Secret Carter Page Surveillance Warrant Documents Released

Carter PageThe FBI believed that former Trump campaign aide Carter Page was an agent of the Russian government working on behalf of the Russian efforts to influence the 2016 presidential election when the agency requested permission to secretly engage in surveillance on him.

The FBI’s warrant requests with the Foreign Intelligence Surveillance Court (FISC) were released over the weekend in heavily redacted form, the result of several Freedom of Information Act lawsuits to get more information.

It is unheard of for secret warrant documents from FISC to be publicly released. One of the court’s purposes is to provide a second branch of governmental oversight over our extremely secretive executive branch foreign surveillance. But the surveillance of Page has become a massive focus of public conflict over whether the FBI’s snooping of people connected to the Trump campaign was legitimate or politically motivated. Democratic and Republican lawmakers have been consumed with either defending or attacking the investigation and the validity of the warrant.

The information released in the warrant is not going to resolve the conflict. Indeed, it appears to be playing out on Twitter and in media discussions exactly the same as it already had been. Critics of President Donald Trump and the administration believe that the warrant shows that the FBI was thoughtful and careful in its requests to FISC and had plenty of valid evidence and concerns above and beyond the controversial “Steele Dossier” that suggested that Russia had compromising information about Trump. For supporters of Trump, the warrant is thin on evidence and heavy on hearsay that Page was doing anything wrong.

Page went on CNN this morning to deny being a Russian agent. He has not yet been charged with any crimes. And Trump, of course, tweeted:

Two responses to those tweets: One, the FBI didn’t submit these warrants until after Page left Trump’s campaign, a detail that gets repeated and repeated but seems to get ignored. Page was not surveilled while he was working for Trump’s campaign. Two, the four judges who approved the warrants were all appointed by Republican presidents.

But if you’re looking for me to tell you whether the warrants were on the level, I’m afraid I don’t have any answers for you, because of that issue of FISC warrants being kept secret. I have no basis of comparison here with other warrants that have come before the court. We don’t really have contextualization to say that the warrant was more or less thorough in making its case than previous warrants.

I will say, though, that the insistence by some that the warrant didn’t have enough to justify surveillance suggests that certain Trump supporters will settle for nothing less than a full smoking gun, which would make the need for surveillance unnecessary in the first place. This was a hunt for evidence based on probable cause, not a full indictment. That there’s uncertainty in the warrant doesn’t invalidate it and it doesn’t necessarily tag it as a “fishing expedition.” The warrant is for the purpose of finding out whether Page was violating the law in the scope of his relationships with Russia. If it turns out he was not, that doesn’t actually mean the warrant was bad or politically motivated. Sometimes investigations show that people are innocent.

It may ultimately mean that the FISC judges are too quick to approve warrants, but that’s a completely separate discussion that we’re probably never going to have because it has nothing to do with Trump and everything to do with how the court operates. And we know that just last year, Trump approved the renewal and expansion of the surveillance powers of the Foreign Intelligence Surveillance Act to be used against American citizens while complaining at the exact same time that he had been snooped on.

That people don’t care about the court outside of Trump’s interests (either shielding or attacking him) is a disappointment, because Page is hardly the only American whose life can be upended on the basis of secret evidence concealed from the public. The release of parts of a FISC warrant should actually be the tip of the iceberg of bringing some more transparency to America’s most secretive court. If trends continue, though, it will remain largely submerged.

Read the FBI warrants here.

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Why Did ‘Russian Agent’ Butina Meet With Obama’s Fed, Treasury Officials In 2015?

Accused Russian spy Maria Butina had far more significant contacts in Washington than previously known – having taken part in April, 2015 meetings between a visiting Russian official and two senior officials at the Treasury Department and Federal Reserve, according to Reuters which sites people familiar with the meetings, as well as a report from a Washington think tank that arranged them.

The two officials were Stanley Fischer, Fed vice chairman at the time, and Nathan Sheets, who was then-Treasury undersecretary for international affairs. 

Fischer, and Israeli-American economist, served as governor of the Bank of Israel from 2005 – 2013 before President Obama nominated him to the Federal Reserve Board of Governors in January, 2014. He resigned in late October for personal reasons.

Sheets, head of Global Macro at Prudential, was formerly the Global Head of International Economics at Citigroup after having spent for 18 years at the Federal Reserve. He was nominated by Obama for his Treasury position in February, 2014.

In April, 2015, Fischer and Sheets met with Butina and Alexander Torshin – then the Russian Central Bank deputy governor, where they participated in separate meetings with Fischer and Sheets to discuss US-Russian economic relations during President Obama’s administration. 

Fischer, an in email to Reuters, confirmed he met with Torshin and his interpreter. While he could not recall details, Fischer said the conversation involved “the state of the Russian economy” and Torshin’s new role as deputy central bank governor.

“I recall Mr. Torshin mentioning, as an aside, that he planned to attend a meeting of the National Rifle Association, a fact that I considered irrelevant to our conversation,” Fischer wrote to Reuters. –Reuters

As a related aside, the recently immune Tony Podesta was paid $170,000 over a 6-month period ending September 2016 to lobby against sanctions handed down by the Obama administration over the 2014 annexation of Crimea, a relationship SunTrust bank would sever ties with Podesta over. 

The meetings between Butina and the Obama-era officials were documented by the Center for the National Interest in a report seen by Reuters, which outlined its Russia-related activites between 2013 and 2015. It describes the meetings as helping bring together “leading figures from the financial institutions of the United States and Russia.”

Butina, 29, was jailed on Wednesday without bail until she stands trial after Department of Justice argued that she has ties to Russian intelligence and is a flight risk. She has pleaded not guilty to charges that she acted as a foreign agent for Russia. 

“Advance the interests”

The top Russian official mentioned in Butina’s indictment matches Torshin, who she traveled with to attend the meetings and serve as his interpreter at various D.C. events. Torshin and Butina are said to have conspired to “advance the interests of the Russian Federation.” 

The Treasury Department in April imposed sanctions on Torshin and a number of other Russian businessmen and government officials in Putin’s inner circle.

