Santa “Grinch” Brings Lump Of Coal

Authored by Lance Roberts via RealInvestmentAdvice.com,

A Lump Of Coal

Last week, I discussed the potential for a “Santa Claus” rally as we head into the end of the year based on both the more extreme levels of short-term oversold conditions coupled with the statistical tendencies going back to 1990. To wit:

IF ‘Santa’ is going to visit ‘Broad & Wall’ this year, it will most likely occur between the 10th through the 17th trading days of the month. Such would equate to Friday, December 14th through Wednesday, December 26th.

While the current oversold condition is supportive of a rally over the next couple of weeks, that does not mean this is a ‘stocking’ you should stuff everything into. Given the macro-backdrop, any rally may be short-lived going into 2019 unless some of the pressure from weaker economic data, Brexit, Washington politics, “trade wars”, balance sheet reductions, and softer-earnings growth is relieved.”

Well, I was clearly wrong.

After being good all year, all investors got last week was a “big lump of coal.”

The relief that was needed to allow the “bulls” to take charge, at least temporarily, failed to materialize.

  • Trump doubled down on his “trade war” rhetoric.

  • He picked a fight to “shut down” the Government over border wall funding.

  • Economic data continued to weaken this past week in some of the most important areas

  • The Fed said they will continue their balance sheet reductions 

  • They are also on track to continue hiking rates regardless of financial market conditions

  • Fed Ex’s global outlook noted marked deterioration in the past quarter. 

  • Geopolitical stresses continue to rise from France, to Russia, and China.

  • Chinese economic growth has weakened markedly which is an immediate feedback into the U.S. economy.

This past week was one of the worst December performances on record.

How about some Christmas cheer?

The market has not been this oversold at any point in the last 20-years, on a monthly basis, as shown in the chart below.

The other bit of good cheer for the bulls is that unlike the previous two starts to more protracted bear markets, the long-term monthly uptrend has not been broken, yet. As noted above, the market is sitting on that uptrend support line which began in 2009.

At this point, the risk/reward for traders is clearly sided to the bulls…for now.

Unfortunately, given that we have now triggered a monthly sell signal for only the 4th time in 20-years the longer-term outlook remains with the bears. As you will notice in both of the previous “bear” markets, oversold conditions reversed even as the bear market continued.

Here is another way to look at it.

When I look at price indicators, I like for an individual signal to be confirmed by other indicators which are measuring different aspects of the market. This helps reduce the number of false signals a single indicator can provide over time. The chart below combines several measures of the market into one monthly chart to look for periods of uniform confirmation.

There are two important points to take away from this chart:

  1. With all of the signals now confirming a “bear” market is likely in progress, such does not mean there can not be substantial counter-trend rallies to sell into, and;

  2. If this is indeed the beginning of a “bear” market, there is likely substantially more downside to go before a lasting bottom is formed and valuations are “mean reverted.” 

But that is just my take.

Tim Hayes of Ned Davis Research recently suggested a cut to the recommended equity allocation for a second time since October. Down by 10 percentage points to 40 percent, the assigned proportion is the lowest since 2008 and has “reached the downside extreme of what we would ever recommend for equity allocation.”

The downgrade comes as the MSCI World All-Country Index heads for its worst quarter in seven years. Stocks may not find a floor before March because the research firm’s models on market trends and breadth keep deteriorating and extreme fear has yet to emerge.

“Advising maximum defensive positioning whatever your constraints and risk tolerance, we would view any rallying as an opportunity to lighten up ahead of increasing volatility in 2019. We have not seen the levels of panic, volatility, and downside volume needed to consider the market sufficiently washed out for the start of a bottoming process.

Market conditions will get worse before they get better.’”

Greg Jensen, co-chief investment officer of Bridgewater Associates, the biggest hedge fund in the world, recently stated: 

“The biggest theme developing is that you are going to have significantly weaker growth, near recession-level growth in 2019, based on our measures, and the markets are generally not pricing that in.

Although the movement has been in that direction, the degree of [ the market’s decline] is still small relative to what we are seeing in terms of the shifts in likely economic conditions.  2019 will be a year of weaker growth and central banks struggling to move from their current tightening stance to easing and finding it difficult to ease because they have very little ammunition to ease.”

All of this should sound very familiar if you have been reading our work over the past year.

I think that Carl Swenlin summed it all up best:

“Less than three months ago there was a great lament about how employers couldn’t fill job positions because of a shortage of job seekers. This week FedEx announced voluntary employee buyouts, presumably to reduce payroll. In view of this, I offer you the Swenlin Basic Economic Theory:

Things get better and better, until they are as good as they’re going to get. Then they get worse and worse, until they are as bad as they’re going to get. Repeat cycle.

If you have a kid headed for college to study economics, think how much money I just saved you. Seriously though, the BPI (Bullish Percent Index), which is the percentage of S&P 500 stocks on technical BUY signals, shows that conditions are worse than they have been for almost 10 years. What may offer some hope to the bulls is that the low readings in 2011 and 2015/16 set the market up for major rallies. The problem is that those setups occurred during a secular bull market, and I think a secular bear market has begun. The two periods I have bracketed between 2000 and 2009 are probably more typical of what we are going to experience.”

