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Authored by Alastair Crooke via The Strategic Culture Foundation,

Is the prospect of looming global recession merely an economic matter, to be discussed within the framework of the Great Financial Crisis of 2008 – which is to say, whether or not, the Central Bankers have wasted their available tools to manage it? Or, is there a wider pattern of geo-political markers that may be deduced ahead of its arrival?

Fortunately, we have some help. Adam Tooze is a prize-winning British historian, now at Columbia University, whose histories of WWII (The Wages of Destruction) – and of WWI (The Deluge) tell a story of 100 years of spiraling; ‘pass-the-parcel’ global debt; of recession (some ideologically impregnated) , and of export trade models, all of which have shaped our geo-politics. These are the same variables, of course, which happen to be very much in play today.

Tooze’s books describe the primary pattern of linked and repeating events over the two wars – yet there are other insights to be found within the primary pattern: How modes of politics were affected; how the idea of ‘empire’ metamorphosed; and how debt accumulations triggered profound shifts.

But first, as Tooze notes, the ‘pattern’ starts with Woodrow Wilson’s observation in 1916, that “Britain has the earth, and Germany wants it”. Well, actually it was also about British élite fear of rivals (i.e. Germany arising), and the fear of Britain’s élites of appearing weak. Today, it is about the American élite fearing similarly, about China, and fearing a putative Eurasian ‘empire’.

The old European empires effectively ‘died’ in 1916, Tooze states: As WWI entered its third year, the balance of power was visibly tilting from Europe to America. The belligerents simply could no longer sustain the costs of offensive war. The Western allies, and especially Britain, outfitted their forces by placing larger and larger war orders with the United States. By the end of 1916, American investors had wagered two billion dollars on an Entente victory (equivalent to $560 billion in today’s money). It was also the year in which US output overtook that of the entire British Empire.

The other side to the coin was that staggering quantity of Allied purchases called forth something like a war mobilization in the United States. American factories switched from civilian to military production. And the same occurred again in 1940-41. Huge profits resulted. Oligarchies were founded; and America’s lasting interest in its outsize military-security complex was founded.

Wilson was the first American statesman to perceive that the United States had grown, in Tooze’s words, into “a power unlike any other. It had emerged, quite suddenly, as a novel kind of ‘super-state,’ exercising a veto over the financial and security concerns of the other major states of the world.”

Of course, after the war – there was the debt. A lot of it. France “was deeply in debt, owing billions to the United States and billions more to Britain. France had been a lender during the conflict too, but most of its credits had been extended to Russia, which repudiated all its foreign debts after the Revolution of 1917. The French solution was to exact reparations from Germany”.

“Britain was willing to relax its demands on France. But it owed the United States even more than France did. Unless it collected from France—and from Italy and all the other smaller combatants as well—it could not hope to pay its American debts.”

“Americans, meanwhile, were preoccupied with the problem of German recovery. How could Germany achieve political stability if it had to pay so much to France and Belgium? The Americans pressed the French to relent when it came to Germany, but insisted that their own claims be paid in full by both France and Britain. Germany, for its part, could only pay if it could export, and especially to the world’s biggest and richest consumer market, the United States. The depression of 1920 killed those export hopes. Most immediately, the economic crisis sliced American consumer demand precisely when Europe needed it most.”

Wars are frequently followed by economic downturns, but in 1920-21, US monetary authorities actually sought to drive prices back to their pre-war levels through austerity. They engineered a depression. They did not wholly succeed, but they succeeded well enough. When the US opted for massive deflation, it thrust upon every country that wished to return to the gold standard, an agonizing dilemma. Return to gold at 1913 values, and you would have to match US deflation with an even steeper deflation of your own – and accept mass unemployment as the consequence – or devalue.

Britain actually chose the course of deflation and austerity. Pretty much everybody else however, chose to devalue their currency (relative to gold), instead. But American leaders of the 1920s weren’t willing to accept this outcome. They did not want their industry and markets disturbed by a flood of cheap French and German products. In 1921 and 1923 – just as today in respect to China – America raised tariffs, terminating a brief experiment with freer trade undertaken after the election of 1912. “The world owed the United States billions of dollars, but the world was going to have to find another way of earning that money than selling goods to the United States”.

That way was found: (you can guess it) – more debt. Germany resorted to the printing press. (Printing money was the only way Germany could afford to rearm in anticipation of the WWII sequel to the First WW). The 1923 hyper-inflation that wiped out Germany’s savers, however also tidied up the country’s balance sheet. Post-inflation Germany looked like a very creditworthy borrower.

“Between 1924 and 1930, world financial flows could be simplified into a daisy chain of debt. Germans borrowed from Americans, and used the proceeds to pay reparations to the Belgians and French. The French and Belgians, in turn, repaid war debts to the British and Americans. The British then used their French and Italian debt payments to repay the United States, who set the whole crazy contraption in motion again. Everybody could see the system was crazy.”

Only the United States could fix it. It never did.

Why?

Because “[a]t the hub of the rapidly evolving, American-centered world system, there was a polity wedded to a conservative vision of its own future” [as global hegemon], Tooze opines.