The think tank hosted Trump at an event at the Mayflower Hotel in Washington in April 2016 also attended by Sergei Kislyak, Russia’s ambassador to Washington at the time. Two months earlier, the group’s Russian-born CEO, Dimitri Simes, traveled to Moscow, where he met with Putin and other Russian officials, the organization’s records showed.

The April visit came about a year after Obama’s administration imposed sanctions on Russia for its annexation of Ukraine’s Crimea region. –Reuters

Butina is accused of trying to infiltrate the NRA, while also trying to arrange meetings between then-candidate Trump and Russian President Vladimir Putin, according to the DOJ filing. She and Torshin are also accused of participating in a private “off the record” discussion at the Center for the National Interest concerning the “Russian financial situation and its impact on Russian politics,” according to people familiar with the meeting and the think tank’s report – an event moderated by former AIG CEO Maurice “Hank” Greenberg. 

Among the think tank’s board members is David Keene, a former NRA president and former chairman of the American Conservative Union. Keene has previously been photographed alongside Butina at events.

Paul Saunders, the think tank’s executive director, said Torshin spoke at an April 2015 event about the Russian banking system and Butina attended. Saunders said people at the organization cannot recall details of Torshin’s presentation. –Reuters

“We were unaware of any charges or suspicions of illegal or inappropriate conduct or of any connections to Russian intelligence services,” Saunders said in an email.


 

***

According to the charges, investigators found a handwritten note in her apartment that included details about a job offer from the FSB, and allegations that she was in contact with senior Russian intelligence officials.

  • HANDWRITTEN NOTES UNCOVERED BY FBI IN BUTINA’S APARTMENT ASKED ‘HOW TO RESPOND TO FSB OFFER OF EMPLOYMENT?’

Because, apparently unlike every other spy agency in the world, the GRU is the only one known to recruit idiots and to advise its agent to specifically leave incriminating evidence in handwritten notes behind so it can be conveniently discovered by, well, anyone.

Perhaps unsurprisingly given the immense resources at her disposal, Butina has been considered “an extreme flight risk” and prosecutors have asked the judge that she be held through trial.

To help facilitate her cover, Butina had a “personal relationship” with an unnamed 56-year-old American citizen with whom she lived. The individual was identified only as “Person 1”.

And despite this, Butina also offered sex to an unnamed official in a “special interest organization” that she wished to join. The filing also alleges that Alexander Torshin,  a Russian who has had personal contact with members of the Trump family, was Butina’s boss.

Reports of her arrest were initially met with incredulity and confusion while the press largely continued to focus on President Trump’s performance at the Helsinki summit. But this new information is extremely titillating.

And now, we know that Butina operated at much higher levels within D.C. than previously known. 

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3 Urban Legends of Bitcoin Debunked

Authored by Kenny Li via HackerNoon.com,

When I started my first company in the cloud computing space in 2011, much of it was similar to what I see in cryptocurrency today. It’s a seemingly complicated subject that has terms and acronyms that the average person can’t wrap his or her head around, which leads to confusion and misrepresentation. As a result, manipulation and deception thrive on both ends of the spectrum, creating both fear and admiration for this enigmatic topic; at the end of the day, misinformation wins.

Attempt to explain cloud computing or blockchain, and many will realize it’s about as complicated as explaining how the processors in their iPhone generate the display on the screen  –  but therein lies the trick to understanding. With the iPhone, you don’t need to learn the intricacies of semiconductors, ALUs, or binary representations of strings to understand that it provides you value (if you’re actually curious, this explainer video is a good place to start, and then read But How Do It Know). You know that you can take or make calls, send or receive photos, and connect to the Internet to use social media, among other things.

The inside of iPhones  –  most of the space is used to just hold battery power!

The same is said about anything, from aspirin to sleep to Bitcoin; in fact, scientists can’t fully explain why we sleep. But that doesn’t stop you from trying to get eight hours, right? The value you receive from services, objects, or even your own body, can be understood and utilized without needing to fully understanding the underlying mechanisms that enable it. Don’t get me wrong — I’m not saying that you shouldn’t take the plunge and educate yourself on the technical intricacies if you want to — blockchain is a great technology that solves problems that decentralized systems have faced in the past such as trustless consensus.

At the end of the day, though, the value that Bitcoin brings to the table is its potential to replace the current digital currency system with a more efficient and democratized methodology built for a global economy. Yes, replacing. Digital currency already exists.

90% of existing money is only digital  –  i.e., a digital currency. Only $6 trillion, or approximately 10%, of the world’s current money supply is in the form of cash (Sapiens, 2011). So believe it or not, you’re already using digital currency when you swipe your credit or debit card. Bitcoin has the potential to replace the underlying engine that powers the same transactions you make today by being more efficient and entirely trusted  –  ironically, by being trustless. A mom-and-pop coffee shop wouldn’t have to pay VISA $0.25 for a $10 transaction. Wire transfers in and out of the country could happen in minutes to hours, rather than days. Creating new accounts can happen in seconds with privacy, rather than days filling out paperwork and waiting for approval.

With all of this value at hand, though, misinformation continues to permeate conversations about cryptocurrency. Most of these conversations are regurgitation of rumors and claims fortified by incomplete understanding. Three common arguments against Bitcoin I witness are:

  1. Bitcoin is used for illegal activities,

  2. Bitcoin is not backed by anything, and

  3. Bitcoin is unregulated.

First and foremost, let me say this: all three are true. But there is a deeper examination to be had for each to better understand exactly what impact it has on Bitcoin, or what impact Bitcoin has on it.

1. Bitcoin Is Used in Illegal Activities

One of the primary arguments is that Bitcoin is used for illegal activities. There has been many studies done on this behalf, and one of the most recently published research papers is Sex, Drugs, and Bitcoin: How Much Illegal Activity is Financed Through CryptocurrencyIn this paper (published in January 2018). researchers argue that “around $72 billion of illegal activity per year involves bitcoin, which is close to the scale of the US and European markets for illegal drugs.” Considering that the entire market cap of Bitcoin at the end of 2016 was only $14 billion, that speaks volumes (pun intended) to the amount of illegal activity conducted through the cryptocurrency.