“Based upon that, it’s probably going to get worse.”

More and more evidence continues to mount that a bear market has begun.

Again, as I stated above, it doesn’t mean we can’t have some extremely strong reflexive rallies along the way. When they do occur, the media will presume the bull market has returned and encourage you to jump in.

Don’t.

There will be a time when the market trends have resumed a positive, healthy, trend.

Currently, that is not the case.

After have been stopped out of Emerging, International, Small Caps and Mid Caps earlier this year. We were stopped out of some of our core positions last week as well.

With a lot of cash on hand, and our bond portfolio (which we have consistently recommended buying bonds above 3% despite all the rhetoric about the end of the bond bull market) performing well, there is little for us to do right now except wait.

In the meantime, all of us at Real Investment Advice and RIA Pro want to wish you and your families a very Merry Christmas and a happy and safe New Year.

Merry Christmas

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222 Dead, Dozens Missing In Indonesia After “Child Of Krakatoa” Triggers Devastating Tsunami

After a wave [no pun intended] of devastating tsunamis during the summer and the fall, 2018 was already on track to be one of the deadliest years for tsunami-prone Indonesia since 2004 – when a massive tsunami struck the region, killing nearly 250,000 people, most of them in Indonesia. But with only days to go until the new year, a massive wave has struck the beaches around Sunda Strait in Indonesia on Saturday night, killing at least 222 people, according to Indonesian officials and RT.

Meanwhile, roughly 850 people have been injured, while some two dozen are still missing. Sunda Strait separates the Indonesian islands of Java and Sumatra. Its coast is located about 62 miles from Jakarta.

Map

The area worst hit by the volcano was the Pandeglang region of Java’s Banten province, which includes Ujung Kulon National Park and popular beaches, the disaster agency said.

A harrowing account of the devastation from the Associated Press described broken chunks of concrete and splintered sticks of wood strewn across hard-hit coastal areas. Beach getaways popular with Jakarta residents had been leveled and turned into near ghost towns. Destroyed vehicles remained capsized or piled on top of one another. Debris from bamboo shacks floated across the beaches.

Ind

The deadly wave is believed to have been caused by undersea landslides resulting from volcanic activity at Krakatoa, according to Indonesia’s disaster agency. Krakatoa is located in the Sunda Strait, and has been spewing ash and periodically erupting for the past several months.

Two

Three

Specifically, the agency believes an underwater landslide triggered by one of the eruptions at Krakatoa was the catalyst for the Saturday night tsunami.

Four

The eruption rattled Mount Anak Krakatau (or “Child of Krakatoa”, an island formed by volcanic matter spewed by Krakatoa), which triggered an underwater landslide. The landslide happened to coincide with high tide to cause the maximum amount of damage.

“The tsunami was not triggered by an earthquake,” said one official. “It’s possible that it was triggered by an underwater landslide due to the eruption of Mount Anak Krakatau [that’s Child of Krakatoa]. At the same time there was high tide because of the full moon. So there was a combination of natural phenomena, tsunami and high tide.”

As the AP explains, “Child of Krakatoa” was formed after one of the deadliest volcanic eruptions in history, which occurred more than a century ago at Krakatoa. An eruption occurred roughly 24 minutes before the tsunami.

The volcano’s name translates to “Child of Krakatoa,” a volcanic island formed over years after one of the largest, most devastating eruptions in recorded history occurred at the Krakatoa volcano more than a century ago. The scientists also cited tidal waves caused by the full moon.

Another expert posited that the deadly wave may have been caused by what geologists call a “flank collapse.”

Gegar Prasetya, co-founder of the Tsunami Research Center Indonesia, said Saturday’s tsunami was likely caused by a flank collapse — when a big section of a volcano’s slope gives way. He said it’s possible for an eruption to trigger a landslide above ground or beneath the ocean, both capable of producing waves.

“Actually, the tsunami was not really big, only 1 meter (3.3 feet),” said Prasetya, who has closely studied Krakatoa. “The problem is people always tend to build everything close to the shoreline.”

One video that swiftly went viral, a tsunami wiped out the stage and pummeled the audience during a performance by the Indonesia pop band Seventeen at a venue on Tanjung Lesung beach in Pandeglang.

The band later released a statement affirming that its bass player, guitarist and road manager had been found dead, while two other band members and one of their wives remained missing.

“The tide rose to the surface and dragged all the people on site,” the statement said. “Unfortunately, when the current receded our members were unable to save themselves while some did not find a place to hold on.”

Buildings near the coast of the worst-affected areas were completely destroyed. According to the National Disaster Mitigation Agency, at least 430 residential homes and 9 hotels were seriously damaged, but those numbers are expected to rise.

Videos of the devastation wrought by the flood waters have circulated online.

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Trump’s New Chief Of Staff: President “Now Realizes He Doesn’t Have Ability” To Fire Powell

With traders already exhausted, angry and confused by the relentless barrage that has hit stocks in recent weeks, a weekend report from Bloomberg that Trump was contemplating firing Fed chair Powell only added to their dread, for the simple reason that such an action would pull the rug from under the already depressed S&P and send markets in the and US tumbling even more (see “Rattled Markets Would ‘Erupt’ If Trump Fired the Fed Chairman“). And not just any markets, but those which president Trump considers the best real-time barometer of his presidency (there is a reason why Trump, who would constantly tweet praising the S&P’s all time highs on the way up has been silent on the current level of the stock market which is 2.5% away from a bear market).