The flip side to this fixation with a dollar “as good as gold” was not just the inter-war hardship of a war-ravaged Europe, but also the threat of American markets flooded with low-cost European imports: German steelmakers and shipyards underpricing their American competitors with weak marks. Such a situation also prevailed after World War II when the US acquiesced in the undervaluation of the Deutsche mark and yen precisely to aid German and Japanese recovery.

Fast forward to today – and here lies the root of Trump’s economic Zeitgeist. The US fear has returned in a new iteration: America’s global primacy is being overtaken, this time by China.

The austerity of the 1920s, and the depression that followed, eviscerated governments throughout Europe. Yet the dictatorships that replaced them were not, as Tooze emphasizes in The Wages of Destruction, reactionary absolutisms; rather, they aspired to be modernizers. And none more so, than Adolf Hitler. Tooze writes: “The originality of National Socialism was that, rather than meekly accepting a place for Germany within a global economic order dominated by the affluent English-speaking countries, Hitler sought to mobilize the pent-up frustrations of his population to mount an epic challenge to this order.

Hitler dreamed of conquering Poland, Ukraine, and Russia as a means of gaining the resources to match those of the United States, Tooze argues. “The vast landscape in between Berlin and Moscow would become Germany’s equivalent of the American West”. Hitler’s original aim, Tooze suggests, was more that of a highly modernised and industrial first Reich – a Carolingian ‘empire’, such as that instigated by the Franks after the Fall of Rome.

Although configured differently, the German National Socialist dream of a ‘modern’ Caroligian empire still underpinsan EU vision of Europe today, as its lineal descendent.

After WWII, a weakened, and chastened Europe definitively turned away from raw ‘power’; or to put it a little differently, it moved beyond power towards a different style of ‘empire’. Still Carolingian in essence – that is, with a centralized command (in the Frankish style), overseeing a self-contained world of laws and rules and tightly regulated cooperation.

But, with the post-war ethos of ‘never again’, it evolved into a millenarian project, grounded in Kant’s ‘Perpetual Peace’ – and of his ‘compelling’ logic of global governance as the only solution to the brutal politics of Hobbesian anarchy, (though Kant also feared that the “state of universal peace” made possible by world government would be an even greater threat to human freedom than the Hobbesian international order, inasmuch as such a government, with its monopoly of power, would become “the most horrible despotism”).

So, Europe lives a “postmodern system” that does not rest on a balance of power, but on “the rejection of force” and on “self-enforced rules of behaviour”. In the “postmodern world,” wrote Robert Cooper (himself a senior EU official): “raison d’état and the amorality of Machiavelli’s theories of statecraft … have been replaced by a moral consciousness” in international affairs.

The result is a paradox. The US solved the ‘Kantian paradox’ for the EU of its Liberal rejection of power politics through providing security, which rendered it unnecessary for Europe’s supranational government to provide it. Europeans did not need power to achieve peace, and neither have they needed power to preserve it.

It is precisely this paradox on which Trump has ‘zeroed-in’, in order to mobilise his base towards a new view of Europe, as a predatory trade rival. The US, faced by a rising China, is retrenching into a Hobbesian world where hard ‘power’ is paramount, and will thus be increasingly unsympathetic to European liberal, moral-concern narratives.

Here is the point: The EU initially would never have come into being, without America’s covert political engineering. And Europe was, (and still is), consequently founded on the premise of unreserved US benignity towards the EU. But that key premise no longer holds: Can a Europe on the cusp of recession successfully manage to balance away from a US now focused on trade war toward Eurasia?

What might a looming recession then portend? The pendulum will (almost certainly) now swing to the other extreme from the 1920s. Trump is a zero-interest, bail-out man. But this extreme swing in the opposite direction, however, is likely induce similar rounds of ‘daisy-chain’ sloughing-off of toxic debt onto someone – anyone – else; of competitive devaluation, and attempted deflation-export.

A substantive global recession may set the whole ‘crazy debt contraption’ in motion again. But this time, amplified by a collapsing oil price, toppling Middle Eastern states, etc. Everybody can see the system is crazy. The United States could fix it, but it never will.

It has weaponised the financial system so thoroughly that the US will never yield on the dollar status. The question is, do China and Russia have the political will – and capability – to assume the task of mounting a different financial order?

Why did the US not fix the system in the inter-war years? Because, Tooze tells us (in coded terms), the system had proved a gold-mine for the weapons-manufacturing oligarchs, and America was mightily taken with the unfolding prospect of its leading the world: the ‘American century’ ahead.

Also, before WWI, Tooze writes in The Deluge, the ability of the US to act was hindered by its ineffective political system; dysfunctional financial system, and uniquely violent racial and labor conflicts.

“America was a byword for urban graft, mismanagement and greed-fuelled politics, as much as for growth, production, and profit”.

Well the two ‘world wars’ – as principal weapons’ provider – did not make that situation much better. Oligarchic fortunes and influence blossomed. The interwar years saw the intersection of certain oligarchic interests with that of organized crime in America, and WWII saw the linking of the Italian mafia into US foreign operations – and thus to the US political class.

