Month: September 2019

Authored by Jacob Hornberger via The Future of Freedom Foundation,

The 9/11 attacks not only killed thousands of Americans, they also led to America’s forever wars in Afghanistan, Iraq, Syria, Libya, Yemen, Iran, and elsewhere, which have brought about the deaths of thousands of other Americans and millions of foreigners. But the 9/11 attacks did more than that. They also fortified the U.S. government as a national-security state, which solidified the destruction of the freedom of the American people.

What is a national-security state? It is a type of governmental structure that has an enormous, permanent military-intelligence establishment. In the case of the United States, that means the Pentagon, the vast military-industrial complex, foreign military bases, the CIA, and the NSA. It also means power — enormous power, not only for the overall government, but also within the governmental structure itself. To place things in a general context, Egypt is a national-security state. So are China, Cuba, and Russia. And the United States.

It wasn’t always that way. America was founded as a limited-government republic, which is the opposite of a national-security state. No Pentagon, no vast military-industrial complex, no foreign military bases, no CIA, and NSA. Just a relatively small army.

That’s the way the Framers and our American ancestors wanted it. The last thing they wanted was the type of governmental structure under which we Americans live today. In fact, if the proponents of the Constitution had said to the American people after the Constitutional Convention that the Constitution was going to bring into existence a national-security state, they would have died laughing, thinking it was a big joke. Once they had realized that it wasn’t a joke, they would have summarily rejected the deal and continued operating under the Articles of Confederation, a third type of governmental system under which the federal government’s powers were so few and weak that the federal government hadn’t even been given the power to tax.

The post-World World II revolution

The revolutionary change occurred after World War II. Although the war against Nazi Germany had just ended in victory, U.S. officials told Americans that, unfortunately, they could not rest. That was because, they said, the U.S. now faced a foe that was arguable more dangerous than Nazi Germany. That foe was the Soviet Union, which, ironically, had served as America’s partner and ally during the war. U.S. officials maintained that America now faced a vast post-war communist conspiracy to take over the world, including the United States, one that was based in Moscow, Russia. (Yes, that Russia!)

U.S. officials said that the only way to prevent this conspiracy from succeeding was to convert the U.S. government to the same type of governmental system that the Soviets had, which was a national-security state. Continuing as a limited-government republic, they said, would almost certainly result in defeat for America and a communist takeover of our nation.

Omnipotent government

That’s how we ended up with a national-security state type of governmental system, along with all of the dark-side powers that come with it. Assassination. Kidnappings. Torture. Regime-change operations. Sanctions. Embargoes. Invasions. Wars of aggression. Occupations. Coups. Secret surveillance. Indefinite detention. Secret prison camps. Military tribunals. Denial of due process of law. Out of control federal spending and debt, in large part owing to ever-increasing budgets for the national-security establishment. In other words, all of the things that one would have expected from the Soviet Union were now part and parcel of the “arsenal of freedom” wielded by the Pentagon, the CIA, and the NSA.

Never mind that none of this was authorized by the Constitution, the charter that called the federal government into existence. U.S. officials maintained that the Constitution was not a “suicide pact.” Continuing to follow it meant certain defeat at the hands of the Reds, they said. It was necessary to abandon constitutional niceties, they maintained, to save America.

Implicit in all the Cold War hoopla was that if the Cold War were ever to end, Americans could have their limited-government republic back. Of course, U.S. officials never thought for a moment that that would happen. The national-security state was a racket that was supposed to go on forever.

But then in 1989, the racket suddenly and unexpectedly came to an abrupt end. Financially broke and uninterested in continuing the Cold War, the Soviet Union declared an end to it, dismantled itself, and brought Soviet troops home from East Germany and Eastern Europe.

Interventionism and a new official enemy

That should have resulted in the restoration of America’s limited-government republic, but it didn’t. Having lost its official Cold War enemy, the U.S. national-security establishment found a new one by going into the Middle East and embarking on a killing spree, especially in Iraq, where it killed hundreds of thousands of people from 1991 through 2003. The victims including Iraqi children, hundreds of thousands of them. When US Ambassador to the UN under the Bill Clinton regime, Madeleine Albright, was asked by “Sixty Minutes” whether the deaths of half-a-million Iraqi children were “worth it,” she responded that while the issue was a hard one, the deaths were in fact “worth it.” By “it,” she meant regime change in Iraq.

Not surprisingly, the U.S. mass killing of Iraqis, along with its decision to station U.S. troops near the Muslim religion’s holiest lands, along with the unconditional military support of the Israeli government, led to terrorist retaliation, beginning with the 1993 attack on the World Trade Center, the attack on the USS Cole, the attacks on the U.S. embassies in East Africa, and then the 9/11 attacks.

The 9/11 attacks then led to the invasions of Afghanistan and Iraq, followed by the interventions in Syria, Libya, Yemen, and elsewhere, which necessarily entailed a fortification and strengthening of America’s national-security state form of governmental structure. They also led to the Patriot Act, which eviscerated the Fourth Amendment as well as to a formalized assassination program, including the power to assassinate Americans … to torture people, including Americans … to indefinitely detain American citizens and others as “enemy combatants” in the forever “war on terrorism” … to conduct secretive surveillance schemes over the American people and others … and to conduct intrusive searches at airports through the TSA … to impose more deadly sanctions and embargoes on foreign citizens … and to initate more coups and other regime-change operations.

It all adds up to the destruction of American liberty. There is only one way to get our freedom back: the dismantling of the national-security state and the restoration of a limited-government republic.

Chinese auto sales continue to plunge deeper into recession, with the country’s China Passenger Car Association releasing preliminary data for August that in no way indicates that the trend could be slowing. 

Instead, it has been a “historically prolonged slump” for the world’s largest car market, according to Bloomberg. 

The CPCA reported on Monday that sales of sedans, SUVs, minivans and multipurpose vehicles in August fell 9.9% to 1.59 million units. 

It has been the industry’s largest downturn in three decades and automakers are still facing headwinds as trade tensions with the U.S. continue. China has tried to roll out several stimulus measures to help the industry, including loosening car purchase restrictions, but they have done little to encourage consumption thus far. 