Which is why shortly after the Bloomberg report hit, perhaps having realized the even greater danger the market faces should investors dump in the holiday-shortened Monday session ahead of a possible Powell firing, Trump unleashed a damage control barrage when he first made Steven Mnuchin tweet late on Saturday that he “never suggested firing Chairman Jay Powell” nor does he believe he  have the right to do so…

… And then on Sunday morning, sent Mick Mulvaney, his acting chief of staff, to tell ABC’s “This Week” that that Trump “now realizes” that he “does not have the ability” to fire Powell, and added that it was “not unusual for a president to complain about the Fed” and that he had spoken to Mnuchin about Trump’s view of the Fed.

Mulvaney, who in 2016 infamous said “Yes, I’m supporting Donald Trump, I am doing so as enthusiastically as I can given the fact that I think he is a terrible human being but the choice on the other side is just as bad”, also touched on the other key issue affecting the US and which has led to what will likely be a protracted government shutdown, when he said that Mexico will “participate” in funding the border wall, whose funding proposals are in the $1.6-$5.0billion range.

Meanwhile, despite the surge in assurances from Trump’s inner circle that he won’t fire Powell, former Fed Vice Chair and NY Fed president Bill Dudley told Bloomberg in a phone interview that he doubts Trump would try to remove the Fed chief, but if he did, and if sticking around the Fed is legally possible, “my advice to him — I would stay on as a governor,” Dudley said in a phone interview. “You have to protect the institution.

Additionally, Bloomberg also reported that if Powell stayed, his colleagues could elect him as chairman for monetary policy, even if he were no longer head of the Fed Board, according to University of Pennsylvania Fed historian Peter Conti-Brown.

And while Dudley tried to depoliticize the feud between Trump and Powell, saying that “certainly the Fed doesn’t want to get into it with the president” and adding that “they have been silent on this — and I think that is the right approach”, the fact that he would urge Powell to stay on suggests that an informal Trump “resistance” splinter group may be forming within the US central bank too.

As for whether Trump will or will not fire Powell, it will ultimately depend on what the market does next, because while it is easy for Mnuchin and Mulvaney to vow that Trump now has no intentions of letting Powell go, that will all change should the S&P drop another 5%, 10% or more and – deep in a bear market – Trump is desperate to find a distraction, one which in addition to HFTs is – most naturally – the head of the Fed, even if this particular Fed chair is merely scrambling to undo decades of monetary mistakes made by his predecessors.

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Rumors Swirl As Mystery Firm Takes Fight With Mueller To Supreme Court

A company owned by a foreign government which appears to be locked in a fierce battle with Special Counsel Robert Mueller has taken their case to the Supreme Court, according to a new legal filing presented Saturday to Chief Justice John Roberts.

The unidentified firm has asked the Supreme Court to block Mueller from obtaining records through a subpoena after a federal appeals court turned down the company’s effort to block the court ordered release of documents. 

The identity of the firm and the foreign country at issue remain closely guarded secrets, but POLITICO first reported earlier this year that the dispute appeared to involve Mueller’s prosecutors. A POLITICO reporter was in the D.C. Circuit Court of Appeals clerk’s office in October when a person connected to the appeal arrived to request a copy of the special counsel’s latest filing in the case.

When the case was argued at the D.C. Circuit last week, the courtroom was closed to the public. Court personnel went to unusual lengths to preserve the secrecy, ordering journalists to leave the floor where lawyers were presenting their positions. –Politico

The court’s public docket has offered few clues – containing no information on the parties or their attorneys. Tuesday, however, a three-page order revealed that the witness fighting the subpoena is a corporation owned by a foreign state.

The firm’s argument that its status as an extension of a foreign government made it immune from subpoenas was rejected by a three-judge DC Circuit panel, while the judges were also unpersuaded by the state-owned company’s claims that complying with the subpoena would violate laws in their home country. 

After the order was filed Tuesday, sealed filings continued in the appeals court in what appeared to be a bid to stay the D.C. Circuit’s ruling or appeal it further. On Friday, the appeals court denied a motion from the company. The precise nature of the motion was not disclosed. –Politico

The Supreme Court’s online docket only reveals the request for a stay of the subpoena, and the fact that the company has asked to proceed under seal. 

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Santa Claus Is Comin’ to Town Is the Most Libertarian Christmas Special

On it’s surface, the 1970 Christmas classic Santa Claus Is Comin’ to Town is a origin story for the titicular jolly elf. Like the other Rankin/Bass stop-motion animated holiday classics (Rudolph the Red-Nosed Reindeer, The Little Drummer Boy) of the era, Santa Claus uses a popular mid-century Christmas song as a jumping-off point for a kid-friendly story about Chirstmas cheer, magical animals, and overcoming adversity.

But Santa Claus Is Comin’ to Town is also a parable about prohibition, black markets, and the awful consequences of arbitrary laws enforced by nanny states. It casts Santa Claus as a heroic individualist who disdains nonsensical regulations, operates by his own moral code, and ultimately chooses to exit a society that views him as a threat to its enforced order.