In 1916, the US output surpassed that of the entire British Empire. Ninety-eight years later, US output supremacy (in PPP terms) came to an end. China surpassed America. Will a more fractured, increasingly belligerent US domestic polity be able to fix the financial order, as the latter careers from one extreme to a disordered, sanctioned and tariffed other? America most likely, will once again be wedded to a “conservative” [i.e. Hobbesian] vision of pursuing its own future.

via ZeroHedge News https://ift.tt/2ZquVIB Tyler Durden

China is expected to expand its production capacity of tear gas and other crowd-control weapons, according to the South China Morning Post.

The report says China doesn’t currently supply the Hong Kong Police Force, but with the out of control civil unrest in the region, tear gas demand is expected to jump in the near term which could leave Chinese producers of the gas in an excellent position.

Mainland tear gas production began in the 1990s, and over the last decade, riot police have used tear gas in high-profile demonstrations, including protests in Wukan village in the southern province of Guangdong in 2011 and 2016.

Made-in-China tear gas has been exported to several countries abroad.

Thailand’s political crisis in 2012 forced the Royal Thai Police to fire Chinese tear gas canisters at protestors. The gas was even used during the Arab spring and at anti-government demonstrations in Sudan and Venezuela.

Analysts at Research & Markets believe the Chinese tear gas industry is likely to grow 7.4% between this year and 2025, generating around $811 million in market value over the six years.

The entire industry could be valued at $10 billion by 2022, according to a report by Allied Market Research, with China expected to be one of the hottest markets “due to strong economic growth, increased military expenditure, rapid industrial development, and growing civil unrest situations.”

Jinjian Police Equipment Manufacturing Company manufactured 20,000 tear gas hand grenades last year, according to a salesman named Han.

“Most clients are from home, but there were also foreign buyers and trading companies that eventually resold the goods abroad,” he said. “As far as I know, some of our grenades went to Algeria.”

Omega Research Foundation in 2014 said Chinese firms making crowd control weapons had quadrupled in the past decade to 134, with 48 offering products for export.

As part of a 2016 Chinese government acquisition process to supply the ministry with tear gas, 16 companies were chosen across the country to fulfill the orders. By 2018, 50 companies were bidding on contracts to provide the government with tear gas.

In the last several months, the increasing use of tear gas, rubber bullets, flashbangs, bean bag rounds, and pepper spray by the Hong Kong Police Force against anti-government protests have put Chinese firms into an excellent position to capitalize on the turmoil.

This is how Hong Kong protesters extinguish tear gas rounds fired by police pic.twitter.com/Qo8XIzGM0f

— Bloomberg TicToc (@tictoc) August 21, 2019

Hong Kong police have so far fired 1,800 rounds of tear gas this year, which it’s long-term supplier, Britain, pulled out of contracts in June over “concerns about human rights abuses.”

It’s “hugely problematic” that Hong Kong police fired tear gas from above crowds, an expert said, as seen here. “If it hits someone in the head, you could kill them,” said Jim Bueermann, former president of the Police Foundation in Washington. “I have never seen that before.” pic.twitter.com/sLsUnRO9RJ

— The New York Times (@nytimes) August 18, 2019

Tear gas is banned from the modern battlefield but is permitted by the Chemical Weapons Convention for domestic crowd control, which suggests that China could soon be exporting the gas to Hong Kong.

A saleswoman at state-owned Henan Ordnance Special Equipment Company, one of the 50 contracted tear gas suppliers, said there are some restrictions on exports.

“Foreign buyers have to provide a whole set of documents, like the end-users’ information and licenses, as well as relevant approvals from the Chinese police,” she said.

With China’s added capacity to make more tear gas coming online in the near term, it could soon supply Hong Kong as the political turmoil deepens.

via ZeroHedge News https://ift.tt/2L8dxTK Tyler Durden

Authored by Barry Brownstein via The Foundation for Economic Education,

For their unorthodox views, some physicians are being treated as medical heretics. Google’s search engine algorithm has essentially ended traffic to their websites…

In Ray Bradbury’s classic novel “Fahrenheit 451,” firemen don’t put out fires; they create fires to burn books.

The totalitarians claim noble goals for book burning: They want to spare citizens unhappiness caused by having to sort through conflicting theories.

Censorship Is Control

The real aim of censorship, in Bradbury’s dystopia, is to control the population.

Captain Beatty explains to the protagonist fireman Montag, “You can’t build a house without nails and wood. If you don’t want a house built, hide the nails and wood.” The “house” Beatty is referring to is opinions in conflict with the “official” one.

“If you don’t want a man unhappy politically, don’t give him two sides to a question to worry him; give him one. Better yet, give him none. Let him forget there is such a thing as war. If the government is inefficient, top-heavy, and tax-mad, better it be all those than that people worry over it,” Bradbury wrote.

Nobel Laureate Copes With Conflicting Opinions

When making decisions, we often face conflicting theories. Daily, we face choices about what to eat. Although the government issues ever-changing dietary guidelines, thankfully, the marketplace supports personal dietary decisions ranging from carnivore to vegan. We are free to choose our diet based on our evaluation of the available evidence and the needs of our bodies.