There is no doubt that Bitcoin’s early use cases were for obfuscation purposes that suited the needs of the Internet black market. In 2013, the FBI seized the Silk Road (the largest known black market at the time), and as a result, also seized almost 150,000 Bitcoin.

“In recent years (since 2015), the proportion of bitcoin activity associated with illegal trade has declined… [due to] an increase in mainstream and speculative interest in bitcoin.”

– Sex, Drugs, and Bitcoin: How Much Illegal Activity is Financed Through Cryptocurrency?

But there has come an inflection point in the adoption and use of Bitcoin; researchers in the paper point out that “in recent years (since 2015), the proportion of bitcoin activity associated with illegal trade has declined.” While one of the supposed reasons for this transformation argued by the research is “the emergence of alternative cryptocurrencies that are more opaque and better at concealing a user’s activity,” the other one is “an increase in mainstream and speculative interest in bitcoin.”

In other words, as more people are starting to get interested in Bitcoin, the amount of transactions used for illegal activities is declining — the new wave of Bitcoin enthusiasts are embracing the idea of using it for different purposes, whether it is to conduct legal transactions, hold for investments, or other uses.

“The very nature of cash, as opposed to bank deposits, is that it is pretty much untraceable. In practice, the currency in our wallets is only the tip of the monetary iceberg: the vast majority lies beneath the surface of the economy, stashed away in mattresses and warehouses, held overseas or circulating illegally on the black market.”

– We Don’t Need Cash, Let’s Abolish It Outright

On the other hand, on March 24, 2015, economist Ed Conway published an editorial We Don’t Need Cash, Let’s Abolish It Outright. Don’t get confused — the argument for getting rid of cash is applicable only to cold, hard, physical cash. But only 10% of all money exists as cash today; the other 90% already exists as digital currency. In other words, out of the $60 trillion in global circulation, only about $6 trillion of it is in cash (Sapiens, 2011). So if everyone in the world decided to cash out immediately… Well, I recommend you grab some popcorn!

Over 50% of cash in most countries is used to hide transactions…

Anyway, much like Bitcoin, “ the very nature of cash… is that it is pretty much untraceable. In practice, the currency in our wallets is only the tip of the monetary iceberg: the vast majority lies beneath the surface of the economy, stashed away in mattresses and warehouses, held overseas or circulating illegally on the black market” (Conway, 2015).

In the Harvard-published paper entitled Costs and Benefits to Phasing Out Paper Currency, Economist Kenneth Rogoff points out that over 50% of cash in most countries “is used precisely to hide transactions.” The anonymity of paper money, a property inherent in Standard Monetary Theory (Kiyotaki and Wright 1989), is catalyzing the use of physical currency in illicit activities as well. In 2013, (Rogoff, 2014) nearly 78% of cash in circulation in the United States were $100 bills; only 4% of cash was $10 or below. When was the last time law-abiding citizens like you or me used a $100 bill in a transaction?

Although illegal Bitcoin transactions are diminishing with increased adoption and development in the cryptocurrency economy, it seems that cash transactions are becoming increasingly used for the same reasons. It’s become such an issue that “regulators are beginning to collect intelligence on whether households and banks are stockpiling cash, stacking it away on pallets in warehouses behind lock and key” (Conway, 2015).

While research suggests that almost 48% of Bitcoin transactions are used in facilitating illegal activity, the same can be said about cash, where economist Kenneth Rogoff points out that over 50% of cash in most countries is used to hide transactions. With the increased adoption of Bitcoin, the percentage of illegal transactions is falling due to newfound enthusiasm for its use in other activities such as investment; by contrast, cash is becoming more of an issue.

Of course, the amount of illegal transactions occurring through Bitcoin is alarming. The idea that the percentage is diminishing with increased adoption is a good sign. But the reality is that illegal activities and transactions will continue to be fueled regardless of Bitcoin’s existence. The culprit isn’t Bitcoin or cash alone, but both, because they are hard to trace.

Whether or not the privacy of such transactions benefit the economy is an argument of principle and will ultimately boil down to a decision of whether or not the anonymity should be preserved. With criminal use inversely correlated with the recent adoption of Bitcoin, and the emergence of alternative cryptocurrencies specializing in anonymity/privacy, Bitcoin is not required to be an anonymous currency. After all, the paper Sex, Drugs, and Bitcoin: How Much Illegal Activity is Financed Through Cryptocurrency points out that “the emergence of alternative cryptocurrencies that are more opaque and better at concealing a user’s activity” than Bitcoin is.

2. Bitcoin Is Not Backed By Anything

Another common critique of Bitcoin is that it isn’t backed by anything of value. But the current cash system isn’t back by anything, either. In the United States, President Roosevelt eliminated the Gold Standard (having the U.S. dollar backed by gold) in 1933. Even prior to 1933, the existence of the Gold Standard or any other standard for backing currency was little more than a psychological comfort; after all, gold has little practical value.

Do you love Gold because of its conductivity?

Sure, one can argue that gold is conductive and people could use it for circuit boards and stuff, but onecould also argue that paper is flammable and people could use it to heat places up, so therefore cash itself has value and has no need to be backed by gold. Face it, most people won’t mold gold into conductive material for circuit boards just as they won’t burn money to warm up a cold winter. The majority of gold’s value is in its supply and demand. By transitive property, the majority of the value in currencies that were pegged to gold was also in its supply and demand. Therefore, by eliminating the Gold Standard, the United States effectively eliminated the middle man in currency value — transforming it into a pure supply-and-demand game, where the United States can control the supply side.

Bitcoin is also a supply and demand game. Because it isn’t regulated by a single entity, though, there is no control on the supply side, unlike with government-backed currencies. Furthermore, the entire market cap and volume is a grain of sand compared to the beach that is existing currency supply — the current supply of Bitcoin equals to about $100 billion in value, while the total available money in the world (both digital and fiat) is around $60 trillion.

“The sum total of money in the world is about $60 trillion.”

-Sapiens by Yuval Harari

The small total valuation of Bitcoin, combined with the lack of centralized control on the supply side, are two contributing factors (of course, among a plethora of others) to its pricing volatility.