It is, in short, the most libertarian holiday special ever made.

For those who haven’t seen it in a while, Santa Claus Is Comin’ to Town opens (after a brief scene introducing the Fred Astaire–voiced postman who narrates for the story, which is told in flashback) in the vaguely Bavarian hamlet of Sombertown. The town is governed by the portly, short-tempered Burgermeister Meisterburger. After tripping over a child’s toy and tumbling down the steps in front of City Hall, Meisterburger issues a strict edict banning all toys. “Either they are going or I am going,” he declares, “and I am certainly not going.” Chuck Schumer would be a fan.

The official statement sounds all too familiar in an age of moral panics and tough-on-crime policies: “Toys are hereby declared illegal, immoral, unlawful, and anyone found with a toy in his possession will be placed under arrest and thrown into the dungeon. No kidding!” Almost immediately, agents of the state swarm into the streets and begin confiscating toys.

The boy who will grow up to become Santa Claus starts out as an orphaned baby abandoned in the mountains outside of Sombertown. He is rescued by a family of toymaking elves, the Kringles, who name the boy Chris. The elves are too small to make the perilous journey across the mountains to the village, and so they have no way to deliver their meticulously crafted gifts to the boys and girls who live there. Once he’s older, Chris volunteers to take a sack of toys to the town.

Kringle (and his penguin sidekick, Topper) arrive to a particularly somber Sombertown. When he opens his sack of toys in the town square, the kids are thrilled—until an uptight schoolteacher named Jessica interrupts the fun by reminding the kids that “toys are against the law!”

“Gee, that’s kind of a silly law,” says Kringle. He immediately disobeys it (and wins Jessica over) by giving her a doll.

The Burgermeister spots kids playing with the new toys and is infuriated. When he orders the arrest of some of the children, Kringle intervenes and offers the Burgermeister a yo-yo. It immediately improves the mayor’s sour mood, until his top law enforcement officer reminds him that he’s breaking his own law—but the distraction gives Kringle an opportunity to escape arrest.

After getting back home, Kringle launches a guerrilla campaign to smuggle toys into Sombertown. He adopts the conventions that we now associate with Santa Claus—arriving under cover of darkness, entering homes through unconventional means, hiding toys in stockings hung by the fire to dry overnight—as a way to supply Sombertown’s demand for toys while avoiding law enforcement.

Santa Claus, the movie tells us, is essentially a heroic bootlegger.

Predictably, a crackdown comes. Unable to stop the flow of toys into the town, the Burgermeister’s soldiers adopt more aggressive tactics. They burst into homes unannounced, seize private property, and subject violators to clearly excessive punishments. “If you find so much as one marble or half a jack, the entire house is under arrest,” the Burgermeister bellows before a half-dozen armed agents carry out one such pre-dawn raid.

All of which strikes a little too close to home in an age when American citizens can be sentenced to life in prison for carrying half an ounce of marijuana. If the Burgermeister had known about asset forfeiture laws, the poor residents of Sombertown may have ended up homeless.

The story’s climax comes when the Burgermeister manages to snare Chris—and the rest of the Kringle family, who are charged with being accomplices to his lawbreaking. They’re tossed in the dungeon and a bonfire is held to destroy the remaining illegal toys. But Jessica recognizes the moral failure of the Bergermeister’s prohibitionist policies and busts the family out of prison. With the help of some reindeer and magical corn, they make a flying escape from Sombertown.

Meanwhile, Chris grows a beard as a disguise, renames himself Santa Claus, and proposes to Jessica. Their marriage again reinforces the libertarian message of the movie. “No town would have them,” so they are wedded in a simple woodland ceremony that doesn’t require any pesky government-issued license.

Then they go full Galt, moving to a secret location near the North Pole to resume their toy-making activities—bestowing the fruits of their labors on those children who live by a moral code that’s based on natural law rather than any rules sanctioned by a state.

Eventually, we’re told, the Meisterburgers died off and were replaced. “By and by,” Astaire says, “the good people realized how silly their laws were.”

It’s an unconventional happy ending, but one that resonates with fans of freedom. The oppressive government loses, and the revolutionary outsider wins public acclaim for violating unjust laws. And parents get a convenient way to keep their kids in line.

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British Government’s Covert Anti-Russian Propaganda & The Skripal Case

Authored by Craig Murray,

It is worth starting by noting that a high percentage of the Integrity Initiative archive has been authenticated. The scheme has been admitted by the FCO and defended as legitimate government activity. Individual items like the minutes of the meeting with David Leask are authenticated. Not one of the documents has so far been disproven, or even denied.

Which tends to obscure some of the difficulties with the material. There is no metadata showing when each document was created, as opposed to when Anonymous made it into a PDF. Anonymous have released it in tranches and made plain there is more to come. The reason for this methodology is left obscure.

