Month: August 2018

A Young Mom Was Justified in a Shooting, But a Past Marijuana Charge Means Prison Time

|||Screenshot via ABC NewsA young woman who killed an intruder may be heading to prison, even now that authorities have ruled the shooting justified.

In December, Krissy Noble shot a man named Dylan Stancoff with her husband’s gun when Stancoff forced his way into her Fort Smith, Arkansas, home. Noble was 11 weeks pregnant. The case was sent to the Sebastian County Prosecutor’s Office, which determined that the shooting was justified.

But Noble still faces felony gun charges because of a previous drug-related conviction. In 2017, Noble pleaded guilty to felony possession of marijuana with intent to deliver as well as possession of drug paraphernalia. (She had been pulled over while riding in a vehicle with friends. Each person in the vehicle received the same charges when no one claimed the items.) She got a five-year suspended sentence, and as part of that was prohibited from either possessing or using firearms.

After Stancoff’s death, the authorities filed a petition to revoke Noble’s suspended sentence. She has since been charged with being a convicted felon in possession of a gun. Yesterday Noble turned herself in, was booked, and was released on a $2,500 bond.

Noble gave birth to her son earlier this year. If convicted, she tells ABC News, she could spend a maximum of 24 years in prison. “That’s my baby’s life,” she lamented. “I won’t even know my child.”

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End of History Author Francis Fukuyama Thinks Leftist Identity Politics Helped Create Trump

FukuyamaIn an interview with The Chronicle of Higher Education, Francis Fukuyama—author of the much-debated 1992 book The End of History and the Last Man—laments that leftist identity politics provoked a backlash from the populist right, which in turn gave rise to Donald Trump.

According to Fukuyama:

A great deal of modern politics is about the demand of that inner self to be uncovered, publicly claimed, and recognized by the political system.

A lot of these recognition struggles flow out of the social movements that began to emerge in the 1960s involving African-Americans, women, the LGBT community, Native Americans, and the disabled. These groups found a home on the left, triggering a reaction on the right. They say: What about us? Aren’t we deserving of recognition? Haven’t the elites ignored us, downplayed our struggles? That’s the basis of today’s populism.

Fukuyama, a former neoconservative who later became a critic of the Iraq War and voted for Barack Obama in 2008, notes that each of these leftist groups is justified in seeking recognition. But the tactic of associating a certain problem with a specific identity group, he adds, can backfire horribly:

The problem is in the way we interpret injustice and how we try to solve it, which tends to fragment society. In the 20th century, for example, the left was based around the working class and economic exploitation rather than the exploitation of specific identity groups. That has a lot of implications for possible solutions to injustice. For example, one of the problems of making poverty a characteristic of a specific group is that it weakens support for the welfare state. Take something like Obamacare, which I think was an important policy. A lot of its opponents interpreted it as a race-specific policy: This was the black president doing something for his black constituents.

I expressed similar concerns when I suggested that political correctness was partly responsible for the right-wing backlash that produced President Trump.

Fukuyama has some interesting thoughts about the campus free speech problem, which he claims is not a full-blown crisis, despite the occasional dust-ups. He also discusses his experience as a student of Jacques Derrida, a French philosopher often lampooned by Jordan Peterson:

Q. You have an unusual background for a political scientist. You majored in classics at Cornell, then did graduate work in comparative literature at Yale, where you studied with Paul de Man. Later you spent time in Paris sitting in on classes with Roland Barthes and Jacques Derrida. Any memories from this journey through deconstruction.

A. I decided it was total bullshit. They were espousing a kind of Nietzschean relativism that said there is no truth, there is no argument that’s superior to any other argument. Yet most of them were committed to a basically Marxist agenda. That seemed completely contradictory. If you really are a moral relativist, there is no reason why you shouldn’t affirm National Socialism or the racial superiority of Europeans, because nothing is more true than anything else. I thought it was a bankrupt way of proceeding and decided to shift gears and go into political science.

Peterson is often attacked for using the term “postmodern neo-Marxism” to describe campus leftist thinking, particularly in the humanities and social sciences. Critics contend that there’s really no such thing as a postmodern neo-Marxist, since postmodernism and Marxism are competing philosophies that disagree on a host of things. Fukuyama seems to agree with Peterson.

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Bank Of America: This Is The Big Call Investors Have To Make

Something odd is going on in global markets: in recent months a huge divergence in the performance of risk assets has opened up which previously has only been observed during recessions.

