Category: zerohedge

Authored by Elijah Magnier, Middle East based chief international war correspondent for Al Rai Media

Syria will adopt a new rule of engagement with Israel now that Russia has taken a tougher and clearer stance on the conflict between Israel and the “Axis of the Resistance”. Henceforth, Damascus will be responding to any Israeli strike. If it damages a specific military target it will reply with a strike against a similar objective in Israel. Decision makers in Damascus said, “Syria will not hesitate to hit an Israeli airport if Damascus airport is targeted and hit by Israel. This will be with the consent of the Russian military based in the Levant.”

This Syrian political decision is based on the clear position taken by Russia in Syria following the downing of its aircraft on September 18 this year. In 2015 when the Russian military landed in Syria, it informed the parties concerned (i.e. Syria, Iran and Israel) that it had no intention to interfere in the conflict between them and Hezbollah and that it would not stand in the way of Tel Aviv’s planes bombing Hezbollah military convoys on their way to Lebanon or Iranian military warehouses not allocated to the war in Syria.

This was a commitment to remain an onlooker if Israel hit Iranian military objectives or Hezbollah convoys transporting arms to Hezbollah from Syria to Lebanon, within Syrian territory. Russia also informed Israel that it would not accept any attacks on its allies (Syria, Iran, Hezbollah, and their allies) engaged in fighting ISIS, al-Qaeda and its allies. Israel respected the will of Moscow until the beginning of 2018, when it started to attack Iranian bases and Syrian military warehouses, though it never attacked a Hezbollah military position. Israel justified its attack against the Iranian base, a military facility called T4, by claiming it had sent drones over Israel.

Tel Aviv considered violation of its neighbors’ sovereignty as its exclusive prerogative. Damascus and Iran have responded with at least one confirmed shooting down of an Israeli F-16. Israel started to attack Syrian warehouses, mainly where Iranian missiles were stored. Iran has replaced every single destroyed warehouse with other more sophisticated precision missiles, capable of hitting any objective in Israel.

However, Russia’s neutrality towards Israel in the Levant turned out to be quite expensive. It has lost more than Iran, especially after the downing of its IL-20, and with it, 15 officers highly trained to use the most advanced communication and espionage systems.

Russia then brought to Syria its long-awaited advanced S-300 missiles and delivered them to the Syrian army while maintaining electronic coordination and radar command. The S-300 poses a danger to Israeli jets only if these violate Syrian airspace. Tel Aviv has kept its planes out of Syria since last September but launched long range missiles against a couple of targets.

For many months, the Russian President Vladimir Putin refused to receive Israeli Prime Minister Benjamin Netanyahu. Only through real harassment by the latter did Putin finally accept to briefly meet with Netanyahu over lunch or around the dinner table during a large Summit or meeting of Heads of State, without however accepting any compromise or reconciliation. Russia has now taken a clear position and has no intention of extending its embrace or pardon to Israel. Russia felt that its generosity (by closing its eyes to Israel’s activities in Syria) was neither recognized nor sufficiently appreciated by Tel Aviv. 

This past week, Moscow agreed to receive an Israeli military delegation led by Major-General Aharon Haliva, following Israel’s insistence on breaking the ice between the two countries. However, Russia’s position is not expected to change in Syria and no Israeli bombing of Syrian or Iranian targets will be tolerated.

IDF delegation returns from Moscow after Northern Shield, Syria talks https://t.co/mVAFUJASMi

— The Jerusalem Post (@Jerusalem_Post) December 12, 2018

According to these sources: 

“Russia has informed Israel that there are Russian officers present at every Syrian or Iranian military base and that any strike against Syrian or Iranian objectives would hit Russian forces as well. Putin will not allow his soldiers and officers to be struck down by Israel’s direct or indirect bombing”.

Moreover, Russia has given Syria the green light — said the source — to strike Israel at any time if and when Tel Aviv’s planes launch raids against Syrian military targets or launch long-range missiles without flying over Syria (for fear of the S-300 and to avoid seeing its jets downed over Syria or Lebanon). 

The source confirmed that Syria — contrary to what Israel claims — now has the most accurate missiles, which can hit any target inside Israel. The Syrian armed forces have received unrevealed long and medium-range missiles from Iran. These operate on the GLONASS system – the abbreviation for Globalnaya Navigazionnaya Sputnikovaya Sistema, the Russian version of the GPS. Thus, the delivery of Iran and the manufacture of missiles inside Syria (and Lebanon) is now complete.

Israel, however, claims it has destroyed Syria’s missile capability, including that of the missiles delivered by Iran. According to the source, Damascus controls a very large number of precision missiles, notwithstanding those destroyed by Israel. “In Iran, the cheapest and most accessible items are the Sabzi and the missiles”, said the source.

