Saudi Arabia Might Recognize Israel Because Of NEOM

Authored by Andrew Korybko via Oriental Review,

The half-a-trillion-dollar initiative to build a tristate city at the Saudi, Egyptian, and Jordanian border in the Gulf of Aqaba will more than likely lead to Riyadh recognizing Israel and integrating Tel Aviv into the project.

The ambitious Saudi Crown Prince Mohammed Bin Salman unveiled a $500 billion project at an investment forum earlier this week in an effort to bring some serious substance to his Vision 2030 project of fundamentally diversifying his country’s oil-dependent economy in the coming decade. The proposal calls for a gigantic city called NEOM to be built at the entrance to the Gulf of Aqaba in the northeastern corner of the Red Sea, with the plan being for it to eventually extend into neighboring Egypt and Jordan as well. The Crown Prince promised that it would be a technologically advanced city with its own laws and administration, and it will also be free from anything “traditional”.

The latter remark hints that Mohammed Bin Salman won’t allow the Kingdom’s traditional Wahhabi socio-cultural “regulations” to be enforced there, which goes along with his other headline-grabbing statement during the event when he said that Saudi Arabia will “return…to moderate Islam” and “swiftly deal a blow to extremist ideologies”. Quite clearly, as analyzed in the author’s earlier piece this month about Saudi Arabia’s shifting grand strategy, a “deep state” conflict is indeed being fought in the country between its monarchic and clerical factions, with the former poised to carry out a “soft coup” against the latter as it seeks to “modernize” the country. This will surely result in some behind-the-scenes tumult in the coming future, if not overt destabilization, but the point of the present article isn’t to dwell too much on that tangent.

Instead, it’s relevant to have brought that up in order to make the case that Saudi Arabia is on the cusp of an unprecedented paradigm change that will likely see it recognizing Israel if the monarchy is successful in snuffing out the clerics’ political influence. Saudi Arabia’s Egyptian and Jordanian NEOM partners have already recognized and signed peace treaties with Israel, and Riyadh is known to be coordinating with Tel Aviv in crafting a comprehensive anti-Iranian regional policy, amongst other strategic commonalities that they share. Moreover, the secret meetings between Saudi Arabia and Israel over the years suggest that their relationship is much warmer in private than either side publicly presents it as for their own respective domestic political reasons.

Israel has always wanted relations with Saudi Arabia, though Riyadh has traditionally shirked away from this because it wanted to present itself as a strong supporter of the Palestinian cause, made all the more symbolic by the Saudi monarchy’s custodianship over the Two Holy Mosques given the religious dimensions of the Israeli-Palestinian conflict. However, if Mohammed Bin Salman comes out on top in his “deep state” “soft coup” against the Wahhabi clerics, then he can easily lay the “blame” on them for his country’s refusal to recognize Israel after all of these decades. Not only could he be interested in doing this as the ultimate expression of his country’s radically transformed identity under his stewardship, but he might be just as importantly driven by the geostrategic imperatives related to Vision 2030’s flagship NEOM project.

Red-Med Railway

The Gulf of Aqaba was chosen not just because it would allow NEOM to spread into Egypt and Jordan, but also because of its proximity to Israel, which is promoting its “Red-Med” railway proposal as the perfect Mideast complementary component of the New Silk Road. Tel Aviv keenly knows that the Chinese are always looking for backup plans and transport route diversification in order to not be too dependent on any single connectivity corridor, and in this case, overland rail transit from the Gulf of Aqaba to the Eastern Mediterranean via Israel comes off as exceedingly attractive to Beijing’s strategists. Furthermore, China has fantastic relations with both Saudi Arabia and Israel, so from Beijing’s perspective, this is the perfect Mideast “win-win”, especially if the People’s Republic can find a way to insinuate that its possible financing of both the NEOM and “Red-Med” projects contributed to bringing peace to the Mideast.

In addition, there’s also the Russian factor to take into consideration, and it’s objectively known – though commonly denied in the Alt-Media Community – that Moscow and Tel Aviv are on excellent terms with one another and basically cooperate as allies in Syria. When accounting for the fast-moving Russian-Saudi rapprochement and Moscow’s envisioned 21st-century grand strategic role in becoming the supreme balancing force in Eurasia, it’s likely that Russia would be in favor of any Saudi recognition of Israel and Tel Aviv’s integration into the NEOM project because it would then allow the Russian business elite both in the Russian Federation and Israel to invest in this exciting city-state and the complementary “Red-Med” Silk Road corridor.

