed to take in many of those on board. The government formally took office on Tuesday, promising a fresh approach to migration following the hardline clampdown on rescue ships introduced by former interior minister Matteo Salvini, who heads the far-right League.


Prime Minister Giuseppe Conte said on Thursday that “several EU countries” had agreed to take in the Africans aboard the Ocean Viking but did not give further details. The ship is run by French charities SOS Mediterranee and Doctors Without Borders. It picked up the migrants off Libya earlier this week and had asked both Italy and Malta for permission to dock. Recent such requests from other boats had been rejected, leaving migrants stranded at sea for prolonged periods. The center-left Democratic Party (PD), which has replaced the League in the ruling coalition, applauded the announcement that the vessel had been given access to Lampedusa.

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As long as it pays more to cut and burn trees than to grow them or just leave them alone, this is inevitable.

World ‘Losing Battle Against Deforestation’ (BBC)

A historic global agreement aimed at halting deforestation has failed, according to a report. An assessment of the New York Declaration on Forests (NYDF) says it has failed to deliver on key pledges. Launched at the 2014 UN climate summit, it aimed to half deforestation by 2020, and halt it by 2030. Yet deforestation continues at an alarming rate and threatens to prevent the world from preventing dangerous climate change, experts have said. The critique, compiled by the NYDF Assessment Partners (a coalition of 25 organisations), painted a bleak picture of how the world’s forests continue to be felled.


“Since the NYDF was launched five years ago, deforestation has not only continued – it has actually accelerated,” observed Charlotte Streck, co-founder and director of Climate Focus, which co-ordinated the publication of the report. The report says the amount of annual carbon emissions resulting from deforestation around the globe are equivalent to the greenhouse gases produced by the European Union. On average, an area of tree cover the size of the United Kingdom was lost every year between 2014 and 2018. Tropical forest loss accounts for more than 90% of global deforestation, with the hotspot being located in Amazon Basin nations of Bolivia, Brazil, Colombia and Peru.

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Your must read for the Sunday. Excellent. You’ll know a lot more about the CIA in Moscow, and in the US elections.

The Spy Who Failed (Scott Ritter)

Oleg Smolenkov was a controlled asset of the CIA. While he was given certain latitude on what information he could collect, generally speaking Smolenkov worked from an operations order sent to him by his CIA controllers which established priorities for intelligence collection based upon information provided by Smolenkov about what he could reasonably access. Before tasking Smolenkov, his CIA handlers would screen the request from an operational and counterintelligence perspective, conducting a risk-reward analysis that weighed the value of the intelligence being sought with the possibility of compromise. Only then would Smolenkov be cleared to collect the requested information.

It is not publicly known what prompted the report from Smolenkov which Brennan found so alarming. Was it received out of the blue, a target of opportunity which Smolenkov exploited? Was it based upon a specific tasking submitted by Smolenkov’s CIA handlers in response to a tasking from above? Or was it a result of the intervention of the CIA director, who tasked Smolenkov outside normal channels? In any event, once Brennan created his special analytical unit, Smolenkov became his dedicated source. If Smolenko was in this for the money, as appears to be the case, he would have been motivated to come up with the “correct” answer to Brennan’s tasking for information on Putin’s role. By late 2016, Western media had made quite clear what kind of answer Brennan wanted.

Every intelligence report produced by a controlled asset is subjected to a counterintelligence review where it is examined for any evidence of red flags that could be indicative of compromise. One red flag is the issue of abnormal access. Smolenkov did not normally have direct contact with Putin, if ever. His intelligence reports would have been written from the perspective of the distant observer. His report about Putin’s role in interfering in the 2016 election, however, represented a whole new level of access and trust. Under normal circumstances, a report exhibiting such tendency would be pulled aside for additional scrutiny; if the report was alarming enough, the CIA might order the agent to be subjected to a polygraph to ensure he had not been compromised.

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Sep 132019
 
 September 13, 2019  Posted by at 9:44 am Finance Tagged with: , , , , , , , , , , ,  7 Responses »


Marc Chagall The watering trough 1925

 

The Dogs in the Street Know (Craig Murray)
Speaker Bercow Warns Boris Johnson Against Disobeying Brexit Law (BBC)
Former FBI Deputy Director Andrew McCabe Must Face Criminal Charges (CNBC)
US House Panel Wants Boeing To Allow Employee Interviews On 737 MAX (R.)
US Pressures Israel To Drop China ‘Belt And Road’ Investments (ZH)
Huawei CEO Offers To License 5G Technology To American Companies (F.)
Mnuchin Says 100-Year Treasury Bond Possible (R.)
US Justice Department To Release Name Of Shadowy Figure In 9/11 Case (R.)
Trump’s Taliban Talks Led by Neocon Operation Cyclone Agent (MPN)
Palace Revolt at the ECB, Legitimacy of Policy out the Window (WS)
The New ECB QE Is A Mistake. Here Is What It Should Have Done (Lacalle)

 

 

A Scotsman taking down the Queen.

The Dogs in the Street Know (Craig Murray)

There are some very obvious facts in British politics which nobody seems to be saying. Joanna Cherry stated in her successful court case that “the dogs in the street know” that the real reason that Boris Johnson had prorogued parliament was to prevent parliament from having an effective say on the outcome of Brexit. The documents that the government was forced to produce to the Scottish Courts proved beyond any shadow of a doubt that was indeed Johnson’s motive. So why are we expected to believe that what you knew and I knew, what Joanna Cherry knew, what the very dogs in the street knew, was not known to the Queen?

Do we really believe that the Queen was “misled” and that she and her courtiers were the only people in the entire country who actually believed that Johnson just wanted the longest prorogation for 89 years to prepare a really good Queen’s speech? Are we really expected to believe that the Queen had not noticed that Brexit was at a crucial stage and the effect that prorogation would have on parliament’s say in the process? This is obviously complete and utter nonsense. The Queen has better sources of information than any of us and knew exactly what was happening. She was not “misled” by Boris Johnson, she was his ally in a common purpose. She absolutely understood both the context and the effect of the prorogation. All this utter nonsense about the Queen being “lied to” and “misled” is part of this strange myth of the ultimate goodness of authority which is a recurring theme in human societies.

Peasants died under the knout while building the Trans-Siberian railway thinking “if only the good Tsar knew.” The Queen is not a naive figure of Christ like innocence taken in by Boris Johnson, she is an ultra wealthy woman of very conservative views embedded in a social circle dominated by very rich and reactionary people. To repeat what I have repeatedly explained, it was unconstitutional for the Queen to appoint Boris Johnson in the first place when it was plain as a pikestaff that he could not command a parliamentary majority. That initial crime (and I use the word advisedly) was compounded by the decision to prorogue parliament to enable her no majority Prime Minister to govern. In a sane world we should be getting out the pitchforks. Instead people are tut-tutting about the poor Queen being misled.

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Prior to his election to Speaker, Bercow was a longtime member of the Conservative Party.

Speaker Bercow Warns Boris Johnson Against Disobeying Brexit Law (BBC)

John Bercow has vowed “creativity” in Parliament if Boris Johnson ignores the law designed to stop a no-deal Brexit. The Commons Speaker also said in a speech that the only possible Brexit was one backed by MPs. A new law, passed before the suspension of Parliament, forces the PM to seek a delay until 31 January 2020, unless a deal or no-deal exit is approved by MPs by 19 October. The PM has said he would rather be “dead in a ditch” than ask for a delay. Delivering a lecture in London, Mr Bercow said: “Not obeying the law must surely be a non-starter. Period.” He said it would be a “terrible example to set to the rest of society”.


“The only form of Brexit which we will have, whenever that might be, will be a Brexit that the House of Commons has explicitly endorsed,” he said. “Surely, in 2019, in modern Britain, in a parliamentary democracy, we – parliamentarians, legislators – cannot in all conscience be conducting a debate as to whether adherence to the law is or isn’t required.” He called it “astonishing” that “anyone has even entertained the notion”. If the government comes close to disobeying the Act, the MP said that Parliament “would want to cut off such a possibility and do so forcefully”. “If that demands additional procedural creativity in order to come to pass, it is a racing certainty that this will happen, and that neither the limitations of the existing rule book nor the ticking of the clock will stop it doing so,” he added.

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Hmm. Should McCabe run free?

Former FBI Deputy Director Andrew McCabe Must Face Criminal Charges (CNBC)

Former FBI deputy director Andrew McCabe has failed in his efforts to convince the Justice Department not to file potential criminal charges against him for allegedly lying to federal agents, NBC News reported Thursday. Lawyers for McCabe, who has not been charged in the case, reportedly met last month with a top Justice official the U.S. Attorney for the District of Columbia and in what were believed to be talks seeking to dissuade then from filing criminal charges. The Washington Post reported last week that federal prosecutors for months have been using a grand jury to investigate McCabe, a critic of President Donald Trump.

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They have to ASK?

US House Panel Wants Boeing To Allow Employee Interviews On 737 MAX (R.)

Congress on Thursday asked Boeing Co’s chief executive to make several employees available for interviews as part of a congressional probe into the design, development and certification of 737 MAX aircraft involved in two crashes that killed 346 people. House of Representatives Transportation Committee Chairman Peter DeFazio and Representative Rick Larsen, who chairs the aviation subcommittee, said in a statement that while Boeing has provided substantial documents and shared senior management’s perspective, “it’s important to the committee’s investigation to hear from relevant Boeing employees.”

The committee plans another Boeing hearing in the coming weeks and previously asked whistleblowers to come forward with any information about the plane’s development. Boeing has provided more than 300,000 pages of documents, a person briefed on the matter said, speaking on condition of anonymity. Boeing said in a statement it was “deeply disappointed the committee chose to release private correspondence given our extensive cooperation to date. We will continue to be transparent and responsive to the committee.”

[..] CEO Dennis Muilenburg said at an investor conference on Wednesday that the company is still targeting “early fourth quarter for getting the airplane back up in the air” but added that “ultimately return-to-service timing will be determined by the regulator.” The FAA has repeatedly said it will not certify the plane to fly again until it is safe to do so. The European Aviation and Space Agency said on Tuesday it “intends to conduct its own test flights separate from, but in full coordination with, the FAA. The test flights are not scheduled yet, the date will depend on the development schedule of Boeing.”

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If they’re pressuring Israel, they much be pressuring others too.

US Pressures Israel To Drop China ‘Belt And Road’ Investments (ZH)

As China executes on its “Belt and Road” global trade scheme, more than 130 countries who have either committed to or expressed interest in the $600 billion initiative have been hard at work expanding their infrastructure to accommodate Beijing’s ambitious plan. And while President Trump has been pounding the table in an ongoing US-China trade war, progress made on Belt and Road threatens to reduce US leverage over Beijing – putting US allies such as Israel, which extended a 25-year offer for the operation of the Haifa terminal to state-controlled Shanghai International Port Group – in a tricky position, according to Bloomberg’s Ivan Levingston.

“With national elections approaching on Sept. 17, Prime Minister Benjamin Netanyahu can ill afford to alienate the Trump administration on its signature international issue. Trump has endeared himself to Netanyahu by transferring the U.S. Embassy from Tel Aviv to Jerusalem and recognizing Israeli sovereignty in the disputed Golan Heights. Netanyahu reciprocated by naming a new Golan settlement after Trump and praising the American leader for, among other things, quitting the Iranian nuclear accord. “Over the years, Israel has been blessed to have many friends who sat in the Oval Office, but Israel has never had a better friend than you,” Netanyahu told the president during a March trip to the White House. An October Pew study found that 69% of Israelis had confidence in Trump’s performance as president, and many of Netanyahu’s campaign ads prominently feature the U.S. leader.” -Bloomberg

Of note, China is currently Israel’s second-largest trading partner with around $11.5 billion in annual transactions in 2018, according to the report. Meanwhile, the United States has pressed Israel to create a buffer with China in the interest of national security – which would look something like the Committee on Foreign Investment in the US (the same one that rubber-stamped Russia’s purchase of 20% of America’s Uranium). “Israel and Israeli companies are quickly coming to the realization that it’s going to be difficult to sustain business as usual in work with China while keeping the United States as the primary partner,” said Daniel Shapiro, Barack Obama’s US ambassador to Israel.

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How is Huawei linked to Belt & Road?

Huawei CEO Offers To License 5G Technology To American Companies (F.)

Zhengfei Ren, the CEO and founder of Huawei offered an olive branch to the Trump administration: License the Chinese telecommunications giant’s 5G technology to American companies, with the caveat that the U.S. government ““the U.S. side has to accept us at some level for that to happen.” Currently, the use of Huawei equipment is banned from U.S. networks over concerns that it could be used by the Chinese government as a method to spy or disrupt telecom systems. The offer [..] would essentially allow the U.S. to finally get in the race for 5G supremacy which is now dominated by Chinese firms Huawei and ZTE, Ericsson of Sweden and Nokia from Finland.