As the S&P 500 marched towards its record bull market and a new all-time high, EM equities, copper and European banks were experiencing bear markets, while EM FX carry has unwound almost all of its post-2016 gains. As a result,  according to Bank of America, the key question for investors as we move into the latter part of 2018 is “whether they should use the pullback in non-US risk assets as a buying opportunity or not.” 

As an indication of just how stretched this divergence is, BofA notes that non-US equities have underperformed the US by the most since the GFC and EM equities are back sub-11x earnings, or as BofA puts it, “the underperformance of non-US equities to US equities is reaching levels normally only exceeded in bear markets.”

Similarly, the bank’s “Risk-Love” metric for emerging markets is now in panic territory, again at levels normally only exceeded in bear markets.

Investors are further confused because those bear markets are almost always associated with recessions, so “the key decision investors have to make is whether a recession is looming or whether the cycle has a good deal further to run.”

Here BofA notes that the unwinding of risk this year is not particularly abnormal, and as reference, it shows the path of  global equities since the peak in its Global Wave, which looks very similar to previous paths, although the question is whether it diverges to the top side, as it did every year ex the bubble bursting years of 2000 and 2007, or if it slides as the global asset bubble pops (more on that below).

As an aside, at the start of June we noted that BofA’s “Global Wave” indicator (shown in the left chart above) just peaked for only the tenth time in 25 years, as five of the seven components deteriorated including confidence, market, and real economy indicators. The “global wave” is an advance indicator for global economic expansion and contraction, with virtually every peak in recent decades resulting in either a recession or a sharp market drop: of which, the last two took place just before the European sovereign debt crisis and around the time of the Chinese post-devaluation turmoil.

Of note: previous downturns in the Global Wave averaged 12 months, although some downturns were brief; Previous negative-but-brief signals occurred in 2002 after President Bush introduced steel tariffs, and in 2005 when PMIs fell quickly before recovering.

Still, the facts are adverse for global stocks, as subsequent to previous peaks in the Global Wave, the MSCI All Country World Index averaged -3.4% in the next 12 months, and defensive regions (the US), defensive sectors (Telecom, Health Care, Consumer Staples) and defensives styles (Quality, Dividends) outperformed, on average.

That said, BofA notes that it is not unusual for higher beta assets such as EM to underperform in such periods, and while the outperformance of the US market is “perhaps a little more marked than usual”, that likely reflects the robustness of the US economy and US earnings.

So going back to the original question, “is now the time to buy non-US assets”, a broader question that has to be answered is how close are we to the end of the cycle?

Whether it is the performance of markets post a Global Wave peak or post a panic reading in the EM Risk-Love indicator, the key is whether the reading is associated with just some form of pause/moderation in the cycle or whether it precedes a recession. The good news for bulls is that currently the MSCI ACWI in chart 4 (below) is following the non-recessionary path, which seems sensible given the US economic data and the consensus view of economists that, ex a shock, the US economy will grow above 3% for the remainder of 2018 and next year.

“This is the big call investors have to make”, according to BofA and summarizes as follows:

“Is it right to continue to anticipate strong global growth and therefore buy risk assets into this pullback? Or are we sufficiently close to the end of the cycle that they should be switching into more defensive assets and selling into any rally?“

The bank shows two charts that sum up the situation. In its latest Fund Manager Survey, the bank asked investors where they think we are in the cycle. Since January there has been a marked rise in the proportion saying we are late cycle to around 80% now. Yet compare this with the right-hand chart of the Global output gap from the OECD, which was updated to the end of this year using the bank economists’ forecasts, which shows the output gap will have only just closed by year-end.

Historically the peak in the cycle is somewhere between 1.5% and 3% positive, as it normally requires some inflation to get central banks to hit the brakes. Even reaching the lower end of that band would require three more years of 3.75% global growth. While the US is more advanced, the picture is similar, with BofA economists thinking that the US output gap has probably just closed. Again, historically it has taken a positive output gap (and hence rising inflation) to get the Fed to tighten enough to send the economy into a recession.

And while the cycle may indeed be late, there is another consideration: missing out on the last meltup in the market. Here are BofA’s thoughts:

Equity markets and risk assets in general tend to peak only six months or so before an economic downturn, which would suggest this pullback in risk assets is one that investors should buy into. If you want to compare with the last cycle, perhaps May 2006 is a good comparison: a sharp pullback in markets (around 12% for MSCI ACWI) was followed by a rally that eventually peaked some 34% later in October 2007. You could have sat that last rally out, but it would have been pretty painful to do so. It wasn’t until the Lehman crisis of October 2008 that the MSCI ACWI properly took out the May 2006 low.