Preliminary data from MarkLines on Japanese automakers selling in China shows Nissan and Honda posting 2.0% and 5.9% gains, respectively, while Toyota sales fell 3.8% and Mazda sales suffered the largest blow, down 20.7%. We will revisit this data toward the middle of the month, when it is updated to include additional manufacturers from around the globe. 

Top Chinese SUV maker Great Wall Motor Co. saw its first half profit lower by an astounding 59% and SAIC Motor Corp., China’s biggest automaker, also cut its sales forecast recently and predicted its first annual sales decline in at least 14 years. Geely Automobile Holdings Ltd. saw sales fall 19% in August. 

Finalized data from July shows that Japanese sales led the charge, posting an 11.2% gain, while Chinese brands, American brands and French brands all fell by double digits. 

For July, three of the top 4 best selling models in China were manufactured by VW, who made up 5 of the 10 best selling models in the country. Toyota, Haval, Honda and Nissan also edged their way into the top 10 list of models sold. 

Exports from China in July also fell significantly:

Overall vehicle exports in July totaled 81,000 units, reflecting a 15.5% m/m decrease and a 14% y/y decline. Passenger car exports totaled 60,000 units, reflecting a 12.5% m/m decrease and a 12.9% y/y decline. Commercial vehicle exports totaled 21,000 units, reflecting a 23.1% m/m decrease and a 17% y/y decline.

And while China continues its struggles, other large markets, like India, are also tumbling. India posted a 41% sales drop for automobiles in August, the largest such drop on record. U.S. automakers eeked out a slight rebound in sales, but were helped along by the Labor Day weekend partially falling in August. 

We will update this post as more data from August becomes available.

Authored by Matthew Ehret via The Strategic Culture Foundation,

Recently, the Japanese government announced that they will be shutting down the remaining 7 nuclear reactors at the Daiichi plant that was hit by a major earthquake and tsunami in 2011. This will bring the total number of nuclear reactors down to 33 (compared to 54 in 2011), only 7 of which are in active operation at any given time. Contrary to popular belief, this is not a good thing.

Since the tsunami hit on April 11, 2011 killing 18 000 civilians, there has been a tendency to refer to the event falsely as “Japan’s nuclear crisis”. The fear that has spread across the world resulted in one of the most devastating attacks on sovereign nations which could have only been executed had we done this to ourselves.

Japan – a nation which became the world’s 3rd largest economy due largely to its commitment to advanced scientific and technological progress and early embrace of nuclear power, has lost much of the energy self-sufficiency it once enjoyed when 25% of its electricity came from nuclear which today has fallen to 3%. Since the shutdown Japan has been forced to massively increase its imports of oil, natural gas and coal bringing in 9 million barrels/day and building 45 new coal plants. This dependency has not only subject it to the whims of the speculative markets, but also to the uncertain stability of the Middle East oil production.

Due to the hysteria unleashed in the wake of Fukushima, Germany was quick to follow the fear wave and declared that its full exit from nuclear by 2022 causing it to vastly increase its imports of fossil fuel from Russia, the Netherlands and USA (and ironically nuclear energy imports from France whose use of nuclear amounts to 70% of its energy basket). Once shut down in 2022, Germany will lose 22GW (or 11% of total capacity).

The fact is that to this day, not one Fukushima death is traceable to radiation exposure. While a meltdown did strike three of the ten reactors in the Daiichi complex, those which suffered damages used outdated technology and cut corners in safety standards such that no coolants were available once electricity was lost after the 8.9 earthquake struck. Those deaths which did occur in the aftermath, had more to do with heart attacks caused by the vast fear-driven evacuation of 160 000 citizens from towns across the coast of Japan- many of which remain abandoned to this day as 100 000 are still considered “nuclear refugees”. After extensive testing, the WHO found radiation levels of evacuees to be undetectable… a fact which has done little to reverse the deeply embedded fears within the Japanese zeitgeist.

The Positive Effects of Low Dose Radiation

Just to put it into perspective, nuclear testing in the 1950s and 1960s put over 100 times the radioactive waste into the atmosphere and oceans than what was released in Fukushima. In Utah, radiation in the 1950s and 1960s were also well over 100 times greater than the worst of Fukushima due to atomic bomb testing, but the state has enjoyed the lowest rates of cancer across America for over 60 years. Also of note, scientists studying A-Bomb survivors who received ionizing radiation in WWII were surprised to discover abnormally long life spans and low rates of cancer.

Today, in spite of the craze to ban Japanese tuna and other seafood from western markets for years, the actual radiation levels are far below the 1200 becquerel limit set by FDA standards and one would get larger doses of radiation by eating a banana or flying in an airplane. Believe it or not, but the Potassium-40 of an average banana releases 3000 beta decays/second and is deemed very good for living tissue and is known as “Low Dose Radiation” which is found in all bio-organic life and natural background radiation from food, the soil and sky.

The Fallacy of Decarbonisation

For those in Japan and Germany celebrating that the exit from nuclear is providing an opportunity to embrace solar and wind energy, a sad slap of reality has also occurred. Not only have energy costs skyrocketed wherever green energies been built, but the toxic waste caused by those photovoltaic cells far outpaces anything produced by the dirtiest nuclear reactor.

In 2017, the Japanese Ministry of the Environment issued the warning that by 2040, Japan would accumulate over 800 000 tons of solar panel waste with no means of disposal- which is 300 times greater than nuclear power. Solar panels have life expectancies of 25 years, after which their disposal becomes nearly impossible as they contain similar heavy metals and toxins as is found in computers and cell phones. They also contain vast toxic metals such as lead and carcinogens such as cadmium.

Disproving the very definition of “renewable energy”, wind mills (which are as tall as a Boing 747) cannot produce the energy density to melt the steel and produce the material needed to build a windmill.

Germany’s celebrated de-carbonisation scheme has resulted in a total failure with no carbon reduction after a 10 year effort, sky rocketing energy prices and a vast destruction of ecosystems. The think tank Frontier Center recently wrote of Germany’s energy debacle:

“Construction of solar and wind “farms” has already caused massive devastation to Germany’s wildlife habitats, farmlands, ancient forests and historic villages. Even today, the northern part of Germany looks like a single enormous wind farm. Multiplying today’s wind power capacity by a factor 10 or 15 means a 200 meter high (650 foot tall) turbine must be installed every 1.5 km (every mile) across the entire country, within cities, on land, on mountains and in water.”