The new Syrian rule of engagement — according to the source — is now as follows: an airport will be hit if Israel hits an airport, and any attack on a barracks or command and control center will result in an attack on similar target in Israel. It appears that the decision has been taken at the highest level and a clear “bank of objectives” has now been set in place.

The rules of engagement are changing and situation in the Levant theatre is becoming more dangerous; regional and international confrontations are still possible. The Middle East will not return to stability unless the Syrian war ends — a war in which the two superpowers, as well as Europe, Israel, Jordan, Saudi Arabia and Qatar, have played essential roles. The final chapters have not yet been written.

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It is not surprising whatsoever that millions of people have a pornography addiction. To be more specific: There are over 125 million daily visits to Pornhub sites, according to Pornhub’s research and analysis blog, Pornhub Insights. 

Pornhub Insights blog has shown that 2018 was an incredible year with lots of searches, celebrities, and events that influenced what people searched on Pornhub. Here are some of those impressive stats: 

According to Pornhub, the website saw more than 33.5 billion views in 2018, which is about a 5 billion visit jump over 2017. 

“That equates to a daily average of 92 million visitors—and at the time of this writing, Pornhub’s daily visits now exceed 100 million…To put that into perspective, that’s as if the combined populations of Canada, Poland and Australia all visited Pornhub every day!”

“Every minute, 63,992 new visitors arrive at Pornhub, 207,405 videos are watched and 57,750 searches are performed. 55 of those video views are of Kim Kardashian’s sex tape, which is still Pornhub’s most watched video of all time at 195 million views.

12 new videos and 2 hours of content are uploaded to Pornhub every minute while 7708 Gigabytes of data are transferred worldwide. Pornhub’s users view 13,962 profiles, follow 593 other users, accept 167 friend requests and send 122 messages. 271 videos are rated, 528 are added to playlists and 22 new comments are left, the report said.”

Mainstream media and pop culture events often influence Pornhub’s top searches. So, it is no surprise that pornstar (and alleged pre-presidential mistress) Stormy Daniels ranked number on the list of searches that defined 2018. 

Searches for the video game ‘Fortnite’ made it to the website’s top 20 list this year. Each time new Fortnite characters were released, searches on Pornhub would surge.

According to Dr. Laurie Betito, Director of the Pornhub Sexual Wellness Center, “searches like these serve as an indication that people use this site to not only satisfy sexual urges but also to get a different angle on something they are already interested in. To see a famous character or hot topic in a sexual context.”

Fantasy plays a significant role in pornography, so it makes sense that people want to see their favorite video game character or celebrity in a porno. In April, when Fortnite’s servers crashed, searches for Fortnite increased by as much as 60% over 24 hours, said Pornhub research.

Pornhub’s top 4 searches by volume remained the same from 2017 to 2018: These included ‘lesbian’, ‘hentai’, ‘milf’ and ‘stepmom’. “Contrary to popular belief, men are not just interested in youthful bodies,” notes Dr. Laurie. “They like the idea of an older, experienced woman and may care less about the perfection of her body.”

Many people believe Sunday is about the Lord’s Day. Then after a few hours of church service, the afternoon becomes a day of flipping between the PGA, NFL, and of course, NASCAR Cup series races on television, but that is not so much the case, millions sit down and watch porn. 

“Sunday is the most popular day to visit Pornhub, while Friday tends to have the lowest traffic. A lot of that has to do with the hours people prefer to watch porn. Peak viewing times are usually from 10 p.m. to midnight, but on weekends (as people tend to stay up a later, go out more, and sleep in longer), the viewing time shifts more into the morning hours.”

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Authored by Sara Carter via SaraCarter.com,

The Special Counsel’s Office released key documents related to former National Security Advisor Lt. Gen. Michael Flynn Friday. Robert Mueller’s office had until 3 p.m. to get the documents to Judge Emmet Sullivan, who demanded information Wednesday after bombshell information surfaced in a memorandum submitted by Flynn’s attorney’s that led to serious concerns regarding the FBI’s initial questioning of the retired three-star general.

The highly redacted documents included notes from former Deputy Director Andrew McCabe regarding his conversation with Flynn about arranging the interview with the FBI. The initial interview took place at the White House on Jan. 24, 2017.

The documents also include the FBI’s  “302” report regarding Flynn’s interview with anti-Trump former FBI Agent Peter Strzok and FBI Agent Joe Pientka when they met with him at the White House. It is not, however, the 302 document from the actual January, 2017 interview but an August, 2017 report of Strzok’s recollections of the interview.

Flynn’s attorney’s had noted in their memorandum to the courts that the documents revealed that FBI officials made the decision not to provide Flynn with his Miranda Rights, which would’ve have warned him of penalties for making false statements.

“The agents did not provide Gen. Flynn with a warning of the penalties for making a false statement under 18 U.S.C. 1001 before, during, or after the interview,” the Flynn memo says.