The risk, however, is that market’s are underestimating the Fed’s resolve to keep hiking, something which became less of an issue last Friday, according to conventional wisdom, Jerome Powell turned dovish at Jackson Hole with his “gradualist” speech invoking Alan Greenspan’s “go slow” rate hike policy of the late 1990s.

Michael Hartnett, BofA’s Chief Investment Strategist, rightly points out that when the Fed is tightening there are often market accidents and the sell-off in EM this time around has been pretty bloody, with Argentina and now Turkey the key victims. Nevertheless, it is also often the case that risk assets recover from those accidents until the Fed finally punctures the cycle, at which point it is game over and all investors have to head for defensive assets.

In other words, those who still are on the fence whether the cycle is about to end, and – if not -whether to buy EM assets, should answer the following question: what would Jerome Powell do during every FOMC meeting next year, and whether he will keep hiking at a time when the strong dollar is already crushing emerging markets around the globe even as US stocks keep hitting all time highs.

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Is Bank of America Really Cracking Down on Undocumented Immigrants?

“Bank Of America Faces Backlash After Freezing Accounts Over Citizenship Questions,” blares the HuffPost headline. “Bank of America Really Wants to Know Your Citizenship Status,” writes Splinter. “Bank of America freezing accounts of suspected undocumented citizens: report,” says The Hill.

So is Bank of America trying to stop undocumented immigrants from accessing their money? The short answer is probably not.

All three of those stories are based on a Miami Herald report claiming the bank is “freezing accounts of customers suspected of not being U.S. citizens.” The story is built around the experience of Saeed Moshfegh, an Iranian Ph.D student studying in America. Until recently, Moshfegh says he had to show proof to the bank that he was in living in the States legally. Then, earlier this month, the bank rejected his documentation and told him he needed to give them a different form. Moshfegh’s funds were frozen. And though they eventually gave him his money, bank officials wouldn’t let him keep the account.

He wasn’t happy. “It’s not the business of Bank of America to shut down someone’s account,” Moshfegh tells the Herald. “Immigration officers are different from Bank of America—with a bank, I would like to feel respect [and be treated] how they treat other customers. But they treat me as an alien.”

The Herald also spoke with Dan Hernandez, a TV writer of Cuban heritage whose business account was suspended in 2016 because Bank of America thought he might be doing business with Cuba. They thought that because his business was called Cuban Missile Inc., after his childhood nickname.

In July, The Kansas City Star reported a similar case. Josh and Jessica Collins are both American citizens who’d been Bank of America customers for almost two decades, so when Josh got a weird-looking letter from the bank asking if he was a citizen, he ignored it. Not long after, their account was frozen. According to The Washington Post, which did a follow-up story on the couple, other Bank of America customers have similar stories.

Many immigration advocates are convinced these instances are proof that Bank of America is helping the Trump administration crack down on undocumented immigration. A petition launched by the California Reinvestment Coalition calls on Bank of America to “stop asking customers about their citizenship status.” The petition, which has garnered more than 63,000 signatures, notes that “history will remember which banks stood by immigrants and which ones helped Donald Trump attack them.”

“Fear is gripping these communities,” the coalition’s Paulina Gonzalez tells the Herald. “It’s like walking into a grocery store to buy milk and being asked for your citizenship at checkout—banking is one of the core aspects of daily life in this country.”

But there’s a simpler explanation for these stories: corporate incompetence.

Bank spokesperson Christopher Feeney tells Fast Company that the institution “periodically” looks at its customers’ accounts to determine if more up-to-date information is necessary. Due to Treasury Department sanctions against other countries, Bank of America asks customers about “country of citizenship” in order “to ensure adherence to these economic sanctions laws.” But Feeney adds that “we do not ask for proof of citizenship.”

Feeney’s statement could explain why Moshfegh and Hernandez had their accounts frozen. The U.S. has been sanctioning Iran since the 1970s, and its embargo against Cuba has been in place since the 1950s. It’s not hard to believe that in its efforts to comply with Treasury Department regulations, Bank of America simply messed up.

Besides, if the bank is working with the Trump administration to target undocumented immigrants, why do most of these cases involve either American citizens or legal immigrants? The case of Josh Collins particularly stands out. If you’re cracking down on undocumented immigrants, why question the citizenship of a local news photographer in Kansas who’s been banking with you for almost 20 years? If Bank of America doesn’t want undocumented immigrants to access their money, someone needs to bring us such a story from an actual undocumented immigrant.

