In 2017 Address, Merkel Decries “Distorted Picture” Of Refugee Policy “Painted By Populists”

In an awkwardly similar rhetoric to the failed slogan of Hillary Clinton, German Chancellor Angela Merkel told her nation that "together, we are stronger. Our state is stronger," giving no ground on her increasingly questioned open-border refugee policy as she slammed the "distorted picture" being painted by populists.

Chancellor Angela Merkel urged Germans to stay calm in the face of Islamist terrorism and, as Bloomberg reports, criticized nationalists for offering false hopes of security, signaling she’ll count on voters to opt for stability when she runs for a fourth term in 2017.

In her New Year’s Eve speech to the nation, Merkel predicted a contentious political climate in a year that’ll include Donald Trump’s inauguration as U.S. president on Jan. 20 and elections in France and the Netherlands.


“As we pursue our lives and our work, we tell the terrorists: They are murderers full of hatred, but it’s not they who determine how we live and want to live,” Merkel said, according to an advance copy of the nationally televised speech on Saturday. “We are free, humane, open. Together, we are stronger. Our state is stronger.”


Merkel’s comments reflect the surge in political risks to her chancellorship, though she may benefit because she’s familiar to voters and has no obvious successor after 11 years in office.


Merkel gave no ground on her open-border refugee policy and took aim at populists who question the value of the European Union “or even of parliamentary democracy itself.”


“What a distorted picture,” she said. While the EU should focus on tasks it can truly do better than national governments, “we Germans should never let ourselves be tricked into believing that going it alone as a nation could lead to a happy future,” Merkel said.


Merkel sought to push back against her critics, saying she’ll work for a political debate “where we argue passionately about many things, but always as democrats,” with criticism voiced “peacefully and with respect for the individual.”

Merkel has become the target of online vilification and an unprecedented political challenge by the anti-immigration Alternative for Germany, or AfD, since leaving Germany’s borders open as more than 1 million refugees arrived over the past two years.

via Tyler Durden

2016 Year End Performance Review (Video)

By EconMatters

We go over our 2016 Market Returns, Discuss the best and worse performing market asset classes, and look at Hedge Fund outperformers through the third quarter in this video. Some crazy political outcomes in 2016, wonder what surprises are in the cards for 2017?

© EconMatters All Rights Reserved | Facebook | Twitter | YouTube | Email Digest | Kindle   

via EconMatters

‘Policing For Profit’ Goes To The Next Level

Submitted by Eric Peters via,

It’s bad enough getting arrested – especially when you didn’t do anything to warrant it. This happens all the time, because the the threshold for arresting someone is very low. It can be done by any cop, pretty much anytime – without much in the way of legal justification. He has the gun – and the handcuffs, after all. If he wants to arrest you, he will arrest you. Maybe the courts will sort it out later; eventually you are released, your record “cleared.”

This isn’t new – or news.

What is new – and ought to be news – is that several states have begun charging people “processing” and “incarceration” fees for their bogus arrest and subsequent just-as-bogus caging.

Minnesota and Kentucky are among the states that levy fees on people who are merely arrested and taken to the clink… even if they are never convicted of anything. In some cases, the people being charged for “services” rendered are never formally charged with any crime (which is something a prosecutor must do; a cop hasn’t got the power to do more than arrest you on suspicion of violating a statute).

It’s policing for profit taken to the next (entirely predictable) level.

Why not, after all?

Most states already have “just take it” laws on the books that empower cops to simply seize cash and other property prior to any judicial proceeding  – and to keep it, even if there never is a judicial proceeding.

The mere fact that you have “excessive” cash on your person is sufficient legal justification in many states to result in its forfeiture – until you prove to their satisfaction it wasn’t “drug” money.

It is not their burden to establish… anything.

Franz Kafka, phone home.

We also have the equally egregious precedent of for-profit enforcement of traffic laws – coincident with the suspension (or at least, the watering down) of any semblance of procedural innocent-until-proved guilty. Cities and counties contract with a private company (the notorious Redflex being the chief profiteer) to install automated red light and speed cameras that chuck tickets to offenders automatically, via the mail – with the offender presumed guilty until he proves himself innocent.

The ticket is sent to the registered owner of the vehicle – who is not necessarily the person who was driving when the camera snapped the photo of the car’s plates and chucked a ticket to the owner. But the owner must prove it wasn’t him – as opposed to the former necessity of the state/county having to prove it was.

Meanwhile, pay up.

So it’s not surprising that states have decided to begin charging people for charging them – that is, accusing them of something. There’s even more potential profit in this since a cop can arrest anyone at any time – just about.

The evidentiary bar has been set extremely low – and whole categories of “crime” have been confected or defined so loosely (e.g., “disorderly conduct,” “interfering” with a law enforcer) as to make an arrest almost a matter of whim.