According to the 302, before the interview, McCabe and other FBI officials “decided the agents would not warn Flynn that it was a crime to lie during an FBI interview because they wanted Flynn to be relaxed, and they were concerned that giving the warnings might adversely affect the rapport.”

McCabe, who has since been fired for lying to the DOJ’s Office of Inspector General about leaking information to the media, also asked Flynn not to have his lawyer present during the initial meeting with the FBI agents.

The July 2017 report, however, was the interview with Strzok. It described his interview with Flynn but was not the original Flynn interview.

Apparent discrepancies within the 302 documents are being questioned by may former senior FBI officials, who state that there are stringent policies in place to ensure that the documents are guarded against tampering.

On Thursday, FBI Supervisory Agent Jeff Danik told SaraACarter.com that Sullivan must also request all the communications between the two agents, as well as their supervisors around the August 2017 time-frame in order to get a complete and accurate picture of what transpired. Danik, who is an expert in FBI policy, says it is imperative that Sullivan also request “the workflow chart, which would show one-hundred percent, when the 302s were created when they were sent to a supervisor and who approved them.”

He stressed, “the bureau policy – the absolute FBI policy – is that the notes must be placed in the system in a 1-A file within five days of the interview.” Danik said that the handwritten notes get placed into the FBI Sentinel System, which is the FBI’s main record keeping system. “Anything beyond five business days is a problem, eight months is a disaster,” he added.

In the redacted 302 report Strzok and Pientka said they “both had the impression at the time that Flynn was not lying or did not think he was lying.” Information that Flynn was not lying was first published and reported by SaraACarter.com.

Flynn was found guilty by Mueller on one count of lying to the FBI. Supporters of Flynn have questioned Mueller’s tactics in getting the retired three-star general to plead guilty to this one count of lying.

In the report, the two agents describe Flynn as being very open and noted said Flynn “clearly saw the FBI agents as allies.” Flynn is described as discussing a variety of  “subjects.”  The report includes his openness regarding Trump’s “knack for interior design,” the hotels he stayed at during his campaign, as well as other issues.

“Flynn was so talkative, and had so much time for them, that Strzok wondered if the national security adviser did not have more important things to do than have a such a relaxed, non-pertinent discussion with them,” it said.

The documents turned over by Mueller also reveal that other FBI personnel “later argued about the FBI’s decision to interview Flynn.”

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Most Americans say they didn’t get a pay raise at their current job, or start a better paying job in the last 12 months, according to a Wednesday survey from Bankrate.com. 

According to the poll, 62% of Americans report not getting a pay raise or better paying job in the past year – up from 52% last surveyed last year. That said, just 25% of respondents in this year’s survey said they would look for a new job in the next year. 

Mike Gnitecki, a licensed paramedic in Longview, Texas, is one of the Americans whose wages flatlined.

Because of a pay freeze at his previous employer, the University of Texas Health hospital system, he hadn’t seen a pay increase for the past three years. He’s been stuck at a base pay of $43,500 a year, with the opportunity for overtime.

“It basically feels like my pay has dropped each year due to normal cost-of-living increases,” Gnitecki says. “At the same time, my experience and responsibility has increased.” –Bankrate.com

32% of those polled by Bankrate said they received a raise, vs. 38% last year, while just 11% of respondents got a better paying job – down from 18% last year. 

After feeling “frustrated,” Gnitecki reached a turning point and found a similar paramedic job with a “decent increase” in pay and benefits, which he starts this month. 

“It feels really good because it kind of feels like I’m being paid how much I should be paid,” he said, adding “I’m very glad I made the switch.”

As Marketwatch notes, meanwhile, the average CEO at the largest 350 companies in the US received a 17.6% increase in pay in 2017 – clocking in at an average of $18.9 million, according to an August study from the Economic Policy Institute. 

Bankrate Chief Financial Analyst Greg McBride says that while the economy might be doing great right now, however productivity isn’t following suit and may explain the stagnation in wage growth. 

“The economy might be doing better, but employees aren’t cranking out more output per hour of work,” said McBride.

“A technological advancement or breakthrough could help, and in a lot of ways, just how work is done could be more efficient in the workplace.”

According to Bankrate, young workers aged 18-27 were the most likely to receive a promotion or new job responsibilities that resulted in a pay raise, and were the most likely group to say they will seek a new job in the next 12 months. 

Among all respondents who got a raise, 37 percent reported it being performance-based, showing no difference from last year’s survey. About 29 percent cited raises because of a promotion or new job responsibilities, up from 24 percent last year. About 27 percent stated a raise was given as a cost-of-living increase, also unchanged from last year. Just 4 percent cited a raise for some other reason. –Bankrate.com

Baby boomers, meanwhile, were the least likely to get a raise according to the survey. 