If the accusations turn out to be true, it wouldn’t be the first time a bank worked with the feds to target allegedly undesirable people. (Remember Operation Chokepoint?) But in these instances, there’s just no evidence to suggest Bank of America is guilty of anything more than bad customer service.

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Forget Who Takes The Mid-Terms; Here’s How To Personally Repeal Obamacare

Authored by Simon Black via SovereignMan.com,

If the US government doesn’t act quickly, Americans may be stuck with years more of deteriorating healthcare and skyrocketing medical bills.

Back in 2010, Congress and President Obama completely overhauled the US healthcare system with the “Affordable” Care Act (aka Obamacare). Their intention was to provide all US citizens with access to healthcare.

But, the result of government interference in markets was – surprise – rising costs and lower quality service.

Over the past several years, politicians have paid lip service to abolishing Obamacare. Even with a Republican-controlled House and Senate in 2017 and 2018, Congress couldn’t issue a repeal.

And now, US midterms elections are looming.

Obamacare stands no chance of repeal by a potentially divided Congress starting in 2019.

Fortunately for you, when it comes to healthcare policies, it doesn’t matter who takes control of Congress…

Because you can still find fantastic and affordable healthcare, even without a corporate-sponsored insurance plan. You just have to look outside the US.

As countries like the US, Canada and the UK suffer under bloated healthcare bureaucracies, more of their citizens are venturing beyond their countries’ borders for medical treatment at a fraction of the costs – so-called medical tourism.

Still, patients receive safe and first-class care from English-speaking doctors, many trained at top medical schools around the world.

For example, heart bypass surgery in the US costs well over $100,000. If you have great insurance, you’ll be fine to remain in the US. (The US healthcare system is great for wealthy patients with low deductible, comprehensive health insurance plans.)

But if you’re self-employed and without access to a large employer’s group plan, your out-of-pocket costs for this surgery may be unaffordable.

Or, you can travel to Thailand, save a fortune and recuperate in a first-class facility.

Bumrungrad International Hospital in Bangkok was the first Asian hospital to receive Joint Commission International (JCI) accreditation. JCI is the gold standard to certify hospitals and clinics worldwide.

At Bumrungrad, they offer a package deal for heart bypass surgery. The package includes the surgeon and anesthesiologist’s fees, operating room charges, routine lab tests, X-rays (if required), medications, medical supplies, pacemaker (if required) and seven nights’ accommodation, including two in the post-surgical Coronary Care Unit.

And your grand total? 690,000 baht (about $21,000 USD).

Medical tourism is not just for major surgeries.

You can also benefit from venturing abroad for preventative health or routine procedures like executive health screenings – a comprehensive physical exam with labs, electrocardiogram, stress tests, consultations with multiple specialists, etc.

Places like the Cleveland or Mayo Clinics will administer an executive exam… but, depending on your insurance, it may not cover these types of physicals.

So, you may pay $5,000 or more out-of-pocket, plus food, lodging and airfare. And you may wait in line for months, as more US patients want this service.

But, back in Thailand there’s no months-long wait and no multi-thousand-dollar price tag for an executive exam.

A screening for a 30 to 40-year-old man or woman includes: Renal function, three liver function tests, a urine test, lung and heart X-rays, an ultrasound of abdominal organs, an electrocardiogram and a few other services. Doctors, nurses and technicians will spend 3-4 hours with you.

And for this thorough exam, you’ll pay… 9,500 Thai baht or about $292 at the current exchange rate.

Even their highest-priced executive exam for women over 50 is 25,600 baht, which is $786. And this package includes all the labs and screenings as above, plus an ophthalmology exam, hearing screening, brain blood vessel check and checks for colon, liver and cervical cancers. Patients spend 5-6 hours with the medical staff.

In the US, you’re lucky to spend 15 minutes with a doctor. And as healthcare deteriorates, US wait times may rival Canada’s and the UK’s – where thousands of patients wait for months to see a specialist.

Then there’s the regulatory hurdle, which prompts individuals to seek care elsewhere. The Food and Drug Administration (FDA) erect barriers that prevent experimental (and often effective) procedures and medicines.

So, medical tourism offers you the chance to skip long medical lines, receive top care that may be unavailable in your home country and potentially save thousands of dollars.

I view medical tourism as another international arbitrage opportunity.