“Huawei is open to sharing our 5G technologies and techniques with U.S. companies, so that they can build up their own 5G industry. That would create a balanced situation between China, the U.S. and Europe,” told Ren to the newspaper. [..] Ren added that the U.S. companies would be allowed to modify as they see fit the software code used to run any of Huawei’s 5G equipment or even change it and use their own. [..] Ren added that the American licensees will be able to sell their 5G equipment based on Huawei’s intellectual property anywhere in the world, except in China.

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“We are going to start with 50 years, and if the answer is, 50-years is successful, we’ll consider 100-year bonds..”

Mnuchin Says 100-Year Treasury Bond Possible (R.)

U.S. Treasury Secretary Steven Mnuchin on Thursday said the United States will issue 50-year bonds if there is “proper demand,” a moved aimed at “derisking” the government’s $22 trillion of debt and locking in low interest rates. “We are going to start with 50 years, and if the answer is, 50-years is successful, we’ll consider 100-year bonds,” Mnuchin said in an interview with New York Times’ DealBook and streamed online live, adding that he began looking into the possibility of ultra-long U.S. bonds two years ago. The longest-dated U.S. Treasury currently is 30 years.


U.S. President Donald Trump has proposed a different fix for the rising cost of the record U.S. debt, calling on Wednesday on the “boneheads” at the Federal Reserve to reduce interest rates to below zero so as to reduce interest-rate payments. The Fed is widely expected to cut interest rates by a modest quarter of a percentage point next week when U.S. rate-setters meet. Fed Chair Jerome Powell and other policymakers see U.S. economic conditions as still generally favorable despite a global slowdown and a still-unresolved U.S.-China trade war, and they have consistently pushed back against the notion of negative rates or of setting rates to cater to political pressure.

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Is something moving?

US Justice Department To Release Name Of Shadowy Figure In 9/11 Case (R.)

The U.S. Justice Department on Thursday said it would release the name of an individual sought by people who are suing the government of Saudi Arabia for alleged involvement in the Sept. 11, 2001, hijacking attacks. U.S. prosecutors in New York said in a court filing that Attorney General William Barr had decided not to invoke state secrets and will share the person’s name with attorneys involved in the case. The decision could help victims of the Sept. 11 attacks and their family members, who charge in a long-running lawsuit that the Saudi government supported the hijackers who crashed jet liners into the World Trade Center, the Pentagon and a Pennsylvania field, killing nearly 3,000 people.


The Saudi government has repeatedly denied involvement in the attacks. The Saudi embassy in Washington did not immediately respond to requests for comment on Thursday. The case, filed in 2003, received a boost in 2016 when Congress passed a law making it easier to sue foreign governments for alleged involvement in terrorism. The plaintiffs have been trying to obtain redacted material from a 2012 FBI report which indicated the agency was investigating two Saudi officials, Omar al-Bayoumi and Fahad al-Thumairy, and said there was evidence that a third, unnamed party had ordered them to help the hijackers. Attorneys will now get to learn the name of that person, though their identity will remain under seal.

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Scary people.

Trump’s Taliban Talks Led by Neocon Operation Cyclone Agent (MPN)

John Bolton wasn’t the only veteran of the conflict in Afghanistan now charged with resolving it. Nor was he the only PNAC veteran in the Trump administration. U.S. Special Representative for Afghanistan Reconciliation Zalmay Khalilzad, the top American official in the negotiations, was a PNAC charter member and has been quietly overseeing the destruction of Afghanistan for most of his political career — longer than the Taliban has existed as an organization. Khalilzad worked closely with late National Security Advisor Zbigniew Brzezinski, who took a leading role in Operation Cyclone under President Carter. The secret CIA program pumped the Afghan Mujahideen up with cash, weapons, training, and jihadist school books.

The Brooklyn-based Al-Kifah Afghan Refugee Center — a front for Maktab al-Khidamat, an organization co-founded by Osama bin Laden — would become key to this endeavor. Brzezinski’s aim, as he stated, was to give the Soviets their own Vietnam quagmire. Back then, his message to the Mujahideen fighters that would become al-Qaeda and the Taliban was: “Your cause is right and God is on your side.” Even after the devastating attacks of September 11, Brzezinski defended the decision to support the Mujahideen in the name of defeating the Soviet Union.

The United States’ support for the Mujahideen in Afghanistan, and later Bosnia, was intended to bleed the Soviet Union. It is no surprise that the same leeches — the Taliban and al-Qaeda — that were trained by the United States, would turn on their masters. In the case of the Taliban, clinging on to the U.S. for nearly two decades, slowly sucking away all the while. In the case of al-Qaeda, the attacks on the World Trade Center dealt massive blows. The end-game tactics mirror the CIA’s philosophy in training the Mujahideen against the USSR. U.S officials like Khalilzad would spend decades in luxurious buildings in and around Washington while the people of Afghanistan would continue to suffer nearly another two decades of conflict because of their policies.

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Wolf Richter sees the ECB falling to bits. Wonder what Lagarde is doing these days.

Palace Revolt at the ECB, Legitimacy of Policy out the Window (WS)

ECB President Mario Draghi, who is on his way out, will, as we’re learning more and more, do anything to push his agenda and make it stick at the ECB long after he leaves, but whatever his agenda may be, it’s clearly unrelated to the European economy which has been buckling under the consequences of his agenda: the destructive weight of negative interest rates and QE. And in the process, he is destroying the legitimacy of the ECB’s policy. The latest incident was on Thursday. During the press conference following the ECB’s policy meeting, he lied to reporters, claiming that the “consensus was so broad there was no need to take a vote,” when in fact he had a revolt on his hand during the meeting by the presidents of the national central banks that represented half of the economy of the Eurozone, and by members of the Executive Board.

Among the key policy changes the ECB announced on Thursday was the restart of QE to the tune of €20 billion a month and a tiny 10-basis point cut in its deposit rate, from the old negative -0.4% to the new negative -0.5%. The announcement also included a provision to help banks – which have been getting re-crushed by these idiotic negative interest rates – to survive those negative interest rates: the ECB would exempt part of the banks’ deposits at the ECB from negative rates in a two-tier system. It was the QE portion of the decision that had triggered the unprecedented revolt during the meeting. “Officials with knowledge of the matter” told Bloomberg that during the contentious meeting, the members of the Governing Council and of the Executive Board who vigorously opposed the restart of QE included but was not limited to:

• Jens Weidmann, President of the Bundesbank • Francois Villeroy de Galhau, Governor of the Bank of France • Klaas Knot, President of the Dutch central bank • Ewald Nowotny, Governor of the Austrian central bank • Ardo Hansson, Governor of the Bank of Estonia • Sabine Lautenschlaeger, Member of the Executive Board • Benoit Coeure, Member of the Executive Board. The countries of the five heads of the national central banks, from Weidmann to Hansson, account for about half of the economy of the Eurozone. They opposed the restart of QE, but there was no vote – which is common in ECB proceedings when there is a consensus. But there was no consensus. And Draghi simply imposed his agenda.

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Mistake perhaps. But hardly an honest one, if you read Wolf Richter’s piece above. The ECB IS the mistake.

The New ECB QE Is A Mistake. Here Is What It Should Have Done (Lacalle)

The ECB is creating a dangerous bubble and should not have cut rates by 10bps nor added a new purchase program of €20 billion per month. 1) Eurozone states are already financing themselves at negative rates. There is no need for lower rates and this disguises real risk. This has saved governments more than 1 trillion euro in interest expenses. 2) The ECB has not abandoned its stimulus. It repurchases all maturities, launched a liquidity injection (TLTRO) in March 2019 and balance sheet stands at almost 40% of eurozone GDP. 3) Excess liquidity is 1.7 trillion euro. More liquidity does not lead agents to spend/invest more. There is no higher solvent credit demand because monetary policy perpetuates overcapacity and zombifies the economy. Share of zombie companies has soared c30% since 2013 (BIS).

4) Interest rates are already negative. This has caused a 23 billion euro loss for banks (according to Scope Ratings) and a worrying rise in junk debt demand. 5) There is no evidence of a need for more credit growth. Rather the opposite. The ECB believes the eurozone problem is one of excess saving and lack of demand when it is of excess debt and oversupply. 6) Negative rates zombify the economy and are a massive transfer of wealth from savers and productive sectors to the indebted and inefficient. 7) The ECB already accumulates a disproportionate amount of sovereign debt as well as corporate bonds of issuers that never had a problem financing themselves at low rates. This disguises risk and creates an enormous bubble.

8) The problem of the eurozone is not one of lack of stimuli, but an excess of them. Governments burden the productive private sector with higher taxes and unnecessary regulations, so economic surprise falls despite massive stimulus. 9) When this fails or -even worse- explodes, central planners will likely blame “markets” or “lack of stimulus” to repeat. 10) Saying that negative rates are “demanded” by investors is a sad excuse. Financial repression leads economic agents to take more risk for lower yields and central banks go from lenders of last resort to enablers of financial bubbles.

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Dec 232018
 
 December 23, 2018  Posted by at 10:24 am Finance Tagged with: , , , , , , , , , , , ,  9 Responses »


Caravaggio Adoration of the Shepherds 1609

 

Krakatau-Triggered Tsunami Kills At Least 168 In Indonesia (R.)
David Collum’s 2018 Year In Review: “The Year Everything Changed”
Corbyn Faces Furious Labour Backlash Over Backing Brexit (G.)
UK To Tackle Loneliness Crisis With £11.5m Cash Injection (G.)
If Truth Cannot Prevail Over Material Agendas We Are Doomed (PCR)
Mnuchin Refutes Report That Trump Wants Powell Fired (MW)
Trump’s Political Viagra (Jatras)
We Know How Trump’s War Game Ends (Taibbi)
Send the Mad Dog to the Corporate Kennel (McGovern)
Is China Getting Too Close To Israel? (ATimes)

 

 

Krakatau in 1883 is the stuff of legend. It affected climate all over the world.

“When the Krakatoa volcano in Indonesia erupted in 1883, the resulting debris caused vibrant red sunsets around the world for up to three years afterward.”

It also killed 30,000+. But it was still much weaker than Tambora in 1811, also Indonesia, which killed over 70,000.

Krakatau-Triggered Tsunami Kills At Least 168 In Indonesia (R.)

A tsunami killed at least 168 people and injured hundreds on the Indonesian islands of Java and Sumatra following an underwater landslide believed caused by the erupting Anak Krakatau volcano, officials and media said on Sunday. Hundreds of homes and other buildings were “heavily damaged” when the tsunami struck along the rim of the Sunda Strait late on Saturday, Sutopo Purwo Nugroho, spokesman for the disaster mitigation agency, said. Thousands of residents were forced to evacuate to higher ground. There was no estimate on the number of missing. TV images showed the seconds when the tsunami hit the beach and residential areas in Pandeglang on Java island, dragging with it victims, debris, and large chunks of wood and metal.

The eruption of Krakatau in 1883 killed more than 36,000 people in a series of tsunamis. Anak Krakatau is the island that emerged from the area once occupied by Krakatau, which was destroyed in 1883. It first appeared in 1927 and has been growing ever since. Saturday’s tsunami was the latest in a series of tragedies that have struck Indonesia, a vast archipelago, this year. Successive earthquakes flattened parts of the tourist island of Lombok, and a double quake-and-tsunami killed thousands on Sulawesi island. Nearly 200 people died when a Lion Air passenger plane crashed into the Java Sea in October.

Authorities warned residents and tourists in coastal areas around the Sunda Strait to stay away from beaches and a high-tide warning remained in place through till Dec. 25. “Those who have evacuated, please do not return yet,” said Rahmat Triyono, an official at the Meteorology, Climatology and Geophysics Agency (BMKG). President Joko Widodo, who is running for re-election in April, said on Twitter that he had “ordered all relevant government agencies to immediately take emergency response steps, find victims and care for the injured”.

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Dave Collum still produces his endless end of the year reviews, and he’s still a good friend and avid reader of the Automatic Earth. Even though Twitter sort of shadow banned him from my feed.

David Collum’s 2018 Year In Review: “The Year Everything Changed”

Sources I sit in front of a computer 16 hours a day gerrymandering my brain, at least three of which are dedicated to non-chemistry pursuits. I’m a huge fan of Adam Taggart and Chris Martenson (Peak Prosperity), Tony Greer (TG Macro), Doug Noland (Credit Bubble Bulletin), The Automatic Earth, Grant Williams (Real Vision and Things That Make You Go Hmmm), Raoul Pal (Real Vision), Bill Fleckenstein (Fleckenstein Capital), Mike Krieger (Liberty Blitzkrieg), Demetri Kofinas (Hidden Forces), James Grant (Grant’s Interest Rate Observer), Campus Reform, and any nonsense spewed by Twitter legend @RudyHavenstein.

There are so many others, many of whom I consider friends that I am simply waiting to meet. ZeroHedge is by far my preferred consolidator of news; it’s an acquired taste and requires a filter, but I think those rogues are great. Twitter is a window to the world if managed correctly—especially for a chemist attempting to connect with the finance world. Warning: the Holy Grail of maximizing follower counts is an illusion; it produces a counterproductive hyperconnectivity that makes extracting signal from noise difficult. So much flow, so little time.

Read more …

The half of British who don’t want Brexit have no-one to speak for them. That is a volatile situation. And potentially explosive.