When we face health issues, decisions become tougher. There is an orthodox opinion, and there are always dissenting opinions. For example, the orthodoxy recommends statins to reduce high cholesterol. Others believe high cholesterol isn’t a health risk and that statins are harmful.

Nobel laureate in economics Vernon Smith was taking a prescribed statin and recently observed the impact it was having on him:

“In the last week, I had a very clear (now) experience of temporary memory loss. I did a little searching and found this article summarizing and documenting the evidence over many years,” he wrote on Facebook.

Smith continues,

“Such incidents have been widely reported, but the problem did not arise in any of the clinical trials, but neither were they designed to detect it.”

Smith had to weigh the purported benefits against the side effects.

“Statin effectiveness in reducing heart/stroke events needs to be weighed against this important negative. Since I am actively writing, this is a primal concern for me, and I have stopped taking it.”

A free person understands that there is no one “best” pathway. Although experts have the knowledge, a free person takes responsibility, makes a choice, and bears the consequences. We never know what the consequences would have been had we made a different choice.

Health Care 451

Some people don’t like to take responsibility for health choices. They prefer to do what they’re told by the doctor.

“Do you understand now why books are hated and feared?” asks Bradbury’s character professor Faber in “Fahrenheit 451.” Faber responds to his own rhetorical question:

“Because they reveal the pores on the face of life. The comfortable people want only wax moon faces, poreless, hairless, expressionless.”

Bradbury is reminding us that life is messy. Often, there is no comfortable one-size-fits-all solution to the challenges we face.

Despite the evidence against statins, the medical orthodoxy would like you to believe that those who question statins are being hoodwinked by fake news. The orthodoxy wants you to believe there is one size for all.

Duke University’s Dr. Ann Marie Navar is the associate editor of JAMA Cardiology. In her article, “Fear-Based Medical Misinformation,” she rails against the “fake medical news and fearmongering [that] plague the cardiovascular world through relentless attacks on statins.”

She writes many patients remain concerned about statin safety. In one study, concerns about statin safety were the leading reason that patients reported declining a statin, with more than 1 in 3 patients (37 percent) citing fears about adverse effects as their reason for not starting a statin after their physician recommended it.

Dr. Navar takes the position that concerns about safety are “fake medical news,” spread in part by ignorant patients via social media. Don’t worry, she counsels, reports are incorrect when they claim “that statins cause memory loss, cataracts, pancreatic dysfunction, Lou Gehrig’s disease, and cancer.”

Fake news? Dr. David Brownstein (no relation) disagrees:

“The Physicians Desk Reference states that adverse reactions associated with Lipitor include cognitive impairment (memory loss, forgetfulness, amnesia, memory impairment, and confusion associated with statin use). Furthermore, post-marketing studies have found Lipitor use associated with pancreatitis. Other researchers have reported a relationship between statin use and Lou Gehrig’s disease. Finally, peer-reviewed research has reported a relationship between statin use and cataracts. Statins being associated with serious adverse effects has nothing to do with fake news. These are facts,” he writes.

To be sure, more physicians would agree with Navar than Brownstein, but should treatments be dictated by those on one side of the argument? After all, due to human variability, statins may both save some lives and impair or kill other people.

Though some doctors question whether to prescribe statins for everyone, there is a large financial incentive to stifle debate.

Can you imagine a future government-controlled health care system, completely captured by the pharmaceutical industry, mandating statins for everyone? I can.

There are good reasons to be concerned that we are losing access to information with which to evaluate opposing sides of health issues, like the statin debate. Already Google is “burning” sites that question the medical orthodoxy about statins.

Google Tips the Scales

Mercola.com, operated by Dr. Joseph Mercola, is one of the most visited websites providing alternative views to medical orthodoxy. If I were researching statins, I would certainly read several of the essays questioning statin use and the cholesterol theory of heart disease. Essays at Mercola.com usually provide references to medical studies. Personally, since Mercola sells supplements and I am a supplement skeptic, I read his essays—like I read all medical essays—with a grain of salt.

Dr. Kelly Brogan is a psychiatrist who has helped thousands of women find alternatives to psychotropic drugs prescribed to treat depression and anxiety. In her book, “A Mind of Your Own: The Truth About Depression and How Women Can Heal Their Bodies to Reclaim Their Lives,” Brogan reports that 1 of every 7 women and 25 percent of women in their 40s and 50s are on such drugs.

“Although I was trained to think that antidepressants are to the depressed (and to the anxious, panicked, OCD, IBS, PTSD, bulimic, anorexic, and so on) what eyeglasses are to the poor-sighted, I no longer buy into this bill of goods” she writes.

For their unorthodox views, Brogan, Mercola, and others like them are treated as medical heretics. Brogan and Mercola have documented how a change in Google’s search engine algorithm has destroyed search traffic to their websites.

From time to time, Google updates algorithms determining how search results are displayed; there is nothing inherently nefarious in such actions. Google has achieved its market position by doing a better job than other search engines.

According to Mercola, before Google’s most recent June 19 algorithm update,

“Google search results were based on crowdsource relevance. An article would ascend in rank based on the number of people who clicked on it.”

After its June 19 algorithm update, Google is relying more on human “quality” raters. Google instructs raters that the lowest ratings should go to a “YMYL page with inaccurate potentially dangerous medical advice.” YMYL stands for “Your Money or Your Life.”