For medical tourism, your arbitrage opportunity takes advantage not only of the price difference, but also of the quality of care you’d receive.

If you’re from a nation suffering under a healthcare system that doesn’t meet your needs and expectations, why wouldn’t you explore other options around the world?

With a little planning and action, you can take charge of your health.

And to continue learning how to ensure you thrive no matter what happens next in the world, I encourage you to download our free Perfect Plan B Guide.

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Trader Exposes Market “Reality” In One Simple Chart

For days, the US equity market has shrugged off every bad trade headline, every weak data-point, every global EM crisis contagion concern, and every signal from other (less-manipulated) markets and soared to record highs, building chips in Trump’s corner to expend in his global trade war.

However, as former fund manager and FX trader Richard Breslow points out, it appears the market is now saying “no mas” as the uglier reality is starting to peak out from behind the curtain.

Via Bloomberg,

Since it’s Friday, I started with the news and then tried to guess what the markets would be up to. Other days the game is played in reverse. This was too easy. Given the upcoming long-weekend in the U.S., the emerging market shambles and the sotto voce move toward perceived safer assets, it’s not a surprise that it looks like nothing is happening today. Never was it more true that traders are quite rightly choosing to let sleeping dogs lie. You have to wonder if they are being a little hasty.

But it is a big mistake to think this in any way implies people are, or should, feel sanguine. Warren Buffett may be adding to his Apple stake. The Austrian representative on the ECB’s Governing Council, Ewald Nowotny, may be calling for rate hikes, regardless of what shape Italy is in. But this all sounds like white noise. You know it’s an off day when JGB futures falling 14 ticks on “BOJ news” grabs headlines in Europe.

All this seeming calm may be appropriate for the day, but needs to be taken with a grain of salt. Markets are confused, not quiet.

At the risk of being repetitive, you just can’t use the U.S. stock market as a risk barometer. It is, just like it did in the third quarter of 2007, receiving the benefits in a very complicated world of being taken as a straightforward, uncomplicated and liquid safe haven. Until it isn’t. Every time this week when I looked at where the S&P 500 was trading, I forced myself to take a peek at EUR/CHF, just as a reality check.

The ultimate safe-haven indicator has now slipped to its lowest since July 2017…

*  *  *

As it’s month-end, it’s time to look at some longer-term charts.

I was struck by how ambiguous they appear vis-a-vis the dollar.

There’s reasonable, even good, arguments to be either bearish or bullish. And nothing screaming from a technical perspective that the market has made its choice and we need to immediately get on board. Frankly, I was a little surprised, but in retrospect this seems entirely appropriate. I’m deathly afraid of the possibility that we will continue to have mini false breaks with no resolution. If we do, it won’t last out the year, but it will be a long slog until we get there.

Sadly, the 10-year Treasury shares many of the same technical characteristics.

There is a slight bias for higher yields, but I must confess little reason for the longs to get out. Like the dollar, this remains a work in progress. But unlike the dollar, I don’t think it can hold this somnolent range for much longer. The question is, how far can it really go? The trick will be not swooning over a few basis point extension one way or the other outside the range without having a solid fundamental reason backing up the excitement.

Gold is again trying to push up against resistance around 1210, but the Bloomberg Commodity Index is lifeless.

This does not bode well for the commodity currencies. Which are also getting no love from Chinese assets. This month-end close for the Shanghai Composite is disappointing, at best.

Monday, or maybe Tuesday, it all starts again. Maybe then all will be revealed. But I suspect it might take a little bit longer.

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Anti-Pot Staffers Conspire to Turn Trump Against Marijuana Federalism

The Office of National Drug Control Policy (ONDCP) is required by statute to “take such actions as necessary to oppose any attempt to legalize” federally prohibited drugs. Toward that end, BuzzFeed‘s Dominic Holden reports, the ONDCP has asked agencies across the executive branch to share any information that reflects badly on marijuana legalization, including “data demonstrating the most significant negative trends.” According to internal memos that Holden obtained, the material will be distilled by something called the Marijuana Policy Coordination Committee, which seems intent on getting Donald Trump to reconsider his support for letting states go their own way in this area.

While running for president, Trump repeatedly said the federal government should not obstruct marijuana legalization by the states, although he expressed concern about the consequences. Last June, notwithstanding Attorney General Jeff Sessions’ threats of a federal crackdown, the president said he “probably will end up supporting” the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, which would exempt state-legal marijuana activities from the federal ban. That position clearly did not sit well with some of the president’s advisers.