Older baby boomers, ages 64-72, had the highest incidence of reporting neither a pay raise nor a better paying job, at 79 percent. This generation is at their peak earning potential, McBride says, and opportunities tend to dissipate at this stage. –Bankrate.com

Despite the lack of wage growth, the Bankrate survey found that 91% of those polled had the same or greater confidence in the job market than one year ago, while just 9% said they have lower confidence. Of course, the caveat is that those making more money felt better about how things are going; 38% of those earning above $75,000 per year had increased confidence in the job market, while 24% of households making under $30,000 said the same. 

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Authored by John Rubino via DollarCollapse.com,

Despite all the ominous press being devoted to the soon-to-be-inverted yield curve, it’s not always clear why such a thing matters. In other words, how, exactly does a line on a graph slipping below zero translate into a recession and equities bear market, with all the turmoil that those things imply?

The answer (which is both simple and really easy to illustrate with charts) is that banks – the main driver of our hyper-finacialized society – still make at least some of their money by borrowing short and lending long. They take money that’s deposited into savings accounts and short-term CDs (or borrowed in the money markets) and lend it to businesses and home buyers for years or decades. In normal times long-term rates are higher than short-term to compensate lenders for tying their money up for longer periods. The banks earn that spread, which can be substantial if borrowers make their payments.

When the yield curve flattens and then inverts – that is, when short rates exceed long rates – banks lose the ability to make money this way. They lend less, which restricts building and buying and spooks the broader markets.

So, here’s the flattening, apparently soon-to-invert yield curve:

And here’s how bank stocks are behaving in response. The following chart is for the BKX bank stock ETF that includes all the major US banks.

Note how it was stable for the first nine months of the year and then fell off a cliff as it became clear that the yield curve really was going to invert.

Reuters conducted a poll of bond analysts that illustrates how fast things are changing:

U.S. Yield Curve to Invert in 2019, Recession to Follow: Reuters Poll

The U.S. Treasury yield curve will invert next year, possibly within the next six months, much earlier than forecast just three months ago, with a recession to follow as soon as a year after that, a Reuters poll showed on Thursday.

The two-year Treasury yield is forecast to rise to 3.20 percent in the next 12 months, from around 2.78 percent on Wednesday, according to the Reuters poll of more than 70 bond market strategists taken Dec. 6-12. The 10-year bond yield was expected to rise to 3.30 percent from about 2.90 in a year.

While that would put the yield spread between the two-year and 10-year Treasuries in a year around where it is now, at around 10 basis points, about 40 percent of respondents forecast that gap to be zero or negative in the next 12 months.

Just in the last three months, the yield spread has collapsed by two-thirds from just over 30 basis points. That has coincided with one of the most tumultuous periods on global equity markets since late August.

Thirty of more than 40 strategists who answered an extra question expect the 2s-10s yield spread to become negative in the next 12 months, including 15 who said within the next 6 months. Half of 26 strategists in the poll expect a U.S. recession to follow that inversion within the next two years.

While there is no set pattern on how long it takes for a recession to hit once the yield curve has flipped, it took about 18 months before the last deep recession about a decade ago.

The conclusion: Sentiment in the bond market – and by implication the broader economy – took a huge hit in the past couple of months.

[ZH: As did the market’s expectations for the Fed rate trajectory]

And since in a fiat currency system sentiment is everything, it should be no surprise that banks are down and taking the rest of the stock market along for the ride.

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Any confidence boost that might have followed Theresa May’s triumph this week over her party’s implacable Brexiteers has probably already faded. Because if there was anything to be learned from the stunning rebuke delivered to the prime minister by EU leaders on Thursday, it’s that the prime minister is looking more stuck than ever.

This was evidenced by the frosty confrontation between the imperturbable May and her chief Continental antagonist, European Commission President Jean Claude Juncker, which was caught on film on Friday shortly before the close of a two-day European Council summit that descended into bitter recriminations. After offering token praise of May’s leadership, Brussels’ supreme bureaucrat criticized her negotiating strategy as “disorganized”, provoking a heated response from May.

Earlier, May desperately pleaded with her European colleagues – who had adamantly insisted that the text of the withdrawal agreement would not be altered – to grant her “legally binding assurances” May believes would make the Brexit plan palatable enough to win a slim victory in the Commons.

If there were any lingering doubts about the EU’s position, they were swiftly dispelled by a striking gesture of contempt for May: Demonstrating the Continent’s indifference to her plight, the final text of the summit’s conclusions was altered to remove a suggestion that the EU consider what further assurances can be offered to May, while leaving in a resolution to continue contingency planning for a no-deal Brexit.

Even the Irish, who in the recent past have been sympathetic to their neighbors’ plight (in part due to fears about a resurgence of insurrectionary violence should a hard border re-emerge between Northern Ireland and the Republic of Ireland), implied that there patience had reached its breaking point.