Radioactivity is Natural!

The idea that radiation is deadly has been spread by a Malthusian lobby which has pushed the absurd notion that ALL doses of radiation are deadly under the theory of the Linear No-Threashold Model (LNT) which was adopted as a standard of medicine in 1959. This LNT hypothesis asserts without evidence that if a lot of radiation will kill you 100% of the time, a fraction of that dose will kill you a fraction of the time… which is equivalent to saying that if drinking 100 liters of water will kill you 100% of the time, drinking 1 liter of water will kill you 1% of the time.

Nicholas Fisher, a nuclear expert at Stony Brook University in New York responded to the fear mongering by reminding his readers that “we live on a radioactive planet in a radioactive universe. All life has evolved in the presence of natural radioactivity.”

Without that natural radiation emitted by stars, supernova, earth’s soil, cosmic radiation etc, then our very cellular functions break down and we get sick. This was demonstrated in tests conducted on lab rats in the 1990s which were isolated from natural background radiation, including in their food. People with arthritis and cancers have been recorded for generations to receive great benefits by soaking their bodies in radiation-rich mineral waters in Ukraine or the radioactive black soil beaches of Brazil proving that low dose radiation is beneficial for life. Another surprising 2010 study proving the benefits of radiation followed 250 000 nuclear workers found a much lower rate of cancer mortality relative to control groups.

Fear of radiation is a fraud pushed by a Malthusian lobby whose goal has been to dismantle the sovereign nation state by getting its victims to undermine their own basis of existence. This is the realization of the Trilateral Commission policy announced by Federal Reserve Chairman Paul Volcker who called for a “controlled disintegration” of industrial civilization in 1978. This is the program of Maurice Strong as he decapitated Canada’s nuclear program in the 1990s and called for the collapse of industrial civilization. This is the policy which is at the heart of the Green New Deal being spread by London bankers like Mark Carney and Prince Charles which is really just another name for de-population.

This is the program which China and Russia have rejected under the emerging global framework of the Belt and Road Initiative. China is planning to triple its nuclear sector by 2032 to power its vast growth program and Russia’s ambitious nuclear energy program is tied directly to Putin’s recent decision to challenge the Liberal Malthusian order by name. Any nation committed to raising the living standards and productive powers of its people cannot tolerate a de-carbonization or de-nuclearization plan for even a minute.

To the chagrin of the largest Silicon Valley tech giants and President Trump, EU anti-trust enforcer Margrethe Vestager will hold on to her position for another 5-year term under incoming European Commission President Ursula von der Leyen, the FT reports.

The return of Vestager will almost certainly infuriate Washington, which has accused her of trying to hamper American firms’ ability to do business in Europe.

President Trump famously dubbed Vestager the “tax lady” and accused the Dane back in June of ‘hating the US’ during an interview with Fox Business.

During her first term, Vestager made a name for herself by pursuing high-profile crackdowns on US tech firms, including her multiple record fines for Google and her push for the Irish government to claw back taxes from Apple.

Margrethe Vestager

And over the next five years, Vestager will see her remit broadly expanded. In addition to covering all things anti-trust and anti-competitive, Vestager will also oversee Brussels’ digital policy in her additional role as executive vice-president of the new European Commission, not long after Europe published stringent user-privacy regulations known as the GDPR.

Von der Leyen said Vestager’s expanded portfolio of digital and competition issues was a “perfect combination.”

“There is a huge field in front of her. The only aspect that matters on portfolios is quality and experience. Margrethe Vestager has done an outstanding job as a commissioner for competition,” she added.

On Tuesday, von der Leyen announced the names of her 27-strong team, Reuters reports. She emphasized Europe’s leadership in combating climate change – including passing its own “Green Deal”, while combating technological threats and responding to a “growing unease” among younger Europeans. The incoming EC president emphasized that her team would take on critical “geopolitical” issues, suggesting that the European Commission will be playing a greater role in world affairs, whether the world likes it or not.

“We will take bold action against climate change, build our partnership with the United States, define our relations with a more self-assertive China and be a reliable neighbor, for example to Africa,” she said.

In addition to Vestager, one of the other bold-faced names to join von der Leyen is Ireland’s Phil Hogan, who will be the Commission’s point-person on trade. This will eventually involve negotiating new trade pacts with the EU, and possibly the US if President Trump decides to slap auto tariffs on the Continent.

Ursula von der Leyen

Former Italian Prime Minsiter Paolo Gentiloni will serve as the commissioner in charge of the economy at a time when Europe is on the cusp of sliding into a recession, and as Germany reportedly contemplates introducing a “shadow budget” that could unleash badly needed fiscal stimulus.

However, Gentiloni could soon find himself in an awkward position as he and former Latvian Prime Minister Valdis Dombrovskis will be tasked with maintaining economic discipline throughout the bloc, including with the Continent’s third-largest economy, Italy. Though Matteo Salvini and his League party have been ousted from Italy’s ruling coalition, the lefti-wing anti-establishment Five Star Movement could still seek to expand Italy’s budget deficit beyond what the European Unions guidelines will allow.

SJWs will appreciate the fact that von der Leyen’s team is roughly gender balanced, with 13 women and 14 men. Though perhaps she could have offered even more balance by including one or two officials who reject the gender binary.

Authored by Pepe Escobar via The Saker blog,

This is the last of a three-part series from a world exclusive interview with Lula, the former Brazilian president, who remains in jail.

Lula on fights with Hillary, talks with Ahmadinejad, Obama “good but nervous and too young”…

Brazil’s President Luiz Inacio Lula da Silva, left, with Iran’s President Mahmoud Ahmadinejad, center, and Turkish PM Recep Tayyip Erdogan celebrate the signing of a nuclear fuel swap deal in Tehran in May 2010. Photo: AFP / Wilson Pedrosa / Agenciia Estado

As we advanced past the first hour of a historic interview – see here and here – at a Federal Police building in Curitiba, southern Brazil, where Lula has been incarcerated for over 500 days as part of the lawfare endgame in a complex coup, former president Luiz Inacio Lula da Silva was on a roll.

“Let me tell you about Iran.”