Since Sessions is out of favor with the White House and the acting director of the ONDCP, James Carroll, seems to be little more than a placeholder, someone else is probably behind the effort to sway Trump against marijuana federalism. The Washington Monthly‘s Nancy LeTourneau suggests that White House Chief of Staff John Kelly, a gung-ho drug warrior who used to oversee interdiction as secretary of homeland security and head of the U.S. Southern Command, is “the most likely culprit.” Kelly has repeatedly complained about the demoralizing effect that marijuana legalization has on America’s allies in the war on drugs.

Holden reports that the ONDCP asked agencies and departments to supply “two-page, bulleted fact sheets that identify marijuana threats,” along with what a White House directive described as “a story, relating an incident or picture, that illustrates one or more of the key areas of concern related to use, production, and trafficking of marijuana.” The aim seems to be an easily digestible presentation that will reinforce the president’s doubts about the wisdom of legalization and make him forget his commitment to respecting state autonomy.

According to a summary of a July 27 White House meeting with department officials that Holden quotes, the presidential propaganda project is all about balance. “The prevailing marijuana narrative in the U.S. is partial, one-sided, and inaccurate,” the summary says. “Staff believe that if the administration is to turn the tide on increasing marijuana use there is an urgent need to message the facts about the negative impacts of marijuana use, production, and trafficking on national health, safety, and security.”

The BuzzFeed report prompted criticism from legislators who represent Colorado, the first state to allow recreational sales of marijuana. “By cherry-picking data to support pre-ordained and misinformed conclusions on marijuana, the Trump administration has further eroded any credibility it had on this issue,” writes Sen. Michael Bennet (D-Colo.) in a letter he sent yesterday to Carroll, the acting drug czar. “I am deeply concerned by this intentional effort to mislead the American people. At a time when we should be investing in objective and peer-reviewed scientific research on marijuana and the effects of legalization, the White House is instead using taxpayer money to spread a politically driven narrative.”

Bennet overlooks the fact that Congress tasked the ONDCP with doing just that, since the office is statutorily bound to oppose legalization by any means necessary. But his dismay is probably shared by other members of Congress, Republicans as well as Democrats, who represent states that have legalized marijuana and who thought the president was committed to respecting those choices. Trump’s decision to “probably” support the STATES Act grew out of a dispute with Bennet’s fellow Colorado senator, Cory Gardner, a Republican who blocked Justice Department appointments in response to Sessions’ threats against state-legal cannabis.

“Since the campaign, President Trump has consistently supported states’ rights to decide for themselves how best to approach marijuana,” Gardner said after conferring with Trump last April. Gardner said the president had assured him that new Justice Department priorities under Sessions “will not impact Colorado’s legal marijuana industry” and that Trump “will support a federalism-based legislative solution to fix this states’ rights issue once and for all.” No matter how persuasive the talking points soliciting by the ONDCP, reneging on that commitment will carry a political cost.

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“No Sign Of The Petro Here”: Mystery And Confusion Besets Venezuela’s Crypto “Revolution”

Authored by Marie Huillet via CoinTelegraph.com,

Reuters has published an investigative report into Venezuela’s national oil-backed cryptocurrency, the Petro (PTR), attempting to square government claims with facts on the ground and evidence of the Petro’s transaction history to date.

Reuters dispatched reporters to the central Venezuelan hamlet of Atapirire, which sits at the heart of the 380-square-kilometer territory that the president has said can provide the 5 billion barrels of petroleum needed to back the new cryptocurrency.

image courtesy of CoinTelegraph

Amid rampant hyperinflation in the Venezuelan economy, President Maduro last week introduced  a rebranded fiat currency – the sovereign bolívar, which will have five fewer zeros than its ailing predecessor, the Bolívar Fuerte (VEF). The new currency has in turn been tethered to the fledgling Petro, valued at around $66 – the price of one barrel of Venezuelan oil.

Venezuelan-born energy policy expert Francisco Monaldi told Reuters that the allegedly oil-rich territory “lacks [the] crucial infrastructure” – including roads, pipelines and power generation facilities – to extract the reserves. Monaldi noted that “there is no investment plan for this area and no reason to think it would be developed before other fields with better conditions.”

Reuters’ investigators claim that the area on the ground showed little sign of oil-industry activity, with only scattered and weathered rigs to be seen.

The article also refers to a recent opinion piece from former Oil Minister Rafael Ramirez, who has estimated that reviving the area would cost at least $20 billion – an astronomical sum for the debt-saddled state-owned oil firm PDVSA. Ramirez has reportedly written that “the petro is being set at an arbitrary value, which only exists in the government’s imagination.”