Here’s the FT:

But Leo Varadkar, the Irish premier, warned that the EU could not tolerate a treaty approval process where a country “comes back every couple of weeks following discussions with their parliament looking for something extra…you can’t operate international relations on this basis.”

Senior EU officials are resisting further negotiations — and suggestions of a special Brexit summit next month — because they see Britain’s requests as in effect a bid to rewrite the exit treaty.

Mr Varadkar noted that many prime ministers had been called to Brussels “at short notice” for a special Brexit summit “on a Sunday in November,” adding: “I don’t think they would be willing to come to Brussels again unless we really have to.”

In response, May threatened to hold a vote on the Brexit plan before Christmas, which would almost certainly result in its defeat, scrapping the fruits of more than a year of contentious negotiations.

Given that Mrs May aborted a Commons vote on her deal this week because she feared defeat by a “significant margin,” her comments amounted to a threat that she would let MPs kill the withdrawal agreement before Christmas.

Mrs May made the threat to German chancellor Angela Merkel, French president Emmanuel Macron and EU presidents Jean-Claude Juncker and Donald Tusk as the two day Brussels summit descended into acrimony, according to diplomats.

“At the point where there is no prospect of getting anything more from the EU, that’s when you would have to put the vote,” said one close aide to Mrs May.

If this week has taught May anything, it’s that her plan to pressure the EU into more concessions (her preferred option to help her pass the Brexit plan) was an unmitigated failure. And given that running out the clock and hoping that MPs come around at the last minute (when the options truly have been reduced to ‘deal’ or ‘no deal’) leaves too much room for market-rattling uncertainty, May is left with a few options, two of which were previously ‘off the table’ (though she has distanced herself from those positions in recent weeks).

They are: Calling a second referendum, delaying a Brexit vote, pivoting to a softer ‘Plan B’ Brexit, or accepting a ‘no deal’ Brexit. As the BBC reminds us, May is obliged by law to put her deal to a vote by Jan. 21, or go to Parliament with a Plan B.

If May does decide to run down the clock, she will have two last-minute options:

On the one hand she could somehow cancel, delay, soften or hold another referendum on Brexit and risk alienating the 17.4 million people who voted Leave.

But on the other hand, she could go for a so-called Hard Brexit (where few of the existing ties between the UK and the EU are retained) and risk causing untold damage to the UK’s economy and standing in the world for years to come.

Alternatively, May could accept the fact that convincing the Brexiteers is a lost cause, and try to rally support among Labour MPs for a ‘softer’ Brexit plan, one that would more countenance closer ties with the EU during the transition, and ultimately set the stage for a closer relationship that could see the UK remain part of the customs union and single market. Conservatives are also increasingly pushing for a ‘Plan B’ deal that would effectively set the terms for a Norway- or Canada-style trade deal.

But as JP Morgan and Deutsche Bank anticipated last week, a second referendum (which supporters have nicknamed a “People’s Vote”) is becoming increasingly popular, even among MPs who supported the ‘Leave’ campaign, according to Bloomberg.

It’s not the only previously unthinkable idea that May has talked about this week. Fighting off a challenge to her leadership from pro-Brexit Conservative members of Parliament, the premier warned that deposing her would mean delaying Britain’s departure from the European Union. That’s not something she admitted was possible last month.

The argument for a second referendum advanced by one minister was simple: If nothing can get through Parliament — and it looks like nothing can — the question needs to go back to voters.

While campaigners for a second vote have mostly been those who want to reverse the result of the last one and keep Britain inside the EU, that’s not the reason a lot of new supporters are coming round to the idea.

One Cabinet minister said this week he wanted a second referendum on the table to make clear to Brexit supporters in the Conservative Party that the alternative to May’s deal is no Brexit at all.

Even former UKIP leader Nigel Farage is urging his supporters to be ready for a second referendum:

Speaking at rally in London, Press Association quoted Farage as saying: “My message folks tonight is as much as I don’t want a second referendum it would be wrong of us on a Leave Means Leave platform not to get ready, not to be prepared for a worst-case scenario.”

Putting pressure on Brexiteers is also the reason there’s more talk of delaying the U.K.’s departure. At the moment, many Brexit-backers are talking openly about running down the clock to March so they can get the hard Brexit they want. Extending the process — which is easier than many appreciate — takes that strategy off the table.

Labour leader Jeremy Corbyn has continued to call for May to put her deal to a vote principally because its defeat is a necessary precursor for another referendum (or a no-confidence vote pushed by an alliance between Labour, and some combination of rebel Tories, the SNP and the DUP).

“The last 24 hours have shown that Theresa May’s Brexit deal is dead in the water,” said Labour leader Jeremy Corbyn. “She’s failed to deliver any meaningful changes. Rather than ploughing ahead and recklessly running down the clock, she needs to put her deal to a vote next week so Parliament can take back control.”