He felt relaxed enough to start telling stories of political negotiation at the highest level. He had already set the context. Nuggets abounded – especially focusing on the sometimes rocky relationship between Brasilia and Washington. Here are only three examples:

1) On the overall relationship with the US:

“People think that I’m angry at the Americans. On the contrary, we had a very healthy political relationship with the US, and that should be the case for Brazil. But to be subservient, never.”

2) On dealing with George W. Bush, Barack Obama and Hillary Clinton:

“Bush accepted ideas with more fluidity than Obama. Obama was much tougher with Brazil. I’m certain that Hillary Clinton does not like Latin America, and she didn’t like Brazil. I had two big fights with her, one in a meeting in Trinidad-Tobago and another in Copenhagen [at the climate conference COP-15]. She arrived late, bossing everyone around. I said, ‘Lady, hang on. Wait for your turn. I’ve been here for three days.’ The petulance and arrogance of the Americans disturbs me, even if I think that the United States is always an important nation, and we should always maintain a good relationship.”

“Our main political gesture was Dilma [Rousseff, then the Brazilian president] traveling to the US, but Obama, it seems to me, had very little influence.”

“It was fantastic, Obama’s capacity to deliver beautiful speeches, but the next day nothing happened, nothing, nothing. I think the United States was too big for Obama, he was too young, too inexperienced.”

“And you know that the US State Department is very powerful…. I think Obama was a good man. When I went to visit him the first time … I left with a lingering doubt: there was no one remotely similar to him in the meeting. I said to myself, ‘This guy has no one matching him here.’ And in our conversation, I said, ‘Obama, you may be the President of the United States who has the greatest possibility to effect change in this country. Because you only need to have the audacity that black people had to vote for you. The people have already granted you the audacity. Make the best of it.’

But then, nothing much happened.”

3) On hybrid war:

“We tried to organize intelligence in the Air Force, the Navy, along with Federal Police intel, but among them there were some pretty serious fights. Whoever has intel has power, so no one wants to relay information to the competitor….  I imagined that after it was clear [from Edward Snowden’s revelations about National Security Agency surveillance] that … the United States was investigating Brazil … I imagined we would have a tougher position, maybe talking to the Russians and the Chinese, to create another system of protection. “

And that would set the scene for the inside story of the first Iran nuclear deal, clinched in Tehran in 2010 by Iran, Brazil and Turkey, and centered on a nuclear fuel swap, years before the Joint Comprehensive Plan of Action reached in Vienna in 2015 by the five permanent members of the UN Security Council, plus Germany.

History will register that as Donald Trump smashed the JCPOA, Hillary Clinton scotched the original deal less than 24 hours after it was clinched, calling instead for a new round of sanctions against Iran at the UN Security Council.

This is how I reported it for Asia Times. Lula, in early 2010, had already told Hillary in person it was not “prudent to push Iran against the wall.”

So what really happened in Tehran?

Meeting Khamenei, Ahmadinejad

“I was in New York. And [then Iranian President Mahmoud] Ahmadinejad didn’t like me. He showed respect, but his preferential relationship here in the continent was with [Bolivian President] Evo Morales and my friend [Venezuela’s Hugo] Chavez… Then one day in New York, I decided to talk to Ahmadinejad, because he had said it was a lie that six million Jews had died. And then I said, ‘Look, Ahmadinejad, I came here because I wanted to know if it’s true that you said that the Jews want to be heroes because they died in the war. I wanna tell you something: The Jews did not die in the war. The Jews were victims of a genocide. They were not soldiers fighting. They were free men, women and children who were taken to concentration camps and killed, that’s different.’

“He said, ‘I know,’ and I said, ‘If you know, tell it to everyone, it’s not possible to deny that six million people were killed.’ … Well, during this conversation I said, ‘I’d like to go to Tehran to talk to you about the nuclear bomb. What do I want from you? I want you to have the same right that Brazil has. Brazil enriches uranium for scientific and peaceful purposes. I want you to do enrichment the same way as Brazil. But if there’s an atomic bomb, I’m against it.’

Iran’s religious leader Ayatollah Ali Khamenei speaks in Tehran on February 2019. Photo: AFP / Anadolu / Religious Leader’s Press Office

“Then I sent [Foreign Minister] Celso Amorim ahead, a few times. We cultivated a relationship with Turkey. It was something very funny. I met the great Ayatollah Khamenei, I had a meeting with him, I think he fell in love with me because I told him my life story. When I told him that I ate bread for the first time when I was seven years old, I thought, ‘I think I won this guy.’ He lavished extraordinary attention on us. We talked for over two hours. Then I left Khamenei and went to talk to the president of their congress; he looked like a czar. Then I went to dinner with Ahmadinejad, while Celso Amorim was negotiating with their prime minister.

“Ahmadinejad was not getting to the point, and I said, ‘Let me tell you something.’ And we had two interpreters: one who translated him into English, and Celso, who translated from English to me. I said, ‘You know that I’m here being bashed by the Americans. Hillary Clinton called the Emir of Qatar to tell me that I could not come, to tell me that I would be fooled. When I arrived in Moscow, [then-president Dmitri Medvedev said, ‘Hillary called, asking me to tell you not to go [because] the Iranians are liars.’ There was even a media joke: They were asking about the chance of a deal. Medvedev said ‘10%,’ and I said ‘99% – we are going there and we are going to do it.’

Obama nervous

“Then I arrived, I was sitting down with Ahmadinejad, and I said, ‘Hey, little guy [laughs], you know that I’m here, I’m losing my friends. Obama is nervous with me – Obama was the most nervous among them all, Angela Merkel does not want me to be here. The only one more or less favorable was [then-French president Nicholas] Sarkozy, and I came here because I think Iran is a very important country, not only from the point of view of your population but from the point of view of your culture. And I want Iran not to suffer the consequences of an embargo because an embargo is worse than war. In war, you kill soldiers. With an embargo you kill children, you kill people with serious illnesses.’

“It was already 10pm at night and I said, ‘I’m not leaving here without a deal.’ Up to this moment, there was no chance of a deal. Around midnight I was discussing things with my aides at the hotel. I was even imagining the headlines in Brazil, against my trip. Then Celso arrived at one in the morning and said, ‘There’ll be a deal.’