Now add a profit motive to the mix.

In economic terms, hanging a dollar sign on every citizen within handcuffing range of a cop is an incentive to handcuff as many citizens as possible. They are, after all, paying customers.

Can arrest quotas be far behind? Remember, many state/county cops already have ticket quotas, precisely because of the profit motive. And note that, in some states, even if you successfully fight a traffic ticket, you are still hit with a “processing” fee which you must pay – or else.

So it’s no surprise that Colorado doesn’t give money (fines and restitution levied) back to people whose convictions have been overturned.

Soon, the Unelected Nine (the Supreme Court) will weigh in on the “constitutionality” of this business.  A case headed their way involves a man named Corey Statham, who was arrested in Ramsey County, MN and charged with “disorderly conduct.” He was taken to the clink but released after the charges against him were dropped.

His money, however, was not released.

He was charged a $25 “booking fee” and other assorted “processing” fees by his gaolers. He is contesting this theft under color of law on the basis that he wasn’t convicted of any crime, hence why should he be punished?

The Unelected Nine are not likely to be sympathetic, having previously legitimated assault and battery upon the Fourth and Fifth as well as other amendments. For example, the ex-constitutional requirement that the accused be presumed innocent until proved guilty (in a court of law) has been gotten rid of by declaring things like automated red light/speeding tickets to be mere administrative affairs. Since there’s no prospect of jail time, you (the accused) lose the right to your day in court, including your ex-right to confront your accuser. Instead, you may be allowed to file some kind of written appeal, which may or may not be read by anyone – who may or may not be interested in anything you have to say.

And – naturlich – you must pay first and regardless. Red Queen style. Maybe they’ll give you your money back. Probably not.

It’s dirty pool, old man.

And the game is getting more serious.

But there is an upside. The fools have showed us their hand. It is clear now to all but the terminally stupid what’s up – and why. We see behind the curtain and know what the man is up to.

It isn’t coincidental that contempt for law enforcement is no longer a feeling felt only by the criminal class. The working and middle classes understand that it’s not about their “safety.”

Or the “safety” of the cops, either.

It’s about separating them from their money using any means necessary. About abusing them as badly as any Redcoat, those many years ago. Which brings up the line in the Declaration about sending hither “swarms of officers” to “eat out their substance.”

Rings a bell, doesn’t it?

via Tyler Durden

Washington Post Published Fake News Story About a Vermont Utility Getting Hacked by Russians

The propaganda coming out of the Washington Post isn’t even creative or convincing. It’s the type of nonsense that one instantly dismisses as the work of a lazy employee of the state. Look at this sensationalist headline posted by Washpo last night.

Ooh, sounds menacing right? By the looks of it, the Russians were quickly working their vodka driven ways towards shutting down all of our lights, Christmas tree included. The only problem with this narrative is that it’s a complete fabrication.
Here is the statement from Burlington Electric.
In other words, a single laptop, not connected to the grid whatsoever, had malware on it — likely from purveying porn sites, and Washpo published an alarmist story suggesting the entire grid was at risk of becoming the bitch to malicious Russian hackers. What the fuck?

After being revealed to be fake news, the cucks at Washpo changed the title of their article. This is what it reads now.


And here’s what the democratic governor of Vermont had to say about the event.

“Vermonters and all Americans should be both alarmed and outraged that one of the world’s leading thugs, Vladimir Putin, has been attempting to hack our electric grid, which we rely upon to support our quality-of-life, economy, health, and safety.”

So instead of keeping his mouth shut after it was revealed that the Russians had not hacked the grid, Shumlin doubled down on a fake Washington Post story and blamed Putin himself for trying to fuck up America’s ‘quality of life, economy, health, and safety.’
Bear in mind, all of this assumes that the actions of this so called ‘GRIZZLY STEPPE’ group is actually real, actually Russian, and not actually a figment of the CIA’s imagination. This was the proof offered to the American people regarding this insidious group, led by Putin, trying to install Trump into the Presidency and then shutting off our lights.
Long time reader of the site and real life cyber security expert, Gap, summed it up best.





Content originally generated at

via The_Real_Fly

Goldman’s 10 Most Important Questions For 2017

Goldman Sachs is relatively optimistic about growth in 2017, for three reasons: first, despite the lack of spare capacity, US recession risk remains below the historical average; second, financial conditions should remain a growth tailwind – at least in the first half of 2017; and third, we expect a fiscal easing accumulating to 1% of GDP by 2018. However, uncertainty remains and here is what Jan Hatzius and his team believe are the ten most important questions for 2017.

1. Will growth remain above trend?

Yes. Admittedly, the expansion is quite advanced. It has already lasted about 18 months longer than the median completed expansion since the mid-1800s. And while expansions do not die of old age, history shows that they are at greater risk when spare capacity is exhausted, as it probably is now. So it is especially important to monitor whether growth may be running out of steam.

