This Is How Much U.S. Households Lose As Gas Prices Rise

Authored by Tsvetana Paraskova via OilPrice.com,

U.S. gasoline prices are at a four-year-high this year as a result of the higher price of oil which has reached a three-and-a-half-year high in recent weeks.

The increased pump prices are now eating into the disposable income of the average American household that will have a total of $440 less to spend this year on other goods and services because this money is expected to go for buying higher-priced gasoline.

The higher spending on gas could offset one-third of the gains from the tax cuts, with low- and middle-income families feeling the pinch much more than higher-income earners, according to S&P Global economists Beth Bovino and Satyam Panday.

“This would be tantamount to a tax increase for American households,” the economists wrote in a recent report, quoted by Bloomberg. “This is especially true for middle- to low-income Americans.”

The higher-income families, on the other hand, will be less affected by the increase in pump prices because spending on gasoline accounts for a smaller share of their total disposable income.

“The income tax cut is virtually compensating those who were hurt least from the oil-price change, which may result in even larger inequality,” according to Bovino and Panday.

Despite the higher spending on gasoline, however, the overall U.S. economy is now less oil-dependent than in the past, so oil prices in the $70s will have a more mitigated impact on economic growth than it would have in previous years, the S&P Global economists and Fed economists say.

For this year’s April–September driving season, the EIA expects U.S. regular gasoline retail prices to average $2.87/gallon (gal), up from an average of $2.41/gal last summer, mostly due to expectations of higher crude oil prices. According to the Short-Term Energy Outlook (STEO) from June, monthly average gasoline prices may have peaked in June at $2.92/gal and are expected to drop gradually to $2.84/gal in September.

For this year’s July 4 holiday, U.S. drivers will be paying the highest Independence Day average gas prices since 2014 – at $2.90/gal, compared to $3.66/gal for July 4 in 2014, when oil prices were $100 a barrel, according to GasBuddy.

Although current national average gas prices are below the May peak of $2.98/gal, a price jump may be looming, due to OPEC’s announcement of a smaller-than-expected oil production increase, the U.S. push to have Iran oil exports down to “zero”, and significant U.S. crude oil stockpiles draws, GasBuddy says.

According to AAA, last week the United States saw the largest one-week reduction—9.9 million barrels—in crude inventories for the first summer driving season in five years. “If the decline in inventories continues and oil prices remain high, motorists could see a spike in gas prices later this summer despite the anticipated increase in production from OPEC and its partners,” AAA said last week.

Still, the higher oil prices now have a more muted impact on the U.S. economy than before, Dallas Fed President Robert S. Kaplan wrote in an essay last month.

Several factors have mitigated that impact over time. One is U.S. shale production—higher domestic oil production means that a larger share of the economy is helped by higher oil prices. Then, reduced crude oil imports benefit the U.S. trade balance. Finally, the U.S. economy is less oil-intensive now than in the past, because of higher fuel efficiency, other forms of energy substituting part of the oil dependence, and higher share of less-energy-intensive services sector as a share of the overall economy, Kaplan argues.

For example, in 1970, the U.S. consumed 1.1 barrels of oil for every $1,000 of gross domestic product (GDP). By 2017, only 0.4 barrels of oil were consumed for every $1,000 of GDP, the Dallas Fed president says.

“Based on these various factors, it is the view of Dallas Fed economists that the negative impact of higher oil prices on GDP growth is likely to be more muted than in the past.

It is our view that a 10 percent increase in the oil price should have a relatively modest negative impact on U.S. GDP growth. This negative impact should further diminish as the U.S. continues to grow its domestic oil production,” Kaplan writes.

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Strzok May Tell House To Pound Sand After Tuesday Subpoena

Beleaguered FBI agent Peter Strzok may not comply with a Congressional subpoena issued Tuesday to testify in public at a joint hearing slated for 10 a.m. on July 10.

Speaking with CNN’s Chris Cuomo on Tuesday, Strzok’s attorney Aitan Goelman said “My client will testify soon, somewhere, sometime. We just got this subpoena today, so I don’t know whether or not we are going to be testifying next Tuesday in front of these two particular House subcommittees.”

When asked by Cuomo why the answer wasn’t an “automatic yes,” Goelman replied “Because we have come to the conclusion, forced to come to the conclusion, that this is not a search for truth, it is a chance for Republican members of the House to preen and posture before their most radical, conspiracy-minded constituents.”

To be clear, Peter Strzok’s attorney just suggested that members of Congress who suspect that his client’s well-documented hatred of Donald Trump affected the Trump investigation he spearheaded are “radical” and “conspiracy-minded.” 

“From our experience with the committee thus far, it is obvious that they don’t want the truth. They don’t want to hear what Pete has to say,” added Goelman. 

Actually, we suspect they do – as evidenced by the subpoena for open testimony from “Pete.” 

As we reported on Tuesday, Strzok testified last Wednesday in a closed door session a week after declaring he would do so “without immunity” and without invoking his Fifth Amendment right not to incriminate himself during questioning over his anti-Trump / pro-Clinton bias while heading up investigations into both candidates.

On Monday, Goelman said in a letter to the committee that they have “sharpened their knives behind closed doors” and will spring a trap on Strzok by seizing “on any tiny inconsistencies” with last week’s testimony “to ‘prove’ that he perjured himself or made false statements,” Goelman wrote in the letter somehow obtained by CNN

Having sharpened their knives behind closed doors, the Committee would now like to drag back Special Agent Strzok and have him testify in public — a request that we originally made and the Committee denied” 

Sounding suspiciously like Rudy Giuliani, he continued: “What’s being asked of Special Agent Strzok is to participate in what anyone can recognize as a trap.”

In his email, Goelman wrote that it was “generous to characterize many of these inquiries as ‘questions’” — suggesting instead that the GOP’s closed-door queries had been “political theater and attempts to embarrass the witness” through various leaks.