“Then we went there the next day, lots of talking, there was this guy who was an aide to Ahmadinejad and was always whispering in his ear, and Ahmadinejad demanded to change a word. So I told him, ‘Damn, get this guy outta here. Every time he comes here you change your mind.’ Then he said, ‘Lula, can we make a deal without signing it?’ And I said, ‘Nah…. Do you know what Sarkozy thinks about you? Do you know what Obama thinks about you? Do you know what Angela Merkel thinks about you? They all think Iranians are liars. So, in Brazil, we’ve got a thing called ‘black on white’. You gotta sign.’ So he agreed. We signed, Brazil, him [Iran] and Turkey.

Lula and US President Barack Obama, on left, meet with other leaders in Copenhagen in December 2009 at the COP15 Climate Conference. Photo: AFP

No talk, no deal

“I imagined I would be invited to the White House, or to Berlin by Angela Merkel…. So imagine my surprise when they were so nervous. You know that kid that goes to school, gets an ‘A,’ tells his mother and the mother thinks it’s a bad thing? I think they were pissed because Brazil could not possibly have achieved what they did not. They started to diss us, so what did I do? I took a letter that comrade Obama had sent, saying what would be good for the United States. And the Reuters news agency released Obama’s letter. And the letter was the same thing as the deal we clinched.

“It happened that Mrs. Hillary didn’t know about Obama’s letter…. Later, I was at a G-20 meeting, I approached Angela Merkel and said, ‘Have you talked to Ahmadinejad?’ I talked to Sarzoky, said, ‘Have you talked to Ahmadinejad?’ No. Approached Obama, said, ‘Have you talked to Ahmadinejad?’ ‘No.’ ‘Damn, how come you want a deal, but you don’t talk? You subcontract the negotiation? Then I understood that the world in the past had had leadership much, much more competent, left and right, people who knew how to discuss foreign policy.”

After hearing this story I asked Lula – the ultimate instinctive politician – if he felt Obama had stabbed him in the back: “No,” he replied. “I think, have you ever received a gift you didn’t know how to put it together?”

If Elizabeth Warren were to succeed in winning the Democratic nomination, then improbably go on to defeat President Trump in the general election, the wealthiest Americans could collectively lose hundreds of billions of dollars to her “wealth tax” over a span of decades.

Two French economists recently published their calculations in a paper where they gamed out the impact of Warren’s wealth tax on the top 15 richest Americans. They found that these families would have seen their net worth decline by more than half to $453.9 billion, had Warren’s plan been in place since 1982.

The paper was published by Cal Berkeley professors Emmanuel Saez and Gabriel Zucman.

Though their paper relies on some assumptions, its findings raise some interesting questions ahead of Thursday’s debate among Democratic Party presidential contenders, as the country debates what should be done to address yawning income and wealth inequality, according to Bloomberg.

To be sure, the authors calculations also don’t take into account any steps billionaires might take to reduce their exposure to the tax, including saving less or giving more money.

Over the time frame explored by the study, Amazon founder Jeff Bezos’ $160 billion fortune (before his divorce settlement) would have been reduced to $86.8 billion.

Meanwhile, Microsoft Corp. founder Bill Gates would have seen his $97 billion fortune shrink to just $36.4 billion.

The economists’ calculations show how a wealth tax of just a few percentage points might erode individual fortunes over time.

Of course, billionaires of more recent vintage would experience smaller declines in net worth because they would have been subject to the tax for shorter periods of time.

Warren has proposed that the wealthiest 75,000 households pay an annual tax of 2% on each dollar of their net worth above $50 million. This sum would rise to 3% on every dollar above $1 billion. Warren insists this would combat rising wealth inequality.

Critics claim that the tax would be difficult to administer and easy to avoid.

The two economists used figures tabulated by Forbes Magazine to establish individuals’ net worth.

Authored by Tom Luongo,

Donald Trump finally fired National Security Adviser and all-around disgraceful human being John Bolton.

Good riddance.

Bolton was a diversity hire by Trump. His allegiance to the Israeli Firsters who helped get Trump into power, namely Sheldon Adelson, got him the job.

The strongest Iran hawk in Washington in the wake of John McCain’s brain tumor valiantly giving up its life to end McCain’s, Bolton’s role was to keep Trump on program delivering maximum force and intimidation to everyone who so much as looked sideways at the U.S.

He was the proxy in the White House for liar and war criminal, Benjamin Netanyahu.

The turning point was Trump’s refusal to take Bolton’s bait to retaliate against Iran for shooting down the Global Hawk Drone back in June.

After the incident I asked the question, “Who Survives the Iran Counter-Offensive?” I expected then that one of Bolton, Mike “The Buffet Line” Pompeo at State or Gina “Miss Rendition” Haspel at CIA to be fired within six to eight weeks.

It took Trump eleven.

And he did this…

… Because the implications here are that he is being boxed in on all sides by his administration and his allies — the Saudis, Israelis and the UAE — and frogmarched to a war he doesn’t want.

He wants Iran to heel but he doesn’t know how to go about it.
That Iran then chose the next day to openly declare that they were not confused or misled and knew exactly what they were doing puts Trump in an even worse position.

Because an unmanned drone, as he said in his futile tweetstorm, is not worth going to war over, especially one whose position in in dispute.

And everyone knows it. Europe wouldn’t condemn Iran here. No one did. Only the U.S. And that silence is deafening as Pompeo, Bolton and Haspel again over-extend themselves.

We are downstream of this event in a way that has forced Trump to realize he’s put thousands of U.S. troops at risk across multiple deployment zones.

And the final straw was apparently Bolton working to scuttle Trump’s talks with the Taliban at Camp David to end the Afghanistan War. I’ll bet good money Bolton leaked this to the press to humiliate Trump because there can be no war on Iran without full U.S. presence in Afghanistan.

Ultimately we are here because Netanyahu will not accept Trump’s passivity here. Since that day Netanyahu has:

• Openly bombed Iraqi militias putting the U.S.’s invitation there at risk and Iran-backed retaliation against U.S. troops on the table.

• Attempted to assassinate Hezbollah personnel in Beirut only to have his drones captured and his border troops killed in retaliation.