3. Bitcoin Lacks Regulation

Another argument against Bitcoin is that it is unregulated. Whether the lack thereof is an advantage or disadvantage is subjective and quite a matter of heated debate. Because the cryptocurrency world is nascent, though, it provides the world with an opportunity to apply only necessary regulations and policies, resulting in a much more streamlined system.

And it must be done carefully; regulation blankets policies over an entire population, which can leave many citizens victims of circumstance. On March 2018, Donald Trump enacted a trade tariff on China that severely increased the cost of imported steel and aluminum. In response, on April 2018, China enacted its own tariffs on the United States on imports of things like pork, fruit, and steel. Now, the world sits and watches as fears of a potential trade war are slowly inching towards reality. Many fear China’s potential tariffs on U.S. soybeans, which account for 1/3 of soybean sales in the United States.

Steel, pork, fruits and soybeans — so what? Who cares if the U.S. can’t sell soybeans to China anymore? Well, we, as humans, should care. Humanity isn’t a list of social security numbers lined up for their turns at daily eight-hour tasks. Individuals that farm the soybeans, pigs, and fruits, will be directly impacted as potential sales drop as a direct result of the tariffs— and the most impacted individuals are not privy to the decisions made by the figureheads of the nations. These are the same figureheads that currently regulate the existing money system.

Just because something is regulated or has rules doesn’t mean it’s good. It’s similar to receiving a new phone, only to find that it’s already full of bloatware — apps that you have no intentions of using but can’t delete. They only take up space, and at worst, slow your phone down.

With 90% of the world’s current money supply existing as digital currency, the world is slowly phasing out paper money. Bitcoin is a digital currency, and the major difference is that it uses a decentralized methodology that is fairer than the existing system because it does not depend on trust — just logic. Of course, more regulation is needed and will emerge as it becomes more widely adopted. With the right regulation in place, though, it can become a much more efficient and fair currency model than our existing systems.

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Goldilocks On The Rocks: Why Next Week’s GDP Will Be “The Last Best Print”

Authored by Andrew Sheets, Morgan Stanley Chief Cross-Asset Strategist

Next week the US Department of Commerce reports its advance estimate of 2Q GDP. It’s likely to be a whopper. Our US economics team expects it to register at +4.7%, and given the unusually large number of moving parts at work this quarter, a 5-handle is possible. A few days later, the June reading of US PCE could show a slight downtick in core inflation. Robust growth and modest inflation; what could be better?

Try not to get carried away. Amid the inevitable cries of ’Goldilocks’, a more important story lies below the surface. An unusually large number of one-off factors appear to have boosted 2Q GDP, many of which are directly related to escalating trade concerns. As companies and countries race to secure supplies that may become expensive later on, exports have surged and inventories have swelled. If these trends are one-time adjustments (and our economists believe they are), the ‘payback’ in 2H could be significant. Enjoy the 2Q GDP number, which may be the last best print for a while.

2018 has seen a steady increase in trade tensions, and trade actions, between the US and its trading partners. The US slapped tariffs on washing machines and solar panels in January, on steel and aluminum in March, and on US$34 billion of goods from China on July 6. In response to these measures, China and the European Union have announced countervailing tariffs of their own.

For Michael Zezas and our US public policy team, this fits with a narrative of continuing escalation in trade tensions, a trend we expect to persist until it comes up against greater political or market pressure. As we have yet to see either, companies are facing this new backdrop with a familiar mantra: ‘Hope for the best, prepare for the worst’.

At least that’s what Ellen Zentner and our US economics team see when they peel back the US data. As Ellen noted in a recent NYT op-ed, countries have dramatically increased the volume of goods they import from the US, likely with a view towards securing goods before new duties are applied. If you don’t believe us, we’re open to other suggestions on why US soybean exports were up almost 9,400% annualised over the last three months, or why the export of crude and fuel oil surged by 244% over this period.

In aggregate, this ‘stockpiling’ in exports could be responsible for 1.5 percentage points of our 4.7% 2Q GDP estimate.
‘Stockpiling’ also appears to be at work for US companies, albeit to a more limited extent. The inventory build in 2Q is tracking at +US$38 billion, versus a +US$10 billion rate in the prior two quarters. And what’s more interesting is the areas where those inventories are building, which have material overlaps with trade: electrical goods, machinery equipment, motor vehicles and parts.

In total, our US economists see net trade and inventories making up 2.2 percentage points of our 4.7% US GDP estimate, the highest combined contribution since 4Q11. Their concern is that since they are one-off adjustments, both contributions are unsustainable and represent a pull-forward of demand that will need to be given back. US GDP was +4.6% in 4Q11, then averaged +1.6% for the next five quarters.

The latest round of trade tensions may also matter for inflation. Despite all the ink spilled on trade this year, the impact on end prices appears minimal. But this may be set to change. My colleague Guneet Dhingra notes that, so far, tariffs have focused on the components of production, which tend to take time to work their way into final prices. But when tariffs target consumer goods, the impact can be rapid. Remember those tariffs on washing machines? The ‘laundry equipment’ category of CPI is up almost 15% year on year.

Why does this matter? Of the US$34 billion in items targeted in the initial set of China tariffs, 3% were consumer goods. In the next US$200 billion set of proposed items, 33% are consumer goods – a much larger share of a much larger number. And if the tariff list expands to the remaining US$250 billion of Chinese goods, of which 60% are consumer goods, this will result in a more acute impact of incremental tariffs on CPI.

What does this mean for markets? While next week’s print will tempt with a narrative of strong growth and modest inflation, we think that 2H will follow a different storyline, with decelerating growth and rising inflation across major regions. More tactically, we’re also moving out of a July reporting period that has historically been supportive of risk into an August-September stretch that is usually one of the most challenging.

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John Brennan: Melting Down & Covering Up

Authored by Peter Van Buren via The American Conservative,

It isn’t a pretty face, but one scarred from a dark past, repackaged now by the frenzy of “resistance.” Accusing Donald Trump recklessly, implying he knows more than he lets on, promising redemption: John Brennan is the face of American politics in 2018.