Nevertheless, we are relatively optimistic about growth in 2017 and expect real GDP to climb at a 2.2% rate. First, despite the lack of spare capacity, US recession risk remains below the historical average, as shown in Exhibit 1. The most important recession predictors, at horizons longer than the next few quarters, are spare capacity and past credit growth. Spare capacity has dwindled, which has boosted the recession probability somewhat, but output is not yet meaningfully above potential. Moreover, debt growth has been very moderate in the economy as a whole, despite pockets in the corporate sector where the credit cycle is more advanced. This is also consistent with alternative measures of financial imbalances such as the private sector financial balance, which remains comfortably in surplus to the tune of 2½% of GDP.

Exhibit 1: US Recession Risk Below Historical Average

Source: Goldman Sachs Global Investment Research

Second, financial conditions have turned from a growth headwind into a growth tailwind over the past year, as shown in Exhibit 2. Admittedly, financial conditions have tightened modestly in recent months as the increase in bond yields and the appreciation of the US dollar have outweighed the rally in the equity market. But our analysis shows that, in practice, the growth impulse depends on the year-to-year change in our financial conditions index, at least to a first approximation. Barring a big tightening in coming months, the impulse should therefore remain quite supportive, at least in the first half of 2017.

Exhibit 2: FCI Impulse Likely to Remain Positive for Much of 2017

Source: Goldman Sachs Global Investment Research

Third, by the time the financial conditions impulse diminishes in the second half of 2017, fiscal policy should begin to turn more supportive. We expect a fiscal easing of about 1% of GDP once it is fully phased in, consisting mostly of personal and corporate tax cuts. Although the multiplier associated with these cuts is probably relatively small—we estimate an average of 0.6 across the entire assumed fiscal package—they should nevertheless make a respectable contribution to growth in the second half of 2017 and first half of 2018, as shown in Exhibit 3.

Exhibit 3: A Fiscal Boost to Growth

Source: Department of Commerce. Congressional Budget Office. Goldman Sachs Global Investment Research.

2. Will the incoming administration enact major tax-related legislation?

Yes. Some type of tax legislation seems very likely to pass in 2017, for three reasons. First, Republicans have it in their ability to pass tax legislation without Democratic votes, by using the reconciliation process. Second, tax reform—or at least a tax cut—was an important aspect of the presidential campaign. Third, it has been a top priority for congressional Republicans, and particularly House Speaker Paul Ryan, for several years.

Congressional Republicans appear to be primarily focused on corporate tax reform, with a particular focus on lowering the statutory rate and reforming the treatment of cross-border income (see here for more detail). We believe the principal goals among many lawmakers are to lower the effective tax rate on business investment and to reduce the incentive for US companies to locate production overseas and/or to redomicile via “inversion” transactions. The most controversial item in the House Republican tax reform plan appears to be the destination-based border-adjusted corporate tax. If enacted, this would have important implications for importers and exporters, domestic price inflation, and the value of the dollar. We see a 30% probability that this proposal is included in whatever tax reform legislation Congress ultimately enacts next year.

Reductions in individual income tax rates also appear likely. The existing plan from House Republicans cuts the top marginal tax rate to 33% from 39.6%, and reduces the number of tax brackets from seven to three. The proposal also calls for repealing the Affordable Care Act (ACA, or “Obamacare”), including its taxes on investment income and higher-income earners, and would make a number of other reforms to the individual income tax code. Analysis by the Tax Policy Center suggests the plan would reduce federal government revenue by about $2 trillion over ten years.

Exhibit 4: Comparing Tax Plans

Source: Office of Management and Budget. House Ways and Means Committee. Trump Campaign. Goldman Sachs Global Investment Research.

3. Will the housing recovery continue?

Yes, at a moderate pace. Admittedly, the 80bp increase in 30-year fixed mortgage rates since September has complicated the housing outlook somewhat. Our analysis shows that this could take as much as 5% off the level of housing starts in the next few quarters, relative to a baseline without mortgage rate shocks (Exhibit 5).

Exhibit 5: Higher Mortgage Rates Likely to Weigh on Residential Investment

Source: Goldman Sachs Global Investment Research

But the positive forces underpinning the housing recovery remain substantial. From a short-term perspective, it is noteworthy how strong the demand indicators have looked recently—new single-family home sales are up about 20% year-on-year and the homebuilders’ index hit an 11-year high in December. And more fundamentally, the still-low level of housing starts relative to the underlying demographics should continue to provide support in coming years. Exhibit 6 shows that the sum of the demographic trend in household formation and demolitions is currently about 1.4 million per year—above the current level of housing starts of around 1.2 million.