Among the questions Goelman complained Republicans put to Strzok were one about whether he loved Lisa Page, the recipient of his anti-Trump texts with whom he was having an affair, and another asking “what DO Trump supporters SMELL like, Agent?” — a reference to an August 2016 text Strzok sent in which he told Page he could “SMELL the Trump support” at a Walmart in southern Virginia. –WaPo

Gunpowder and freedom?

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Libertarian Party Rebuffs Mises Uprising

Nicholas Sarwark ||| Matt WelchThe Libertarian Party on Monday afternoon re-elected in a surprising first-ballot landslide incumbent Chair Nicholas Sarwark to an unprecedented third consecutive two-year term. In doing so, the nation’s third-largest political party swatted down what was supposed to be the most contentious challenge at its biannual national convention—to a leadership that was considered by various critics to be too operationally incremental, too ideologically tepid, and too (in the words of Ludwig von Mises Institute Senior Fellow and popular podcaster Tom Woods at a nearby New Orleans rally Saturday) “SJW-friendly.”

Instead, Sarwark’s main opponent, the Mises Caucus-endorsed Joshua Smith, stumbled badly in a defensive debate performance at the New Orleans Hyatt Regency Sunday night, and ended up Monday on the business end of a 65 percent-22 percent rout. In the vice chair race, two-term incumbent Arvin Vohra, who has become a lightning rod over the past year-plus for intentionally provocative public comments such as “Bad Idea: School Shootings. Good Idea: School Board Shootings,” was resoundingly drummed out of office, never receiving more than 11 percent of the vote in three rounds of balloting that ended Tuesday with a positivity-exuding 33-year-old finance/tech/consulting guy named Alex Merced squeaking past the 50 percent finish line.

“What I think the race shows is that if you want to change the direction of the Libertarian Party, if you have new ideas about how we can grow and reach new members, the election of Merced to vice chair shows that the delegates want that kind of change,” Sarwark told me Tuesday afternoon. “If your campaign is seen, or has themes of trying to kick people out, of trying to attack people like Gov. Weld, or… basically anyone—if your campaign was seen as trying to drive people out of the party, the delegates soundly rejected that. And I think that that is the biggest takeaway from the convention.”

Bill Weld and 2016 Gary Johnson campaign honcho Ron Nielson ||| Matt WelchWeld, the controversial-within-the-party 2016 vice presidential nominee and former moderate Republican Massachusetts governor who is laying the groundwork for a possible 2020 presidential run (and was everywhere to be seen at the convention, amiably taking on all skeptical comers), played a pivotal role in the decisive debate. Candidates had the opportunity to ask their opponents one question, and when it was Smith’s turn, a delegate in the audience shouted out, “What do you think about Bill Weld?!” (Weld-heckling was a sporadic feature throughout the three-day event.) Smith decided to make that his question.

“What I think about Bill Weld,” Sarwark started slowly, building into a feisty crescendo, “is that he is still in the Libertarian Party, while many of his opponents are not. [He’s been] raising money for and endorsing Libertarian candidates. He is fundraising for us. And the exposure of Bill Weld to the Libertarian Party has not made the Libertarian Party more like an establishment Republican, but has made Bill Weld a lot more like a Libertarian….He knows something about winning public office, and [we need to] learn how to do that from anybody who will help us, anybody who will join us. And we should not PUSH PEOPLE OUT who are willing to help!”

As New York gubernatorial candidate and popular party organizer Larry Sharpe, who had backed Smith, commented later, after that exchange it was “game over.”

Smith, an energetic and rough-hewn Washington-based activist and co-founder of the libertarian news site Think Liberty, was both magnanimous and defiant after his defeat at the hands of man he had criticized during the campaign for prioritizing “virtue signaling, identity politics, and battles for infamy.”

“Look, no one knew who I was eight months ago,” Smith told me. “We came in here and took 22 percent of the vote…from the most popular chair that we’ve ever had in 46 years. I’m not mad!”

Smith won the consolation prize of an at-large national committee berth Tuesday evening. “I like Nick, I’ve always liked Nick,” he said. But as a party, “we’re not going up. We’re just not, you know. He sits up there and talks a big game….We [have] a small budget, small membership base, and we’ve got to grow that. So I hope that me being an at-large will help us accomplish those goals, and, you know, if he wants to take credit for that, that’s fine.”

Sarwark’s resounding victory—he received more votes than he did in a far smoother race in 2016—was hailed by the L.P.’s more prominent elected officials, whose approach toward voter outreach tends to dovetail more with the Libertarian Pragamatist Caucus than, say, the Misesites or the in-your-face Audacious Caucus.

“This gives us a chance as a party to have some consistency and get to the next level,” said Calimesa, Calif. Mayor Jeff Hewitt, an L.P. star and successful policy reformer who is neck-and-neck in a two-man race to get on the Riverside County Board of Supervisors in November. “We’ve got the right guy in as chair, and it’s really going to make us grow.”

The contest between Sarwark, a careful and smooth-talking 38-year-old lawyer/car dealer who is also running for mayor of Phoenix, and the 35-year-old Navy veteran Smith was so nasty and upsetting for some delegates that vendors were hawking “I survived the Libertarian National Chair campaign 2018” T-shirts. But to the extent that it was a proxy war between the party’s new influx of elbow-throwing Tom Woods listeners and its older cohort of more patient coalition-builders, the pragmatists won in a rout.