But before all that, Brennan lived in a hole about as far down into the deep state as one can dwell while still having eyes that work in the sunlight. He was director of the Central Intelligence Agency. He was Obama’s counterterrorism advisor, helping the president decide who to kill every week, including American citizens. He spent 25 years at the CIA, and helped shape the violent policies of the post-9/11 Bush era. He was a fan of torture and extrajudicial killing to the point that a 2012 profile of him was entitled, “The Seven Deadly Sins of John Brennan.” Another writer called Brennan “the most lethal bureaucrat of all time, or at least since Henry Kissinger.” Today, however, a New York Times puff piece sweeps all that away as a “troubling inheritance.”

On Twitter this week, Brennan cartoonishly declaimed, “Donald Trump’s press conference performance in Helsinki rises to and exceeds the threshold of high crimes and misdemeanors. It was nothing short of treasonous. Not only were Trump’s comments imbecilic, he is wholly in the pocket of Putin.”

Because it is 2018, Brennan was never asked to explain exactly how a press conference exceeds the threshold of high crimes and misdemeanors the Constitution sets for impeachment, nor was he asked to lay a few cards on the table showing what Putin has on Trump. No, Brennan is a man of his times, all bluster and noise, knowing that so long as he says what a significant part of the country apparently believes – that the president of the United States is under the control of the Kremlin – he will never be challenged.

Brennan slithers alongside those like Nancy Pelosi and Cory Booker who said Trump is controlled by Russia, columnists in the New York Times who called him a traitor, an article (which is fast becoming the Zapruder film of Russiagate) in New York Magazine echoing former counterterrorism coordinator Richard Clarke in speculating that Trump met Putin as his handler, and another former intelligence officer warning that “we’re on the cusp of losing the constitutional republic forever.”

Brennan’s bleating has the interesting side effect of directing attention away from who was watching the front door as the Russians walked in to cause what one MSNBC analyst described as a mix of Pearl Harbor and Kristallnacht. During the 2016 election, Brennan was head of the CIA. His evil twin, James Clapper, who also coughs up Trump attacks for nickels these days, was director of national intelligence. James Comey headed the FBI, following Robert Mueller into the job. Yet the noise from that crowd has become so loud as to drown out any questions about where they were when they had the duty to stop the Russians in the first place.

The excuse that “everybody believed Hillary would win” is in itself an example of collusion: things that now rise to treason, if not acts of war, didn’t matter then because Clinton’s victory would sweep them all under the rug. Only after Clinton lost did it become necessary to create a crisis that might yet be inflated (it wasn’t just the Russians, as originally thought, it was Trump working with them) to justify impeachment. Absent that need, Brennan would have disappeared alongside other former CIA directors into academia or the lucrative consulting industry. Instead he’s a public figure with a big mouth because he has to be. That mouth has to cover his ass.

Brennan is part of the whole-of-government effort to overturn the election. Remember how recounts were called for amid (fake) allegations of vote tampering? Constitutional scholars proposed various Hail Mary Electoral College scenarios to unseat Trump. Lawsuits claimed the Emoluments Clause made it illegal for Trump to even assume office. The media set itself the goal of impeaching the president. On cue, leaks poured out implying the Trump campaign worked with the Russian government. It is now a rare day when the top stories are not apocalyptic, rocketed from Raw Story to the Huffington Post to the New York Times. Brennan, meanwhile, fans the media’s flames with a knowing wink that says “You wait and see. Soon it’s Mueller time.”

Yet despite all the hard evidence of treason that only Brennan and his supine journalists seem to see, everyone appears resigned to have a colluding Russian agent running the United States. You’d think it would be urgent to close this case. Instead, Brennan admonishes us to wait out an investigative process that’s been underway now through two administrations.

The IRS, meanwhile, has watched Trump for decades (they’ve seen the tax docs), as have Democratic and Republican opposition researchers, the New Jersey Gaming Commission, and various New York City real estate bodies. Multiple KGB/FSB agents have defected and not said a word. The whole Soviet Union has collapsed since the day that some claim Trump first became a Russian asset. Why haven’t the FBI, CIA, and NSA cottoned to anything in the intervening years? Why are we waiting on Mueller Year Two?

If Trump is under Russian influence, he is the most dangerous man in American history. So why isn’t Washington on fire? Why hasn’t Mueller indicted someone for treason? If this is Pearl Harbor, why is the investigation moving at the pace of a mortgage application? Why is everyone allowing a Russian asset placed in charge of the American nuclear arsenal to stay in power even one more minute?

You’d think Brennan would be saying it is time to postpone chasing the indictments of Russian military officers that will never see the inside of a courtroom, stop wasting months on decades-old financial crimes unconnected to the Trump campaign, and quit delaying the real stuff over a clumsy series of perjury cases. “Patriots: Where are you???” Brennan asked in a recent tweet. Where indeed?

Is Brennan signaling that there is one step darker to consider?Reuters commentary observes that “Trump is haunted by the fear that a cabal of national-security officers is conspiring in secret to overthrow him…. Trump has made real enemies in the realm of American national security. He has struck blows against their empire. One way or another, the empire will strike back.” James Clapper is confirming reports that Trump was shown evidence of Putin’s election attacks and did nothing. Congressman Steve Cohen asked, “Where are our military folks? The Commander-in-Chief is in the hands of our enemy!”

Treason, traitor, coup, the empire striking back—those are just words, Third World stuff, clickbait, right? So the more pedestrian answer must then be correct. The lessons of Whitewater and Benghazi learned, maybe the point is not to build an atmosphere of crisis leading to something undemocratic, but just to have a perpetual investigation, tickled to life as needed politically.

Because, maybe, deep down, Brennan (Clapper, Hayden, Comey, and Mueller) really do know that this is all like flying saucers and cell phone cameras. At some point, the whole alien conspiracy meme fell apart because somehow when everyone had a camera with them 24/7/365, there were no more sightings and we had to admit that our fears had gotten the best of us. The threat was inside us all along. It is now, too.