Corbyn Faces Furious Labour Backlash Over Backing Brexit (G.)

Jeremy Corbyn is facing a storm of criticism from Labour activists and MPs after suggesting he would press ahead with Brexit if the party won a snap general election. In a sign that he is losing backing among overwhelmingly pro-Remain Labour supporters, Corbyn was also accused of betraying the party membership by appearing reluctant to back the idea of supporting Remain in a second referendum. The first signs of a serious internal revolt from party members on the left, who helped propel him to the leadership, came after Corbyn gave an interview to the Guardian in which he suggested he thought Brexit should go ahead and said EU state-aid rules would prevent a Labour government intervening to support UK industries.

His anti-EU tone drew immediate criticism from party supporters and members who had successfully persuaded the leadership to back the possibility of a second referendum at Labour’s annual conference in Liverpool in September. Richard Brooks, a Labour member, activist and co-founder of For our Future’s Sake (FFS), a pro-Remain youth and student-led organisation, said Corbyn risked losing the backing of young people as well as the mass Labour membership he had promised to empower. “Jeremy Corbyn is in danger of betraying and losing the support of millions of young people and students who very nearly propelled him to Downing Street last year, and whose support he needs if he is to ever to become prime minister.

“Students and young people will not forget or forgive politicians who sell them down the river by backing a Brexit that limits our life opportunities and makes us poorer,” he said.

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Because there’s nothing that cannot be bought.

UK To Tackle Loneliness Crisis With £11.5m Cash Injection (G.)

A coffee caravan in rural Suffolk, furniture restoration projects for men and organised rambles for the recently bereaved are among more than a hundred initiatives being backed with a £11.5m fund to tackle Britain’s epidemic of loneliness. One hundred and twenty-six projects have been chosen to receive up to £100,000 each in the first ever government-backed fund to tackle a problem that the prime minister, Theresa May, described as “incredibly damaging to our humanity” when she launched a national loneliness strategy in October. The projects will target a wide range of groups from isolated Pakistani women in Bradford to young LGBTQ+ in Bristol and lonely elderly men in Cornwall.

The government believes the health impact of loneliness is on a par with obesity and smoking. It says loneliness is associated with a greater risk of smoking, coronary heart disease and stroke as well as an increased risk of depression, low self-esteem, sleep problems and Alzheimer’s disease. Mims Davies, the minister for loneliness, said: “I am committed to encouraging open conversations around this sensitive topic to reduce the stigma and create an environment where everyone is better connected.”

Rural Coffee Caravan in Suffolk will buy a new camper van that will travel to quiet villages in the East Anglian countryside and set up temporary cafes. It is also using the money to extend an initiative that involves pubs giving out free coffee on Monday mornings. “Loneliness is just so damaging,” said Ann Osborn, its director. “Lonely people are more likely to have problems with obesity, have heart disease and suffer from depression. But also they cut themselves off and so the community suffers.

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Well, truth is gone from the media already…

If Truth Cannot Prevail Over Material Agendas We Are Doomed (PCR)

Throughout the long Cold War Stephen Cohen, professor of Russian studies at Princeton University and New York University was a voice of reason. He refused to allow his patriotism to blind him to Washington’s contribution to the confict and to criticize only the Soviet contribution. Cohen’s interest was not to blame the enemy but to work toward a mutual understanding that would remove the threat of nuclear war. Although a Democrat and left-leaning, Cohen would have been at home in the Reagan administration, as Reagan’s first priority was to end the Cold War. I know this because I was part of the effort. Pat Buchanan will tell you the same thing.

[..] Today Cohen is stressed that it is the United States that thinks it can win a nuclear war. Washington speaks openly of using “low yield” nuclear weapons, and intentionally forecloses any peace negotiations with Russia with a propaganda campaign against Russia of demonization, villification, and transparant lies, while installing missile bases on Russia’s borders and while talking of incorporating former parts of Russia into NATO. In his just published book, War With Russia?, which I highly recommend, Cohen makes a convincing case that Washington is asking for war.

I agree with Cohen that if Russia is a threat it is only because the US is threatening Russia. The stupidity of the policy toward Russia is creating a Russian threat. Putin keeps emphasizing this. To paraphrase Putin: “You are making Russia a threat by declaring us to be one, by discarding facts and substituting orchestrated opinions that your propagandistic media establish as fact via endless repetition.” Cohen is correct that during the Cold War every US president worked to defuse tensions, especially Republican ones. Since the Clinton regime every US president has worked to create tensions. What explains this dangerous change in approach?

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One little rumor can last an entire Christmas season.

Mnuchin Refutes Report That Trump Wants Powell Fired (MW)

President Donald Trump, reportedly angry over the U.S. central bank’s decision to raise interest rates last week, has talked about ousting Federal Reserve Chairman Jerome Powell, according to Bloomberg News. The report, based on “four people familiar with the matter,” said they were not convinced Trump would move against Powell, but that the president’s ire remained elevated over rising interest rates. Rates are climbing at the same time that the stock market has wiped out 2018 gains. In a Saturday evening tweet, Treasury Secretary Steven Mnuchin said he has spoken with the president and Trump said, “I totally disagree with Fed policy. I think the increasing of interest rates and the shrinking of the Fed portfolio is an absolute terrible thing to do at this time especially in light of my major trade negotiations which are ongoing, but I never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so.”

On Friday, Trump’s economic team split publicly over the Fed. Trump’s trade adviser Peter Navarro told a Japanese newspaper that “we” — presumably meaning the White House — didn’t want to see any more interest-rate hikes from the central bank. The Fed has penciled in two rate hikes for 2019. Navarro said that would be “two too many.” “We don’t understand why the Fed is acting so contractionary at a time when there’s no inflation to worry about,” he said. White House chief economist Kevin Hassett said he disagreed with Navarro. “That’s Peter speaking for himself,” Hassett insisted. “I think the appropriate position for an economist in the White House is to respect the independence of the Fed and not comment on their policies,” Hassett said.

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Is Trump finally getting the chutzpah to implement his promises?

Trump’s Political Viagra (Jatras)

After two years of getting rolled by the Washington establishment, it seems that President Donald Trump woke up and suddenly realized, “Hey – I’m the president! I have the legal authority to do stuff!” • He has announced his order to withdraw US troops from Syria. • His Defense Secretary James Mattis has resigned. There are rumors National Security Adviser John Bolton may go too. (Please take Secretary of State Mike Pompeo with you!) • He announced a start to withdrawing from Afghanistan. • He now says he will veto a government funding bill unless he gets $5 billion for his Wall, and as of 12:01 AM Washington time December 22 the federal government is officially under partial shutdown.

All of this should be taken with a big grain of salt. While this week’s assertiveness perhaps provides further proof that Trump’s impulses are right, it doesn’t mean he can implement them. The Syria withdrawal will be difficult. The entire establishment, including the otherwise pro-Trump talking heads on Fox News, are dead set against him – except for Tucker Carlson and Laura Ingraham. Senator Lindsey Graham is demanding hearings on how to block the Syria pullout. Congress hardly ever quibbles with a president’s putting troops into a country, where the Legislative Branch has legitimate Constitutional power. But if a president under his absolute command authority wants to pull them out – even someplace where they’re deployed illegally, as in Syria – well hold on just a minute!

We are being told our getting out of Syria and Afghanistan will be a huge “gift” to Russia and Iran. Worse, it is being compared to Barack Obama’s “premature” withdrawal from Iraq (falsely pointed to as the cause of the rise of ISIS) and will set the stage for “chaos.” By that standard, we can never leave anywhere. This will be a critical time for the Trump presidency. (And if God is really on his side, he soon might get another Supreme Court pick.) If he can get the machinery of the Executive Branch to implement his decision to withdraw from Syria, and if he can pick a replacement to General Mattis who actually agrees with Trump’s views, we might start getting the America First policy Trump ran on in 2016.

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Wait, we do? Matt sounds a bit confused here.

We Know How Trump’s War Game Ends (Taibbi)

So we’re withdrawing troops from the Middle East. GOOD! What’s the War on Terror death count by now, a half-million? How much have we spent, $5 trillion? Five-and-a-half? For that cost, we’ve destabilized the region to the point of abject chaos, inspired millions of Muslims to hate us, and torn up the Geneva Convention and half the Constitution in pursuit of policies like torture, kidnapping, assassination-by-robot and warrantless detention. It will be difficult for each of us to even begin to part with our share of honor in those achievements. This must be why all those talking heads on TV are going crazy.

Unless Donald Trump decides to reverse his decision to begin withdrawals from Syria and Afghanistan, cable news for the next few weeks is going to be one long Scanners marathon of exploding heads. “Today’s decision would cheer Moscow, ISIS, and Iran!” yelped Nicole Wallace, former George W. Bush communications director. “Maybe Trump will bring Republicans and Democrats together,” said Bill Kristol, on MSNBC, that “liberal” channel that somehow seems to be populated round the clock by ex-neocons and Pentagon dropouts. Kristol, who has rarely ever been in the ballpark of right about anything — he once told us Iraq was going to be a “two month war” — might actually be correct.

Trump’s decisions on Syria and Afghanistan will lay bare the real distinctions in American politics. Political power in this country is not divided between right and left, and not even between rich and poor. The real line is between a war party, and everyone else. This is why Kristol is probably right. The Democrats’ plan until now was probably to impeach Trump in the House using at minimum some material from the Michael Cohen case involving campaign-finance violations.

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“Like all members of the military profession I never had an original thought until I left the service. My mental faculties remained in suspended animation..”

Send the Mad Dog to the Corporate Kennel (McGovern)

Outgoing Defense Secretary Gen. James “Mad Dog” Mattis was famous for quipping, “It’s fun to shoot some people.” It remains a supreme irony that Mattis was widely considered the only “adult in the room” in the Trump administration. Compared to whom? John Bolton, the rabid neocon serving as national security adviser? That would be the epitome of “condemning with faint praise.” [..] Mattis was simply incapable of acknowledging the self-destructive, mindless nature of U.S. “endless war” in the Middle East, which candidate-Trump had correctly called “stupid.” In his resignation letter, Mattis also peddled the usual cant about the indispensable nation’s aggression being good for the world.

Mattis was an obstacle to Trump’s desire to pull troops out of Syria and Afghanistan (and remains in position to spike Trump’s orders). Granted, the abrupt way Trump announced his apparently one-man decision was equally stupid. But withdrawal of ground troops is supremely sane, and Mattis was and is a large problem. And, for good or ill, Trump — not Mattis — was elected president. Historically, Marines are the last place to turn for sound advice. Marine Gen. Smedley Butler (1881-1940), twice winner of the Medal of Honor, was brutally candid about this, after he paused long enough to realize, and write, “War is a Racket”: “I suspected I was just part of a racket at the time. Now I am sure of it. Like all members of the military profession I never had an original thought until I left the service. My mental faculties remained in suspended animation while I obeyed the orders of the higher- ups. …”

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Next up are ports in Chesapeake Bay?

Is China Getting Too Close To Israel? (ATimes)

China is constructing seaports at two sites where the US 6th Fleet deploys, in Haifa next to Israel’s main naval base and Ashdod near Tel Aviv, prompting concerns about China’s military potential in the Mediterranean Sea and Middle East. “The civilian [Chinese] port in Haifa abuts the exit route from the adjacent [Israeli] navy base, where the Israeli submarine fleet is stationed and which, according to foreign media reports, maintains a second-strike capability to launch nuclear missiles,” Israel’s Haaretz media reported. “No one in Israel thought about the strategic ramifications,” Haaretz said in September. The guided-missile destroyer USS Arleigh Burke visited Haifa on October 25 in support of the 6th Fleet which is headquartered in Naples, Italy.

Shanghai International Port Group (SIPG) signed the Haifa contract in 2015, began construction in June, and is to operate the Bayport Terminal for 25 years starting from 2021. SIPG signed memorandums of understanding with U.S. ports in Seattle, Washington in 2006 and Georgia Ports Authority in 2004, plus Barcelona, Spain, in 2006. SIPG also works with European ports in Rotterdam, Hamburg and London, and two ports in Japan, its website said. China Harbor Engineering, one of China’s biggest government-owned enterprises, is meanwhile constructing a port at Ashdod, 25 miles (40 kilometers) south of Tel Aviv.

“At $3 billion, this is one of the biggest overseas investment projects in Israel, ever, and also one of the biggest for the Chinese company, China Harbor Engineering,” wrote Arthur Herman, senior fellow at the Washington-based Hudson Institute think tank in November. “Ashdod on the Mediterranean coast is the destination of fully 90 percent of Israel’s international maritime traffic,” Herman said.

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Aug 012018
 


Salvador Dali Swans reflecting elephants 1937

 

I am often confused by events that happen and by things that people say. But then I think them over and they mostly become less confusing, even if often slivers of confusion remain. This was again the case yesterday morning. Donald Trump went after the Koch brothers, the one biggest symbol of everything that’s wrong with American politics, and I expected the anti-Trump echo-chamber to finally agree on something with him.