Exhibit 6: Housing Starts Remain Below Demographic Trend

Source: Department of Commerce. Goldman Sachs Global Investment Research.

4. Will consumption continue to outperform capital spending?

No. Growth has been quite unbalanced over the last two years. Since the third quarter of 2014, real personal consumption has grown 3% (annualized), more than 1pp above the economy’s estimated long-term trend of 1¾%. In contrast, real business investment has stagnated. Outside early recovery episodes, when consumption often leads capital spending, such a gap is quite unusual. We expect it to close because much of it is a one-off effect of the 2014-2016 decline in energy prices.

The energy price decline sharply boosted real household income, and thereby consumption. As shown in the left panel of Exhibit 7, lower energy prices added about 0.6pp to the annualized growth rate of real disposable income over the past two years. The marginal propensity to consume out of energy-related changes in real income is usually thought to be relatively high because lower- and middle-income households typically spend a larger share of their income on energy than higher-income households. This suggests that most of this 0.6pp boost probably translated into stronger consumption growth. But most of it is now likely behind us.

Conversely, the energy price decline sharply hit corporate profits, and thereby capital spending. The right panel of Exhibit 7 shows that losses in the oil & gas industry subtracted about 15pp from corporate profit growth over the course of 2015. Now the weakness is behind us, and corporate profits are once again growing at a reasonable pace.

Exhibit 7: Energy Price Declines Lifted Household Income but Weighed on Profits

Source: Department of Commerce. Department of Labor. Standard and Poors. Goldman Sachs Global Investment Research.

5. Will the labor market overheat?

Yes, slightly. The starting point at the end of 2016 is approximately full employment. Some indicators such as the broad underemployment rate U6 and summary measures of nominal wage growth still show a small amount of labor market slack. Others such as the job openings rate and the level of skill shortages are already consistent with a modest amount of labor market overheating.

Our growth forecast for 2017 implies that the economy will grow about ½pp above its longer-term trend rate and as much as 1pp above the pace that has been consistent with stable labor market slack in recent years. If so, we would expect the unemployment rate to fall ¼-½ pp over the next year, with other labor market indicators following suit. This would imply a small amount of labor market overheating.

Labor market overheating must eventually be reversed to keep inflation from rising too far above the target. But reversing an overheating means that the unemployment rate would need to rise, and it has historically been very difficult to do this without pushing the economy into recession. In fact, as shown in Exhibit 8, there has never been a rise in the US unemployment rate of more than ?pp that was not associated with a recession. Outside the US, there are precedents for such "soft landings from below" (see here), but the point that these are difficult to achieve holds more broadly.

Exhibit 8: A Soft Landing from Below Is Difficult

Source: Department of Labor. NBER.

6. Will wage growth hit our 3.0%-3.5% estimate of its full employment level?

Yes. Wage growth has accelerated meaningfully in recent years as the labor market has tightened (Exhibit 9). The firming has been most pronounced at the bottom end of the wage distribution, aided by minimum wage hikes at the state and city level that are likely to continue in coming years—even if an increase at the federal level now appears very unlikely. While aggregate wage growth remains somewhat below both the pre-recession rate and the equilibrium rate that we would expect in a full employment economy, we do not see this as a sign that hidden slack remains. Rather, a combination of the impact of past slack earlier in the year, negative composition effects on aggregate wage growth, and an environment of weak productivity growth and soft inflation appear to account for most of that gap (see here for more detail). As the labor market tightens further wage growth should continue to firm.

Exhibit 9: Wage Growth Continues to Accelerate

Source: Goldman Sachs Global Investment Research

7. Will inflation reach the Fed’s 2% target?

Yes. Headline PCE inflation has picked up from a low of 0.2% year-over-year in September 2015 to 1.4% as of last month. If energy prices hold around the current level, PCE inflation should reach the Fed’s 2% target by February or March. Core PCE inflation has also firmed over the last year, rising from a low of 1.3% to 1.6% as of November. We expect core inflation to continue accelerating—reaching 2% by Q4—as the labor market tightens further and the lagged effects of past dollar appreciation fade.

We will be keeping a particularly close eye on medical care inflation next year, which has been the main factor behind the divergence between core CPI and core PCE inflation recently. As we have discussed in detail elsewhere, only about half of the gap between the two measures can be explained by differences in scope. The remaining difference between the two series largely reflects measurement error, in our view, with the CPI overstating reimbursement rate inflation and the PCE index understating it. We therefore expect the two series to converge over time, giving a lift to core PCE inflation while holding core CPI inflation roughly steady in 2017.