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“Highly Unstable Equilibrium”: Why One CIO Expects China Will Crash The Market “To Restore Balance”

Submitted by Eric Peters, CIO of One River Asset Management

Prisoner’s Dilemma

Two members of a criminal gang are arrested and imprisoned. Each prisoner is in solitary confinement with no means of communicating with the other. The prosecutors lack sufficient evidence to convict the pair on the principal charge, but they have enough to convict both on a lesser charge. Simultaneously, the prosecutors offer each prisoner a bargain. Each prisoner is given the opportunity either to betray the other by testifying that the other committed the crime, or to cooperate with the other by remaining silent. The offer is:

If A and B each betray the other, each of them serves 2yrs in prison. If A betrays B but B remains silent, A will be set free and B will serve 3yrs in prison (and vice versa). If A and B both remain silent, both will only serve 1yr in prison (on the lesser charge). If two players play prisoner’s dilemma more than once in succession and they remember previous actions of their opponent and change their strategy accordingly, the game is called iterated prisoner’s dilemma. The iterated prisoner’s dilemma game is fundamental to some theories of human cooperation and trust. On the assumption that the game can model transactions between two people requiring trust, cooperative behavior in populations may be modeled by a multi-player, iterated, version of the game. Which I will explore in today’s Anecdote (below).

In the iterated prisoner’s dilemma version, the classic game is played repeatedly between the same prisoners, who continuously have the opportunity to penalize the other for previous decisions. If the number of times the game will be played is known to the players, then (by backward induction) two classically rational players will betray each other repeatedly, for the same reasons as the single-shot variant. But in an infinite or unknown length game there is no fixed optimum strategy, and prisoner’s dilemma tournaments have been held to compete and test algorithms for such cases in an attempt to determine optimal strategies.

In such tournaments, when these encounters are repeated over a long period of time with many players, each with different strategies, greedy strategies tend to do very poorly in the long run while more altruistic strategies do better, as judged purely by self-interest. The winning strategy is “tit for tat”. The strategy is simply to cooperate on the first iteration of the game; after that, the player does what his or her opponent did on the previous move. Depending on the situation, a slightly better strategy can be “tit for tat with forgiveness”. When the opponent defects, on the next move, the player sometimes cooperates anyway. This allows for occasional recovery from getting trapped in a cycle of defections.

Almost all top-scoring strategies are “optimistic” (not defecting before its opponent does); therefore, a purely selfish strategy will not “cheat” on its opponent, for purely self-interested reasons. However, the successful strategy must not be a blind optimist. It must sometimes retaliate. An example of a non-retaliating strategy is “always cooperate”. This is a very bad choice, as “nasty” strategies ruthlessly exploit such players. Successful strategies must also be “forgiving”. Though players will retaliate, they will once again fall back to cooperating if the opponent does not continue to defect. This stops long runs of revenge and counter-revenge. The last important quality is being “non-envious”, that is not striving to score more than the opponent.

* * *

Anecdote

“Global trade is a never-ending prisoner’s dilemma,” said the CIO, explaining that we’re collectively better off through cooperation but nevertheless periodically seek short-term advantage by exploiting the blindly optimistic.

“The most successful prisoner’s dilemma strategy is ‘tit for tat’ in which both players cooperate initially.” But once one player chooses non-cooperation, the opponent retaliates with non-cooperation in the subsequent round, making both worse off. To interrupt that destructive cycle, one player will periodically choose to cooperate despite their opponent’s non-cooperation, signaling a desire to return to the optimal state where both cooperate and everyone is better off.

“The US and China are not cooperating. And Trump will obviously not do a deal ahead of November elections.” Every deal requires compromise, and Trump won’t allow his critics to criticize any concessions ahead of mid-terms, so no deal will be done.

“What makes this round particularly interesting is that in prisoner’s dilemma, both non-cooperators are punished. But today, only China is penalized. Trump is rewarded. With each escalation, his popularity rises as does the S&P 500.” The massive tax stimulus and budget deficit have temporarily insulated America from non-cooperation’s consequences.

“This creates a highly unstable equilibrium. It puts China in an impossible negotiating position.”

To restore balance, Beijing must impose a material cost on the US for its non-cooperation. “China’s revealed preference to impose pain on America is through a dramatic renminbi devaluation.” China’s currency has now fallen 6% in a straight line over 4wks, which hurt emerging markets but hasn’t yet punished the S&P 500.

“Will Trump continue to turn up the heat unless his popularity falters and the S&P falls hard? Yes. And won’t China continue to attempt to devalue its currency as far as it must to restore its negotiating position? Yes.”

“And is there anything else in global markets to focus on right now? No.”

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Trade Deficits And The American Empire

Submitted by Bryce McBride,

Over the past couple of months, Donald Trump has sought to change America’s security commitments (most notably NATO) and trade agreements (most notably NAFTA) to better serve his view of American interests. Looking at these arrangements in isolation while imagining the U.S. to be a country like any other, it would appear that the U.S., by shouldering more than its share of NATO’s costs and tolerating decades of trade deficits, has been getting a raw deal. However, American military leadership depends upon global dollar dominance which in turn demands persistent trade deficits. These are the three essential aspects of America’s global empire. If you remove one, you threaten the survival of the other two and the continued existence of the American empire itself.

The American empire is, in the words of John Perkins, the author of the books “Confessions of an Economic Hit Man” and “The Secret History of the American Empire,” the first truly global empire, and the first empire based on indirect economic rather than direct military power. However, it nonetheless resembles every empire the earth has ever known in its basic structure.

Empires such as the Roman Empire exhibit certain features which often, at least in the beginning, improve the lives of their subjects.

First, imperial armies both keep the peace internally and defend against foreign invasion.

Second, conquered nations are compelled to accept and use the empire’s money.

Third, peace and stability and the use of a common currency cause trade to flourish.

Finally, this increase in trade and economic activity in general permits the empire to collect the taxes and tribute payments necessary to pay for the imperial armies upon which the empire’s security depends.

Comparing the current American empire to earlier empires, we can see that the first three features of empire are present.

First, American military power is deployed worldwide; 170 000 active-duty servicemen currently serve in 150 nations outside of the United States in support of its obligations under NATO and other alliances.

Second, the U.S. dollar is the world’s money. As noted economics commentator Jim Rickards put it recently in his article “The U.S Dollar: A Victim Of Its Own Success,” the dollar is used for about 60% of global foreign currency reserves, 80% of global payments and almost 100% of global oil transactions. 