But no, what was I thinking? The echo-chamber has deafened and blinded its inhabitants for far too long and far too loudly for one single word of agreement to come out of it. Trump could sing the praises of Hillary Clinton tomorrow morning and it would be used against him. This is not new, it’s been going on for his entire presidency, and before, but it’s still good for people to acknowledge that it’s getting worse be the day – or better perhaps in their eyes?!

Still, if you want to call yourself a journalist, and want to be taken seriously as such, objectivity is the number one requirement. But who in the US or international press can claim to be objective when it comes to Trump? Trump sells, on all sides of the aisle. Be very much for him, or equally much against him, and your paper or TV channel can expect revenues to rise. Being neutral on him: not so much.

Anyway, so Trump went after the Koch brothers. That must have shaken up a lot of the Republican party, because countless senators and congressmen and lower level politicians owe their seats more or less exclusively to the hundreds of millions the brothers throw at election campaigns. Trump does not. Here’s how Tyler Durden covered the action:

Two days after Charles Koch voiced his growing displeasure with Trump’s domestic, foreign and economic policy, warning that Trump tariffs could trigger a US recession, President Trump responded on Tuesday by slamming the powerful Koch-led donor network as “globalist” and “a total joke,” rejecting the conservative group amid reports that the network was shifting away from him over trade and immigration issues. Trump alleged that his policies have “made them richer” and that they “want to protect their companies outside the U.S. from being taxed,” while he supports the American worker. In another tweet Trump called them: “Two nice guys with bad ideas.”

“The globalist Koch Brothers, who have become a total joke in real Republican circles, are against strong borders and powerful trade. I never sought their support because I don’t need their money or bad ideas,” Trump said in a post on Twitter. “They love my Tax & Regulation Cuts, Judicial picks & more. I made them richer” Trump continued his angry tirade: “Their network is highly overrated, I have beaten them at every turn. They want to protect their companies outside the U.S. from being taxed, I’m for America First & the American Worker – a puppet for no one. Two nice guys with bad ideas. Make America Great Again!”

That seems obvious enough. The 82- and 78-year-old brothers have bought much of the GOP with their billions, but not Trump. Whether that is because they didn’t want to, or couldn’t, is largely irrelevant. One would think even the anti-Trumpers could feel some sense of gratification in the demise of the brothers’ pernicious influence over America as a country, but no, their hate of Trump trumps their dislike of the Koches.

 

And you know what they found to rationalize this? The word ‘globalist’. Yesterday morning I was watching in amazement as my Twitter feed supplied one tweet after the other on the theme. It lasted just a few hours and then it was gone; this morning the whole thing has died out. But the message, or should I say the damage, had been conveyed.

The allegation in these circles is that Globalist Equals Jew. And so you can’t call anyone a globalist, or at least Trump can’t, or you -and he- only can when someone ‘s not Jewish. Now, globalism is a real thing, it’s a philosophy concerning how economies can and should be organized. And it’s sort of the opposite of Trump’s America First and Make America Great Again.

People who ‘believe’ in globalism are opposed to Trump’s trade tariffs. Not so much his proposal to the EU to drop all tariffs though, because that is what they also want. For Trump, globalism means the jobs America lost to people like the Koch brothers moving manufacturing to China et al. His view is that America needs those jobs back. These are simply different views of how economies and societies should be organized. Nothing more, nothing less.

But by making the word Globalist the same as Jew, the discussion about the different views becomes impossible. You cannot call a Jewish person a globalist, even if that person ‘believes’ in the concept of globalism. On the other hand, it’s fine to call non-Jewish people globalists. And this is because certain rightwing forces have at some point allegedly used the term as an anti-semitic slur, or dog-whistle.

However, who decided to let the rightwing decide what a word means? See, I’m sure those who bring this up didn’t invent it out of thin air, but globalism is still a real thing, and since no-one wishes to equate globalism with Judaism one-on-one, I’d say caution is required. Like this: If you cannot positively prove that someone is an antisemite, don’t go there girlfriend. It’s toxic.

 

In Britain, Labour leader Jeremy Corbyn, 180 light years away from Trump politically, is the subject of an anti-semitism smear campaign at the same time. Though all he’s ever done is be critical of Israeli policies vs the Palestinians. And if we can’t criticize that kind of thing anymore, I don’t know what we live in, but a democracy it’s certainly not. By the way, The Guardian ran a headline yesterday saying “Corbyn Ally Says ‘Jewish Trump Fanatics Making Up’ Antisemitism Claims”. Wait, Jewish Trump fanatics? Oh, never mind…

And yes, we all know that Trump’s son-in-law Jared Kushner is Jewish, and his favorite daughter Ivanka has converted to orthodox Judaism when she married Kushner, and Trump’s grandchildren by the couple are Jewish too. Still when economic adviser Gary Cohn left earlier this year, and Trump said “he’s a globalist, but I still like him”, that is now being used against him. Trump’s an antisemite. But Cohn would still be a globalist even if he weren’t Jewish.

Which fits in nicely and seamlessly with Trump being a racist and misogynist and rapist and Putin-puppet and yada yada. But you know, the anti-Trump chamber has become so deafening it’s become fully dysfunctional. There is no information emanating from it anymore, even if many journalists reside in that chamber.

There’s just a bunch of people trying to trump each other in their hate of the man. For them that seems to do the trick, but for anyone outside of the chamber, it’s just a whole lot of noise. It has taken Robert Mueller a year and a half to come up with absolutely nothing in the way of collusion, and he just keeps going. For what? He wants to make it the full 4-year Trump term?

I’m sure there are people out there who use Globalist as a slur for Jewish, but I have no way of being sure Trump uses it in that sense, and neither do his detractors. They have reached a stage where any allegation or rumor or innuendo seems for them to prove their unproven suspicions even and ever more, but they have long lost sight of what is actually true, and what is mere conjecture.

Labeling someone an antisemite is one of the worst things one can accuse another person of, and it should therefore never be done lightly, let alone without any proof. It’s just dirty smear if you have no evidence; and mere allegations don’t cut it. Sure there are people who voted for Trump who fit the picture, but that doesn’t make the man an antisemite. Nor does calling someone who believes in open borders everywhere, a globalist. Whether that person is Jewish or not. Don’t just throw shit around hoping it will stick.

 

Oh, and if you feel tempted to call me an antisemite now, here’s something I wrote in January 2010 when Anne Frank’s friend Miep Gies died aged 100, about where I grew up: Miep Gies Died Today. Good luck with that.

 

 

Jun 012018
 
 June 1, 2018  Posted by at 1:01 pm Finance Tagged with: , , , , , , , , , , , , ,  1 Response »


Nikolay Dubovsky Became Silent 1890

 

“European Stocks Surge Celebrating New Spanish, Italian Governments”, says a Zero Hedge headline. “Markets Breathe Easier As Italy Government Sworn In”, proclaims Reuters. And I’m thinking: these markets are crazy, and none of this will last more than a few days. Or hours. The new Italian government is not the end of a problem, it’s the beginning of many of them.

And Italy is far from the only problem. The new Spanish government will be headed by Socialist leader Pedro Sanchez, who manoeuvred well to oust sitting PM Rajoy, but he also recently saw the worst election result in his party’s history. Not exactly solid ground. Moreover, he needed the support of Catalan factions, and will have to reverse much of Rajoy’s actions on the Catalunya issue, including probably the release from prison of those responsible for the independence referendum.

Nor is Spain exactly economically sound. Still, it’s not in as bad a shape as Turkey and Argentina. A JPMorgan graph published at Zero Hedge says a lot, along with the commentary on it:

The chart below, courtesy of Cembalest, shows each country’s current account (x-axis), the recent change in its external borrowing (y-axis) and the return on a blended portfolio of its equity and fixed income markets (the larger the red bubble, the worse the returns have been). This outcome looks sensible given weaker Argentine and Turkish fundamentals. And while Cembalest admits that the rising dollar and rising US rates will be a challenge for the broader EM space, most will probably not face balance of payments crises similar to what is taking place in Turkey and Argentina, of which the latter is already getting an IMF bailout and the former, well… it’s only a matter of time.

 

And now Erdogan has apparently upped the ante once more yesterday. Last week he called on the Turkish population to change their dollars and euros into lira’s, last night he ‘suggested’ they bring in their money from abroad (to profit from ‘beneficial tax rules’). Such things have, by and large, one effect only: the opposite of what he intends. He just makes his people more nervous than they already were.

It’s June 1, and the Turkish elections are June 24. Will Erdogan be able to keep things quiet enough in the markets? It’s doubtful. He has reportedly already claimed that the US and Israel are waging an economic war on Turkey. And for once he may be right. A few weeks ago Erdogan called on all member states of the Organisation of Islamic Cooperation to boycott all Israeli products (and presumably America products too).

On April 30, the IMF warned that the Turkish economy is showing “clear signs of overheating”. On May 1, Standard & Poor’s downgraded the Turkish economy to double-B-minus. Economic war? Feels a bit more like a political war. Erdogan has three weeks left to win that election. Don’t expect things to quieten down before then. But as the graph above shows, Turkey itself is the problem here first and foremost.

Expect Erdogan to say interest rates -usury- are immoral in Muslim countries. Expect much more pressure from the west on him. Erdogan has also been busy establishing Turkish ‘enclaves’ in Syria’s Afrin territory (where he chased out the original population) and in the Turkish-occupied northern part of Cyprus (where he added 100s of 1000s of Turks).

No, the West wouldn’t mourn if the man were defeated in the vote. They can add a lot more pressure in three weeks, and they will. Will it suffice? Hard to tell.

 

Back to Italy. Where the optimism comes from, I can’t fathom. The M5S-Lega coalition has never made a secret of its program and/or intentions. Just because pronounced eurosceptic Paolo Savona was shifted from Finance to EU minister doesn’t a summer make. New Finance minster Tria may be less outspoken than Savona, but he’s no europhile, and together the two men can be a woeful pain in Europe’s behind. This is Italy. This is not Sparta.

The essence of the M5S-Lega program is painfully simple: they reject austerity as the basics of economic policy. And austerity is all that Europe’s policy has been based on for the past decade at least. That spells collision course. And there is zero indication that the new coalition is willing to give an inch on this. Tsipras may have in Greece, but Italy’s sheer size means it has a lot more clout.

To begin with, the program wants to do away with the Eurozone’s 3% deficit rule. It speaks of a 15-20% flat tax, and a €780 basic income. These two measures would cost between €109 billion and €126 billion, or 6 to 7% of Italian GDP. As Italy’s public debt stand at €2.4 trillion, 132% of GDP.

“The government’s actions will target a programme of public debt reduction not through revenue based on taxes and austerity, policies that have not achieved their goal, but rather through increased GDP by the revival of internal demand,” the program says. Yes, that is the opposite of austerity.

The parties want a roll-back of previously announced pension measures to a situation where the sum of a person’s age and years of social security contributions reach 100. If someone has worked, and contributed to social security for 40 years, they will be able to retire at 60, not at 67 as the present plans demand.

In an additional plan that will make them very popular at home amongst the corrupt political class, the parties want to slash the number of parliamentarians to 400 MPs (from 630) and 200 senators (from 318). They would be banned from changing political parties during the legislature.

 

And then there are the mini-Bots, a parallel currency system very reminiscent of what Yanis Varoufakis proposed for Greece. Basically, they would allow the government to pay some of its domestic obligations (suppliers etc.) in the form of IOUs, which could then in turn be used to pay taxes and -other- government services. They would leave what is domestic, domestic.

There’s a lot of talk about this being a first step towards leaving the euro, but why should that be so? The main ‘threat’ lies in the potential independence from Brussels it may provide a country with. But it’s a closed system: you can’t pay with mini-Bots for trade or other international obligations.

Italy, like an increasing number of Eurozone nations, is looking for a way to get its head out of the Brussels/Berlin noose that’s threatening to suffocate it. If the EU doesn’t react to this, and soon, and in a positive manner it will blow itself up. Yes, if Italy started to let its debt balloon, the European Commission could reprimand it and issue fines. But the Commission wouldn’t dare do that. This is Italy. This is not Sparta.

Anyway, risk off, as the markets suggest(ed) this morning? Surely you’re joking. And we haven’t even mentioned Trump’s trade wars yet. Risk is ballooning.

 

 

May 152018
 


Henri Matisse Odalisque couchée aux magnolias 1923

 

Making Money In The Stock Market Just Got A Lot More Difficult (MW)
America’s Worst Long-Term Challenges: #1- Debt. (Black)
Fifteen Thoughts About Israel (Caitlin Johnstone)
Australia Probes Claim Google Harvests Data, Makes Consumers Pay (R.)
Warning Sounded Over China’s ‘Debtbook Diplomacy’ (G.)
China Really Is To Blame For Millions Of Lost US Manufacturing Jobs (MW)
No Progress Made On Any Key Area Of Brexit For Months – EU (Ind.)
Russian Company Charged In Mueller Probe Seeks Grand Jury Materials (R.)
Bridge From Mainland Russia To Crimea Hours Away From Opening (RT)
Industrial Trans Fats Must Be Removed From Food Supply –
Bank of England Should Print Money To Prevent Climate Change (Ind.)
Wildlife Poachers In Kenya ‘To Face Death Penalty’ (Ind.)