8. Will the Fed hike faster than implied by market pricing?

Yes. At present markets are discounting an end-2017 federal funds rate of about 1.2%—54 basis points (bp) above the current effective funds rate, and implying just over two 25bp rate hikes for the year. We continue to expect the FOMC to raise rates three times, with the first hike coming in June. At the end of October markets were pricing in about 30bp of rate increases for 2017—slightly more than one 25bp rate hike—so the gap between market pricing and our forecast has already narrowed quite a bit, but we still think market pricing looks too low. Much will depend on the incoming data early in the year and the evolving prospects for fiscal stimulus. If growth momentum continues to look solid and fiscal stimulus appears likely, we would expect most FOMC members to support picking up the pace of hiking.

9. Will the market’s terminal funds rate estimate continue to rise?

Yes. In our annual questions for 2016 we said the same, but decided the verdict was inconclusive (see here for our review). Forward OIS rates declined for much of 2016, but increased sharply after September (Exhibit 10). Markets are now pricing a terminal funds rate of 2.5%—virtually identical to the level at the end of 2015, but up more than 100bp from the 2016 lows.[1]

Even after the latest increase these estimates still strike us as quite low. The US economy is close to full employment, growing above trend, and generating inflation around 2%. Plus, markets already see the funds rate reaching 1.2% by the end of next year. Given this economic backdrop and with the prospect of more rate increases over the near-term, market pricing for the terminal funds rate seems unsustainable. Moreover, our research shows that one key tenet of the depressed r* narrative rests on relatively shaky empirical ground: historical evidence suggests market participants and Fed officials may be assuming too tight a link between potential growth and equilibrium policy rates (see here for details).

Exhibit 10: Only a Partial Recovery in the Market’s Terminal Funds Rate Estimate So Far

Source: Goldman Sachs Global Investment Research

10. Will the Fed start to shrink its balance sheet?

No. Fed officials have said that the size of the central bank’s balance sheet will likely remain unchanged until funds rate increases are “well under way”. We have interpreted this guidance to mean that full reinvestments in the Fed’s securities portfolio would continue until mid-2018, when we expect the funds rate to be around 2% (Exhibit 11). After that we forecast that policymakers would begin a slow, tapered runoff of the balance sheet that would last for several years.

Exhibit 11: We Expect the Fed’s Balance Sheet to Remain at Current Size in 2017

Source: Federal Reserve. Goldman Sachs Global Investment Research.

Some of the economic advisers to President-elect Trump appear to favor a smaller Fed balance sheet with a shorter duration, and this issue could come up in any nomination hearings for the two open Board positions. However, we do not think the election result meaningfully affects the outlook for the balance sheet for 2017. First, Chair Yellen will remain at the helm until early 2018, and will likely continue to execute the committee’s current plans—even with the addition of a few President-elect Trump appointees to the Board. Second, in our view, the ideal size of the central bank’s balance sheet is not really a macroeconomic issue—rather, most of the key determinants are institutional and regulatory matters (see here). As a result, the views of the new administration may evolve as it begins to tackle regulatory reform and debt management concerns.


via Tyler Durden

“This Would Cross Our Red Line” – Chinese Military Considering Measures To “Cripple” Taiwan

While Donald Trump is tweeting his new year’s greetings to his friends, and especially enemies, China is thinking three weeks ahead to the day the president-elect is officially inaugurated, and is worried what that could mean for a suddenly empowered Taiwan, whose outreach to Trump now means that the long-standing “One China” policy is now a topic of negotiation.  As a result, Reuters reports that China’s military, alarmed by Trump’s support of Taiwan, is considering strong measures to prevent the island from moving toward independence.

With China’s only aircraft carrier demonstratively passing in close proximity to Taiwan last week, and currently in the contested area inside the South China Sea, it is not surprising that according to Reuters’ sources, one measure being contemplated is conducting war games near the self-ruled island. More troubling is that as Reuters’ sources add, another measure “was a series of economic measures to cripple Taiwan.

And since Taiwan is among the main sources of global high-tech, semiconductor fabrication and production, an economically “crippled” Taiwan suddenly becomes a potential gray swan for a world reliant on instant access to technological components to grow.

Adding to concerns of a potential “hot” conflict between China and Taiwan, while Reuters sources admitted that it was not clear if any decisions had yet been taken, the Taiwan issue had become a hot topic within the upper echelons of China’s People’s Liberation Army (PLA) in recent weeks.

“If Trump challenges ‘one China’ after becoming president, this would cross our red line,” said another source, who has ties to China’s leadership.

While the defense ministry declined to comment, Reuters said that an official at the ministry’s news department said China’s position was clearly laid out in the 2005 Anti-Secession Law, which authorizes the use of force against Taiwan in the event China judges it to have seceded.

Asked about any possible aggressive moves from China, Taiwan defense ministry spokesman Chen Chung-shi said: “We are fully prepared, and plan for the worst while preparing for the best.”