Third, since the end of WWII global trade and global prosperity have expanded enormously under the protection of American arms and under the guidance of dollar-based American-led international economic institutions such as the World Trade Organization and International Monetary Fund.

However, while the Romans could finance their armies by levying taxes on the growing trade of their empire, the U.S. is not able to do so as it does not actually govern the nations it dominates. However, the worldwide use of the U.S. dollar does allow America to gather the wealth needed to fund its military in a manner reminiscent of the tribute payments commonly paid by nations dominated by the ancient Near Eastern empires of the Assyrians, Babylonians and Persians.

As other nations need U.S. dollars to buy oil and other imports, they also need to hold U.S. dollars as foreign currency reserves. The simplest way to acquire dollars is to sell goods and services to the U.S. while accepting dollars (which will never be used to purchase American goods) in payment. Looking at the flow of goods and services, we can easily detect a pattern of tributary states sending treasure to the imperial power. Oil from the Middle East, electronics and apparel from East Asia, minerals from Africa, tropical fruits from Latin America and automobiles and automobile parts from Canada, Mexico and the E.U. all flow into the U.S. from around the world in exchange for dollars which will henceforth be used only outside the U.S. As I wrote in a previous column, the U.S. is the only country in the world able to write cheques (issue dollars) which will never be cashed (used to purchase American goods and services).

Looked at as a whole, the system works. The U.S. provides security and a common currency to the world and in return the world, made prosperous by American protection and financial integration, provides the U.S. with goods and services.

However, when examined through the lens of national accounts these flows of goods and services are identified as trade deficits. To Trump and many of his supporters, these persistent trade deficits have caused the de-industrialization of America and the elimination of millions of American manufacturing jobs. To bring these jobs back, Trump is determined to renegotiate America’s trade deals to try to bring America’s trade accounts back into balance.

As an imperial power and as the issuer of the world’s reserve currency, though, America can never have a balanced trade account. This dilemma was first noted by the Belgian economist Robert Triffin in the 1960s. If America’s trade account was in balance, foreigners would not be able to access the additional dollars needed to purchase imports from one another and to hold as reserves. Without reliable access to dollars, global trade would become very difficult as 80% of global payments are made in dollars. Were global trade to collapse, so too would global prosperity. Finally, without the tribute payments represented by its persistent trade deficits, how could America continue to fund its military commitments?

Fundamentally, Trump seemingly wants to jettison some aspects of American empire while holding on to others, but the problem is that empire is a package deal. It is simply not possible for the U.S. to eliminate its trade deficits without also giving up the benefits which flow to the U.S. (and to the rest of the world) from the dollar’s acceptance as the world’s reserve currency.

Meanwhile, other countries who understand the damage Trump’s incompatible aims may inflict on global trade and prosperity are busy constructing alternatives to the U.S. dollar for international payments and reserves.

Most notably, the Chinese are busy giving their currency, the Yuan, a greater international presence. However, aware of Triffin’s dilemma, China does not want the Yuan to become a global reserve currency. Instead, according to Jim Rickards’ recent article, they appear to be working with the Russians, the Iranians and other countries to create a system where trade is conducted and balances are recorded using some form of distributed ledger technology (similar to Bitcoin), with any net balances settled in gold (the original global reserve currency) at the end of each quarter.

Alternatively, the International Monetary Fund is also working to create a cryptocurrency version of their existing reserve currency (called the ‘Special Drawing Right’ or SDR) which could similarly be used to denominate, record and settle international trade.

Whichever trade settlement system ends up being adopted, the writing appears to be on the wall for the U.S. dollar as the world’s reserve currency. When foreign dollar holders begin seeing dollars becoming either unavailable or less useful for trade, they will not want to hold them as reserves. If they begin to dump them to buy gold or SDRs, the dollar’s value will collapse against other currencies. If, as a consequence, foreigners become unwilling to accept payment in dollars that are fast losing their value, the American government will no longer be able to afford a global military presence. The resulting economic and geopolitical uncertainty will undoubtedly disrupt world trade, threatening both global prosperity and security. On the plus side, though, America’s trade accounts will once again be in balance as Americans holding newly-depreciated dollars will no longer be able to afford foreign goods even as American goods produced with now-cheaper American resources will find ready buyers abroad.

All in all, it would probably be better for everyone involved to continue to tolerate persistent American trade deficits.

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Israeli Jets Strike Syrian Chemical Facility In Rare Daylight Attack

On a day that’s already witnessed significant developments along the Syrian-Israeli Golan border region after an overnight evacuation of hundreds of White Helmets members and their families by Israeli Defense Forces (IDF), Israeli jets have reportedly carried out a major airstrike on a Syrian government facility in northwest Syria in Hama province. 

Map source: Haaretz

Syrian state SANA news has confirmed what it’s calling an “Israeli aggression” near the city of Masyaf, indicating the “losses are only material”, while early reports in both regional social media and in official Israeli media sources allege the site is a facility for the production and storage of chemical weapons. 

The Times of Israel reports that the targeted building is associated with Syria’s well-known Scientific Studies and Research Center (or also commonly CERS) near Masyaf.


Arabic press journalist Elijah Magnier says that the attack is unusual in that it took place just before nightfall and not under the cover of darkess as all attacks of the past few weeks and months have been. Magnier, reporting for Middle East-based Al Rai media, further notes that Israeli jets once again fired from above “neutral” Lebanese airspace over the Bekaa Valley, unleashing a volley of three missiles. 

Other sources say as many of ten missiles may have been fired, with up to six striking the Syrian government complex, with others possibly intercepted by Syrian air defenses. 

Unconfirmed video circulating on Syrian social media purports to show a missile defense intercept in action:

The strike came just hours after Prime Minister Benjamin Netanyahu warned Israel was continuously acting against Iran’s military activities in Syria, saying in a statement“We will not stop taking action in Syria against Iran’s attempts to establish a military presence there.”

No formal Israeli government claim of responsibility has been immediately forthcoming. 

Despite Netanyahu’s warnings that Israel might continue to act against Iranian troops operating in different parts of Syria, local journalists have said throughout Masyaf and the surrounding area that no Iranian or Hezbollah forces exist. 