 

 

Bonds yield more than stocks.

Making Money In The Stock Market Just Got A Lot More Difficult (MW)

For almost a decade, it’s been extremely difficult to lose money in the U.S. stock market. Over the next decade, it could be hard to do anything but, according to analysts at Morgan Stanley. The outlook for market returns has precipitously worsened in recent months, with analysts and investors growing increasingly confident that the lengthy bull market that began in the wake of the financial crisis could be, if not coming to a close, petering out. More market participants view the economy as being in the late stage of its cycle, and a recession is widely expected in the next few years. All of that could result in an equity-market environment that’s a mirror image of recent years, where gains were pretty much uninterrupted, and volatility was subdued.

“2018 is seeing multiple tailwinds of the last nine years abate,” Morgan Stanley analysts wrote in a report to clients that was entitled “The End of Easy,” in reference to the investing environment. “Decelerating growth, rising inflation and tightening policy leave us with below-consensus 12-month return forecasts for most risk assets. After nine years of markets outperforming the real economy, we think the opposite now applies as policy tightens.” As part of its call, Morgan Stanley reduced its view on global equities to equal weight, saying they were “in a range-trading regime with limited 12-month upside.” It raised its exposure to cash, following Goldman Sachs, which last week upgraded its view on the asset class on a short-term basis.

U.S. GDP grew at an annualized 2.3% in the first quarter, below the 3% average of the previous three quarters, as consumer spending hit its weakest level in five years. While slowing growth isn’t the same as a contraction, the data added to concerns that a period of synchronized global growth was coming to a close. According to a BofA Merrill Lynch Global survey of fund managers in April, just 5% of respondents expect faster global growth over the coming 12 months, compared with the roughly 40% that did at the start of the year.

[..] Howard Wang, the co-founder of Convoy Investments, called the Fed’s ballooning balance sheet “the fundamental driver of asset prices over the last decade.” He provided the chart below, which compares the growth in the U.S. money supply against the long-term return of all assets, including global equities, bond categories, real estate, and gold. “I believe the trend of shrinking money supply in the system will continue for some time to come,” Wang wrote. “This adjustment is a painful but necessary process for healthier markets and economies.”

Read more …

$52,000 per second.

America’s Worst Long-Term Challenges: #1- Debt. (Black)

On October 22, 1981, the national debt in the United States crossed the $1 trillion threshold for the first time in history. It took nearly two centuries to reach that unfortunate milestone. And over that time the country had been through a revolution, civil war, two world wars, the Great Depression, the nuclear arms race… plus dozens of other wars, financial panics, and economic crises. Today, the national debt stands at more than $21 trillion– a milestone hit roughly two months ago. This means that the government added $20 trillion to the national debt in the 37 years between October 22, 1981 and March 15, 2018.

That’s an average of nearly $1.5 BILLION added to the national debt every single day… $62 million per hour… $1 million per minute… and more than $17,000 per SECOND. But the problem for the US government is that this trend has grown worse over the years. It took only 214 days for the government to go from $20 trillion in debt to $21 trillion in debt– less than eight months to add a trillion dollars to the national debt. That’s an average of almost $52,000 per second. Think about that: on average, the US national debt increases by more in a split second than the typical American worker earns in an entire year. And there is no end in sight.

At 105% of GDP, America’s national debt is already larger than the size of the entire US economy. (By comparison the national debt was just 31% of GDP in 1981.) Plus, the government’s own projections show a steep increase to the debt in the coming years and decades. The Treasury Department has already estimated that it will borrow $1 trillion this fiscal year, $1 trillion next year, and another trillion dollars the year after that. They’re also forecasting the national debt to exceed $30 trillion by 2025.

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I’ll let Caitlin do the talking. The damage done to America yesterday will be felt for a long time.

Fifteen Thoughts About Israel (Caitlin Johnstone)

1. I hate writing about Israel. The accusations of anti-semitism which necessarily go along with literally any criticism of that nation are gross enough, but even worse are the assholes who take my criticisms of the Israeli government as an invitation to actually be anti-semitic. They really do hate Jews, they really do think that every problem in the world is because of Jews and they post Jewish caricature memes and calls for genocide in the comments section on social media and it’s incredibly gross and I hate it. It feels exactly as intrusive, jarring and violating as receiving an unsolicited dick pic. But the Israeli government keeps committing war provocations and massacring Palestinians, so it’s something I’ve got to talk about.

2. Anti-semitism (or whatever word you prefer to use for the pernicious mind virus which makes people think it’s okay to promote hatred against Jewish people) is a very real thing that does exist, and I denounce it to the furthest possible extent. Anti-semitism is also a label that is used to bully the world into accepting war crimes, apartheid, oppression, and mass murder. Both of those things are true.

3. There were dozens of Palestinians killed and well above a thousand injured in the Gaza protests over the US moving its embassy to Jerusalem yesterday. I haven’t found any report of so much as a single Israeli injury. The only way to spin this as the fault of the Palestinians is to dehumanize them, to attribute behaviors and motives to them that we all know are contrary to human nature. To paint them as subhuman orc-like creatures who are so crazy and evil that they will keep throwing themselves at a hail of bullets risking life and limb just to have some extremely remote chance of harming a Jewish person for no reason. This is clearly absurd. A little clear thinking and empathy goes a long way.

6. Any position on Israel that is determined by words made up by dead men thousands of years ago is intrinsically invalid. Saying the Jewish people are more entitled to Israel than those who were living there seven decades ago because of some superstitious voodoo written in obsolete religious texts is not an argument. Religious freedom is important, and it’s important to be able to believe whatever you like, but your beliefs do not legitimize your actions upon other people. If you murder someone in the name of Allah, you have murdered someone. If you kill 58 people because you feel some ancient scripture entitles you to a particular section of dirt, you have killed 58 people. Your internal beliefs do not give you a free pass for your egregious actions upon others.

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Betcha it’s true. Making people pay to be spied upon.

Australia Probes Claim Google Harvests Data, Makes Consumers Pay For It (R.)

Google is under investigation in Australia following claims that it collects data from millions of Android smartphones users, who unwittingly pay their telecom service providers for gigabytes consumed during the harvesting, regulators said on Tuesday. Responding to the latest privacy concerns surrounding Google, a spokesman for the U.S. based search engine operator said the company has users’ permission to collect data. The Australian investigations stem from allegations made by Oracle Corp in a report provided as part of an Australian review into the impact that Google, owned by Alphabet Inc, and Facebook have on the advertising market. Both the Australian Competition and Consumer Commission (ACCC) and the country’s Privacy Commissioner said they were reviewing the report’s findings.

“The ACCC met with Oracle and is considering information it has provided about Google services,” said Geesche Jacobsen, a spokeswoman for the competition regulator. “We are exploring how much consumers know about the use of location data and are working closely with the Privacy Commissioner.” Oracle, according to The Australian newspaper, said Alphabet receives detailed information about people’s internet searches and user locations if they have a phone that carries Android – the mobile operating system developed by Google. Transferring that information to Google means using up gigabytes of data that consumers have paid for under data packages purchased from local telecom service providers, according to the Oracle report.

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As I’ve said for a long time, this is the Belt and Road scheme.

Warning Sounded Over China’s ‘Debtbook Diplomacy’ (G.)

China’s “debtbook diplomacy” uses strategic debts to gain political leverage with economically vulnerable countries across the Asia-Pacific region, the US state department has been warned in an independent report. The academic report, from graduate students of the Harvard Kennedy school of policy analysis, was independently prepared for the state department to view and assessed the impact of China’s strategy on the influence of the US in the region. The paper identifies 16 “targets” of China’s tactic of extending hundreds of billions of dollars in loans to countries that can’t afford to pay them, and then strategically leveraging the debt.

It said while Chinese infrastructure investment in developing countries wasn’t “inherently” against US or global interests, it became problematic when China’s use of its leverage ran counter to US interests, or if the US had strategic interests in a country which had its domestic stability undermined by unsustainable debt. The academics identified the most concerning countries, naming Pakistan and Sri Lanka as states where the process was “advanced”, with deepening debt and where the government had already ceded a key port or military base, as well places including Papua New Guinea and Thailand, where China had not yet used its amassed debt leverage.

Papua New Guinea, which “has historically been in Australia’s orbit”, was also accepting unaffordable Chinese loans. While this wasn’t a significant concern yet, the report said, the country offered a “strategic location” for China, as well as large resource deposits. While there was a lack of “individual diplomatic clout” in Cambodia, Laos and the Philippines, Chinese debt could give China a “proxy veto” in Asean, the academics said.

[..] China’s methods were “remarkably consistent”, the report said, beginning with infrastructure investments under its $1tn belt and road initiative, and offering longer term loans with extended grace periods, which was appealing to countries with weaker economies and governance. Construction projects, which the report said had a reputation for running over budget and yielding underwhelming returns, make debt repayments for the host nations more difficult. “The final phase is debt collection,” it said. “When countries prove unable to pay back their debts, China has already and is likely to continue to offer debt-forgiveness in exchange for both political influence and strategic equities.”

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That’s been obvious for many years.

China Really Is To Blame For Millions Of Lost US Manufacturing Jobs (MW)

Millions of Americans who lost manufacturing jobs during the 2000s have long ”known” China was to blame, not robots. And many helped elect Donald Trump as president because of his insistence that China was at fault. Evidently many academics who’ve studied the issue are finally drawing the same conclusion. For years economists have viewed the increased role of automation in the computer age as the chief culprit for some 6 million lost jobs from 1999 to 2010 — one-third of all U.S. manufacturing employment. Firms adopted new technologies to boost production, the thinking goes, and put workers out of the job in the process. Plants could make more stuff with fewer people.

In the past several years fresh thinking by economists such as David Autor of MIT has challenged that view. The latest research to poke holes in the theory of automation-is-to-blame is from Susan Houseman of the Upjohn Institute. Academic research tends to be dry and complicated, but Houseman’s findings boil down to this: The government for decades has vastly overestimated the growth of productivity in the American manufacturing sector. It’s been growing no faster, really, than the rest of the economy. What that means is, the adoption of technology is not the chief reason why millions of working-class Americans lost their jobs in a vast region stretching from the mouth of the Mississippi river to the shores of the Great Lakes. Nor was it inevitable.

Autor and now Houseman contend the introduction of China into the global trading system is root cause of the job losses. Put another way, President Bill Clinton and political leaders who succeeded him accepted the risk that the U.S. would suffer short-term economic harm from opening the U.S. to Chinese exports in hopes of long-run gains of a more stable China. No longer needing to worry about U.S. tariffs, the Chinese took full advantage. Low Chinese wages and a cheap Chinese currency — at a time when the dollar was strong — gave China several huge advantages. Companies shuttered operations in the U.S., moved to China and eventually set up research hubs overseas in another blow to the America’s economic leadership. The cost to the U.S. is still being tallied up.

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Gee, what a surprise.

No Progress Made On Any Key Area Of Brexit For Months – EU (Ind.)

EU27 ministers met on Monday with the bloc’s chief negotiator Michel Barnier in Brussels to discuss the state of talks so far. “Mr Barnier informed us that since 23 March no significant progress has been made on the three pillars that we work on: withdrawal, future framework, and Ireland,” Ekaterina Zakharieva, the Bulgarian foreign minister chairing the council, told journalists at an official press conference following the meeting. The renewed deadlock in Brussels comes as Theresa May’s cabinet repeatedly fails to agree with itself on what customs arrangement it wants with the EU after Brexit, despite publishing two options in August of last year. Both those options were dismissed as “magical thinking” by the EU at the time.

Speaking at a separate event in Brussels on Monday evening, Mr Barnier himself said that full talks on the future relationship had not even started in earnest despite getting the green light at a summit in March. “There is still a lot of uncertainty. Negotiations on the future with the UK have not started yet. We have had first exploratory discussions,” he said. Ms Zakharieva said the EU27 countries wanted more “intensive engagement by the UK government in the coming weeks”, warning that the October deadline was “only five months from now”. Ms May will next meet EU leaders in Brussels at the end of June for a meeting of the European Council.

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If you can’t see the material used to accuse you, what rights do you have?

Russian Company Charged In Mueller Probe Seeks Grand Jury Materials (R.)

A Russian company accused by Special Counsel Robert Mueller of funding a propaganda operation to interfere in the 2016 U.S. presidential election is asking a federal judge for access to secret information reviewed by a grand jury before it indicted the firm. In a court filing on Monday, lawyers for Concord Management and Consulting LLC said Mueller had wrongfully accused the company of a “make-believe crime,” in a political effort by the special counsel to “justify his own existence” by indicting “a Russian-any Russian.” They asked the judge for approval to review the instructions provided to the grand jury, saying they believed the case was deficient because Mueller lacked requisite evidence to show the company knowingly and “willfully” violated American laws.