“We have very high Page Quality rating standards for YMYL pages because low-quality YMYL pages could potentially negatively impact users’ happiness, health, financial stability, or safety,” Google writes.

Does that sound reasonable? If a site argues for treatments other than the medical orthodoxy then, by definition, the site can arouse readers’ cause for concern and, for some people, unhappiness. Do we really want Google to assume the role of Bradbury’s firemen?

Google wants to protect you from conflicting opinions. And if you don’t think that’s a problem, imagine sometime in the future when searching for information on monetary policy, you only find results for Modern Monetary Theory.

Google thinks its intention to “do the right thing” is enough to prevent abuses; some Google employees would disagree.

Google Plays Happiness Doctor

Google isn’t eliminating access to alternative health pages; it’s making it harder to find them. Typical health searches will still generate plenty of “facts,” just not conflicting facts. In “Fahrenheit 451,” Beatty explains the government’s strategy: “Give the people contests they win by remembering the words to more popular songs or the names of state capitals or how much corn Iowa grew last year.”

Instead of “conflicting theory,” Beatty explains the strategy is to “cram” the people “full of noncombustible data, chock them so … full of ‘facts’ they feel stuffed, but absolutely ‘brilliant’ with information.”

Filled with “facts,” Beatty explains, people will “feel they’re thinking, they’ll get a sense of motion without moving.” He assures Montag that his fireman role is noble. Firemen are helping to keep the world happy.

“The important thing for you to remember, Montag, is we’re the Happiness Boys, the Dixie Duo, you and I and the others. We stand against the small tide of those who want to make everyone unhappy with conflicting theory and thought. We have our fingers in the dike. Hold steady. Don’t let the torrent of melancholy and drear philosophy drown our world. We depend on you. I don’t think you realize how important you are, to our happy world as it stands now.”

The only way Google will maintain its dominance is to continue to meet the needs of consumers. Whether Google continues to “burn” websites is up to us. Google will continue to sort out unorthodox views as long as “we” the consumer continue to rely on Google’s search engine.

via ZeroHedge News https://ift.tt/327SF5M Tyler Durden

The threshold to an armed conflict around the Persian Gulf just got even smaller.

On Monday, Iran said it had deployed two warships – a destroyer and a helicopter carrier – to protect the country’s commercial vessels around the Gulf of Aden, located between the Arabian Peninsula and Africa, and Persian Gulf region amid a growing US-driven military build-up in the volatile region, which recently culminated with several tanker seizures on both sides, the navy times reports.

Iran’s brand new destroyer Sahand and the supply ship/replenishment carrier Kharg whiuch has a helicopter pad and services as lositics support,  were deployed to the Gulf of Aden and Sea of Oman and tasked with escorting ships in international waters.

The “Sahand” commissioned in December 2018, is Iran’s most advanced home-made warship. It has a stealth hull and can travel a further than the previous class destroyers without refueling. It is equipped with surface-to-surface and surface-to-air missiles as well as anti-aircraft batteries and radar and radar evading capabilities.

Tehran’s decision to escort its cargo vessels comes at a time of escalating tensions in the Gulf, with US and UK warships operating in and around the Persian Gulf under the “defensive” premise that Iran is the aggressor behind June’s attacks on two tankers in the Strait of Hormuz. Accusing Tehran of ‘sponsoring terrorism’ and running a secret nuclear program, Washington has beefed up its military in the region with more troops and hardware, including an aircraft carrier and bombers.

In early July, the Iranian tanker Adrian Darya, previously known as Grace 1, was seized off the coast of Gibraltar for allegedly carrying oil to Syria in violation of EU sanctions. It was later released, despite US demands that it be detained again. In retaliation, Iran detained a British oil tanker in the Persian Gulf; it remains in Tehran’s custody.

The United States’ most devoted ally in Europe, the UK, is the only country, so far, to support Trump’s call for an international anti-Iran armada in the region. It has sent three new warships to reinforce its presence there in recent weeks, with the stated goal of protecting shipping lanes.

Meanwhile, after Iran’s foreign minister Javad Zarif made a surprise appearance at the G-7 summit in Biarritz over the weekend where he failed to achieve any notable diplomatic breakthroughs, he then darted off to Beijing, where he met with China’s Foreign Minister Wang Yi in Beijing. This was s the third time the Iranian FM has visited China this year, as the Iranian tries to reinforce Chinese support of Iran in its conflict with the US.

Iran and China need to join forces to counter unilateralism and “contempt for international law,” Zarif told his Chinese counterpart at a meeting in Beijing on Monday. WHile Zarif did not mention the U.S. directly in opening remarks to Wang Yi at a state guesthouse, he appeared to be referencing the administration of President Donald Trump.

China has been a close Iranian economic partner and is among the signatories to the 2015 nuclear accord, which has been unraveling since President Donald Trump pulled the U.S. out of the agreement.

“Unilateralism is on the rise. Rejection of international law, not just lack of respect for international law but in fact contempt for international law, is on the rise and we need to work together,” Zarif said, after making an impromptu five-hour visit Sunday to the seaside resort of Biarritz, where he met with French President Emmanuel Macron and French, German and British diplomats.