As longtime L.P. hand and 2016 Gary Johnson right-hand man Tom Mahon sang to me right after the vote:

The Mises came over the mountain

The Mises came over the mountain

The Mises came over the mountain

and the Praggies kicked their ass

The Praggies kicked their ass

The Praggies kicked their ass

The Mises came over the moun-tain…..

and the Praggies kicked their ass

The respective leaderships of the Libertarian National Committee and the Ludwig von Mises Institute (LVMI) have been hurling insults at each other since the Unite the Right rally and subsequent riots in Charlottesville, Virginia last Aug. 11-12. Two days after protester Heather Heyer was rammed and dragged to death by an automobile driven by reported neo-Nazi James Alex Fields, Jr., Sarwark dinged Mises Institute President Jeff Deist for blaming the conflict on politicization without uttering the name “Donald Trump.” Then Sarwark took a swing at Woods for defending Murray Rothbard’s controversial “paleolibertarian” push toward the reactionary right in the late-1980s and early ’90s.

Woods responded by calling Sarwark a “pansy” with “a very low IQ;” Sarwark accused the LVMI of being “the preferred choice of actual Nazis,” and then Vohra issued a stinging denunciation of a pro-nationalism speech Deist had given two weeks before Charlottesville that had concluded with the line, “blood and soil and God and nation still matter to people. Libertarians ignore this at the risk of irrelevance.” Retorted Vohra: “‘Blood and soil’ is a central Nazi and nationalist idea….[A]t the current time, Mises Institute has been turned into a sales funnel for the White Nationalist branch of the Alt Right.”

Libertarian Party Executive Director Wes Benedict made the distancing exercise complete with an Aug. 15 press release stating, “There is no room for racists and bigots in the Libertarian Party. If there are white nationalists who — inappropriately — are members of the Libertarian Party, I ask them to submit their resignations today. We don’t want them to associate with the Libertarian Party, and we don’t want their money. I’m not expecting many resignations, because our membership already knows this well.”

Then something interesting happened: People didn’t leave. In fact, they kept coming in. The Mises Caucus has continued to be one of the fastest growing blocs within the party, even as the war of words between the L.P. and the LVMI (and Mises allies, such as the libertarian comic Dave Smith) raged on. Joshua Smith announced his candidacy for chair in September, winning an early endorsement from the caucus, and included in his critique of Sarwark “the fights with Tom Woods” and “telling people that maybe you’re not the kind of people we want in the Libertarian Party,” statements Smith characterized as “a huge ball-drop.”

Woods, not previously noted for his party-related activities, organized the day before the convention a raucous Take Human Action Bash a few blocks away, featuring a lively mix of speakers such as anti-war author Scott Horton and a piped-in Ron Paul. Unusually for both Woods and Paul, their speeches each made first-person plural references to capital-L Libertarians, and were basically pleas to make the party more like, well, Ron Paul.

“Most people change or adopt ideologies, not because they’re gently led by some stuffed shirt, but because they’re jolted by an articulate true believer,” said Woods, who spent a good deal of time eviscerating the philosophical and policy errors of Bill Weld, to an audience that occasionally broke out in “Tom Woods for president!” chants. “I mean, is the idea that we should be trying to trick people into voting Libertarian?”

Paul, too, urged the 200 or so people in the room—who he called “the libertarian wing of the Libertarian Party”—to focus on the basics of property rights, volunteerism, and being anti-war and anti-Federal Reserve. “Congratulations for being in the Mises Caucus, keep up the good work, and keep everybody honest,” he concluded.

Woods, a gifted and funny speaker with a loyal flock, painted a picture of a modern L.P. too far adrift from the non-aggression principle, too wracked by “fear of seeming unfashionable in elite circles.”

“When it comes to pot smoking and gay marriage, everybody has accepted those by now. What is the point? That horse is dead,” he said at one point. At another: “Now, I’ve heard it said that the Libertarian Party ought to avoid certain issues, because it will make it more difficult to make the party appeal to the LGBT community, [that] the party should be pro-LGBT. But, my answer to that is that Libertarians are not pro-LGBT. Libertarianism and the Libertarian Party are pro-humanity, period.”

She won. ||| Matt WelchMeanwhile, at the convention over the subsequent days, the party adopted new platform language defending sex workers, and removed old platform language that had supporting “control over the entry into our country of foreign nationals who pose a credible threat to security, health or property” (a change that Sarwark in particular finds significant in the current political climate). The party retained its usual support for “free market banking” and condemnation of the “use of force.”

Heading into the convention, there were two main chunks of dissatisfaction with Sarwark that translated into a widespread belief that Smith had at least a puncher’s chance to knock him out: The Mises/Charlottesville fracas, and an impatience about growing the party faster. But by the time Sarwark filleted Smith on the debate stage—and not incidentally, wielded an expert gavel during the cat-herding that passes for parliamentary procedure debates among Libertarians—the Mises Caucus just didn’t have enough bodies.

“The people who were mad about the Charlottesville and near-Charlottesville comments, that was the core of the support that on the ballot ended up voting for my competitor,” the chair said. “The people who wanted more growth, I believe that after the debate performance, and after hearing the actual numbers about how we’ve been doing, realized that we’re actually on that good trajectory for growth, and decided to stick with Nick.”

What does that trajectory look like? The 2018 L.P. convention was by far the largest of any of the party’s midterm gatherings, doubling the size of 2014. Fundraising at the convention gala possibly eclipsed even 2016—”I think we might have raised over $100,000 last night at a whack, which is amazing,” Sarwark said. There has been a post-2016 downturn in active dues-paying membership at the national level, but the party has been winning more and more local elections, getting a record number of state legislators to switch parties, and is already attracting national interest in its presidential deliberations for 2020. Most of the long-term metrics look good.

“There aren’t really words to describe how well we are doing,” Sarwark said. “The excitement we’ve had in the midterms with the number of candidates we have running and the number of Libertarians who are elected to office who are running for re-election, it has generated an energy and a buzz that I’ve never seen.”

Factionalism and bitter fights are just as prevalent in the Libertarian Party as they are in the broader lower-case-l libertarian movement, if a tad more colorfully dressed. But unlike the latter grouping, the former has a single banner under which they all manage to cooperate, with a charming and idiosyncratic affection for their occasionally vast differences. For now, the direction seems to be people coming in the tent to fight for their beliefs, rather than taking their balls and going home.