Concord is one of three entities and 13 Russian individuals charged earlier this year by Mueller’s office, in an alleged criminal and espionage conspiracy to meddle in the U.S. race, boost then-presidential candidate Donald Trump and disparage his Democratic opponent Hillary Clinton. The indictment said Concord was controlled by Russian businessman Evgeny Prigozhin, who U.S. officials have said has extensive ties to Russia’s military and political establishment. Prigozhin, also personally charged by Mueller, has been dubbed “Putin’s cook” by Russian media because his catering business has organized banquets for Russian President Vladimir Putin and other senior political figures. He has been hit with sanctions by the U.S. government. Concord is facing charges of conspiring to defraud the United States, and is accused of controlling funding, recommending personnel and overseeing the activities of the propaganda campaign.

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“..more than half a year ahead of schedule..” Try that at home.

Bridge From Mainland Russia To Crimea Hours Away From Opening (RT)

The bridge across the Kerch Strait, which will connect the Crimean Peninsula and Krasnodar Region is set to open on Tuesday. Construction of the bridge, the longest in Russia with a span of 19 kilometers, has been carried out since February 2016, and it is opening for cars more than half a year ahead of schedule. The bridge capacity is 40,000 cars and 47 pairs of trains per day, 14 million passengers and 13 million tons of cargo per year. The railway section is scheduled to open in early 2019, the bridge will be opened for trucks starting from October of this year.

The link became vital after Crimea voted to rejoin Russia in 2014, as the peninsula’s only land border is with Ukraine. Before the opening, regular passenger and cargo deliveries were organized by direct flights and ferries from ports in southern Russia. Each pillar of the bridge needs about 400 tons of metal structures, which means that all pillars need as much iron as 32 Eiffel towers. The bridge’s piles are installed at least 90 meters under water.

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It’s very easy to just ban the stuff. That your governments haven’t simply done that says a lot.

Industrial Trans Fats Must Be Removed From Food Supply – WHO (G.)

Trans fats used in snack foods, baked foods and fried foods are responsible for half a million deaths worldwide each year and must be eliminated from the global food supply, the World Health Organization says today. Most of western Europe has already acted to reduce industrially made trans fats from factory-made foods. Denmark, like New York, which followed its lead, has an outright ban. Big food companies elsewhere have been under intense pressure to use substitutes. In the UK, the latest national diet and nutrition survey shows average intake of trans fats is well below the recommended upper limit of 2% of food energy, at 0.5-0.7%. Although companies manufacturing processed food in the UK do not use trans fats any more, the fats are in some cheap foods imported from other countries.

The WHO is calling on all governments to take action, including passing laws or regulations to rid their food supply of industrial trans fats. Director general Dr Tedros Adhanom Ghebreyesus said eliminating trans fats would “represent a major victory in the global fight against cardiovascular disease”. The WHO is targeting industrially made trans fats, but trans fats are also contained in milk, butter and cheese derived from ruminants, mainly cows and sheep. Dr Francesco Branca, director of the Department of Nutrition for Health and Development at the WHO, said the amounts we eat in dairy products are unlikely to breach the health guidelines. “We are saying that trans fats contained in those products have the same effect as industrial trans fats – we are not able to tell the difference,” he said. “But the amount contained in dairy products is much less.”

Read more …

How about money NOT to build roads?

Bank of England Should Print Money To Prevent Climate Change (Ind.)

The Bank of England should print money for the government to invest in the low-carbon economy to combat climate change, according to a new report. The BoE must also offload fossil fuel assets and use its existing powers more effectively to promote green projects, the campaign and research group Positive Money says. The report argues that the bank’s mandate to secure financial stability “looks incoherent over time unless it considers the long-term viability of the economy”. That viability will be undermined unless the threat of climate change is tackled soon, the researchers say. “The nature of climate change is such that either physical damage from weather or radical changes in technology and policy will occur in some combination, so action is needed now,” the report says.

It challenges the bank’s record on climate change and says its programme of, in effect, printing billions of pounds to prop up the economy has disproportionately helped carbon-intensive companies that are choking the planet. Under quantitative easing (QE), the bank has bought billions of pounds of debt from companies and the government. This is supposed to increase demand for debt, which in turn lowers interest rates. Cheaper borrowing means more borrowing which is supposed to be used to fund economic activity. But the researchers argue that QE has been actively harmful to efforts to combat climate change because the bank’s own criteria have been skewed towards buying debt from high-carbon sectors like manufacturing and utilities.

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The only solution left.

Wildlife Poachers In Kenya ‘To Face Death Penalty’ (Ind.)

Wildlife poachers in Kenya will face the death penalty, the country’s tourism and wildlife minister has reportedly announced. Najib Balala warned the tough new measure would be fast-tracked into law. Existing deterrents against killing wild animals in the east African nation are insufficient, Mr Balala said, according to China’s Xinhua news agency. So in an effort to conserve Kenya’s wildlife populations, poachers will reportedly face capital punishment once the new law is passed. Kenya is home to a wide variety of treasured species in national parks and reserves, including lions, black rhinos, ostriches, hippos, buffalos, giraffe and zebra.

Last year in the country 69 elephants – out of a population of 34,000 – and nine rhinos – from a population of under 1,000 – were killed. “We have in place the Wildlife Conservation Act that was enacted in 2013 and which fetches offenders a life sentence or a fine of US$200,000,” Mr Balala reportedly said. “However, this has not been deterrence enough to curb poaching, hence the proposed stiffer sentence.”

Read more …

May 102018
 


Paul Gauguin Road in Tahiti 1891

 

Beware of the Coming Economic Debt Bomb (Tanous)
Argentina Looks To Be Headed For Another Economic Storm (CNBC)
At Last, A Reason To Celebrate: House Prices Are Falling (G.)
RBS Reaches $4.9 Billion Deal To Settle US Mortgage Bond Probe (R.)
The Deep State First (Stockman)
Turkey Detains Dozens Of Air Force Personnel Over Gulen Links (R.)
Did Putin Green-Light Tonight’s Massive Israeli Strikes On Syria? (ZH)
Trump Welcomes Home Three Americans Released By North Korea (G.)
Democrats’ Lead Is Slipping In Generic Ballot Poll (Hill)
Is Capitalism a Threat to Democracy?
Bullshit Jobs: Why They Exist And Why You Might Have One (Vox)

 

 

“..over half of all personal income taxes will be required just to service the national debt.”

Beware of the Coming Economic Debt Bomb (Tanous)

In 2009, the year President Obama took office, the national debt held by the public was $7.27 trillion. At the end of fiscal 2016, that had soared to approximately $14 trillion. Given that our marketable debt doubled from 2009 to 2016, it’s remarkable that the annual cost of the interest on the debt rose far less, from $185 billion to $223 billion. The long march of rising rates that began recently is a dramatic reversal after nearly 40-years of declining interest rates. The new trend portends a return to more historic rates. You may be asking: what are the historic rates? We calculate that the average rate paid on the federal debt over the last 30 years was close to 5%. The Congressional Budget Office (CBO) has just raised its estimate that debt held by the public will rise to $17.8 trillion in 2020.

Some economists believe that the figure will be much higher. For our exercise though, let’s stick with the CBO estimate. We are postulating that the interest rate on our national debt may return to the long-term, 30-year average of 5%. Note, too, that Treasury debt rolls over every 3 to 4 years so the maturing bonds at low interest rates will be refinanced at the then current higher rates. Let’s do the math together. Take the CBO estimate of debt held by the public of $17.8 trillion in 2020, a 5% average interest on that amount comes to annual debt service of $891 billion, an unfathomable amount. (In 2017, interest on the debt held by the public was $458.5 billion, itself a scary number.)

In its current report, the CBO added: “It also reflects significant growth in interest costs, which are projected to grow more quickly than any other major component of the budget.” Here’s the danger: • According to CBO, individual income taxes produced $1.6 trillion in revenue in fiscal year 2017. • Under this 2020 scenario, over half of all personal income taxes will be required just to service the national debt. • Annual debt service in 2020 will exceed our newly increased defense budget of $700 billion in FY 2018. • Annual debt service would exceed our Social Security obligations.

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[The IMF] “..admitted shortly after the intervention that its support to keep the peso’s peg against the dollar prolonged the crisis in the country.”

Argentina Looks To Be Headed For Another Economic Storm (CNBC)

Argentina has started talks with the IMF seeking financial rescue once again, as inflation soars and the currency sinks. Buenos Aires looks to be going through another economic nightmare, with prices rising rapidly while the Argentine peso drops. The central bank announced last week another increase in rates to 40% — as the 12-month inflation rate hit 25.4%, above its 15% target. At the same time, since the start of the year, the peso is down by more than 20% against the U.S. dollar. [..] Asking for help from the Fund is a contentious issue for the country. Back in 2001, Argentina defaulted on $132 billion of foreign debt. The Washington-based institution, which was helping the country at the time, admitted shortly after the intervention that its support to keep the peso’s peg against the dollar prolonged the crisis in the country.

Following Macri’s announcement Tuesday, several people protested against a new IMF intervention, still traumatized by the economic collapse at the start of the century, Reuters reported. “The IMF has a terrible reputation among Argentinians, and so this is a big political gamble for the government,” Fiona Mackie, regional director for Latin America at the Economist Intelligence Unit, told CNBC via email. “At present, though, (the government) clearly sees the need to regain the confidence of markets as more pressing, and is hoping that its program of adjustment gets back on track in time for the presidential election late next year,” she added.

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“The Germans are right. Ever-rising house prices are a curse. They are bad for social mobility. They are bad for young people. And they are bad for the economy. ”

At Last, A Reason To Celebrate: House Prices Are Falling (G.)

The housing market is dead. Britain’s biggest mortgage lender, the Halifax, says that prices fell in April by 3.1%, the biggest monthly drop in almost eight years. Newspapers bury this disastrous news way back in their editions for fear that it will spread gloom and despondency. We need to wean ourselves off this way of thinking. Falling house prices are not disastrous, and only in a country with such a perverted relationship with bricks and mortar could they be seen as such. In Germany, they scratch their heads in bemusement when they hear Britons boast of how the value of their house has soared. The Germans are right. Ever-rising house prices are a curse. They are bad for social mobility. They are bad for young people. And they are bad for the economy.

The billions that are spent pushing up property prices could be more productively invested elsewhere. Imagine for a second that the next time you went to the train station the rail operating company had unexpectedly cut fares by 5%. Or that when doing your weekly shop you discovered that the supermarket had slashed your normal bill by £10. Would you think this was an unwelcome development? Daft question. Of course you would be happy, because your money would go further. Conversely, you would be less than chuffed to find more of your pay being spent on getting to work or putting food on the table. That’s why there are no headlines in the papers screaming “Boom-boom Britain: joy for commuters as rail fares rise by 10% for third year in a row”, or “Good news for families as supermarkets add £10 a week to the average shop”.

The papers stand up for their readers when they think they are being gouged by train companies and supermarkets. They stick up for buyers rather than sellers. But different rules apply to property. If the average house price had risen rather than fallen by £7,000 in April, that would have been front-page news and hailed as a sign that all was well with the economy. The papers tend to side with owner-occupiers rather than the buyers of property getting the rough end of the deal. This fetishisation of rising house prices is relatively recent. For the first 25 years after the second world war, a combination of mass housebuilding and strict controls on credit meant that the cost of property rose only modestly.

But since 1970, financial deregulation, much lower levels of housebuilding and a tax system heavily weighted in favour of owner-occupation have meant demand for housing in parts of the country has tended to outstrip supply. There have been four big house-price booms – the early 1970s, the late 80s, the mid 00s and the mid 10s. None of them have ended well.

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No criminal charges.

RBS Reaches $4.9 Billion Deal To Settle US Mortgage Bond Probe (R.)

The British state-backed bank said that $3.46 billion of the proposed civil settlement will be covered by existing provisions and the bank will take a $1.44 billion incremental charge in 2018’s second quarter to cover the rest. The accord would resolve a major issue that has weighed on the company’s share price and complicated the UK government’s plan to sell down its more than 70 percent stake in the bank. RBS Chief Executive Ross McEwan called the deal a “milestone.” “Removing the uncertainty over the scale of this settlement means that the investment case for this bank is much clearer,” he said in a statement.

The U.S. Attorney’s Office in Massachusetts, which led the probe, confirmed it had reached an agreement in principle with RBS that would resolve potential civil claims related to mortgage-backed securities that were issued from 2005 to 2008. “Further details remain to be negotiated, however, before a formal agreement can be reached,” the office said. The implosion of markets for risky residential mortgage-backed securities and related derivatives contributed to the 2008 global financial crisis and prompted a series of investigations by authorities including the Justice Department. The U.S. Attorney’s Office in Massachusetts had also been conducting a criminal investigation into RBS and former employees who were involved in structuring and selling the securities.

But the settlement that RBS and the office disclosed on Thursday was only civil in nature, signaling no criminal charges were likely to result. RBS previously agreed in July 2017 to pay $5.5 billion to resolve a lawsuit by the Federal Housing Finance Agency, the conservator for Fannie Mae and Freddie Mac, claiming it misled the U.S. mortgage giants into buying mortgage-backed securities. It resolved similar claims by the National Credit Union Administration related to mortgage-backed securities RBS sold to credit unions that later failed for $1.1 billion in 2016.