• Bombed Syrian Army positions in and around Damascus

• pledged to annex the Valley of Jordan publicly likely without Trump’s approval.

Bolton was a key voice in that policy of embargo and death.

Armchair bullies like Trump and Bolton are a dime a dozen in D.C. And from them spews the most disgusting jingoism to justify murder, starvation, privation and corruption.

For the eighteen months Bolton was in the White House the Trump administration has been worse than a laughing stock the world over. From the Bay of Fat Pigs failed coup in Venezuela to the pathetic detaining of the Grace One oil tanker in Gibraltar no act of statecraft was beneath this gang of thugs.

And psychopaths like Bolton have nothing but contempt for the people he says he’s trying to liberate. Only the stick works in John Bolton’s world, here must not be any carrots.

Because if he had one ounce of sympathy for Venezuelans struggling under Nicolas Maduro, Syrians under Bashar al-Assad or Iranians under the Mullahs he wouldn’t be starving them through sanctions and embargo but enriching them through trade and commerce.

And since Trump himself is both a bully and a liar, as Chinese Premier Xi Jinping now fully believes, he and Bolton, I’m sure, got along famously at first with John telling Don how great all of these policies will be.

Big wins. Yuge.

Bolton was brought on board along with Pompeo to toughen up Trump’s team to pressure Iran and the rest of Israel’s enemies across the Shia Crescent. He would cow China into helping Trump bring North Korea in from the nuclear cold.

Russian President Vladimir Putin would give up Crimea and the breakaway republics of the Donbass. Then Putin would give up his hypersonic missiles.

Instead Putin offered to sell them to Trump to level the playing field.

Honestly, that story leaking may have been the final indignation for Trump, for whom image is everything. The embarrassment of Putin’s offer in front of the other G-20 members had to gall him to the core.

This is what Bolton and the Neocons have done for Trump’s presidency, reduced it to a clown show where no one listens to the American President anymore because he’s irrelevant.

But the maximum pressure policy has done none of these things save make Trump look like an unstable lunatic and strengthen the resolve of the U.S.’s opposition.

The INF Treaty is dead. The START 2 Treaty in jeopardy.

The Shia Crescent is closer to completion than at any point in recent memory. Only the holdout annoyances of U.S. troops at Al-Tanf and near Deir Ezzor is stopping that now.

Once the Al-Bukamai border crossing between Syria and Iraq is secure and opened publicly the point of the U.S. presence east of the Euphrates River will be moot.

Trump’s foreign policy ideas are at least twenty years out of date. He’s spouted the same nonsensical effluvia about China at least that long. And it didn’t matter if the timing of his Presidency was wrong, if the world had moved to a state incompatible with his ideas, he would them out anyway.

Because a tiger doesn’t change his stripes. Personnel is policy in D.C. and every other national capitol in the world.

Bolton was the height of the neoconservative ethos; an academic with no real world experience, daddy issues and a knack for getting close to the most influential people in the world to warp policy to their Trotskyite goals of permanent revolution.

Now, thankfully, he’s out of a job. Next up has to be Haspel at the CIA as well as Mike Pompeo. These people are a stain on the U.S. They diminish not only Trump, who doesn’t apparently need any help in this regard, but all of us as Americans.

It’s clear Trump made this move for re-election purposes. Bolton was a liability. If more heads don’t roll after three years of foreign policy blunders of epic proportions Trump’s second term will look just like his first, a shambolic mess long on bravado and short on consistency.

*  *  *

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President Trump has ordered White House officials to crack down on homelessness in California according to an anonymously-sourced Tuesday report in the Washington Post. 

#1 on the list appears to be Los Angeles’s infamous “skid row,” where vagrants will be moved into government-backed facilities. Trump is said to be actively involved in the effort, which is currently under discussion by the Department of Housing and Urban Development, the Domestic Policy Council, and the Department of Health and Human Services. 

One official cited the need to take action due to the “rampant diseases” and sewage problems (a.k.a. so much feces that San Franciscso pays ‘poop patrollers’ $185,000 per year to keep up with their shitty situation). 

Among the ideas under consideration is razing existing tent camps for the homeless, creating new temporary facilities, or refurbishing existing government facilities, two officials said. The officials spoke on the condition of anonymity because the planning hasn’t been publicly revealed. The changes would give the federal government a larger role in supervising housing and health care for residents.

The Post notes that “the talks are fluid and concrete plans had not been reached.”  

Given Trump’s recent comments on the “disgrace to our country” of homelessness, along with the “rat and rodent infested” city of Baltimore (represented by House Oversight Committee Chairman Rep. Elijah Cummings (D) – who’s investigating Trump in several matters), it stands to reason that dinging Democrats for their disastrously run sanctuary utopias will be a key focus going into the 2020 election. 

In early July, Trump told Fox News host Tucker Carlson that his administration “may intercede” in cities like New York, San Francisco and Los Angeles. 

“You can’t have what’s happening — where police officers are getting sick just by walking the beat.  I mean, they’re getting actually very sick, where people are getting sick, where the people living there living in hell, too,” said Trump. “We cannot ruin our cities.  And you have people that work in those cities. They work in office buildings and to get into the building, they have to walk through a scene that nobody would have believed possible three years ago.”

And in a late July tweet, the president slammed Democrats for wasting time on “the Witch Hunt Hoax” instead of “focusing on our Country!”

Speaking of failing badly, has anyone seen what is happening to Nancy Pelosi’s district in San Francisco. It is not even recognizeable lately. Something must be done before it is too late. The Dems should stop wasting time on the Witch Hunt Hoax and start focusing on our Country!

— Donald J. Trump (@realDonaldTrump) July 28, 2019

According to White House spokesman Judd Deere, Trump signed a June executive order governing the regulation of affordable housing, while his administration has been drawing up plans to deal with homelessness across the country. 

Trump’s executive order created a new White House council on eliminating “regulatory barriers” increasing the cost of building new housing, a move aimed at expanding the housing supply and driving down prices.

“Like many Americans, the President has taken notice of the homelessness crisis, particularly in cities and states where the liberal policies are combining to dramatically increase poverty and public health risks,” said Deere. “President Trump has directed his team to go further and develop a range of policy options for consideration to deal with this tragedy.“

Meanwhile, Los Angeles Mayor Eric Garcetti aide Breelyn Pete told Politico that a “very large delegation” of Trump administration officials were in town to discuss the matter. 