“I’m not going to leave these values, I love these values,” Hewitt said. “And no matter what person come in, I love even the crazy people in there. That won’t even become a problem once we get some wins. They’ll be whimsical then, or whatever else. People come to see that we’ll be winning, and we are that sexy party, we are that fun party. We’ve just got to start having confidence in ourselves, and taking a bit more of a patient approach to get a load of global offices.”

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Bill Bonner Asks “Would The Founding Fathers Recognize Modern America?”

Authored by Bill Bonner via Bonner & Partners,

The metamorphosis of a caterpillar into a butterfly is one of the most remarkable things in nature. The animal apparently digests itself, using enzymes triggered by hormones. Then, from the pupa, a whole new animal develops – one with wings.

Time and growth produce changes in institutions, too. Sometimes, they merely get bigger and older. Sometimes, they go through a metamorphosis and change into something very different.

We recently moved back to France for the summer. We lived here for nearly 20 years… and still have a house in the country, to which we retire every summer.

Here, we find our old friends and acquaintances… our old clothes and shoes… our tools and workshop… our tractor… and our favorite office.

And what a pleasure… there, on the table next to the bed, was a copy of Michel De Jaeghere’s great book, Les Derniers Jours: La Fin de l’Empire Romain d’Occident (The Last Days: The End of the Roman Empire in the West).

We picked it up and found where we left off a year ago… page 321.

Roman Example

Many of the founders of the American Republic were readers and scholars. “I can’t live without books,” said Jefferson.

He, Monroe, Madison, Adams, and others were much more aware of Roman history than our leaders today. Most had studied Latin and/or Greek.

They had read Plutarch, Seneca, Sallust, Suetonius, and Cicero.

Much was known about the Roman era… and much was discussed. People believed they could learn from it and do better.

In the same year that the Declaration of Independence was adopted, Edward Gibbon published the first volume of his masterpiece, The History of the Decline and Fall of the Roman Empire.

The Founding Fathers were well aware of the transition – natural, and perhaps inevitable – from republic to empire. They had studied it in the Roman example. They had seen how it drew power into a few hands… and corrupted them.

They tried to prevent it from happening in the New World, putting in place limits… circuit breakers… and checks and balances… to keep the government from becoming too big, too ambitious, or too powerful.

Even then, they were doubtful that it would stick. “We give you a republic…” Franklin wrote to posterity, “if you can keep it.”

America did keep it… for nearly 100 years. Maybe a few more. Then, the metamorphosis occurred. And, like Rome, it was not very pretty.

Metamorphic Change

When a man has a wife, he has a more or less agreeable situation, depending on the circumstances. But if he has two wives, he doesn’t simply have twice as much wife. Or twice as much marriage. Or twice as much satisfaction. Or twice as much misery, such as the case may be. It is something altogether different.

Likewise, going to a small airport is very different from going to a large one. And a small, modest country has little in common with a big, aggressive, worldwide empire.

The point we have been making in our Diary is that time and scale have changed the nature, not just the age and the size, of the United States of America. It has become something the Founding Fathers had tried to avoid… and almost certainly wouldn’t like.

It was a metamorphic change, not just more of the same thing. But unlike Jesus, who turned water into wine… or nature, which turns an ugly caterpillar into a beautiful butterfly… the change from modest republic to aggressive empire was not necessarily for the better.

The Constitution was twisted into a new shape; like when an alcoholic chaperones a school party after he has had a few drinks, the kids can get away with anything.

The Bill of Rights, too, was run through the wringer. Citizens still have the right to life, liberty, and property – but only to the extent that the feds allow.

They can keep their firearms, for example, but under the Obama Doctrine, the feds can label them terrorists… and kill American citizens.

They still have the right to express themselves under the protection of the First Amendment, unless their opinions are considered “hate speech,” or the feds – or their agents at Facebook and Google – just don’t like what they say.

Your property is still safe, too; but under the doctrine of civil forfeiture, the police can take your money, your cars, and your house… with no due process of law.

Thus, were Americans mugged, mangled, and manacled. And then, the feds hit them in the face with a shovel.

Beginning in 2008, they distributed nearly $4 trillion to America’s wealthy stock- and bond-owners. Trillions more were taken from savers (most of us) by reducing interest rates… and given to big borrowers (corporations, Wall Street, and the feds themselves).

Is it any wonder that ordinary Americans are feeling a little testy?

Almost everything seems to be subject to the law of declining marginal utility. Power is no exception. And like desserts, wives, and shots of whiskey, it doesn’t take too long before the returns to additional power diminish so much that they are no longer positive.

They fall below the zero line. There, another drink is not merely useless, it could be fatal… and more power turns you into a Hell-bound bully.

Evolution of Power

That is the insight we’ve struggled to bring to light. As America evolved into an aging empire, it left behind it the laws, rules, customs, and instincts of its youth, much like Rome did after the death of Crassus in 53 BC.

The U.S. empire is now more than 100 years old. It began in the late 1890s, with the annexation of the Philippines. (Some people put the start date much earlier… when the North brought the South into imperial submission.)

Empires are very different from republics. They are no longer by, for, and of the people. They’re too big… too complex… with too many fingers in too many pies for the people or their elected representatives to keep up with.

So power migrates to the center. There, where the CIA, NSA, Pentagon, NIH, FBI, IRS, and dozens of other agencies… along with the corporate headquarters of hundreds of big industries… and thousands of pressure groups, lobbyists, factotums, hacks, think tanks, NGOs, powerful families, and apparatchiks reside, is where the real power flows.

There, too, in Rome as in Washington, the power congeals.

De Jaeghere… along with hundreds of other historians, ancient and modern… brings the process to light.

After reading them, reading the news today is almost like watching an old movie. We’ve seen it before, but we may still laugh… or shed a tear.