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“The mere threat of a military attack from the White House is madness because it arises from blatant lies that have absolutely nothing to do with US national security..”

The Deep State First (Stockman)

At his so-called Cabinet meeting this morning, the Donald basically threatened Iran with annihilation if it does what 15 other signatories to the nuclear non-proliferation treaty (NPT) do every day: Namely, increase production of industrial grade nuclear fuel (3.5%-5.0% purity) at its enrichment plant at Natanz—which, in any event, is crawling with IAEA inspectors. Moreover, it really doesn’t matter whether Trump was play-acting in the style of Art of the Deal or that the JPAOC could be improved. The mere threat of a military attack from the White House is madness because it arises from blatant lies that have absolutely nothing to do with US national security. Nor, for that matter, the security of any other country in the region, including Saudi Arabia and Israel.

The real purpose of the Donald’s missile-rattling is nothing more than helping Bibi Netanyahu keep his coalition of right wing religious and settler parties (Likud, United Torah Judaism, Shas, Kulanu and the Jewish Home) together, thereby maintaining his slim 61-vote majority in the 120-seat Knesset. Netanyahu’s malefic political glue is the utterly false claim that Iran is an “existential threat” to Israel because it is hell-bent on getting the bomb. But that’s where the whopper comes in. It amounts to the ridiculous postulate that Iran is so fiendishly evil that if it is involved in the nuclear fuel cycle in any way, shape or form – presumably even just operating a uranium mine – it is only a matter of months before it will have a bomb.

As a matter of record, of course, Netanyahu has been saying this since the early 1990s and he has always been wrong because there were never any facts or logic to support his blatant fear-mongering.

Read more …

Madman,

Turkey Detains Dozens Of Air Force Personnel Over Gulen Links (R.)

Turkish police detained 65 suspects on Thursday in an operation targeting air force personnel accused of links to the U.S.-based preacher whom Ankara says orchestrated an attempted coup in 2016, state-run Anadolu news agency said. Prosecutors issued arrest warrants for a total 96 people, of which 91 were from the air force, and police were still seeking the remaining suspects in an operation focused on the western city of Izmir and spread across 15 provinces, it said. The suspects were said to have ties to the cleric Fethullah Gulen, whose network is accused of being behind the failed putsch in July 2016, during which 250 people were killed. Gulen has denied involvement.

In a separate operation, an Ankara prosecutor on Thursday issued detention warrants for 93 employees of a private tutoring center that was previously closed down on suspicion of links to Gulen’s network, Anadolu said. Turkish authorities have detained 160,000 people and dismissed nearly the same number of civil servants since the failed military intervention, the U.N. human rights office said in March. Among those detained, more than 50,000 have been formally charged and kept in jail during their trials.

Read more …

Hmmm…

Did Putin Green-Light Tonight’s Massive Israeli Strikes On Syria? (ZH)

Just off a 10-hour visit with Russian President Vladimir Putin in Moscow, and less than a day after Trump pulled out of the Iran nuclear deal, Israeli Prime Minister Benjamin Netanyahu said on Wednesday he doesn’t expect Russia to act against Israeli forces as they continue exchanging fire with Syria. It appears the meeting wrapped up at the very moments a major escalation began along the Golan Heights, with both Syria and Israel trading blame for an initial attack which quickly escalated into Israeli cruise missile launches and shelling on targets in southern Syria and notably, on Damascus itself. The question remains, did Putin give Netanyahu the green light for tonight’s events?

If it wasn’t clear over the past weeks and months of unprovoked Israeli strikes on Syria—ostensibly to roll back Iranian troop presence—then it should be very clear by now that Syria, Israel, and Iran are now in a state of war and all signs point to a continued intensification of the conflict. And crucially, there’s currently no sign that Russia came to the aid of its close ally as rockets rained down on Damascus overnight. Russia has routinely looked the other way while Israel has conducted, by its own admission, over one hundred major strikes on Syria—most of which have come after Russian intervention on behalf of Assad in 2015. As Reuters reported late in the day Wednesday, Netanyahu told reporters just before departing Moscow: “Given what is happening in Syria at this very moment, there is a need to ensure the continuation of military coordination between the Russian military and the Israel Defence Forces.”

The Russians and Israelis coordinate their actions through a direct military hotline intended to avoid accidental clashes which could lead to escalation between the two countries. A reportedly “upbeat” Netanyahu further said, “”In previous meetings, given statements that were putatively attributed to – or were made by – the Russian side, it was meant to have limited our freedom of action or harm other interests and that didn’t happen, and I have no basis to think that this time will be different.” Thus it appears Israel may have been given a green light by Putin to engage targets in Syria, however, at this point it is unclear what limitations or restrictions Putin may have issued, if any at all.

Read more …

Victory.

Trump Welcomes Home Three Americans Released By North Korea (G.)

Three Americans released by North Korea have landed in the US under cover of darkness, with Donald Trump waiting on the tarmac to greet their plane. The three men emerged from a US government plane, flashing peace signs high above their heads. A huge US flag hung between two fire trucks served as a backdrop against the night sky. “I want to thank Kim Jong-un,” Trump said. “I think he wants to do something and bring that country into the real world.” “We didn’t think this was going to happen, and it did. It was very important to all of us,” he said, referring to the prisoner release. “The true honour will be if we have a victory in getting rid of nuclear weapons.” The US secretary of state, Mike Pompeo, flew to Pyongyang for a surprise one-day visit on Wednesday, when he met the North Korean leader and secured the release of the three men.

Read more …

What do Democrats stand for?

Democrats’ Lead Is Slipping In Generic Ballot Poll (Hill)

The lead held by Democrats over Republicans on generic ballot polls ahead of the 2018 midterm elections is beginning to slip, a new CNN poll suggests. Overall, 31% of respondents in a poll released Wednesday told CNN that they believe the country would be better off with Democrats in control of Congress, while 30% said Republicans should hold the reins. However, the largest proportion of respondents, at 34%, said it makes no difference to them who is in charge. Among registered voters asked whether they would vote Democratic or Republican in their congressional district if the elections were held today, Democrats had a three-point advantage, at 44% to 41%, which is within the poll’s margin of error.

Democrats have seen a steady decline in their advantage over Republicans in recent months, according to CNN polling, falling from a 16-point advantage in February to a 6-point one in March, to just a 3-point lead this week, roughly six months away from the midterm elections. An ABC News/Washington Post poll similarly found last month that Democrats’ lead over Republicans among registered voters was only 4 points, at 47% to 43%, down from a 12-point lead the poll found Democrats held in January. Democrats still have an edge in enthusiasm, according to CNN. Among respondents who said they are excited to vote in November, more plan to vote Democratic than Republican, at 53% to 41%.

But enthusiasm does seem to be growing among GOP voters. According to the CNN poll, 44% of Republican and Republican-leaning registered voters said they were “very enthusiastic” about voting, which is a jump from 36% in March. [..] President Trump’s own job approval has increased recently, with his approval rating at 41% in the CNN poll and his approval over his handling of the economy at 52%.

Read more …

On Polanyi.

Is Capitalism a Threat to Democracy?

In a sweeping, angry new book, “Can Democracy Survive Global Capitalism?” (Norton), the journalist, editor, and Brandeis professor Robert Kuttner champions Polanyi as a neglected prophet. Like Polanyi, he believes that free markets can be crueller than citizens will tolerate, inflicting a distress that he thinks is making us newly vulnerable to the fascist solution. In Kuttner’s description, however, today’s political impasse is different from that of the nineteen-thirties. It is being caused not by a stalemate between leftist governments and a reactionary business sector but by leftists in government who have reneged on their principles.

Since the demise of the Soviet Union, Kuttner contends, America’s Democrats, Britain’s Labour Party, and many of Europe’s social democrats have consistently tacked rightward, relinquishing concern for ordinary workers and embracing the power of markets; they have sided with corporations and investors so many times that, by now, workers no longer feel represented by them. When strongmen arrived promising jobs and a shared sense of purpose, working-class voters were ready for the message.

[..] Polanyi starts “The Great Transformation” by giving capitalism its due. For all but eighteen months of the century prior to the First World War, he writes, a web of international trade and investment kept peace among Europe’s great powers. Money crossed borders easily, thanks to the gold standard, a promise by each nation’s central bank to sell gold at a fixed price in its own currency. This both harmonized trade between countries and stabilized relative currency values. If a nation started to sell more goods than it bought, gold streamed in, expanding the money supply, heating up the economy, and raising prices high enough to discourage foreign buyers—at which point, in a correction so smooth it almost seemed natural, exports sank back down to pre-boom levels.

The trouble was that the system could be gratuitously cruel. If a country went into a recession or its currency weakened, the only remedy was to attract foreign money by forcing prices down, cutting government spending, or raising interest rates—which, in effect, meant throwing people out of work. “No private suffering, no restriction of sovereignty, was deemed too great a sacrifice for the recovery of monetary integrity,” Polanyi wrote. The system was sustainable politically only as long as those whose lives it ruined didn’t have a say. But, in the late nineteenth and early twentieth centuries, the right to vote spread. In the twenties and thirties, governments began trying to protect citizens’ jobs from shifts in international prices by raising tariffs, so that, in the system’s final years, it hardened national borders instead of opening them, and engendered what Polanyi called a “new crustacean type of nation,” which turned away from international trade, making first one world war, and then another, inevitable.

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More Graeber. Most jobs are bullshit.

Bullshit Jobs: Why They Exist And Why You Might Have One (Vox)

Corporate lawyers. Most corporate lawyers secretly believe that if there were no longer any corporate lawyers, the world would probably be a better place. The same is true of public relations consultants, telemarketers, brand managers, and countless administrative specialists who are paid to sit around, answer phones, and pretend to be useful. A lot of bullshit jobs are just manufactured middle-management positions with no real utility in the world, but they exist anyway in order to justify the careers of the people performing them. But if they went away tomorrow, it would make no difference at all. And that’s how you know a job is bullshit: If we suddenly eliminated teachers or garbage collectors or construction workers or law enforcement or whatever, it would really matter. We’d notice the absence.

But if bullshit jobs go away, we’re no worse off. [..] We’re all taught that people want something for nothing, which makes it easy to shame poor people and denigrate the welfare system, because everyone is lazy at heart and just wants to mooch off other people. But the truth is that a lot of people are being handed a lot of money to do nothing. This is true for most of these middle-management positions I’m talking about, and the people doing these jobs are completely unhappy because they know their work is bullshit. I think most people really do want to believe that they’re contributing to the world in some way, and if you deny that to them, they go crazy or become quietly miserable.

[..] You expect this outcome with a Soviet-style system, where you have to have full employment so you make up jobs whether a need exists or not. But this shouldn’t happen in a free market system. I think one of the reasons is there’s huge political pressure to create jobs coming from all directions. We accept the idea that rich people are job creators, and the more jobs we have, the better. It doesn’t matter if those jobs do something useful; we just assume that more jobs is better no matter what. We’ve created a whole class of flunkies that essentially exist to improve the lives of actual rich people. Rich people throw money at people who are paid to sit around, add to their glory, and learn to see the world from the perspective of the executive class.

Read more …

Nov 252017
 
 November 25, 2017  Posted by at 1:48 pm Finance Tagged with: , , , , , , , , ,  4 Responses »


Zao Wu-Ki The red sun 1950

 

Once again, to my delight, we’re back with former British diplomat and MI6 ‘ranking figure’ Alastair Crooke and his Conflicts Forum organization. We posted a few of his articles this year and last. This time, Alastair writes a reaction to one of his own articles posted at Consortium News, which I included in the November 18 Debt Rattle at the Automatic Earth. My short comment then: “Former (and current?!) TAE contributor Alastair Crooke draws his conclusions.” This morning, the Conflicts Forum reached out again:

Dear Raul, We took the hint on a recent posting your site that referred to one of Alastair’s articles! …. and below is a comment piece he has done. It is an attempt to be strategic at where we’re going.

Anytime, guys! My first reaction to that piece was that Alastair makes Donald Trump and Jared Kushner’s role in the Saudi crackdown seem very large, which makes the role played by deep state America look small in comparison. And I’m not so sure about that. The riddle of ‘who’s playing who?’ is not a straightforward one. But that’s by no means a criticism (I ain’t criticizing no MI6!). It’s a question.

First, here are two paragraphs of that article to ‘get in the mood’:

 

Trump’s Saudi Scheme Unravels

Aaron Miller and Richard Sokolsky, writing in Foreign Policy, suggest “that Mohammed bin Salman’s most notable success abroad may well be the wooing and capture of President Donald Trump, and his son-in-law, Jared Kushner.” Indeed, it is possible that this “success” may prove to be MbS’ only success. “It didn’t take much convincing”, Miller and Sokolski wrote: “Above all, the new bromance reflected a timely coincidence of strategic imperatives.” Trump, as ever, was eager to distance himself from President Obama and all his works; the Saudis, meanwhile, were determined to exploit Trump’s visceral antipathy for Iran – in order to reverse the string of recent defeats suffered by the kingdom.