Seeing as how Mohammed Bin Salman is trying to purge the clerics’ political influence from the Kingdom, it’s very possible that Saudi Arabia will end up recognizing Israel in the near future and blaming its decades-long delay in doing so on the Wahhabis. The grand intent behind this isn’t just to formalize the Saudi-Israeli anti-Iranian partnership or to show the world just how serious the Crown Prince is in changing the course of his country, but to please Riyadh’s newfound Multipolar Great Power partners in Moscow and Beijing, both of which enjoy exceptional relations with Tel Aviv but would probably be reluctant to invest in the Kingdom’s NEOM city-state project so long as its connectivity access remained dependent on the Suez Canal chokepoint.

Russia and China would feel more strategically secure if Israel was incorporated into this megaproject so that its territory could be used for overland transshipment between the Red and Mediterranean Seas via the “Red-Med” railway proposal, which would then make NEOM infinitely more attractive from a logistics perspective for all sorts of investors.

If Saudi Arabia doesn’t recognize Israel, then this non-Suez workaround is impossible and the NEOM city-state loses its grand strategic significance in the context of the Multipolar World Order, which could consequently lead to a lack of investment and therefore the potential failure of Vision 2030’s flagship project. As such, due to the economic-strategic imperatives associated with NEOM, as well as the geopolitical paradigm shift staking place in Saudi Arabia, Riyadh will probably recognize Israel in the coming future in order to guarantee that its city-state initiative succeeds and ultimately transitions the Kingdom away from its oil-exporting dependency.

via http://ift.tt/2gIG6IJ Tyler Durden

Orban Launches Intelligence Probe Into George Soros’ “Open Society” Network

Apparently, Hungarian Prime Minister Viktor Orban thinks his propaganda campaign to discredit Hungarian-born billionaire George Soros – Orban’s political archnemesis – hasn’t been sufficiently effective.

As Orban’s ruling party gears up for parliamentary elections in April – where it is the prohibitive favorite to win largely thanks to its refusal to accept refugees under a plan devised by the European Commission – the prime minister has instructed his intelligence services to map what he described as the networks run by the billionaire financier’s “empire” targeting his country, Bloomberg reported.

Intelligence agencies will help evaluate what he sees as efforts by Soros to get Hungary punished by EU institutions pursuing a “mixed-population” continent, Orban said in an interview with Kossuth Radio on Friday.

The Associated Press added that the investigation will also focus on alleged Hungarian members of the network.

Intelligence agencies will help evaluate what Orban sees as efforts by Soros to get Hungary punished by EU institutions pursuing a “mixed-population” continent, Orban said in an interview with Kossuth Radio on Friday.

Orban speaks often of a coming split in Europe between “migrant-free zone” and those in the west who refuse calls to “haul” undocumented migrants away.

The unraveling of the friendship between Orban and Soros in some ways mirrors the falling out between Turkish President Recep Tayyip Erdogan and US-based cleric Fehtullah Gulen in terms of the extent of the deterioration.

Three decades ago, billionaire financier George Soros paid for a young Viktor Orbán to study in Britain. And as recently as 2010, Soros donated $1 million to Orbán’s government to help the cleanup effort following the infamous “red sludge” disaster.

But the once-warm relationship between the two men has deteriorated substantially over the past seven years, as Orban has drifted further to the right. In 2014, the leader of Hungary’s Fidesz party declared he would seek to model Hungary’s government after “illiberal” democracies like the government of Russian President Vladimir Putin. In response, Soros this summer denounced his former protege and accused him of creating a “mafia state” in Hungary.

One of dozens of billboards around Hungary bearing anti-Soros messaging…

Orban responded by accusing Soros's network of using the European Union to achieve its own aims, including the promotion of mass migration into Europe.

Orban was no doubt provoked to launch the probe by reports Soros has donated $18 billion from his family office to his “Open Society” foundation, his primary tool for influence policy throughout the west. The group funds a network of dozens of organizations that fund liberal, globalist causes throughout Europe and the US. At times, recipients of funding have included Black Lives Matter groups, and even Antifa.

But will Orban’s investigation morph into a full-on, Turkey-style purge of anyone with ties to Soros’ linked organizations, regardless of their actual complicity? That, of course, remains to be seen.
 

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Mueller Reportedly Ready To File First Charges In Russia Probe

Five months after Assistant Attorney General Rod Rosenstein tasked Robert Mueller with taking over the Justice Department investigation into possible collusion between the Trump campaign and Russia, CNN is reporting that the first charges have been filed, and that arrests could be made in the coming days.

A federal grand jury in Washington, DC, on Friday approved the first charges in the investigation led by special counsel Robert Mueller, according to sources briefed on the matter.

 

The charges are still sealed under orders from a federal judge. Plans were prepared Friday for anyone charged to be taken into custody as soon as Monday, the sources said. It is unclear what the charges are.