Most frustratingly, Anonymous’ comments on the releases indicate that they have vital information which is not, so far, revealed. The most important document of all appears to be a simple contact list, of a particular group within the hundreds of contacts revealed in the papers overall. This is it in full:

Tantalisingly, Anonymous describe this as a list of people who attended a meeting with the White Helmets. But there is no evidence of that in the document itself, nor does any other document released so far refer to this meeting. There is very little in the documents released so far about the White Helmets at all. But there is a huge amount about the Skripal case. With the greatest of respect to Anonymous and pending any release of further evidence, I want you to consider whether this might be a document related to the Skripal incident.

The list is headed CND gen list 2. CND is Christopher Nigel Donnelly, Director of the Institute for Statecraft and the Integrity Initiative and a very senior career Military Intelligence Officer.

The first name on the list caught my eye. Duncan Allan was the young FCO Research Analyst who, as detailed in Murder in Samarkand, appears in my Ambassadorial office in Tashkent, telling me of the FCO staff who had been left in tears by the pressure put on them to sign up to Blair’s dodgy dossier on Iraqi WMD. During the process of clearing the manuscript with the FCO, I was told (though not by him) that he denied having ever said it. It was one of a very few instances where I refused to make the changes requested to the text, because I had no doubt whatsoever of what had been said.

If Duncan did lie about having told me, it did his career no harm as he is now Deputy Head of FCO Research Analysts and, most importantly, the FCO’s lead analyst on Russia and the Former Soviet Union.

Now let us tie that in with the notorious name further down the list; Pablo Miller, the long-term MI6 handler of Sergei Skripal, who lived in Salisbury with Skripal. Miller is the man who was, within 24 hours of the Skripal attack, protected by a D(SMA) notice banning the media from mentioning him. Here Pablo Miller is actively involved, alongside serving FCO and MOD staff, in a government funded organisation whose avowed intention is to spread disinformation about Russia. The story that Miller is in an inactive retirement is immediately and spectacularly exploded.

Now look at another name on this list. Howard Body. Assistant Head of Science Support at Porton Down chemical weapon research laboratory, just six miles away from Salisbury and the Skripal attack, a role he took up in December 2017. He combines this role with Assistant Head of Strategic Analysis at MOD London. “Science Support” at Porton Down is a euphemism for political direction to the scientists – Body has no scientific qualifications.

Another element brought into this group is the state broadcaster, through Helen Boaden, the former Head of BBC News and Current Affairs.

In all there are six serving MOD staff on the list, all either in Intelligence or in PR. Intriguingly one of them, Ian Cohen, has email addresses both at the MOD and at the notoriously corrupt HSBC bank. The other FCO name besides Duncan Allan, Adam Rutland, is also on the PR side.

Zachary Harkenrider is the Political Counsellor at the US Embassy in London. There are normally at least two Political Counsellors at an Embassy this size, one of whom will normally be the CIA Head of Station. I do not know if Harkenrider is CIA but it seems highly likely.

So what do we have here?

We have a programme, the Integrity Initiative, whose entire purpose is to pump out covert disinformation against Russia, through social media and news stories secretly paid for by the British government. And we have the Skripals’ MI6 handler, the BBC, Porton Down, the FCO, the MOD and the US Embassy, working together in a group under the auspices of the Integrity Initiative. The Skripal Case happened to occur shortly after a massive increase in the Integrity Initiative’s budget and activity, which itself was a small part of a British Government decision to ramp up a major information war against Russia.

I find that very interesting indeed.

With a hat-tip to members of the Working Group on Syria, Media, and the Propaganda, who are preparing a major and important publication which is imminent. UPDATE Their extremely important briefing note on the Integrity Initiative is now online, prepared to the highest standards of academic discipline. I shall be drawing on and extrapolating from it further next week.

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Subscriptions to keep Craig’s blog going are gratefully received.

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Drones: A Rising Menace To UK Aviation

After 36 hours of chaos, Gatwick’s runway has finally opened and a small number of flights are operational.

As Statista’s Niall McCarthy notes, the airport was shut down by drone sightings and around 110,000 passengers were impacted by the disruption on Thursday.

In the UK, it is illegal to fly a drone within 1 kilometre of an airport boundary and above 400ft high.

Data from the UK Airprox Board reveals that the number of near-misses between drones and civil and military air traffic has climbed dramatically in recent years.

Infographic: Drones: a rising menace to UK aviation | Statista

You will find more infographics at Statista

Up to November 2018, 117 such incidents were recorded, an increase on 93 throughout 2017. In 2016, there were 71 while in 2015, there were only 29.

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Escobar: Russia, Ukraine, & The Minsk Agreement Fiction

Authored by Pepe Escobar via The Saker Blog

Rostislav Ishchenko is arguably the leading international analyst focused on the extraordinarily turbulent Russia-Ukraine relations. He posts regularly on Ukraina.ru, with frequent English translations here.

In contrast to the 24/7 “Russian aggression” demonization campaign effective on all corners of the Beltway and spreading towards selected European capitals, Ishchenko’s analysis, for instance of the information war deployed on all fronts of the Russia-Ukraine saga comes as a breath of fresh air.

Although we were not able to meet in person during my recent visit to Moscow, due to conflicting schedules (the meeting will take place later in the winter), Ishchenko graciously accepted to answer my most pressing questions regarding what could happen next on the Russia-Ukraine front, with translation by Scott Humor.