He said he planned to brief Wang on “the latest developments as well as my tour of Europe and my discussions in Biarritz with our French colleagues” in the nuclear agreement.

Wang said in his opening remarks that “unilateralism is rising and power politics is emerging. Facing this situation, China as a responsible country agrees to work with Iran and other countries to work together for multilateralism, the basic rules of international politics and uphold the rightful interests of each country.”

During his trip to China, which has emerged as an obvious ally in Iran’s feud with Trump, Zarif was said to focus on security in the Strait of Hormuz. It is unclear if he was successful, however if one more Chinese warships unexpectedly appear in the Persian Gulf, we will know the answer.

via ZeroHedge News https://ift.tt/2ZjZsMM Tyler Durden

Authored by Patrick Michaels and Caleb Stewart Rossiter via The Washington Examiner,

Computer models of the climate are at the heart of calls to ban the cheap, reliable energy that powers our thriving economy and promotes healthier, longer lives. For decades, these models have projected dramatic warming from small, fossil-fueled increases in atmospheric concentrations of carbon dioxide, with catastrophic consequences.

Yet, the real-world data aren’t cooperating. They show only slight warming, mostly at night and in winter. According to the United Nations’ Intergovernmental Panel on Climate Change, there has been no systematic increase in the frequency of extreme weather events, and the ongoing rise in sea level that began with the end of the ice age continues with no great increase in magnitude. The constancy of land-based records is obvious in data from the National Oceanic and Atmospheric Administration.

Should we trust these computer models of doom? Let’s find out by comparing the actual temperatures since 1979 with what the 32 families of climate models used in the latest U.N. report on climate science predicted they would be.

Atmospheric scientist John Christy developed a global temperature record of the lower atmosphere using highly accurate satellite soundings. NASA honored him for this achievement, and he was an author for a previous edition of the U.N. report. He told a House Science Committee hearing in March 2017 that the U.N. climate models have failed badly.

Christy compared the average model projections since 1979 to the most reliable observations — those made by satellites and weather balloons over the vast tropics. The result? In the upper levels of the lower atmosphere, the models predicted seven times as much warming as has been observed. Overprediction also occurred at all other levels. Christy recently concluded that, on average, the projected heating by the models is three times what has been observed.

This is a critical error. Getting the tropical climate right is essential to understanding climate worldwide. Most of the atmospheric moisture originates in the tropical ocean, and the difference between surface and upper atmospheric temperature determines how much of the moisture rises into the atmosphere. That’s important. Most of earth’s agriculture is dependent upon the transfer of moisture from the tropics to temperate regions.

Christy is not looking at surface temperatures, as measured by thermometers at weather stations. Instead, he is looking at temperatures measured from calibrated thermistors carried by weather balloons and data from satellites. Why didn’t he simply look down here, where we all live? Because the records of the surface temperatures have been badly compromised.

Globally averaged thermometers show two periods of warming since 1900: a half-degree from natural causes in the first half of the 20th century, before there was an increase in industrial carbon dioxide that was enough to produce it, and another half-degree in the last quarter of the century.

The latest U.N. science compendium asserts that the latter half-degree is at least half manmade. But the thermometer records showed that the warming stopped from 2000 to 2014. Until they didn’t.

In two of the four global surface series, data were adjusted in two ways that wiped out the “pause” that had been observed.

The first adjustment changed how the temperature of the ocean surface is calculated, by replacing satellite data with drifting buoys and temperatures in ships’ water intake. The size of the ship determines how deep the intake tube is, and steel ships warm up tremendously under sunny, hot conditions. The buoy temperatures, which are measured by precise electronic thermistors, were adjusted upwards to match the questionable ship data. Given that the buoy network became more extensive during the pause, that’s guaranteed to put some artificial warming in the data.

The second big adjustment was over the Arctic Ocean, where there aren’t any weather stations. In this revision, temperatures were estimated from nearby land stations. This runs afoul of basic physics.

Even in warm summers, there’s plenty of ice over much of the Arctic Ocean. Now, for example, when the sea ice is nearing its annual minimum, it still extends part way down Greenland’s east coast. As long as the ice-water mix is well-stirred (like a glass of ice water), the surface temperature stays at the freezing point until all the ice melts. So, extending land readings over the Arctic Ocean adds nonexistent warming to the record.

Further, both global and United States data have been frequently adjusted. There is nothing scientifically wrong with adjusting data to correct for changes in the way temperatures are observed and for changes in the thermometers. But each serial adjustment has tended to make the early years colder, which increases the warming trend. That’s wildly improbable.

In addition, thermometers are housed in standardized instrument shelters, which are to be kept a specified shade of white. Shelters in poorer countries are not repainted as often, and darker stations absorb more of the sun’s energy. It’s no surprise that poor tropical countries show the largest warming from this effect.

All this is to say that the weather balloon and satellite temperatures used in Christy’s testimony are the best data we have, and they show that the U.N.’s climate models just aren’t ready for prime time.

via ZeroHedge News https://ift.tt/2NEUKlI Tyler Durden

Could the Group of Seven countries again become the Group of Eight – as it was known between 1997 and 2014 when Russia was included among the summit of the top IMF-designated advanced economies in the world?