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Why Did FRED Suddenly Discontinue Reporting On The Fed’s Balance Sheet Normalization?

In the interests of transparency at The ‘New’ Federal Reserve, The St.Louis Fed has decided, suddenly and without warning, to discontinue the production of The Fed’s balance sheet size from its FRED website.

h/t @MichaelLebowitz

And while the data is still available on various data terminals and The New York Fed SOMA site continues to provide the updates, we can’t help but wonder why the government would decide that this data series – one that is simple to report, readily available from the source, and requires very little manpower to produce – would suddenly be discontinued from one of the most popular, publicly accessible, and free US government data repositories?

Perhaps it is because the pace of balance sheet normalization is about to take a huge step larger – from around $30bn to around $50bn per month in the next quarter…

 

Or perhaps its because if ‘average joes’ accessing FRED can see the normalization accelerating and will notice that the SMART money is piling out of the stock market – and selling to the greater fools chasing momo…

Or more likely, Gluskin Sheff’s David Rosenberg is right: “Don’t fight the Fed works in both directions…”

 

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Psychoanalysing NATO: Projection

Authored by Patrick Armstrong via The Strategic Culture Foundation,

“NATO” can be a rather elusive conceptLibya was a NATO operation, even though Germany kept out of itSomalia was not a NATO operation even though Germany was in it. Canada, a founding NATO member, was in Afghanistan but not in Iraq. Some interventions are NATO, others aren’t. But it doesn’t really mean much because NATO is only a box of spare parts out of which Washington assembles “coalitions of the willing”. So it’s easier for me to write “NATO” than “Washington plus/minus these or those minions”.

We are told – incessantly – that Putin is “Winning the Information War“,We have no counterattack to Russia’s information warfare“. Nonsense. The real information war is being conducted by the British Army’s “77th Brigade“, the soldiers of Fort Bragg, NATO’s Centre of Excellence in Tallinn. Or by the BBC, RFE/RL, Deutsch Welle, AFP et al; each of whose budgets is many multiples of RT’s. They manipulate; they dominate; they predate; Moscow is a minor newcomer.

I am not a psychiatrist, psychologist or any other kind of psychist, but I cannot fail to notice the projection and gaslighting practised by Washington and its minions. They accuse Russia of doing things that they actually do – projection – and they manipulate our perception of reality – gaslighting. I will discuss gaslighting in the next essay.

Wikipedia defines projection as

Psychological projection is a theory in psychology in which humans defend themselves against their own unconscious impulses or qualities (both positive and negative) by denying their existence in themselves while attributing them to others. For example, a person who is habitually intolerant may constantly accuse other people of being intolerant. It incorporates blame shifting.

Another source calls it a “defence mechanism”:

Psychological projection involves projecting undesirable feelings or emotions onto someone else, rather than admitting to or dealing with the unwanted feelings.

Interference: Russia! Russia! But NATO actually does it

Russia, we are told, interfered in the US presidential election. And Brexit, and France, and GermanyHungaryGreecepopulism, and and and. The American story has metamorphosed from its initial version which was supposed to have been an attempt to elect Trump into an attempt to sow division in US society. The NYT attempts to explain how both stories fit together. The absurdity of the charge was shown when the 3500 or so Facebook ads paid for by the so-called Internet Research Agency were revealed: they were all over the place. Even more amusingly, Mueller, who no doubt thought he was safe to indict a Russian companyis trying to get out of having to prove it now that the company’s lawyers have shown up. If the matter ever does come to trial it will likely show that the whole operation was a scam designed to create interest groups to sell advertising to. (Which would explain why the majority of the ads appeared after the election: the election was the bait to create the groups.)

This is projection at its most obvious: the USA is by far the world champion at interfering in other people’s elections. No less an Establishment outlet than the Washington Post (one of the principals in sustaining Putindunnit hysteria) listed many in: “The long history of the U.S. interfering with elections elsewhere“; but piously insisted “the days of its worst behavior are long behind it”.

A quick diversion from the sordid reality of the rigged Democratic Party nomination – “don’t blame us for doing it, blame Russia for revealing it!” – attributed to Russia what it denied in itself. The actual interference, we now learn, was not by Russia on the outside but by, among others, FBI officials on the inside.

A textbook illustration of blame shifting, isn’t it?

The Russian threat NATO created

NATO expansion is all projection: NATO expands to meet the threat its expansion creates. NATO justifies itself by pretending to solve the problems it creates: Canada/Libya leads to Libya/Mali leads to Canada/Mali. When the documents about the broken expansion promise were published, we saw that NATO’s own “false memory syndrome” had been projected onto Moscow.

This NYT headline from last year perfectly shifts the blame: “Russia’s Military Drills Near NATO Border Raise Fears of Aggression“.

NATO blames Russia when its fake news fails

Does anyone remember Gay Girl in Damascus tweeting about the horrors of life in Syria under Assad? Not gay, not girl, not Damascus. How about Sarah Abdallah, who, the BBC tells us is “a mysterious and possibly fictitious social media celebrity [who] tweets constant pro-Russia and pro-Assad messages“. But she actually exists. But the champion of champions is surely Bana from Aleppo whose English abilities declined so dramatically when she got out (and few wondered how, in a destroyed city, her Internet service could be so good). Aleppo has mostly disappeared from the West’s news outlets but here is AFP’s coverage a year later (a less NATOcentric view here). Even with the obligatory propaganda twists – “pro-regime residents back on the streets” – it’s obviously a better place after the “Assad regime” reclaimed it than it was when Bana wanted to start World War III. Believing Gay Girl, believing Bana, denigrating Sara is projection: because projectors live in a world of falsehood, they assume that everything they do not fake themselves must be faked by someone else.