The upshot is that the Brexit trainwreck, which has been stuck at an impasse for months, could finally see some meaningful movement in the coming weeks. Which means its a good time to bring back this handy chart illustrating the many different outcomes that could arise:

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Authored by EconomicPrism’s MN Gordon, annotated by Acting-Man’s Pater Tenebrarum,

Stars in the Night Sky

The U.S. stock market’s recent zigs and zags have provoked much squawking and screeching.  Wall Street pros, private money managers, and Millennial index fund enthusiasts all find themselves on the wrong side of the market’s swift movements.  Even the best and brightest can’t escape President Trump’s tweet precipitated short squeezes.

The Donald mercilessly hits the shorts with a well-timed tweet. But as it turns out, this market is in a really bad mood at the moment. [PT]

The short-term significance of the DJIA’s 8 percent decline since early-October is uncertain.  For all we know, stocks could run up through the end of the year.  Stranger things have happened.

What is also uncertain is the nature of this purge: Is this another soft decline like that of mid-2015 to early-2016, when the DJIA fell 12 percent before quickly resuming its uptrend?  Or is this the start of a brutal bear market – the kind that wipes out portfolios and blows up investment funds?

The stars in the night sky tell us this is the latter.  For example, when peering out into the night sky even the most untrained eye can identify the three ominous stars that are lining up with mechanical precision.

These stars include a stock market top, followed by a monster corporate debt buildup, and a fading economy.  In short, the stock market’s latest break is presaging a corporate credit crisis and global recession.

BofA/Merrill Lynch US high yield Master II Index yield – this looks like a quite convincing breakout, impossible to tweet down. In other words, the corporate debt build-up is beginning to bite back – and rather bigly, if we may say so (ed note, in case you’re wondering: the little poems are from a Spectator competition in which people used phrases from actual tweets to put together Donald haikus and poems). [PT]

The last time these three stars aligned in this sequence was roughly a decade ago.  If you recall, that was when the DJIA crashed 50 percent coincident with a mega credit crisis and recession.  We suspect that the disaster that’s approaching will be much larger, and much more destructive than the disaster of a decade ago.

Bad Habit

Astute readers will be quick to point out that government debt was not identified as one of the three ominous stars lining up in the night sky.  This is not an oversight.  Rather, it is an insight.

Without question, government debt has burgeoned way beyond what even the most doom and gloom pessimists could have envisioned just a decade ago.  In fact, November marked the widest one month budget deficit in U.S. history.

Over a one month period – a month with just 30 days, not 31 – the U.S. government spent $411 billion while it only received $206 billion.  By our rough back of the napkin calculation, the U.S. government spent nearly double what it took in.  That difference, of course, was made up with debt.  Roughly, $6.83 billion of new debt was added each and every day.

At best, spending more than one makes, like smoking or swearing, is a bad habit.  However, spending more than one makes with no intention to pay it back is a moral failing.  What’s more, running up untenable levels of government debt with the implied intent of inflating it away at the expense of the citizenry is downright evil.

It’s definitely a tremendous pile of debt… and the slope of the mountain has steepened quite dramatically in recent years…  [PT]

Day after day, month after month, year after year, decade after decade, the U.S. government has racked up close to $22 trillion in debt.  Throw in unfunded liabilities of social security, Medicare (Parts A, B, and D), federal debt held by the public, and federal employee and veteran benefits, and the U.S. government’s on the hook for over $115.8 trillion in debt – or nearly $1 million per taxpayer.  How about that?

Of course, as the population ages, and the ratio of workers to retirees balances, these debt figures will go vertical.  As you can see, government debt is more than just an ominous star.  It’s the essential star.  Moreover, it is a dying star on the verge of collapse.  Quite frankly, it may not have enough energy to backstop the financial system during the next downturn.  Here’s why…

How Faux Capitalism Works in America

Our guess is that the real squawking from investors won’t begin until mid-2019.  That’s about the time corporate America becomes acutely aware that pumping gobs of borrowed money into grossly overvalued stocks was an act of financial suicide.

Just look to General Electric, IBM, and Citigroup for an early indication of the forthcoming catastrophe.  For instance, over the last decade GE spent $46 billion buying back its shares.  In 2016 and 2017 alone, at a time of mushrooming debt, GE pumped $24 billion into share buybacks.

GE wasted $46 billion on buying back its shares – with nothing to show for it except a collapsing share price. This was an astonishing misallocation of capital – very likely the company will eventually have issue new shares  to prop up its equity, at prices far below the prices it paid for buying them back. [PT]

Over this time, the price of these shares dropped from about $30 to $16.  And even with Thursday’s 7.3 percent boost, on word of a surprise JPMorgan upgrade, GE shares trade at $7.20.  In other words, shares GE bought back during the early part of 2016 have lost 75 percent of their value.  What to make of it?