Meanwhile, Taiwan president Tsai, who took power this year, says she wants to maintain peace with China, but China is unconvinced. Tsai said on Saturday that Taiwan will be “calm” when facing issues to do with China, but uncertainties next year will test the self-ruled island and its national security team.

Beijing has also been angered by a trip planned by Tsai in January to Latin America in which she will transit through Houston and San Francisco. China has urged the United States to block the stopovers, but the US refused to comply.

The silver lining is that Chinese officials have blamed Taiwan for creating the recent diplomatic trouble rather than accuse Trump, and many believe he will be more accommodating to China once in office. That remains to be seen. “We’re ready. If Taiwan wants to make trouble so can we. Let’s hit them hard,” said an official in Beijing who meets regularly with China’s most senior military officers, including those who work directly with President Xi Jinping.

“We can hold exercises close to Taiwan, and show them the damage we could cause. Taiwan will have to give in then,” the official added, citing a recent conversation with one of the military officers. Unless, of course, Taiwan doesn’t “give in”, and instead pushes for further diplomatic ties with the US.

But the worst-case scenario would be an economic blockade of the small, but crucial in global technological supply-chains island.

A retired senior officer who maintains contacts with the PLA told Reuters that China probably wouldn’t need to fire any missiles to bring Taiwan to its knees. China is Taiwan’s largest trading partner, and Taiwan runs a huge trade surplus with China, worth $27 billion in 2015.

“We can just cut them off economically. No more direct flights, no more trade. Nothing. Taiwan would not last long,” the officer said. “There would be no need for war.”

He added that any Western economic blockade of China put in place in the event of war with Taiwan would also be damaging to China, already dealing with a slowing economy. What is disturbing is that China has already considered the implications of a scenario in which a conventional war on Taiwan is declared.

As for the American response, a US defense official told Reuters that Chinese actions had been more provocative in the past month, since Trump won the U.S. election and made comments about Taiwan, and culminated this month when a Chinese naval flotilla headed by its sole aircraft carrier, the Liaoning, took part in drills that took it around Taiwan. It remains unclear who, how and why tensions surrounding Taiwan will be defused in the near future.

via Tyler Durden

“Something Stinks” – Like Iraq WMD Fiasco, Russia Story Doesn’t Add Up

Submitted by Michael Shedlock via,

Yesterday, President Obama expelled 35 Russian “Operatives” from the Russian Embassy.

Is there any evidence those expelled are “intelligence operatives”? Any hard evidence Russia was behind the Hillary hacks? Any credible evidence that Putin himself is to blame?

The answers are No, No, and No. Yet, once again the American press is again asked to co-sign a dubious intelligence assessment.

Rush to Judgment


Something Stinks

The Rolling Stone comments Something About This Russia Story Stinks

In an extraordinary development Thursday, the Obama administration announced a series of sanctions against Russia. Thirty-five Russian nationals will be expelled from the country. President Obama issued a terse statement seeming to blame Russia for the hack of the Democratic National Committee emails.


“These data theft and disclosure activities could only have been directed by the highest levels of the Russian government,” he wrote.


The problem with this story is that, like the Iraq-WMD mess, it takes place in the middle of a highly politicized environment during which the motives of all the relevant actors are suspect. Nothing quite adds up.


If the American security agencies had smoking-gun evidence that the Russians had an organized campaign to derail the U.S. presidential election and deliver the White House to Trump, then expelling a few dozen diplomats after the election seems like an oddly weak and ill-timed response. Voices in both parties are saying this now.


Republican Sens. John McCain and Lindsey Graham noted the “small price” Russia paid for its “brazen attack.” The Democratic National Committee, meanwhile, said Thursday that taken alone, the Obama response is “insufficient” as a response to “attacks on the United States by a foreign power.”


The “small price” is an eyebrow-raiser.


Adding to the problem is that in the last months of the campaign, and also in the time since the election, we’ve seen an epidemic of factually loose, clearly politically motivated reporting about Russia. Democrat-leaning pundits have been unnervingly quick to use phrases like “Russia hacked the election.”


This has led to widespread confusion among news audiences over whether the Russians hacked the DNC emails (a story that has at least been backed by some evidence, even if it hasn’t always been great evidence), or whether Russians hacked vote tallies in critical states (a far more outlandish tale backed by no credible evidence).


As noted in The Intercept and other outlets, an Economist/YouGov poll conducted this month shows that 50 percent of all Clinton voters believe the Russians hacked vote tallies.


And reports by some Democrat-friendly reporters – like Kurt Eichenwald, who has birthed some real head-scratchers this year, including what he admitted was a baseless claim that Trump spent time in an institution in 1990 – have attempted to argue that Trump surrogates may have been liaising with the Russians because they either visited Russia or appeared on the RT network. Similar reporting about Russian scheming has been based entirely on unnamed security sources.