Ishchenko’s answers on the situation in Donbass should also be expanded to Crimea, after Russian Foreign Minister Sergey Lavrov revealed he had information about Ukrainian President Petro Poroshenko planning an armed provocation on the border with Crimea in the last ten days of December.

Considering the terrain in winter is usually propitious for tank advance, would Poroshenko, in desperation, go for a major provocation in the Donbass, perhaps between Christmas and New Year’s Eve? 

First of all, this winter is too warm and the area is not yet favorable for an offensive. Second, even if frost strikes and an attack becomes possible, it is too big of a risk for Poroshenko. He does not have enough military power to defeat the DPR/LPR forces, without even mentioning that surprises are still possible as it happened in August 2008 in South Ossetia. After all, the Minsk peace agreement has not been canceled yet, and it is unlikely that the West will be able to stand against Russia in a consolidated manner at the moment when Russia is conducting a peace coercion of the confectioner, who is out of his mind with fear, and whom the West has already written off. The West requires a mandatory holding of elections, and any war would mean a cancellation of elections. If the war is facilitated by Poroshenko, he will be blamed for the cancellation of the elections and there will be no need to protect him.

Is there any possibility of the Minsk agreements being fulfilled in case of a slightly less anti-Russian government in place in Kiev after the next elections? 

No, it’s not possible. Kiev is unable to implement the Minsk agreements because this would imply the federalization of Ukraine, while the Kiev elites are able to rule only within the rigid vertical of the unitary state. They basically do not imagine a different system of relationships. Since 2014, the internal resources which could satisfy appetites of oligarchic groups were exhausted, and there is no material basis for compromise. Therefore, they are doomed to fight among themselves for the dominance. Even if Russia, Crimea, Donbass and the whole world would suddenly vanish, the civil war in Ukraine, no longer restrained from the outside, would only intensify.

Is Kiev aware that in case of a military attack on Donbass, the Russian response would be devastating? And that in Brussels, as I confirmed with many diplomatic sources, nobody really cares about Poroshenko’s fate anymore? 

I think that he knows this very well. That’s exactly why he organized his provocations in the Kerch Strait and also in Kiev (attacking the Ukrainian Orthodox Church of the Moscow Patriarchate), but not in Donbass.

*  *  *

And in response to this interview, one comment from The Saker blog – by Larchmonter – stood out in its clarity of the situation:

It is very important to recall, or learn, that Putin and the Kremlin did not start the Militia or launch an armed resistance against Kiev. That was Strelkov’s plan. In open defiance of Putin and the Kremlin.

So, once the war began, the Kremlin and the General Staff had to create a means to support the defense of Donbass.

That led to several systemic operations. Voentorg supplied the militia with the logistics of warfare. North Wind supplied the volunteers with military experience and expertise. Strategy and maneuvering of forces was commanded by top officer advisers (Generals and Colonels) who made certain the Militia was not defeated.

The Ukies and Kiev supplied the stupidity and incompetence that led to their devastating losses in boilers.

Meanwhile, the Kremlin welcomed the other stakeholders from the West—Germany and France. The basis of the Normandy Group was formed, four heads of state, including Kiev’s Porky.

From the initial Minsk Accord came failure. But Debaltsevo brought back to life the device for freezing the conflict. Kiev lost thousands of men, NATO had 600 or more men trapped in the boiler with the Ukies, so the three sides facing Putin had to accept what he constructed in Minsk 2.

It froze the conflict, freed the NATO troops, and finished with the utter debacle of Debaltsevo for the Ukies.

The 13 milestones were almost all exclusive steps that Kiev had to take in order to fulfill the Minsk 2 agreement.

There would be a federal government, Donbass would be safeguarded.

This is where the reality and the roadmap diverged.

Kiev could not obey, the government would be overthrown by the nazi battalions.
The US began to step in and manipulate the contact line separation of forces and all-for-all exchange of prisoners, while demonizing the Militia, the two Republics, Putin, the Kremlin and Russia.

But Putin had bigger fish to fry. He had three years of GRU and SVR reports on the war in Syria and intended to rescue Assad. He had Crimea to support, rejuvenate and clean out the corruption. He had secret weapons to complete and test and then surprise the US and the West with Russian military superiority.

Freezing the war in Donbass (even at the cost of a few hundred people per year) was imperative.
His Generals had the militia rotate to Russia for better training, many thousands of them. Training has been ongoing since 2015.

What is in the cards for Donbass is really a product of Kiev and the U.S. If the U.S. wants to, it can keep control of the Ukraine government through financing its survival. Ukraine will remain a basket case for decades. No one wants to reconstruct, invest in, or underwrite any sector of the society. As long as this occurs, the Ukies will be used to terrorize Donbass and threaten the Russian border with irrational military thrusts. One mistake and the U.S. will lose that military proxy. Even FM Lavrov spoke of that yesterday. The MOD presented proof of us of Iskander missiles in Syria. Lavrov indicated such weapons would be used to stop any attack by Kiev.

Donbass’s fate is attached to Putin. They have half a decade of support in all forms coming their way. After that, no one yet can see a solution of any kind.

It is as likely as not that something will happen to change this fate.

Russia will not decide this matter for itself. Russia’s military will not decide this matter as an aggressor.