And we’re still waiting for Kerry’s “we observed it”, a coherent Skripal story (here’s one but it’s not the authorities’), actual evidence of the Russian “invasion” and many other things that we were told were anything but “fake news”. Believing NATO’s stories requires crimestop: if you doubt 76 missiles hit this site (here’s just one), then you must be a Russian troll or a victim of Russian fake news.

Don’t look here, look there: our fakery is real, their reality is fake.

Russia challenges the ideas NATO puts in your head

The concern over Russia’s influence in the West has grown considerably in the past few years, particularly the Russian regime’s use of information technologies to malign unfriendly Western politicians and undermine the Western public’s faith in democracy.

Russian bots everywhere influencing, dividing, affecting. But the real bots are NATO’s: from Operation Mockingbird in the 1950s, through Udo Ulfkotte’s Bought Journalists to today:

The 1,200-strong psychological operations unit based at Fort Bragg turns out what its officers call ‘truthful messages’ to support the United States government’s objectives, though its commander acknowledges that those stories are one-sided and their American sponsorship is hidden. (New Yorker, December 2005).

Our vision is to be the main source of expertise in the field of cooperative cyber defence by accumulating, creating, and disseminating knowledge in related matters within NATO, NATO nations and partners. (NATO, October 2008)

A contest to re-design the USAF Cyberwarrior Badge (2010)

Three years later the accusations have not been substantiated, but they have served their purpose nonetheless: NATO dispatched cyber warfare experts to Estonia shortly after the events of 2007 and on May 14, 2008 the military bloc established what it calls the Cooperative Cyber Defence Centre of Excellence (CCD COE) in the nation’s capital of Tallin. (2010)

The British army is creating a special force of Facebook warriors, skilled in psychological operations and use of social media to engage in unconventional warfare in the information age. (Guardian, January 2015)

Members of the Military Information Support Task Force-Central influence and persuade targets or intended audiences within the U.S. Central Command area of responsibility to reject those enemy narratives and violent extremist ideologies in order to establish conditions for long-term regional stability. (CENTCOM, April 2017).

The Army announced on Wednesday (Nov. 29) that a team of its researchers would work alongside scientists from Ukraine and Bulgaria to ‘understand and ultimately combat disinformation attacks in cyberspace. (November, 2017)

Clearly NATO is projecting what it is actually doing onto Russia.

“Hybrid war” was invented by the Russian who’s reacting to it

In 2014 NATO worried about “hybrid war”, apparently something Russia practised. This writer tells us it is sometimes called the “Gerasimov doctrine” after an article written in 2013 (note the date) by the Chief of the Russian General Staff.

According to Gerasimov, the lessons of the Arab Spring are that if the ‘rules of war’ have changed, the consequences have not – the results of the ‘colored revolutions’ are that a ‘thriving state can, in a matter of months and even days, be transformed into an arena of fierce armed conflict, become a victim of foreign intervention and sink into a web of chaos, humanitarian catastrophe and civil war.’

In short the theoretical foundation of this supposedly amazing, tricky, sinister and almost invisible Russian way of waging war originates in a paper written about Western-inspired “colour revolutions”. Like the 2003 Rose Revolution in Georgia (ten years before Gerasimov’s paper), the 2004 Orange Revolution in Ukraine (nine), the 2005 Tulip Revolution in Kyrgyzstan (eight). Once upon a time to get rid of a ruler you didn’t like, you invaded his country and, months later, fished him out of a hole and hanged him. But it’s much cheaper to invest money ($5 billion in Ukraine we are told) to organise protests and overthrow him. And, as we have seen in Ukraine, sometimes it becomes a real shooting war, with real dead bodies and entrails. Sometimes the one thing, sometimes the other; but it’s all conflict, and it’s all “hybrid”. It’s “hybrid” because it uses many methods to bring about the desired regime change: propaganda, manipulation, protest and, occasionally, a little judicious bombing or sniping.

So how ironic – how “hybrid” – to accuse Gerasimov of inventing something that began years earlier. His so-called textbook of Russian “hybrid war” is actually a response to the real “hybrid war” that Washington practises.

Projection: accusing Russia of doing what you are actually doing.

We bomb hospitals by mistake,Putin does it on purpose

Putin and Assad mercilessly bombed Aleppo – we heard about it for months. “Carpet bombing“. “War crimes“. The boy in the ambulance. Humanitarian convoys intentionally hit (although Bellingcat has become sloppy with his faked evidence). The implication was that Russia just threw lots of bombs around while NATO was precise, surgical.

We heard rather less about Mosul or Raqqa. Although that may change: even the managed Western media/human rights apparat has noticed the stunning, indiscriminate destruction.

Islamic State fighters have now essentially been defeated in Mosul after a nine-month, US-backed campaign that destroyed significant parts of Iraq’s second largest city, killing up to 40,000 civilians and forcing as many as one million more people from their homes.

In Raqqa: 20,000 bombs, 30,000 artillery rounds, altogether, about one per five pre-war occupants! Amnesty International condemned the NATO bombing of Raqqa: “we witnessed a level of destruction comparable to anything we’ve seen“.

But, as “The Persistent Myth of US Precision Bombing” shows, the US military has always pretended “surgical precision” while scattering prodigious numbers of bombs. “America has no idea how many innocent people it’s killing in the Middle East” said the Independent in 2017. Even the Establishment-friendly NYT concluded that the US military greatly understated the number of civilians it kills – reporting maybe as few as 4%! At least eight wedding parties. But the quantity of bombs dropped makes a mockery of “precision”: by its own count 114,000 weapons since 2013 on Iraq, Afghanistan and Syria. Who can believe there are a hundred thousand pinpoint targets in those countries? “The detonation of the bombs as they hit the ground appears to be pretty huge.” In Afghanistan the USAF is now bombing to “shape the terrain” – geological bombing.

If you want a single word to summarize American war-making in this last decade and a half, I would suggest rubble.

A tour through the rubble in Mosul.