Now we have this sanctions story, which presents a new conundrum. It appears that a large segment of the press is biting hard on the core allegations of electoral interference emanating from the Obama administration.

Did the Russians do it? Very possibly, in which case it should be reported to the max. But the press right now is flying blind.


Maybe the Russians did hack the DNC, but the WikiLeaks material actually came from someone else? There is even a published report to that effect, with a former British ambassador as a source, not that it’s any more believable than anything else here.


We just don’t know, which is the problem.


We ought to have learned from the Judith Miller episode. Not only do governments lie, they won’t hesitate to burn news agencies. In a desperate moment, they’ll use any sucker they can find to get a point across.

Where the Hell is the Evidence?

‘I Can Guarantee You, It Was Not the Russians’

John McAfee, founder of the security firm McAfee Associates, says ‘I Can Guarantee You, It Was Not the Russians’.

The Joint Analysis Report from the FBI contains an appendix that lists hundreds of IP addresses that were supposedly “used by Russian civilian and military intelligence services.” While some of those IP addresses are from Russia, the majority are from all over the world, which means that the hackers constantly faked their location.


McAfee argues that the report is a “fallacy,” explaining that hackers can fake their location, their language, and any markers that could lead back to them. Any hacker who had the skills to hack into the DNC would also be able to hide their tracks, he said


“If I was the Chinese and I wanted to make it look like the Russians did it, I would use Russian language within the code, I would use Russian techniques of breaking into the organization,” McAfee said, adding that, in the end, “there simply is no way to assign a source for any attack.”

Question of Patriotism

It’s not patriotic to accept accusations as facts, given US history of lies, deceit, meddling, and wars.

via Tyler Durden

Trump Tweets Taunt: “Happy New Year To My Many Enemies Who Lost So Badly”

Taking a slightly mutated page out of the Vladimir Putin “taking the high road” book, on Saturday morning Donald Trump tweeted New Year’s greeting to all, while taunting those “many enemies” who opposed him. 

“Happy New Year to all, including to my many enemies and those who have fought me and lost so badly they just don’t know what to do. Love!” Trump wrote hours before the end of 2016.

Having previously used Twitter to mark holidays with taunts to his opponents, it appears that Trump is unwilling to stop now. This particular tradition dates back before his entry into politics, with one particular tweet coming to mind when in 2013, he wrote: “Happy Thanksgiving to all–even the haters and losers!”

The same year, he even wrote a similar message on the anniversary of the Sept. 11, 2001, terrorist attacks that killed nearly 3,000 people, tweeting: “I would like to extend my best wishes to all, even the haters and losers, on this special date, September 11th.”

via Tyler Durden

Russian Hackers Said To “Penetrate US Electricity Grid” Using Outdated Ukrainian Malware

Two days after the DHS and FBI released a report revealing what the US agencies alleged was the government-controlled Russian operation behind the “hacking of the US election” which they dubbed “Grizzly Steppe”, and which had a peculiar disclaimer according to which nothing contained in the report should be taken at face value or was even credible after the DHS said it “does not provide any warranties of any kind regarding any information contained within”

… overnight the crusade against “Russian hackers” continued following news that Russian hackers had managed to penetrate the Vermont electric grid, after a state utility, Burlington Electric, announced that it had found a notebook computer containing the same malware code that the FBI and DHS had touted as linked to the Russian hackers.

According to WaPo, “Burlington Electric said in a statement that the company detected a malware code used in the Grizzly Steppe operation in a laptop that was not connected to the organization’s grid systems. The firm said it took immediate action to isolate the laptop and alert federal authorities.” On Friday night, Vermont Gov. Peter Shumlin (D) called on federal officials “to conduct a full and complete investigation of this incident and undertake remedies to ensure that this never happens again.”

As a reminder, this Thursday when Obama unveiled sanctions against Russia and announced the expulsion of Russian state workers in the worst diplomatic clash between the two nations since the cold war, concurrently the FBI and DHS released a joint report on the “Grizzly Steppe” a hacking operation which was supposedly linked to the Russian government, and alleged that it had targeted “US persons and institutions, including from US political organizations.” In reality what they described in the report, was the simplest of spoofing operations, in which the “hackers involved in the Russian operation used fraudulent emails that tricked their recipients into revealing passwords.” In other words, if simple email spoofing – i.e., relying on the stupidity of its “American targets- was the best the Russian government could do to “hack the US elections”, then the US had little reason to be concerned.


Which is why the US felt the need to add to the sense of urgency overnight when it accused the same “government-organized group of hackers” as having penetrated the Vermont electric grid.

Along with the report, the US security agencies released a sample of the malware code allegedly used in the Grizzly Steppe operation to compromise US computer networks. The code was also shared with executives from 16 industries around the nation, including the financial, utility, and transportation sectors.  It is this code which Burlington Electric, a Vermont-based utility, allegedly found.