The initiative is in the hands of the US, or Germany or Ukrainians.

However, what any of these three face is the Russian military and Kremlin, as well as the straightjacket of Minsk 2 which is the legal bondage Kiev cannot escape except through suicidal military action.

They (Ukies) cannot fight their way out of Minsk 2 and prevail.
They cannot bait the Russians into a war.
They cannot walk away from Donbass and leave it to Russia. The nazis will execute them.
They cannot win while trying, because they will lose.

They can only give in to whatever Putin decides he wants. (Of course, such an outcome is unacceptable to U.S.)

So, for five more years, they won’t do anything different. They will try to wait out Putin’s presidency.

You can see the policy in Syria as prototype for Ukraine.
The U.S. has no intention of allowing a full Syrian victory for Assad and Russia.
They will stay for as many years as they can.
And the near term is five more years. They will try to wait out Putin’s presidency.
And they have the Kurds, al Nusra, ISIS proxies to use, like they use the nazis and conscripts in Ukraine.

It is almost painless for the U.S. to follow this policy in both hotspots.
Trump has bought into it for both fronts.

This is why Putin did not want an armed resistance to the Maidan Putsch in early 2014.

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Sorting Out The Brexit Chaos

Authored by Kai Weiss via The Mises Institute,

“Everything is happening, nothing has changed,” Alex Massie wrote over at CapX last week, perhaps summing up best the political situation in the UK right now. What has happened in the Brexit debate in the last few months, but in the last week in particular, has caused much astonishment around the globe – indeed, it has left almost everyone with the question of what in the world is going on in Britain.

Just looking back at the at the beginning of last week, Parliament was still debating on Theresa May’s Withdrawal Agreement from the EU. Should the House of Commons accept the Prime Minister’s deal in the so-called “meaningful vote” on Tuesday, or rebuke what May sees as the best she can get from Brussels? Instead, the Prime Minister, having been cornered from all sides, called off the vote, which subsequently led to the threshold of 48 Conservative Members of Parliament needed for a no-confidence vote being reached. May won her party’s confidence, but a shocking 117 MPs turned against her. In the end, May’s position has mostly stayed the same, though, having neither been particularly strengthened nor weakened, since her leadership can’t be challenged again for the next year.

The same might be true for her deal with the EU, which will now be voted on in the Commons in January. By some described as the best compromise that was possible, by (most) others however described as a disaster which would, say the critics, chain the UK to Brussels as a vassal state, it has undoubtedly been a controversial agreement.

Critics have mostly pointed to the so-called “backstop.” That the border between Ireland and Northern Ireland stays undeterred for movement and trade has been essential for all parties involved — risking a hard border could lead to conflict at a border which has often been wrecked by strife. At the same time, though, one of the major goals of Brexiteering has been to leave the EU’s customs union, which would enable Britain to decide on its own trade policy (and thus, make its own trade agreements). This vision has often been called one of a “Global Britain.”

With the current agreement, the UK would stay in the customs union for the remainder of the transition period, which currently is set to end in December 2020. Not only that this deems it impossible for Britain to pursue its own course until then, the backstop could cause havoc in the Kingdom afterwards. The concept is as follows:

When Britain finally leaves in 2020, there will hopefully be in place a comprehensive trade agreement with the EU. But if not, there would once more be border controls between Britain and mainland Europe (and, importantly, Ireland). To prevent a hard border between Northern Ireland and Ireland, through the backstop, Northern Ireland would stay both in the common market as well as the customs union, while island Britain merely leaves the common market, while staying in the customs union.

There are two major consequences from this: while the backstop is in place, the UK could still not do anything on its own as of trade policy. In addition, Northern Ireland and the rest of the UK would be separated, and there would then be border controls between Northern Ireland and Britain, splitting apart the union (in return for there not being any controls on the Irish island). Worst for many pro-Brexit voices, the Withdrawal Agreement does not say whether the backstop is only temporary or indefinitely. Indeed, they fear, the EU could trap the UK in this middle-of-the-road state in which Britain is sort of outside the EU, but in many respects still part of it (like trade policy).

The EU has played a rather precarious role in all of this: while ensuring in public again and again that the backstop is temporary, it has also refused (so far) to revise the agreement to include this little detail.

For Theresa May, this has created a complicated situation to say the least: the agreement cannot be passed in Parliament — that is also why she cancelled the vote, hoping that the EU will give her a little more leeway. For one, so-called “hard Brexiteers,” mostly Tory backbenchers, want to leave the customs union once and for all — and as soon as possible. They argue that a good deal with the EU would be beneficial — but if they can’t get one, then Britain should just leave. This is the “no deal” scenario, where Britain would fall back on WTO rules. The backstop then is the reason why they are completely opposed to May’s deal.

Then there is the Democratic Unionist Party (DUP) from Northern Ireland. The Tories are only in government at the moment because they are supported by the DUP. And for the DUP, as its party name already says, the further existence of the union has first priority. For them, the backstop is a grave danger for Northern Ireland staying in the union. This is why they are completely opposed (to put it mildly) to May’s deal (and May needs them stay in power).