To say nothing of the sustained destruction of a clearly marked and identified hospital in Afghanistan. (A mistake, for which no one was punished.)

Projection again: don’t look here, look over there.

Russian Federation is not the USSR

The USSR did lots of things in its time – influencing, fiddling elections, regime changes, fake news, projection and so on. But the Communist Party was the “leading and guiding force” in those days; today it’s the opposition; the Comintern is gone but Mockingbird is not. Things have changed in Moscow, but NATO rolls on.

Which, when you think of it, is the problem.

If NATO accuses Russia of something, NATO is actually doing it

I leave you with this simple rule of thumb:

Every time NATO accuses Russia of doing something 

you know it’s doing it itself.

And reflect on this: NATO and its propaganda minions are so unimaginative that they cannot imagine Russia doing anything but what they are doing. That’s why they are surprised all the time.

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EURUSD Spikes After Report ECB Members “Uneasy” With Market’s Dovish View On Rate-Hikes

Amid the illiquidty of a US trading holiday, Bloomberg reports that some European Central Bank policy makers are uneasy that investors aren’t betting on an interest-rate hike until December 2019, according to people familiar with the matter.

The headline was enough to spike EURUSD back to unchanged on the day…

As Bloomberg notes, investors in the money markets are fully pricing in a 10 basis points hike to the deposit rate only in December 2019, but a move in September or October next year is on the cards, the people said, asking not to be named because the discussions are confidential.

The ECB announced last month that it will end net bond purchases this year, but also that interest rates will stay unchanged until “at least through the summer of 2019.” The wording was generally interpreted as leaving open the possibility of increasing borrowing costs already at the September meeting.

But Governing Council member Vitas Vasiliauskas said the guidance should be interpreted as “until the end of September,” highlighting the ambiguity of the language.

The market’s expectations for a Sept 2019 rate-hike has now jumped from 49% to 80%…

Of course, this is just the Bundesbank hawks trying to preserve optionality in case oil prices spike and the ECB is forced to hike sooner than expected, but is definitely tilting back towards a more hawkish position.

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China Changes Time It Starts Trade War Against US To Avoid Striking First

With the US set to launch the first salvo in the trade war against China at 12:01am on Friday when Washington imposes 25% tariffs on $34 billion in Chinese products, and with Beijing set to immediately respond, a logistical issue emerged: who gets to strike first?

Due to Beijing being 12 time zones ahead of the US, and because China also planned to launch retaliatory tariffs against the US on Friday at midnight, it would mean Beijing would technically start the trade war, because 12:01 a.m. in Beijing on Friday would mean noon Thursday in Washington. So upon reflection, and realizing that the earth’s curvature could make China appears as the aggressor, China said that it wouldn’t implement tariffs ahead of the U.S. on Friday, after previous arrangements put it on course to do so.

The earlier arrangement, a Chinese official said Wednesday according to the WSJ, reflected Beijing’s determination to start its tariffs on July 6, the same date set by the U.S. for its tariffs. And since China’s plans a tit-for-tat escalation, a statement issued by the China’s State Council on June 16 said that retaliatory extra duties on $34 billion of U.S. imports are set to take effect on July 6.  “It’s the U.S. that started all this,” a Chinese official said. “China is fully prepared.”

However, in a statement published late on Wednesday, the Ministry of Finance said “we will never fire the first shot and will not implement tariffs ahead of the U.S.,” after media reported that Beijing would start levying tariffs hours ahead of the U.S. due to the time zone difference.

So, as a result of the timezone difference, it means Beijing would actually implement its tariffs from midday Friday in China—an unusual practice for Chinese customs, which generally assess levies on a full-day basis.

Beijing’s plan shifted as it was wary of being seen as provoking the battle, and as Bloomberg adds, in the brewing trade war between the U.S. and China, “Beijing officials consistently seek to portray their nation as simply being on the defensive against Donald Trump’s aggressive tactics.”

Moving ahead of Washington to impose tariffs would have entailed risks for Beijing, analysts said, making it harder for both sides to resume negotiations stalemated for the past month. A first strike would go against the Chinese leadership’s public position that China doesn’t want a trade war with the U.S. President Donald Trump has threatened to levy duties on an additional $400 billion in Chinese products if Beijing retaliates for his first batch of tariffs. – WSJ

Commenting on the 12 hour delay, Timothy Stratford, a lawyer at Covington & Burling in Beijing said that a Chinese head start “would not be moving hearts and minds on both sides toward the positive direction of de-escalation.”

China’s desire to be seen as the victim in the trade war also explains why the PBOC has been so careful not to give the impression that it is the entity behind the recent devaluation of the Yuan, over concerns that if Trump perceives the PBOC as easing the currency in response to tariffs and not, for example, because the Chinese economy is slowing and Beijing has cut RRR twice already, he would lob even more protectionist measures into the mix (which of course doesn’t mean the PBOC is not intervening, in fact as Reuters writes today, the central bank may well get involved, although to a far lesser extent than in 2015 when there was no potential allegation of aiding and abetting a concurrent trade war).

So this is the final sequence of events:

At one minute after midnight Eastern Time on July 6, Trump will roll out 25% tariffs on $34 billion of goods representing sectors including aerospace and information technology as well as auto parts and medical instruments.

At exactly the same time, which however happens to be one minute after noon on Friday Beijing time, China will retaliate by targeting $34 billion in U.S. products ranging from soybeans, beef, pork, chicken and seafood to sport-utility vehicles and electric vehicles.

Furthermore, China picked the farm goods it is targeting to hit U.S. states that supported Trump. However, as the WSJ notes, such tactics have upset U.S. officials, who said targeting American farmers was an ill-willed attempt by the Chinese government.

What happens then?

If both nations are satisfied with just this one round of implemented tariffs, nothing much. According to UBS, $34BN in tariffs will have a limited impact on China’s $11 trillion economy.