The number of homeless families in California has skyrocketed in recent years by at least 25%, according to David Garcia, policy director at the Terner Center for Housing Innovation at the University of California, Berkeley, who told the Post “Generally speaking, all the major cities have seen incredible increases. It’s a crisis.“

That said, Garcia also slammed Trump for adding to the homelessnes problem by “tightening immigrants’ eligibility for federal assistance,” which puts more families on the streets. 

California also lacks a “right to shelter” law that in other states gives homeless people temporary shelters, meaning a large percentage of California’s homeless population ends up sleeping on the street or in their vehicles, according to Diane Yentel, president and CEO of the National Low Income Housing Coalition, a nonprofit group.

Complicating matters, California has enacted a number of restrictive zoning laws that drive up the cost of housing by constraining the state’s supply, she said, although some state lawmakers are pushing to relax those limits.

Skid Row holds about 5,000 homeless people, an 11 percent increase from last year, according to statistics published in September by the Los Angeles Homeless Services Authority. –Washington Post

If the Trump administration’s endeavors prove successful, poop patrollers may be out of a job. 

Authored by Sara Carter via SaraACarter.com,

A bombshell revelation was barely noticed at National Security Advisor Michael Flynn’s hearing Tuesday, when his counsel revealed in court the existence of a Justice Department memo from Jan. 30, 2017 exonerating Flynn of any collusion with Russia.

The memo, which has still not been made available to Flynn’s attorney Sidney Powell, is part of a litany of Brady material she is demanding from prosecutors. The memo is currently under protective order and Powell is working with prosecutors to get it disclosed, SaraACarter.com has learned.

U.S. District Court Judge Emmet G. Sullivan presided over the hearing Tuesday  and set a tentative Dec. 18 sentencing date. He told the prosecution and defense that the sentencing date could be moved depending on the outcome of requests for Brady material requested by Powell and how the case will unfold in the upcoming months. Sullivan also noted during the hearing that the Brady order takes precedence over the plea agreement.

Powell will likely seek to have case dismissed for ‘egregious’ prosecutorial misconduct and withholding of exculpatory material.

“Judge Sullivan is obviously taking the Brady issues very seriously and clearly told the prosecutors that his Brady order stands regardless of the plea agreement or the plea,” Powell told SaraACarter.com.

“If the prosecutors here were seeking justice instead of a conviction, General Flynn would not have been prosecuted. They have been hiding evidence that he was exonerated in early 2017.”

Government Misconduct

Powell noted the extraordinary misconduct of the government during the hearing. She also said that Flynn would have never pleaded guilty if the government had disclosed the Brady materials before the original trial that she is now demanding. There would not have been a plea if the prosecutors had met their Brady obligations, Powell argued before the court.

Powell’s discovery of the memo shatters not only the narrative that was pushed by former Obama Administration officials regarding Flynn but also the ongoing narrative that President Donald Trump’s concern over Flynn’s prosecution amounted to alleged obstruction.

The January, 2017 timeline of the DOJ memo is extremely significant. Former FBI Director James Comey said in previous interviews that he leaked his memos through a friend to be published in the New York Times with the hope of getting a special counsel appointed to investigate Trump for obstruction. In late August, Inspector General Michael Horowitz released his much anticipated report on Comey. It was scathing and revealed that he violated FBI policy when he leaked his memos that described his private conversations with  Trump. However, the DOJ declined to prosecute Comey on Horowitz’s referral.

But the existence of such a memo calls into question Comey’s actions both when he met with Trump privately and when he wrote his personal memos recanting the meetings. If the Jan. 30, 2017 DOJ Flynn memo does exonerate Flynn, then it will call into question Comey’s actions when he had the private meetings with Trump. Why didn’t Comey reveal to Trump that DOJ found no evidence that Flynn was an ‘agent of Russia’ when he met Trump at the White House on Feb. 14 meeting?  Why were the stories about Flynn, along with classified information regarding his phone conversations with the former Russian Ambassador Sergey Kislyak, leaked to the Washington Post in January, with a followup in  early February? Remember, the information was leaked by senior government officials, according to the author and columnist David Ignatius. Ignatius said that senior officials accused Flynn of violating the Logan Act, even worse conspiring with Russia.

Further, new information that former FBI Deputy Director Andrew McCabe advised that there was no Logan Act violation, along with the DOJ internal memo of Jan. 30 that Flynn ‘was not an agent of Russia,’ was enough information for Comey to advise the President that Flynn had been cleared of any wrongdoing.

Instead, Comey claimed obstruction of justice by the President.

Comey’s Memos Vs DOJ Jan. 2017 Flynn Memo 

Comey said in one of his most significant memos chronicling his Feb. 14, 2017 meeting at the Oval Office with Trump, which was the day after Trump had fired Flynn, that Trump asked everyone but Comey to leave the room, and told him he wanted to “talk about Mike Flynn.” Flynn was fired at the time over controversy that arose from a classified information leaked to the Washington Post regarding his conversations by phone in December, 2016 with former Russian Ambassador Sergey Kislyak. The story stated that Flynn had discussed the sanctions with Kislyak. However, Comey later admitted that the FBI agents he sent to interview Flynn didn’t believe he was lying about his conversation with the former ambassador.

According to Comey’s memo Trump said:

 “I hope you can see your way clear to letting this go, to letting Flynn go. He is a good guy. I hope you can let this go.”

Comey suggested that Trump’s request was inappropriate, accusing him of obstructing justice by asking him to drop Flynn’s case. He used this as a pretense to leak his memos and put the nation through more than two years of Robert Mueller’s Special Counsel, which in the end found no evidence of a conspiracy with Russia. As for obstruction, Attorney General William Barr and then Deputy Attorney General Rod Rosenstein concluded that there was no obstruction based on the evidence gathered by Mueller’s team.

However, if Comey would have advised Trump of the Jan. 30 memo it would have cleared up any unfounded lies that Flynn had in any way colluded or conspired with Russia.

If and when this memo is made public, the ongoing narrative continuing to be pushed by those former Obama officials, as well as, House Intelligence Committee Chairman Adam Schiff who continues to push for hearings on obstruction will be squashed.