According to Syrian-British journalist Danny Makki, reporting from on the ground, “there is no Iranian or Hezbollah presence whatsoever (in Masyaf), the Israel strikes were directly on an official Syrian military facility.”

And Lebanese Hezbollah’s Al-Mayadeen television channel also affirms the target of the Israeli strike was a research center in the area. A prior Israeli strike hit the same facility in 2017. Syrian sources are reporting possible fatalities in the area as a result of the attack, however, this is not confirmed. 

Developing

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Clapper: Obama Was Behind The Whole Thing

Former Director of National Intelligence (DNI) James Clapper admitted in a CNN interview Saturday that former President Obama orchestrated the ongoing investigations into Donald Trump and those in his orbit. 

Speaking with CNN‘s Anderson Cooper, Clapper let slip:

If it weren’t for President Obama we might not have done the intelligence community assessment that we did that set up a whole sequence of events which are still unfolding today including Special Counsel Mueller’s investigation.  President Obama is responsible for that.  It was he who tasked us to do that intelligence community assessment in the first place.

Recall in May, Senate Judiciary Committee Chairman Chuck Grassley (R-IA) fired off a letter to the Department of Justice  demanding unredacted versions of text messages between FBI agent Peter Strzok and former bureau attorney Lisa Page, including one exchange which took place after Strzok had returned from London as part of the recently launched “Operation Crossfire Hurricane”  referring to the White House “running” an unknown investigation.

Strzok had been in London to interview Australian ambassador Alexander Downer about a drunken conversation with Trump campaign aide George Papadopoulos, who – after reportedly being fed information – mentioned Russia having Hillary Clinton’s emails. 

Strzok: And hi. Went well, best we could have expected. Other than [REDACTED] quote: “the White House is running this.” My answer, “well, maybe for you they are.” And of course, I was planning on telling this guy, thanks for coming, we’ve got an hour, but with Bill [Priestap] there, I’ve got no control….

Page: Yeah, whatever (re the WH comment). We’ve got the emails that say otherwise.

And with Clapper’s admission – it looks like Strzok’s text stating “the White House is running this” may have been right on the money.

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The Blue Pill Presidency (Be Careful What You Wish For)

Authored by Jennifer Matsui via Counterpunch.org,

Who would have predicted that in 2018, the FBI, the CIA, John McCain, Jeff Bezos, and now the monarchy would be be feted as the vanguard of ‘The Resistance’ by the American ‘left’? Suddenly Trump’s presidency makes sense. To paraphrase a leaked Deep Squid memo from the deep swamps of Deep Space: “When they are forced to eat shit sandwiches around the clock, eventually deep fried vampire squid will appear delectable by comparison. Mission almost accomplished. Mwaah ha ha . . . !”

Our cephalopod overlords know us better than we do. After all, they created and control the devices that keep us under surveillance, and the algorithms that accurately predict at what point we will press ‘accept’ on the terms and conditions of a Trumpless, Squid-led world order that builds walls, empowers banks, oligarchs and polluters, while privatizing and militarizing everything that isn’t nailed down. We now identify with our captors – at least the ones playing the ‘good capitalist’ role, rather than recognizing that all the players in this absurdist spectacle of ‘Curtains for the Anthropocene’ are complicit profiteers of impending planetary collapse.

Fighting fascism is a noble and worthy pursuit. Unfortunately, we haven’t quite figured out how to do it. Flaming pitchforks or pussy hats? Collective struggle or individual belief in the power of existing institutions to rein in their own power? (Cue evil laugh track here) Allowing oligarchs, tech billionaires, war criminals, secret police agencies and monarchs to lead the charge is like treating a worsening chronic ailment with skin burrowing predator aliens from a deep space wormhole. Once you let ’em in, they will feast on your organs and prey on everything in their path. Don’t believe it? Just ask your local polar bear, honey bee or independent bookstore owner.

Notice how the Left establishment is suddenly enraged that a ‘classless’ dotard Bingo hall barker doesn’t know how to curtsy all proper-like on his tax-funded tour of Downton Abbey. Fancy that! Ten million slated to die of disease and starvation in Yemen? Whatever . . .

Before we all break out into a Beyonce led chorus of “God Save the Queen – She’s a Stellar Human Being – She Smote the Tangerine – Let’s Put Her Name on a War Ship’s Submarine”, here’s a little reminder: The old lady might look like she’s luring yet another loose cannon lunatic into a Paris tunnel with her super monarch powers, but QE2 would sooner submit to a golden Trump shower before she would relinquish her role in the feudalism that keeps her in jewels and corgis. The oaf in office is just another necessary evil the class system’s crypt keeper has to contend with for the survival of her undead progeny.

Post-Trump, we will never question the tentacled Master Race again, or doubt their wisdom. Eternal warfare and worsening poverty will be viewed through a ‘blue pill’ haze of relief. The nightmare ends. We are none the wiser, having taken the option to forget and move on. An escape back into reality, as the metaphorical ‘red pill’ suggests, would require a brutal confrontation with truth and the permanent discomfiture that comes with knowledge. Instead, we will once again swallow the same pill that transformed George W. Bush a beloved and unfairly maligned statesmen a few short years after his presidency unleashed those still burning hellfires across much of the earth. Her Majesty will once again be properly genuflected to by a visiting American head of state with better hair plugs.

FLOTUS will be decommissioned, disassembled, and sent back to the offshore factory that makes state-of-the-art Living Dolls for moneyed incels. With any luck, she will be rebooted as a life sized Barbie companion for a lonely 12-year girl old in Dubai. Worst case scenario: A shipping invoice mishap will have her sent to Barron on his 30th birthday.

The ceaseless bombing and starvation will continue under a different Twitter feed, and POTUS 46, after proving he can clip on his own tie before launching a nuclear strike on Iran will be embraced by woke folk, arms dealers, spooks and crowned heads of states alike.

After being hogtied and injected with near-lethal doses of absurdity, we find ourselves collectively hallucinating a tinpot tycoon blowing up Twitter one day, a giant orange clown in a diaper floating over London the next. Carefully sowed confusion will give way to an equally orchestrated acceptance of the war-as-usual status quo when the blue pill kicks in. A return to normal will be a much welcome steel-toed boot to the face.

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