The question, of course, is what happens if the conflict escalates. As shown in the chart below, Trump has already proposed a total of nearly $800 billion in total tariffs and countetariffs as part of Washington’s trade war playbook.

According to UBS, if the conflict escalates to include only the incremental $200 billion of Chinese exports and global trade slows, it would reduce China’s 2017 GDP of 6.9% by 0.5%, excluding secondary effects.

Will it stop there? Unfortunately, that is the question nobody knows, because once tit-for-tat tariffs begin, the equilibrium strategy shift to mutual defection, resulting in growing escalation unless either Trump or Xi wave a white flag and halts the escalation.

Or, as UBS’ chief Chine economist Wang Tao puts it “The risk of further escalation has increased.”

But at least we’ll know that going forward every Chinese “retaliatory” tariff will take place just after noon Beijing time…

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Cryptos Shake Off Binance-Shutdown Fears, Bitcoin Tests 4-Week Highs

In an unusual show of resilience for the cryptocurrency space, overnight anxiety surrounding headlines that Binance – the biggest crypto exchange in world – suspended all trading and withdrawal services has been shrugged off and Bitcoin is testing $6,800 – near one-month highs…

image courtesy of CoinTelegraph

After suspending service due to “irregular” SYS trading risk alerts, Binance has resumed services and Bitcoin is bouncing back…

As CoinTelegraph reports, the temporary suspension was due to an alert over “irregular” Syscoin (SYS) trades “from a number of API users.” Binance subsequently chose to suspend trading, withdrawals and other account functions, as well as to take a series of further measures in order to protect its users.

Syscoin for its part notified the public in a tweet yesterday that its developers were investigating a “possible issue” on the Syscoin blockchain, saying that it itself “asked for exchanges to halt trading while [its team] investigate[d].”

It later tweeted that notwithstanding “odd trading behavior” and “atypical blockchain activity,” its investigation suggested that the SYS blockchain was safe, and said it was asking exchanges to reopen SYS trading.

While exact details remain undisclosed, the incident appears to have seen Syscoin trades on Binance rocket to account for over 87 percent of the token’s total trade volumes, becoming the top traded coin on the Binance platform. Binance trading data indicates that at one point, SYS prices on the platform hit a staggering 96 BTC (around $640,000):

Binance SYS/BTC Chart. Source: Binance

In response to the alert, Binance acted to remove all existing API keys and has requested all API users to recreate their API keys — stressing that customers who are not regular API users should not create an API key for the time being.

The exchange also says it has rolled back all the irregular trades, and offers anyone who was negatively affected by trading during the rising SYS prices a zero-free trading regime from July 5 through July 14.

All other Binance users will be given a 70-percent rebate on trading fees throughout the same period, paid out in the platform’s native token, Binance Coin (BNB).

Lastly, the incident has prompted Binance to create a ‘Secure Asset Fund for Users’ (SAFU), which as of July 14, will allocate 10 percent of all trading fees received into the fund “to offer protection to users and their funds in extreme cases.” Binance says that it will use segregated cold wallet storage for all SAFU funds.

According to Coinmarketcap, Binance is currently the largest crypto exchange in the world with around $1.5 billion in trade volume in the 24 hours to press time.

Bitcoin has come ripping back and tests $6800 – near 1-month highs…

And the rest of the crypto space is jumping too…

This is the first time in a while that a FUD event has been so quickly dismissed by the crypto community.

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Merkel Hints At Financial Crisis In Latest Trade War Warning

Two weeks after Daimler AG became the first German car company to cut its earnings forecasts due to trade war concerns (an implicit warning that already despondent European economic data still has room to worsen), German Chancellor Angela Merkel has ratcheted up her doomsaying rhetoric, invoking the memory of the global financial crisis in a warning about the potential fallout should the US continue to press its trade war with China, Europe and the rest of the world.

According to Bloomberg, Merkel warned during a speech before Germany’s lower house of Parliament that the levies on European car makers threatened by President Trump and the Commerce Department could potentially be “much more serious” than the US’s tariffs on steel and aluminum. Instead, Merkel argued that economic cooperation is far more effective at bolstering economic growth, as the response to the global financial crisis (when the world’s largest central banks worked in concert to pump some $14 trillion into the global financial system) demonstrated.

Merkel

And in what sounded like a bit of denial about the current state of things, Merkel warned that the US must prevent the “trade conflict” with China from blossoming into an all-out “trade war,” according to the AFP (as if that hasn’t already happened).

“The international financial crisis, which ensured that we now act in the framework of the G-20, would never have been resolved so quickly, despite the pain, if we hadn’t cooperated in a multilateral fashion in the spirit of comradeship,” Merkel said on Wednesday. “This has to happen.”

[…]

“It’s worth every effort to try to defuse this conflict so it doesn’t turn into a war,” she said. “But of course it takes two sides to do that.”

President Trump’s complaints about US trade deficits are overblown, Merkel argued. If services are factored in, the US actually has a trade surplus with the EU.

“If you include services like the digital services, then you have a completely different trade balance sheet with the US showing a surplus against the EU,” she noted.

“It is almost old-fashioned to only calculate goods and not include services,” Merkel told parliament.

This is in keeping with the chancellor’s demands for a “digital tax” that would target US tech companies like Amazon, Facebook and Google.

Of course, Merkel and other European leaders’ apprehensions about a trade war haven’t stopped Brussels from slapping retaliatory tariffs on US products from bourbon to motorcycles and threatening tariffs on an additional $300 billion in US goods.

We imagine this won’t be the last plea to “make it stop” that we hear from the embattled German chancellor, who narrowly survived a challenge to her leadership over Germany’s immigration policy – especially if the eurozone continues to be rocked by disappointing economic data that have already punctured the “global synchronous recovery” narrative, as even Mario Draghi admits that “growth may have peaked.”

Europe

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