The 2008 financial crisis helped clarify how faux capitalism works in America.  That when the big corporations and the big banks get in trouble, the people on top quickly absolve culpability while appropriating public funds from their friends at the Treasury for the purpose of private bailouts. This, in effect, socializes the losses across bottom rungs of society and concentrates profits across the top.

No doubt, the aftermath of the great corporate stock buyback craze of 2009 to 2017 will be a text book example of faux capitalism in action.  First, massive financial bailouts will be disseminated to crony banks and corporations with purpose and intent.  Then, a colossal river of monetary liquidity from the Fed will be diverted into credit markets, and into direct stock purchases of government preferred corporations.

Bailout progression – it continues until it cannot continue anymore, i.e., until the “running out of other people’s money” moment arrives. [PT]

The size and scope of these fiscal and monetary bailouts will utterly dwarf the TARP, ZIRP, and QE policies of the last crisis.  Assuming this doesn’t blow up the Treasury’s balance sheet, or vaporize what’s left of the dollar’s value, a certain end effect will take shape.  The middle class will be reduced to a notch or two above poverty, and wealth will be further concentrated into fewer and fewer hands.

We don’t like it.  We don’t agree with it.  But we can’t stop it.  This is the world we live in.  A world where justice has been debased and rectitude has been sullied.

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Week five of Yellow Vest demonstrations turned violent after protesters in Paris began to scuffle with police. 

Just under 70,000 police have been mobilized across France in an effort to contain some 33,500 estimated protesters – a much lower turnout than in previous weeks, while the Yellow Vest movement itself has spread to several countries across Europe, as well as Iraq, Israel and even Canada. 

Less than 3,000 protesters descended on Paris so far on Saturday, compared to 8,000 or so last week. Of those, 114 people had been detained in the capital – around 20% of last week’s figure. 

Police used tear gas and pepper spray on protesters in the center of Paris on Saturday. One person was reportedly hurt in the head during clashes at Champs-Élysées. A correspondent with Russian state-owned media outlet RT suffered an injury to the face and was taken to the hospital. 

Нашего корра на протестах во Франции ранили в лицо. Она поехала в больницу. pic.twitter.com/nVRBuuOKWG

— Маргарита Симоньян (@M_Simonyan) December 15, 2018

Seven people in total have died during the Yellow Vest demonstrations, which has gone from a fuel tax protest to an anti-government movement.

“Last time, we were here for taxes,” said 28-year-old called Jeremy told the AFP news agency.

“This is for the institutions – we want more direct democracy,” he said, adding that people needed to “shout to make themselves heard”.

Some museums are closed, but both the Louvre and the Eiffel Tower remain open.

In Calais, a group of “yellow vests” blocked the access road to the port. –BBC

Meanwhile, an Anonymous Sith yellow vest brought his double-lightsaber: 

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The hacking collective known as “Anonymous” has published more explosive documents detailing a UK-based psyop to create a “large-scale information secret service” in Europe in order to combat “Russian propaganda” — which has been blamed for everything from Brexit to Trump winning the 2016 US election to this month’s anti-Macron “Yellow Vest” protests.

We previously detailed the first trove of documents which were dumped online November 5th to the site Cyberguerilla, revealing the private UK organization with deep government ties, the Integrity Initiative, to be engaged in an aggressive campaign to organize “clusters” of journalists across the West engaged in “counter-propaganda” efforts on social media networks and in media. And now a new trove of leaked Integrity Initiative documents has been dumped online Friday.

This week the Integrity Initiative and its founding parent organization, the Institute for Statecraft — which is known for its close relationship with the UK military and defense officials — is at the center of debate in the House of Commons over its anti-Corbyn and anti-Labour smears involving labeling party leader Jeremy Corbyn a “useful idiot” for Moscow, even while the company is a recipient of official Foreign and Commonwealth Office (FCO) funding. 

The early November online leaks of confidential Integrity Initiative documents were the first to reveal the UK government’s relationship to the private project devoted to “fighting Russian disinformation”. According to The Guardian:

FCO funding of the Integrity Initiative was revealed by a set of stolen documents posted online last month by hackers under the banner of the Anonymous hacktivist collective. The organisation has not disputed their authenticity, but in a statement suggested that Russia was responsible for the hack and that Moscow had used its media channels to amplify its impact.

We noted previously that the work done by the Initiative — which claims it is not affiliated with government bodies, is done under “absolute secrecy via concealed contacts embedded throughout British embassies,” according to memos in the November leak. It does, however, admit to working with unnamed British “government agencies.” 

In the Commons earlier, I asked Alan Duncan why taxpayers money had been used by the so-called ‘Integrity Initiative’ to disseminate political attacks from its Twitter site (1/2). pic.twitter.com/zQNOPeQOMn

— Emily Thornberry (@EmilyThornberry) December 12, 2018

Friday’s document dump via “Anonymous” is the third such release, and already some bombshell information has come to light.