Finally, even Labour, the Scottish Nationalist Party (SNP), as well as the Liberal Democrats are opposed to the deal. There are different reasons here. Many are hoping that by the agreement being blocked, the exit on March 29, 2019, would have to be postponed, thus opening up the possibility for a second referendum – a “People’s Vote,” as they call it (regardless of how undemocratic it would be). But especially Labour is of course also hoping that if the deal falters, the current government would, too; potentially triggering new elections – elections, they hope, which would put Chavismo Jeremy Corbyn in power.

What is a possible way out? Free-marketeers have often pointed out that simple unilateral free trade from the UK’s side could be the solution (I have argued this, too, on several occasions). But regardless of whether this is the best idea in theory, one also needs to realize that it is detached from political reality at the moment: next to the major disruptions it would cause at first and that it could possibly completely destroy any relationship the UK still has with Europe (which is still, yes, important for its economy), this vision also simply has nowhere close to a majority in the population. Pulling this off could easily lead to a Corbyn administration, leading the UK down the dumpster.

The same is true for those arguing for a “People’s Vote:” there is simply no majority for this, and it would put the final nail in the coffin for the British political class by ignoring the momentous vote of 52 percent of the country in 2016. Meanwhile, for those wanting the “Norway option” — i.e., a membership in the EEA or EFTA like Norway or Switzerland, time is running out (and once again, it is not clear whether there is a majority in Parliament for this either).

Thus, all opponents of May’s deal have one more thing in common other than thinking her deal is a disaster: namely, that none of them has a majority and for now, a realistic chance to implement their own vision (and subsequently still win elections for a while). Could May’s deal not be the worst of all worlds, but maybe the only world which could realistically lead the UK out of the EU then (which it does)?

At this point, no one seems to know anymore – I certainly don’t. What I know is that the Brexit vote shows one thing ever clearer: that simple ‘yes’ or ‘no’ votes veiled as supposedly democratic referendums have some major problems. In 2016, there was a vote asking the people of the UK whether they, ‘yes,’ want to leave the European Union, or, ‘no,’ want to remain. But as the aftermath of this vote shows ever more clearly by the day, it is much more difficult than that: there are a thousand ways to Brexit. Which one Britain will ultimately take, still no one knows yet – and the vote in 2016 doesn’t give an answer to that.

To repeat Massie’s quote from the start, in the last few months “everything has happened, nothing has changed.” In 2019, everything will continue to happen. Just how much will actually change at some point will determine the future relationship between Britain and the EU.

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Global Happiness: Which Countries Are The Most (And Least) Miserable?

How much happier would you be if were given a 10% raise?

While money can be a crucial indicator of happiness at lower income levels, Visual Capitalist’s Iman Ghosh notes that studies have found that as incomes rise, money becomes a less important part of the overall happiness equation.

In fact, researchers see happiness as a complex measure that involves many variables outside of material wealth, including social support, freedom, and health.

MEASURING GLOBAL HAPPINESS

Today’s chart uses data from the World Happiness Report 2018 to measure and understand which countries report feeling the most and least happy.

Courtesy of: Visual Capitalist

WHAT CONTRIBUTES TO HAPPINESS?

The six key variables used by researchers in this report on global happiness include:

  1. GDP per capita

  2. Healthy life expectancy

  3. Social support

  4. Freedom of choice

  5. Generosity

  6. Perceptions of corruption

While average income and life expectancy definitely carry their weight in explaining happiness levels, what’s more interesting are the Gallup World Poll (GWP) questions about the other, more subjective variables.

  • Social support
    “If you were in trouble, do you have relatives or friends you can count on to help you whenever you need them?”

  • Freedom to make life choices
    “Are you satisfied or dissatisfied with your freedom to choose what you do with your life?”

  • Generosity
    “Have you donated money to a charity in the past month?”

  • Perceptions of corruption
    “Is corruption widespread throughout the government or not?”
    “Is corruption widespread within businesses or not?”

HOW HAPPY IS THE WORLD?

The top tier of happiest countries happen to be Nordic, with Finland, Norway, Denmark, and Iceland making it into the top five. Aside from having a common geographic location, these countries are also well-known for their social safety nets, using a high tax burden to fund government services such as education and healthcare.

A surprising entry near the top of the list might be Costa Rica. It’s the happiest country in the Latin American region, despite persisting income inequality issues. Although it has a lower GDP per capita than other high-ranking entries, the country has more than made up for it through social support; Costa Rica has invested significantly in education and health as a proportion of GDP, and the nation is also known for housing a culture that forms solid social networks of friends, families and neighborhoods.

On the other hand, 18 of the least happy countries are concentrated on the African continent. GDP per capita varies intensely among the bottom countries, and many report a lack of freedom overall. A silver lining is that social support is relatively stable, and there have been steady improvements over time.

Finally, the aftermath of the 2008 financial crisis has had a ripple effect on global happiness. The report demonstrates where the most and fewest advances have been made.

  • Togo
    Happiness is on the upswing, as the West African nation climbs 17 places to demonstrate the most improvement.

  • Venezuela
    Meanwhile, the South American country plummeted even further, in part from socio-political changes and dramatic hyperinflation.

Where does your country fare on this scale?

Eudaimonia [happiness] is the meaning and the purpose of life, the whole aim and end of human existence.

-Aristotle

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