So compelling seemed the prize (that MbS seemed to promise) of killing three birds with one stone (striking at Iran; “normalizing” Israel in the Arab world, and a Palestinian accord), that the U.S. President restricted the details to family channels alone. He thus was delivering a deliberate slight to the U.S. foreign policy and defense establishments by leaving official channels in the dark, and guessing. Trump bet heavily on MbS, and on Jared Kushner as his intermediary. But MbS’ grand plan fell apart at its first hurdle: the attempt to instigate a provocation against Hezbollah in Lebanon, to which the latter would overreact and give Israel and the “Sunni Alliance” the expected pretext to act forcefully against Hezbollah and Iran.

Since the crackdown seems to have had limited success so far on an international level, this is certainly an interesting issue to delve deeper into. MbS has reportedly, assisted by US mercenaries, hung members of his own family upside down from ceilings in posh hotels and palaces to break them into submission and steal their fortunes, but if the international part of his plan falls short, this becomes a very unpredictable story.

But this new article has a much broader scope. I’ve often said that the falling apart of the American, European and global political systems is caused one-on-one by deteriorating economies (even if 90% of media and politicians stick the recovery narrative). Alastair agrees, and even quotes me again.

 

 

Alastair Crooke: Robert Kagan first called attention to the fact that America would need to awake from its ‘dream’ a decade ago in End of Dreams: The Return of History, and would have to manage the rise of ‘other’ powers, (some greater than others), with adroitness, if it were to avoid a bad road-crash as emerging competitors clashed with the waning dominant power.  

This meant that the US no longer would be able to assert its will everywhere, and on everything – and would have to give ground – especially to China and Russia.  “There’s going to have to be some very painful horse trading”, historian Sir Max Hastings suggests, adding that its pain will be none the less traumatic, since – like Germany after WW1 – America, does not feel itself defeated: Quite the converse, it sees itself having emerged from the Cold War wholly vindicated: in terms of its societal, governmental and capitalist models.

The American-shaped globalist order, in which three American generations have been steeped, had seemed so naturally to flow out from the Cold War, that the onset of world ‘order’ dissolution seems – shockingly, for many – to have struck out of the blue – as it were – with Brexit, and the election of Mr Trump. 

Commentators speak of America needing to be wary of the Thucydides’ Trap (when the then aspiring power, Athens, threatened the primacy of the established hegemon, Sparta, leading to war). But ‘the trap’ today is not simply just about who’s rising ‘up’, and who’s heading ‘down’, in the great-power stakes – for, as Josh Feinman, chief economist for Deutsche Bank, last year  warned, the problem is not just great power competition. But rather: “We’ve seen this movie before. The first great globalization wave, in the half-century or so before World War I, sparked a populist backlash too, and ultimately came crashing down in the cataclysms of 1914 to 1945.”  In short, the two world wars were not just about Germany challenging British hegemony, but were also about globalization ‘backlash’ too – something that is often overlooked. 

In other words, in the wake of WW2, America has been backing itself into the corner of an ‘American-shaped’ (imposed), second wave ‘globalisation’, and that is the major risk posed today (as much as rising China), with ‘populism’ again markedly on the up. And ‘second wave globalisation’ is again yielding predictable political volatility (i.e. in ‘unexpected’ election results).  However, as Max Hastings  suggests, (quoting former UK politician Michael Howard), “we must recognize that the élites, of which he [Howard] himself freely admits to having been a part, have failed to sustain the consent of electorates for this [Euro-centralisation and for globalisation]. This ignoring the need to sustain the consent of the electorate, bears a considerable responsibility for getting us into this mess”.

Further, as Andrew Bracevich underlines globalism has its distinct social ‘flipside’: “[A] war [has been waged] on (genuine) culture: Under whatever guise, liberal-market globalism is hostile to tradition, community, established norms, and the very idea of a common culture – all of which impinge [adversely] upon the operation of the market, or claims of radical individual autonomy”.

 

 
The Thucydides’ Trap for America, rather, as Professor Lears of Rutgers writes, then, is not just the rising of Russia and China, but that of Americans being backed into the corner of not recognizing “that ‘they’ [the liberal globalists] are no longer defending either liberalism or democracy; [these] forms of élite rule – that provoke [such] popular anger – are merely the husk of liberal democracy: The once-vital discourse of liberal democracy has been hollowed out, and transformed into a language of managerial technique … Within this discourse, freedom has been reduced to market behaviour; citizenship to voting; and, efficiency for the public good to efficiency for profit. The rich civic culture that gave rise to popular American politics in the past—unions, churches, local party organizations—has been largely replaced, in both parties, by élites who have benefited from the ‘technocratic turn’”.

“As long as prosperity continued to increase as it has since 1945, western electorates were willing to give élites a very considerable measure of discretion about what they did, [whether in creating the EU], or whatever it might be. They were willing to acquiesce. Now, prosperity is being squeezed, wages are stagnant, and for many people unlikely to rise much in real terms.   It is going to be much more difficult to sustain the consent of Western electorates for purposes which the élites might consider as [somehow] ‘enlightened and unselfish’”. (Hastings again – with emphasis added).

And here lies the real ‘trap’: it is not that “prosperity is being squeezed” as per Hastings, but that the economy has rather, been divaricated into the ‘squeezed 60%’ and the asset-holding, and enriched 40% (as Ray Dalio describes it). Last month Dalio, the billionaire founder of top hedge fund, Bridgewater Associates, posted a new article, “The Two Economies: The Top 40% and the Bottom 60%”.  He believes it is a serious mistake to think you can analyze or understand “the” economy because we now have two of them. The wealth and income levels are so skewed between top and bottom that “average” indicators no longer reflect the average person’s experience or living conditions. Dalio explains with this chart:

 

 

The red line is the share of US wealth owned by the bottom 90% of the population, and the green line is the share held by the top 0.1%. Right now they are about the same, but notice the trend. The wealthiest 0.1% has been increasing its share of wealth since the 1980s, while the bottom 90% has been losing ground. But it would be a mistake to understand this phenomenon – ‘populism’ as it is labelled in Dalio’s chart – or, the push to recover national culture and sovereignty – as simply a gripe about inequity. It has become since 2009 much more than that: it has become a matter of survival for a major segment of the American and European population (especially, as it coincides with a pensions crisis, which will leave many impoverished in their old age): 

“Prior to 2009, debt was able to support a rising standard of living…”, Raúl Ilargi Meijer says, “but less than a decade later, [personal debt], can’t even maintain the status quo. That’s what you call a breaking point.” (Alastair: Or, even, a precursor to civil violence?)

“To put that in numbers, there’s a current shortfall of $18,176 between the standard of living and real disposable incomes. In other words, no matter how much people are borrowing, their standard of living is in decline. 

“Something else we can glean from the graphs is that after the Great Financial Crisis of 2008-9, the economy never recovered. The S&P may have, and the banks are back to profitable ways and big bonuses, but that has nothing to do with real Americans in their own real economy. 2009 was a turning point, and the crisis never looked back”.

 

 

And Max Hastings’ point is that with austerity gone, early popular acquiescence has turned to anger against the élites – for having so taken them for granted in their utopian globalist projects.

Now the wider point: what we have here is the intersection of geo-politics with geo-finance. Both are now wholly contingent on the ‘saving of appearances’.  One co-constitutes the other.  One is the saving of appearance that America is not losing ‘respect’, or being disdained in the international arena, as it attenuates its global commitments (that is the Thucydides ‘syndrome’), and two, saving the appearance that ‘recovery’ and ‘prosperity for all’, are continuing to unfold nicely in the economy (the world converging globally to western values ‘syndrome’). 

Both these aspects to the dissolution of today’s western ‘modernity’ are intertwined, and co-constituting, and therefore likely to march in tandem – at least for now:  western ‘prosperity’ underwrites the global order, and the global order underwrites American ‘prosperity’.  The American and European élites therefore find themselves painted into a globalised ‘rules-based order’ corner, geo-politically, just as the Central Bankers have been backed into their QE, low or negative interest rate corner – from which there is no easy escape, either. 

The term ‘globalisation’ has been used to paint a landscape that is both inevitable, and beneficent: “free trade floats all boats; everywhere” is the meme. Devotees of globalisation however, never examine rigorously whether David Ricardo’s comparative advantage theory still holds good in the contemporary world (Nobel prize winner Joseph Stiglitz, however, being a notable exception). There just has been no point in asking the fundamentally political (as opposed to technical) question: Has the resulting off-shoring of supply lines, truly been in our interest – politically, as well as financially?  And has the concomitant – globalist disembedding of humans from national culture, community and sovereignty, and the rise of the apolitical, neo-liberal, chameleon-identity ‘Self’, been in the general political and societal interest, too?

It may be objected that Trump is not a globalist.  Whilst it is true that he does not favour America shouldering the claims of a world order; he – himself – protests loudly that he is a globalist – but it is just that he is a hard-nosed, New York businessman, type of globalist: that’s all.  Globalisation (in the neo-liberal mode), remains as a western totem, rightly, or not, according to political taste.

 

Where now? In the domestic field, the Central Banks’ easy ‘group think’ on QE, low or negative interest-rates, and ballooning public and private debt, has been pursued now for so long and so extensively, that it has both given us Dalio’s Two Economies, and no way back.   It has become a vicious circle: as high debt, to GDP ratios, low-interest zombification of entities and shrinking personal disposable income in the 60%, have depressed growth. Yet, paradoxically, never has the need for more of the same – QE, low or negative interest rates, or even ‘helicopter’ income – been so widely extolled — and, at the very moment when their drawbacks have become so widely identified, even by central bankers, themselves.

So here we are: there is a messy, and bitter, divorce taking place in our societies between the 60% and the 40% ‘tribes’. Asset valuations indeed have never been higher. Yet growth by contrast, has, on average, been ratcheting down, decade by decade – and for some, the situation has become truly existential (those for whom even additional debt cannot sustain their non-discretionary outgoings).

Where do we go from here?  A continuation of the existing financial paradigm is what everyone believes; what everyone expects (wants) – and is what we likely will get.  It might even be deepened a little, in the wake of a market hiccough (S&P down by more than 2%).  And in the case of a financial black swan, we may witness the system literally ‘hosed down’ with newly created ‘money’.  But essentially, the business and trade cycle will continue to be heavily repressed – volatility slammed down – and the S&P be the metric of national well-being.

Not only do the markets ‘believe it’, President Trump needs it: geo-politically he likes to do his style of negotiating from a position of strength (and not from one of economic crisis); and internally, he is at ‘war’ with the Establishment.  With the S&P touching records daily, he is immune from taunts of incompetence (regardless of whether not the highs have anything to do with the President).  His base likes it too: their meagre retirement portfolios at least are rising in value. And in any event, it is not surprising if Trump is a low interest, plentiful liquidity, expanding balance sheet, man globally:  It is how he made his billions, personally.

 

Of course, the flip side to continuing the ‘easing’ paradigm is the ongoing hidden transfer of wealth from general taxpayers (the 60%) to the 40%: more populism; more unexpected election outcomes in Europe; more fake-ness; quicker dissolution of the glue holding society together; more political process, less outcome; less ability to address the needs of collective purpose, etcetera — rising rancour and push-back, in a word. This is the implication.

In parallel, the saving of appearance in geo-politics seems to require its slamming down of volatility too (and in the EU, not least – i.e. Catalonia).  People want to believe it (in American power); important sectors of the economy want it, (need it): the appearance of America’s global standing must be preserved.  Repressing North Korea, ‘slamming down’ Iran can save appearances (America is strong), but the flip-side is the increased danger of war – whether inadvertently triggered, or by the US cornering itself into it.  Actually, ebbing power is something that you smell: false bravura only heightens the odour of weakness.

So, continuance of the paradigms (financial and geopolitical), and the continuance of ‘populist push-back’ (i.e. volatility) seem set. Is Josh Feinman of Deutsche Bank then right when he says: “We’ve seen this movie before. The first great globalization wave, in the half-century or so before World War I, [it] sparked a populist backlash too, and ultimately came crashing down in the cataclysms of 1914 to 1945.” Is a financial crisis inevitable – ultimately?  Is war – a confrontation with either Russia, China or N. Korea – unavoidable?

Who can say, for sure?  But the repeating of history is not inevitable.  Financial re-set at some point, has become inevitable, it would appear. It has taken time for the old meme to fade, and weaken its hold sufficiently. Hemingway famously said about bankruptcy (his), that it starts only very slowly, but ends lightningly fast.  The political impulse for a change in the social and cultural paradigm however does seem to be unfolding at an accelerating pace. ‘Populism’ and ‘unexpected’ election results are acting as its accelerant. And the intellectual context for a seismic economic policy shift, is in place too:  monetary policy is seen to be bust, and the economic ‘models’ have been seen to be plain wrong. TINA (there is no alternative) is wobbling on her pedestal, and seems poised to topple over.

Of course there are alternatives.  But will they arrive in time?  Perhaps the existing paradigms are destined to endure a while yet … ’til Hemingway’s observation about bankruptcy sliding unstoppably fast towards the end is further proven as a truism?  In the meantime: we wait; shackled by inertia, and backed into a corner.