As Reuters notes, the Petro does not currently trade on any of the major international crypto exchanges. Hong Kong-based Bitfinex told Reuters that it officially banned the token from its platform in the wake of U.S. sanctions. Other exchanges – including Coinbase, Bittrex and Kraken – reportedly declined to comment as to why they have chosen not to list the Petro.

Of the 16 minor exchanges that are said to support Petro trade, Reuters could not discern any internet presence for seven of them. Seven others reportedly did not respond to requests for comment. Only India-based Coinsecure has publicly pledged to support the petro, in exchange for royalties from Venezuela.

Reuters further undertook an effort to probe official statements from president Maduro that sales of the Petro have raised $3.3 billion to date. According to the Petro white paper, Singapore-developed NEM tokens serve as the “preliminary” token for the initiative, later to be exchanged for Petros.

According to Reuters, records from March show that a NEM account allegedly operated by the Venezuelan government issued 82.4 million tokens as part of an ICO that was first announced in late February. Around 2,300 of those tokens were found to have been transferred to 200 anonymous accounts in early May, at a total value of about $150,000, based on Reuters’ calculations.

In April, records reportedly show that a single NEM account issued a total of around 13 million tokens to around a dozen accounts, which Reuters calculates could have raised about $850 million. While the issuance in question is said to have targeted “major investors,” no one has reportedly to date publicly confirmed having made an investment of this scale in the Petro.

Tom Robinson of UK blockchain data firm Elliptic told Reuters that:

“This certainly doesn’t look like a typical ICO, given the low level of transaction activity. We have found no evidence that anyone has been issued a petro, nor of it being actively traded on any exchange.”

Cabinet Minister Hugbel Roa reportedly told Reuters last week that the technology behind the coin is still in development and that “nobody has been able to make use of the Petro…nor have any resources been received.”

Ahead of Reuters’ investigations, significant voices from the Venezuelan crypto community have this month similarly scathingly denounced the petro as little more than an opaque “stunt” backed by a centralized and debt-crippled entity.

 

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Pro-Russian Leader Of Donetsk People’s Republic Killed In East Ukraine Bomb Explosion

According to breaking reports a targeted blast has killed Ukraine’s most prominent separatist leader in what appears a high level assassination under mysterious circumstances.  The head of the self-proclaimed Donetsk People’s Republic, Aleksandr Zakharchenko, was reportedly at a cafe in central Donetsk city in eastern Ukraine when an explosion of as yet unknown origin went off, killing Zakharchenko and injuring several other top separatist officials. 

Local reports say that Zakharchenko was still alive at the scene, but died of his severe injuries after arriving an an area hospital. 

Alenksandr Zakharchenko, Reuters file photo

A group of the Donetsk People’s Republic’s leaders were gathered at ‘Separ’ — a well-known restaurant and cafe in the city center.

A spokesperson for the breakaway Ukrainian region confirmed his death and called it a “terrorist attack”. 

“The head of the DNR, Alenksandr Zakharchenko, has died as a result of a terrorist act,” a spokesperson of the self-proclaimed republic’s administration told journalists, though revealed no further details of the incident. 

The Separ cafe, file photo via RFE/RL

A US broadcaster has further cited local officials to report that another separatist figure, the movement’s “finance minister” Aleksandr Timofeyev, was injured in the blast at the Separ (Separatist) cafe.

Donetsk sources have yet to assign blame; however, the breakaway region in eastern Ukraine have been at war with forces loyal to the Ukrainian government in Kiev since 2014. 

The heavily-armed rebels in Donetsk and Luhansk regions have waged what they say is a war for independence and have refused the the Ukrainian government in Kiev. One senior Donetsk rebel, Vladislav Berdichevsky, told Interfax news agency: “According to preliminary information, it is unfortunately true. The republic’s leader suffered a fatal wound.”

And predictably, Russia’s Foreign Ministry immediately pointed the finger at Ukrainian authorities for the attack, saying Kyiv had decided to engage in a “bloody fight.”

But Ukrainian security officials countered that it appears to be the work of “terrorists and their Russian sponsors.”

Lately the separatist movement has undergone internal fighting and rivalries, with several leaders reportedly having fled the region while citing unconfirmed threats by former comrades.

developing…

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China Using LinkedIn For Mass Spy Recruitment Of Americans With Security Clearances

After social media giants Facebook and Twitter have led efforts to purge what they deem to be Russian and Iranian foreign intelligence accounts, a bombshell new report says China is using LinkedIn to attempt mass recruiting of Americans with access to government and commercial secrets. 