Trump re-upped his position that it should eventually happen, as he described before reporters at the close of the G7 in Biarritz, France on Monday:

There were a lot of things that we were discussing and it would have been easy if Russia were in the room… Yesterday we were discussing four or five matters, and Russia was literally involved in all of those… matters.

Currently the G7 includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. President Trump said he’d “certainly” invite Russian President Vladimir Putin to next year’s G7 summit as a guest.

After 2014 Russia was essentially booted from the summit as relations with the Obama White House broke down over the Ukraine crisis and the Crimea issue.

As part of his remarks about Russia, Trump did indicate that Putin would very unlikely agree to attending merely with “guest” status. 

“Those are tough circumstances. He was a part of G8, and all of a sudden he’s out,” Trump explained. “That’s a pretty tough thing for him. He’s a proud person.”

WATCH: @Yamiche asks President Trump about his calls for Russia to rejoin the G-7, what the political impact might be and why he repeats a misleading statement that “Putin outsmarted” former President Obama. pic.twitter.com/Yjoc9Fv8HE

— PBS NewsHour (@NewsHour) August 26, 2019

Trump then sparred with a reporter over assertions that Obama had been “outsmarted” by Putin regarding Crimea, which led to Russia taking control of the vital strategic territory.

“President Obama was helping Ukraine. Crimea was annexed during his term… President Obama was pure and simply outsmarted… it could have been stopped,” Trump said.

Meanwhile, though ‘RussiaGate’ has been conspicuously absent from the 24/7 coverage it once received for the prior couple years, Trump’s daring to admit that a number of global issues “would have been easier” if Russia’s leader had been in the room was met with widespread scorn in the mainstream media. 

Journalists claimed one key G7 dinner was “ruined” over Trump’s insistence that Russia would be vital to discussions:

During the seaside meal, French president Emmanuel Macron and European Council president Donald Tusk opposed Trump’s demands. A diplomat present told the publication that the evening was tense: “Most of the other leaders insisted on this being a family, a club, a community of liberal democracies and for that reason they said you cannot allow president Putin — who does not represent that — back in.”

Apparently Italian prime minister Giuseppe Conte, who formally announced his resignation early this week, was the only G7 leader present to back Trump’s proposal. 

via ZeroHedge News https://ift.tt/33WOPyd Tyler Durden

Authored by Nouriel Roubini via Project Syndicate,

There are three negative supply shocks that could trigger a global recession by 2020. All of them reflect political factors affecting international relations, two involve China, and the United States is at the center of each. Moreover, none of them is amenable to the traditional tools of countercyclical macroeconomic policy.

The first potential shock stems from the Sino-American trade and currency war, which escalated earlier this month when US President Donald Trump’s administration threatened additional tariffs on Chinese exports, and formally labeled China a currency manipulator.

The second concerns the slow-brewing cold war between the US and China over technology. In a rivalry that has all the hallmarks of a “Thucydides Trap,” China and America are vying for dominance over the industries of the future: artificial intelligence (AI), robotics, 5G, and so forth. The US has placed the Chinese telecom giant Huawei on an “entity list” reserved for foreign companies deemed to pose a national-security threat. And although Huawei has received temporary exemptions allowing it to continue using US components, the Trump administration this week announced that it was adding an additional 46 Huawei affiliates to the list.

The third major risk concerns oil supplies. Although oil prices have fallen in recent weeks, and a recession triggered by a trade, currency, and tech war would depress energy demand and drive prices lower, America’s confrontation with Iran could have the opposite effect. Should that conflict escalate into a military conflict, global oil prices could spike and bring on a recession, as happened during previous Middle East conflagrations in 1973, 1979, and 1990.

All three of these potential shocks would have a stagflationary effect, increasing the price of imported consumer goods, intermediate inputs, technological components, and energy, while reducing output by disrupting global supply chains. Worse, the Sino-American conflict is already fueling a broader process of deglobalization, because countries and firms can no longer count on the long-term stability of these integrated value chains. As trade in goods, services, capital, labor, information, data, and technology becomes increasingly balkanized, global production costs will rise across all industries.

Moreover, the trade and currency war and the competition over technology will amplify one another. Consider the case of Huawei, which is currently a global leader in 5G equipment. This technology will soon be the standard form of connectivity for most critical civilian and military infrastructure, not to mention basic consumer goods that are connected through the emerging Internet of Things. The presence of a 5G chip implies that anything from a toaster to a coffee maker could become a listening device. This means that if Huawei is widely perceived as a national-security threat, so would thousands of Chinese consumer-goods exports.

It is easy to imagine how today’s situation could lead to a full-scale implosion of the open global trading system. The question, then, is whether monetary and fiscal policymakers are prepared for a sustained – or even permanent – negative supply shock.

Following the stagflationary shocks of the 1970s, monetary policymakers responded by tightening monetary policy. Today, however, major central banks such as the US Federal Reserve are already pursuing monetary-policy easing, because inflation and inflation expectations remain low. Any inflationary pressure from an oil shock will be perceived by central banks as merely a price-level effect, rather than as a persistent increase in inflation.