The geopolitical blog, Moon of Alabama, was the first to unearth and analyze one of the more interesting among the document trove:

A “strictly confidential” proposal by the French company Lexfo to spread the Integrity Initiative’s state-sponsored propaganda through an offensive online influence campaigns for a monthly pay per language of €20-40.000. The proposal also includes an offer for “counter activism” through “negative PR, legal actions, ethical hack back, etc.” for €50,000 per month.

The document is marked “Strictly confidential” and lays out a “comprehensive action proposal” which repeatedly invokes Russian state funded media outlets RT and Sputnik as enemy disinformation to be defeated.

The proposal touts the ability of an Integrity Initiative partner — the French cybersecurity firm Lexfo — to create “indirect” and “untraceable” news content, including its ability to conduct “naming and shaming” campaigns targeting “allies” of “Russian disinformation”.

Presumably “allies” means any person or entity that happens to align with the Russian viewpoint on any given issue. The shaming campaigns and counter-information operations will be conducted “across hundreds of credible media outlets”.

Alarmingly, the document notes that:

 “where we lack platforms to publish our content… we will create news media sites serving our objectives…”

Again, both the contracting cybersecurity firm and the Integrity Initiative’s role in literally creating media sites out of thin air for the purpose of “serving our objectives” will remain “untraceable”.

As part of the “infowar campaign” teams of media operatives across Europe and the U.S. will “monitor” and edit social media pages as well as Wikipedia entries, according to the leaked document.  

“Hot topics” which especially need to be monitored include the Ukraine conflict and any situation wherein “pro-Western local politicians” could be swayed by “Russian-backed trolls”

The teams will engage in “special operations” which are listed as:

• negative PR
• legal actions
• ethical hack back 

And which populations are to be targeted? The document specifically mentions seeking out a Russian audience alongside Western countries: “This plan should be implemented in every targeted country and language, including Russia.”

These “influence operations” come at a price, according to the document. One figure which is floated is a monthly pay per language fee of €20-40.000, making it classic government subsidized mass propaganda (again, the company has been confirmed as receiving FCO funding).

Given that this looks like merely the tip of the iceberg in terms of similar such UK and US funded “combating disinformation” projects conducted in partnership with private entities out there, these initiatives have most likely already been active for years. 

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Trump’s Interior Secretary Ryan Zinke – who rode a horse to the Department of the Interior on his first day of work – has notified the White House he intends to step down amid an ethics investigation by the Interior Department’s inspector general into his travel, political activity and potential conflicts of interest, Bloomberg reported on Saturday morning with the president confirming the departure by tweet moments later.

Secretary of the Interior @RyanZinke will be leaving the Administration at the end of the year after having served for a period of almost two years. Ryan has accomplished much during his tenure and I want to thank him for his service to our Nation…….

— Donald J. Trump (@realDonaldTrump) December 15, 2018

…….The Trump Administration will be announcing the new Secretary of the Interior next week.

— Donald J. Trump (@realDonaldTrump) December 15, 2018

News of Zinke’s departure comes as Democrats, who are about to take control of the House of Representatives, have vowed to grill the him over his conduct raising the prospect of heightened oversight – and a flood of legal bills from defending himself. According to Bloomberg, concern about all the scrutiny and legal costs on the horizon were factors in Zinke’s decision to quit.

Zinke’s impending departure also emerges as President Donald Trump grapples with other changes to his Cabinet that underscore the challenges of filling vacancies in a tumultuous administration.

On Friday, Trump announced that budget director Mick Mulvaney would take over as chief of staff, replacing John Kelly, whose ouster on Dec. 8 touched off a roller-coaster search to fill the key White House post.

The Interior Department’s inspector general had initiated at least seven investigations directly targeting Zinke. A separate independent federal investigative agency also has opened as many as six other inquiries into allegations Zinke engaged in improper political activity – a volume that invited comparisons to the ousted Environmental Protection Agency chief, Scott Pruitt.

Trump’s been aware of Zinke’s plans for several days, and a search for a replacement is under way with Zinke’s replacement expected to be announced next week.

Zinke had championed using federal lands to pursue U.S. “energy dominance,” and that agenda will be continued by his likely successor as acting Interior Secretary: David Bernhardt, the agency’s No. 2 official. As deputy he’s played a key, behind-the-scenes role in shaping the department’s policies, according to Bloomberg.

Other potential contenders for the post include Cynthia Lummis, a former congresswoman from Wyoming; Utah Attorney General Sean Reyes; Adam Laxalt, the Nevada attorney general who lost his bid to be governor ; Idaho Governor C.L. “Butch” Otter; former Nevada Senator Dean Heller, who lost his re-election bid in November; and outgoing Wisconsin Governor Scott Walker. The role is typically filled by Western politicians who have experience navigating the vast federal lands.

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