It looks like Comey, who would have been fully aware of this memo, has a lot of explaining to do.

To those who read, and took heed of, last week’s Quant Insights report by Citi, which cautioned that Price Momentum and Low Beta outperformed while Value underperformed most in August as the equity market turned to risk-off again, that Low Beta (Low Vol) had become the most crowded factor in the U.S. because of its historically high valuation and macro risk exposure, and that Short interest continues to build up in high beta stocks…

… the trade was a no brainer: unwind the best performing YTD strategy, which – as we noted last week – was momentum, and reallocate to value.

To everyone else who did nothing, well… the momo massacre that swept across markets over the past three days has made sure that anyone who had market-beating profits as recently as the start of the month, is now read for the year!

It wasn’t just Citi who saw the divergence: as JPM’s head quant, Marko Kolanovic writes today, the divergence observed last Friday with the record performance gap between small and large companies, was an “all-time extreme“, as JPM’s momentum indicator – a weighted average of 1, 3, 6 and 12M price momentum – of small cap stocks reached its maximal negative reading, while the same indicator for the S&P 500 reached its maximal positive reading.

This divergence, as Kolanovic describes it, “has only occurred on two days in history” and most recently was recorded on one day in February 1999 during the tech bubble.

Of course, as subsequent market action demonstrated vividly, this record gap between value, cyclicals, SMid and high beta stocks on one side, and momentum, low volatility, and growth on the other side was not sustainable, and as shown in the chart below, the market suffered a ~5 standard deviation rally of value vs. momentum yesterday and today.

So what happens next? Or as Kolanovic notes, “many clients are asking how long this rotation can last.” Indeed, if duration and low vol are now effectively one and the same trade, there is a long ways to go, with a non-trivial chance that we end up with the biggest VaR shock in history if the 30Y has yet to catch down to the momo bloodbath.

Before answering that question which suddenly preoccupies anyone who trades real money, Kolanovic reminds us that as discussed recently, the positioning of equity investors is near historical lows, “with global hedge fund equity beta in its 2nd percentile, and equity long-short hedge funds in its 1st percentile.”

And while systematic investors recently dipped their toe into the broader market, their exposure is also low, with CTAs’ equity beta in its ~20nd percentile, and volatility targeting exposure in its ~25th percentile. Meanwhile, volatility has started declining from the August spike and dealers’ index option convexity is now long (further suppressing realized volatility), which suggests that systematic funds will soon be automatically pushed into the market.

As a result, Kolanovic predicts “equity inflows on account of declining volatility” coupled with strong buyback activity over the next ~3 weeks, ahead of the Q3 blackout.

Besides the bullish technicals (mostly in the form of low positioning), the JPM strategist also notes that there are some “positive fundamental developments related to Brexit, Italy, Hong Kong, US economic activity (services), and most importantly negotiations between the US and China that are scheduled for October.”

Yet while one doesn’t have to have a view Regardless of the outcome of these negotiations, there does seem to be a 3-week window in September where the market can move higher from record low positioning. How would an increase of equity positioning look? We first note that while net equity positioning is near lows, gross exposure of hedge funds is very high (for instance, JPM’s Prime Brokerage portfolio shows gross leverage in its 99th percentile since Jan’18). Given record high gross and near record low net exposure, the most likely way to increase exposure is by closing shorts. This is the type of move that we saw yesterday and we think it has a lot of room to continue.

Indeed, as noted earlier, one of the main reasons for the dramatic push higher in stocks today was precisely due to a wholesale lifting of the most shorted stocks…

… which the JPM quant believes may continue, and would push value, cyclicals, high volatility, and small caps to outperform the broad index.

Besides the purely technical reasons, Kolanovic also predicts that a more sustained value and broader market rally beyond the October trade talks is “quite possible” given the recent increase of monetary and fiscal stimulus globally that typically acts with a delay, coupled with the rebound in the China credit impulse. And while manufacturing lags both, JPM now expects that in the coming months manufacturing activity will pick up “given the increased monetary stimulus, providing support for the market and value stocks.” As such, “the October negotiations will be the key for future performance of equity markets and more broadly the global economy”, and a favorable outcome could results in further dramatic mean reversion in the value-momentum divergence.

There is another wild card why Kolanovic is “cautiously optimistic” about progress being made during trade talks, and it has to do with growing fears that the US economy is sliding into a recession, and Trump’s desire to avoid being blamed for one especially with the 2020 elections just around the corner.

As JPM argues, “recent voter polls indicate that 65% of US voters would blame US administration trade policies and Trump directly for market volatility, and 57% would blame Trump if the US were to enter recession.”

These results were confirmed with another poll yesterday indicating similar results. A recession going into election would be politically devastating, and with the time window to the election closing, it would be reasonable to expect some progress on trade. This could give enough time for monetary and fiscal measures to turn around economic activity.

In sum, while the recent violent snapback between value and low beta/momentum stocks is unlikely to persist at the same pace, JPMorgan’s head quant believes that “the value rotation can continue and the broad market could move higher going into October negotiations, and if real progress is made, continue into a more sustained rally.”

This view is based on positioning, record factor spreads (e.g., value vs low volatility), and an unwind of some of the August technical flows in both rates and equities.

That said, just like the market barely dipped as value stocks tumbled due to a great rotation of capital underneath the surface, JPM does not expect a sharp move in the broader S&P, but rather mostly sees upside potential in small caps, cyclicals, value, and Emerging Market stocks.

So if Kolanovic is right, and the value outperformance/quant crash/short squeeze all persist over the next two months, what are the opportunities and how can investors quickly re-balance portfolios towards value? As the quant notes, “one market segment that got hit particularly hard is SMid companies in the energy and material sectors. This segment is at the nexus of selling by low volatility, growth and momentum style investors, shorted by discretionary PMs, and sold by long only investors due to trade war concerns and the strong USD.“

Investors can also go long commodities, for example nat gas, as commodity prices got suppressed by a high level of shorting by CTAs (e.g., near record short interest in natural gas futures), and the unwind could result to tremendous upside (and volatility). As Kolanovic concludes, “normalization of these extreme conditions, and related feedback loops, may create unusually high upside in this market segment.”