The company released a statement on Friday night saying that the malware code had been detected during a scan of a single company laptop. However, soon after publication of the Post’s story, it was revealed that the malware had only infected a utility company laptop that had no access whatsoever to the electrical grid. As noted by Politico cybersecurity reporter Eric Geller, the Post quickly edited its headline upon learning that the incident was far less serious than initially reported.

“We took immediate action to isolate the laptop and alerted federal officials of this finding. Our team is working with federal officials to trace this malware and prevent any other attempts to infiltrate utility systems. We have briefed state officials and will support the investigation fully,” the statement said.

Naturally, the US media promptly ran with the story as further evidence of Russian hacking of US interests: the WaPo wrote “Russian operation hacked a Vermont utility, showing risk to U.S. electrical grid security, officials say“, the AP added “Vermont Utility Finds Malware Code Attributed to Russians.” As Mikael Thalen notes, the mistake on behalf of the Post is not to suggest that nation states do not hack into one another’s critical infrastructure. Russia has successfully infiltrated the U.S. grid before, is likely inside now, and has attacked the power grids of other countries, such as the Ukraine, in the past. The U.S. government likewise has gained access to foreign power grids. As part of the “Nitro Zeus” operation, the U.S. breached Iranian infrastructure and prepared to carry out cyber attacks during the early years of the Obama administration in the event that diplomatic efforts to reduce Iran’s nuclear program failed.

However, the damage was quickly done and shortly after the statement, Vermont politicians had gotten involved.

“Vermonters and all Americans should be both alarmed and outraged that one of the world’s leading thugs, Vladimir Putin, has been attempting to hack our electric grid, which we rely upon to support our quality-of-life, economy, health, and safety,” Vermont Governor Peter Shumlin said in a statement. “This episode should highlight the urgent need for our federal government to vigorously pursue and put an end to this sort of Russian meddling,” he said.

But was it really Russian meddling? After all, how does one prove not only intent but source in a world of cyberespionage, where planting false flag clues and other Indicators of Compromise (IOCs) meant to frame a specific entity, is as important as the actual hack.

Robert M. Lee, CEO and founder of cybersecurity company Dragos, which specializes in threats facing critical infrastructure, also noted that the IOCs included “commodity malware,” or hacking tools that are widely available for purchase.

According to some cybersecurity specialists, the code came from an outdated Ukrainian hacking tool. As RT notes, IT specialists that have analyzed the code and other evidence published by the US government are questioning whether it really proves a Russian connection, let alone a connection to the Russian government. Wordfence, a cybersecurity firm that specializes in protecting websites running WordPress, a PHP-based platform, published a report on the issue on Friday.

Wordfence said they had traced the malware code to a tool available online, which is apparently funded by donations, called P.A.S. that claims to be “made in Ukraine.” The version tested by the FBI/DHS report is 3.1.7, while the most current version available on the tool’s website is 4.1.1b.

“One might reasonably expect Russian intelligence operatives to develop their own tools or at least use current malicious tools from outside sources,” the report says.

The second part of the analysis deals with the list of IP addresses provided by the US agencies. The report says they “don’t appear to provide any association with Russia” and “are probably used by a wide range of other malicious actors.”

Meanwhile, that little nuance, i.e., the ongoing lack of actual evidence that Russians hacked the Vermont utility let alone the “US elections” however did not stop the Obama administration from accusing Russian government of hacking US computer networks in order to influence the presidential to justify imposing some of the toughest sanctions on Russia yet.

In the biggest news yesterday, however, Putin chose to ignore Obama’s punitive measures, calling their imposition a clear provocation, while saying that Moscow will build its relations with the US based on the policies of the next administration under President-elect Donald Trump, not President Barack Obama’s parting shots. In October, Putin ridiculed the idea that Russia could influence the US presidential election, saying that America was not “a banana republic.”

Shortly after Putin took the “high road” Donald Trump took to Twitter, praising Vladimir Putin, saying “Great Move On Delay – I Always Knew He Was Very Smart”, while mocking US media outlets, “Russians are playing @CNN and @NBCNews for such fools – funny to watch, they don’t have a clue!” His tweet promptly, and predictably, drew accusations of treason by many liberals.

via Tyler Durden

2016 in Food Policy: New at Reason

AgricultureFor food policy writer Baylen Linnekin’s last column of 2016, he asked five experts in the field to discuss the best and worst developments of the year. He also asked them to consider what may be likely to come in 2017.

The responses discuss everything from improved consumer control of purchasing choices, farm subsidies, food labeling regulations, GMO panics, and school lunch programs, to private choice in food processing, food technology advances, the faulty science behind nutritional guidelines, and more.

View this article.

from Hit & Run