Over time, negative supply shocks tend also to become temporary negative demand shocks that reduce both growth and inflation, by depressing consumption and capital expenditures. Indeed, under current conditions, US and global corporate capital spending is severely depressed, owing to uncertainties about the likelihood, severity, and persistence of the three potential shocks.

In fact, with firms in the US, Europe, China, and other parts of Asia having reined in capital expenditures, the global tech, manufacturing, and industrial sector is already in a recession. The only reason why that hasn’t yet translated into a global slump is that private consumption has remained strong. Should the price of imported goods rise further as a result of any of these negative supply shocks, real (inflation-adjusted) disposable household income growth would take a hit, as would consumer confidence, likely tipping the global economy into a recession.

Given the potential for a negative aggregate demand shock in the short run, central banks are right to ease policy rates. But fiscal policymakers should also be preparing a similar short-term response. A sharp decline in growth and aggregate demand would call for countercyclical fiscal easing to prevent the recession from becoming too severe.

In the medium term, though, the optimal response would not be to accommodate the negative supply shocks, but rather to adjust to them without further easing. After all, the negative supply shocks from a trade and technology war would be more or less permanent, as would the reduction in potential growth. The same applies to Brexit: leaving the European Union will saddle the United Kingdom with a permanent negative supply shock, and thus permanently lower potential growth.

Such shocks cannot be reversed through monetary or fiscal policymaking. Although they can be managed in the short term, attempts to accommodate them permanently would eventually lead to both inflation and inflation expectations rising well above central banks’ targets. In the 1970s, central banks accommodated two major oil shocks. The result was persistently rising inflation and inflation expectations, unsustainable fiscal deficits, and public-debt accumulation.

Finally, there is an important difference between the 2008 global financial crisis and the negative supply shocks that could hit the global economy today. Because the former was mostly a large negative aggregate demand shock that depressed growth and inflation, it was appropriately met with monetary and fiscal stimulus. But this time, the world would be confronting sustained negative supply shocks that would require a very different kind of policy response over the medium term. Trying to undo the damage through never-ending monetary and fiscal stimulus will not be a sensible option.

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There’s been a flurry of threats and counter-threats after pro-Iran allies in Lebanon, Syria and Iraq were all hit in suspected Israeli strikes in the space of less than 24 hours, signalling a new aggression out of Tel Aviv and willingness to risk yet another major Middle East war. Indeed Lebanon’s southern border with Israel is heating up once again in the worst tensions since the devastating 2006 war. 

Hezbollah secretary general Hassan Nasrallah has vowed to shoot down any Israeli aircraft violating Lebanon’s sovereign airspace after early Sunday a pair of drones targeted Hezbollah offices in south Beirut, and further after a follow-up drone strike reached deep into Lebanon, killing a Palestinian paramilitary commander (of the PFLP-GC) in the Bekaa Valley.

“Hezbollah will endeavor to down all Israeli drones, which may violate Lebanon’s airspace,” Nasrallah pledged in a televised speech. “The era of the Israeli military’s undeterred attacks on Lebanon has come to an end. Hezbollah will tolerate no more Israeli drones penetrating Lebanese airspace,” Nasrallah said. 

Simultaneously, Lebanese President Michel Aoun on Monday said the drone strikes amount to a “declaration of war” and convened an emergency meeting of the country’s top military and security chiefs. 

Meanwhile in a potential return to the precise lead-up to the month-long 2006 war, which saw the Israel Defense Forces conduct a heavy bombing campaign across southern Lebanon all the way into Beirut, including the international airport, Tel Aviv is now signaling its forces won’t differentiate between Hezbollah and the Lebanese state.

This according to Axios’ Barak Ravid, who described a phone call between Pompeo and Lebanese Prime Minister Saad Hariri:

Israeli officials tell me Netanyahu told Pompeo in their phone call on Sunday that he should convey to Hariri that if Hezbollah attacks Israel, Israel won’t differentiate between Hezbollah and the Lebanese government and will retaliate against the Lebanese state as a whole.

Pompeo had over the weekend expressed support for Israel’s ability to “defend itself” from the encroaching “Iran threat”. Specifically during the latest weekend Israeli strikes on Syria officials claimed to have thwarted an Iran-backed “killer drone attack” being planned. 

In 2006 Israel waged “total war” on Lebanon, bombing cities, villages, roads, and infrastructure in its failed attempt to root out Hezbollah. 

Meanwhile, during the evening hours (local time) along the Israeli-Lebanon border the IDF has reportedly been releasing flares over the area amid concerns Hezbollah could be ready to launch an attack. 

Nasrallah during his Sunday speech warned that the Israeli military would soon face a reprisal attack. 

“I say to the Israeli army along the border, from tonight be ready and wait for us,” he said. “What happened yesterday will not pass.”

“We will not allow the clock to be turned back. We will not allow Lebanon to be violated by bombardment, killing or explosions, nor the violation of sanctities. This for us is a red line,” Nasrallah said.

He was specifically echoing words used by Israeli officials during the 2006 war, who said they would unleash destruction on Lebanon which would “turn back the clock” on its national development. 

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