In an interview with Reuters, a top US counterintelligence chief has claimed China is being “super aggressive” in its online recruitment efforts on the Microsoft-owned job networking and locator tool.

That a high ranking intelligence member would take the step of calling out a particular company by name, urging it to curtail Chinese influence, is rare even in the current environment hyper-anxiety and fears over Russian election hacking. 

The counterintelligence official, William Evanina described to Reuters that US agencies have confirmed that the Chinese are casting a broad dragnet on LinkedIn while seeking to lure Americans into personal interviews:

He said the Chinese campaign includes contacting thousands of LinkedIn members at a time, but he declined to say how many fake accounts U.S. intelligence had discovered, how many Americans may have been contacted and how much success China has had in the recruitment drive

Evanina, who heads the U.S. National Counter-Intelligence and Security Center, has further called on LinkedIn to follow the lead of other online companies: “I recently saw that Twitter is cancelling, I don’t know, millions of fake accounts, and our request would be maybe LinkedIn could go ahead and be part of that,” according to Reuters.

LinkedIn has something approaching 600 million users on its site around the globe, including about 150 million members in the US. 

Meanwhile, LinkedIn has responded to the allegations of US intelligence by noting it is increasingly aware of such threats and says it’s cooperating with authorities:

LinkedIn’s head of trust and safety, Paul Rockwell, confirmed the company had been talking to U.S. law enforcement agencies about Chinese espionage efforts. Earlier this month, LinkedIn said it had taken down “less than 40” fake accounts whose users were attempting to contact LinkedIn members associated with unidentified political organizations. Rockwell did not say whether those were Chinese accounts.

Rockwell told Reuters further that, “We’ve never waited for requests to act and actively identify bad actors and remove bad accounts using information we uncover and intelligence from a variety of sources including government agencies.”

But if the allegations of mass infiltration efforts to ensnare Americans with security clearances and access to sensitive information are true, it doesn’t appear that LinkedIn has so much as begun to identify or put a dent in such activities. 

China for its part has vehemently denied the charges leveled by the US counterintelligence chief, saying through its foreign ministry: “We do not know what evidence the relevant U.S. officials you cite have to reach this conclusion. What they say is complete nonsense and has ulterior motives,” according to a statement. 

Meanwhile it has been confirmed that Chinese intelligence did use LinkedIn to successfully recruit a retired CIA officer who is reported to have been facing financial hardship at the moment he was contacted by what he thought was a Shanghai think tank looking for fluent Mandarin speaker. 

Screenshot of Kevin Mallory’s original LinkedIn account through which he was recruited by Chinese intelligence and ultimately convicted of espionage. 

Evanina cited Kevin Mallory’s case specifically, as Mallory was convicted in June for espionage. In a relationship that started with someone claiming to be a headhunter on LinkedIn, Mallory eventually made two trips to China where he agreed to knowingly hand over US defense secrets to Chinese intelligence officers. 

Reuters describes in connection with Mallory’s case: “U.S. officials said China’s Ministry of State Security has ‘co-optees’ – individuals who are not employed by intelligence agencies but work with them – set up fake accounts to approach potential recruits.”

And reports further that “the targets include experts in fields such as supercomputing, nuclear energy, nanotechnology, semi-conductors, stealth technology, health care, hybrid grains, seeds and green energy.”

Often bribery or prospects of major business deals or employment are used, or in the case of American academics with access to sensitive corporate or government studies, promises of huge grants or career advancement are made under false pretenses. 

Though the allegations of US intelligence can claim Kevin Mallory as a prime example of how the Chinese operation works, the only evidence thus far of the extent of the operations is as follows:

Some of those who set up fake accounts have been linked to IP addresses associated with Chinese intelligence agencies, while others have been set up by bogus companies, including some that purport to be in the executive recruiting business, said a senior U.S. intelligence official, who requested anonymity in order to discuss the matter.

The Reuters report notes that up to 70 percent of China’s espionage efforts are aimed at the American private sector, according to the head of the FBI’s intelligence division. 

“They are conducting economic espionage at a rate that is unparalleled in our history,” the FBI’s Joshua Skule said.

However, for now convictions and exposures of particular instances of successful penetration are few and far between. But it will be interesting if the next online “purge” targets China and online users linked with Chinese business and entities. 

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