 

A spokesman for the special counsel's office declined to comment.

To be sure, CNN's version of events leaves room for doubt. And importantly, it doesn't name the subject of the charges.

On Friday, top lawyers who are helping to lead the Mueller probe, including veteran prosecutor Andrew Weissmann, were seen entering the court room at the DC federal court where the grand jury meets to hear testimony in the Russia investigation.

Reporters present saw a flurry of activity at the grand jury room, but officials made no official announcements. The flurry… implies someone being charged… presumably – though CNN says it talked to a source close to the investigation who corroborated its suspicions.

The special counsel's investigation has focused on two things: potential collusion between the Trump campaign and Russia, and obstruction of justice by the President, who might have tried to impede the investigation. CNN has previously reported that Mueller's team was scrutinizing Trump and his associates' financial ties to Russia. Former campaign executive Paul Manafort and Trump son-in-law have both been subject to intensive scrutiny during the investigation. Manafort has had his financial records thoroughly probed and his home raided by the FBI. Mueller has also scrutinized Manafort's foreign lobbying efforts, as well as those of former National Security Adviser Michael Flynn.

Mueller impaneled a grand jury over the summer, a sign that he intended to file charges. If the report is accurate, it's certainly an interesting coincidence that Mueller is moving ahead with charges just as calls to shut down his investigation are picking up steam. Meanwhile, Congress has launched several investigations into the Obama-era Uranium One deal to scrutinize the Clinton's dealings with the Russians.

Republicans have been skeptical of Mueller’s ability to be impartial in the investigation – suspicions that have intensified following reports that Hillary Clinton and the Democratic National Committee helped fund research into the infamous "Trump dossier." Rep. Trent Franks of Arizona told Fox News Friday that “the federal code could not be clearer – Mueller is compromised by his apparent conflict of interest in being close with James Comey.”

New Jersey Gov. Chris Christie suggested Friday that Mueller should "step aside"

"If the facts that you just laid out are true, then somebody with Bob Mueller's integrity will step aside, and should," Christie said. The Russia probe was launched in the summer of 2016 by then-FBI Director James Comey.

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The One Paragraph You Need To Read From The JFK Assassination Files That May Change Everything

TruePundit.com warns that one haunting paragraph unearthed from 3,000 never-before-seen documents will shake Patriots to their core about the assassination of President John F. Kennedy.

Or perhaps worse. Make that haunting three paragraphs.

This is not pretty.

But it is likely President Donald Trump understands what Kennedy comprehended, which now appears to have led to his murder:

The out-of-control shadow government in this country threatens the fabric and the future of the United States.

See for yourself.

As a reminder, here is the position of the alleged shooter explained…

So how do 'they' explain this…

From Jan 31st 1964 FBI memo

For clarity…

…the "Surgeon General's Report" on the assassination stated that the first bullet entered the President's throat below the adams apple, clearly showing that two persons were involved with the first shot being fired from the bridge across the park way in front of the car.

 

To further substantiate this, POTITO said there was a bullet hole in the wind shield of the President's car

Not exactly the narrative that was sold to the world – and certainly not the narrative that J. Edgar Hoover proclaimed must be defended to the world.

Here is Douglas P. Horne, via LewRockwell.com, detailing the photographic evidence of a bullet hole in JFK's limousine's windshield "hiding in plain sight."

In 2009, I believed I had discovered new evidence in the JFK assassination never reported by anyone else: convincing photography of the through-and-through bullet hole in the windshield of the JFK limousine that had been reported by six credible witnesses. I revisited that evidence today, and am more convinced than ever that the bullet hole in the limousine windshield is what I am looking at in those images. But the readers of this piece don’t have to take my word for it — you can examine the images yourself, and make up your own minds. The evidence is contained in one of the banned, suppressed episodes of Nigel Turner’s The Men Who Killed Kennedy — episode 7 in the series, called “The Smoking Guns,” which was aired in 2003, and then removed from circulation by The History Channel in response to intense political pressure by former LBJ aides Jack Valenti and Bill Moyers.

I’ll tell you about the stunning evidence I have found in that episode at the end of this article, but first we need to set the stage by reviewing the eyewitness testimony about the damage to the windshield observed the day of JFK’s assassination, on Friday, November 22nd, 1963; as well as three days later, on Monday, November 25th, 1963.

Introduction

Before I reveal the details about the “new” photographic evidence I am talking about here, let’s review the Big Picture, the “evidentiary landscape” on this issue (see pages 1439-1450 of Volume V of my book, Inside the Assassination Records Review Board, for full details):

(1) Dallas motorcycle patrolmen Stavis Ellis and H. R. Freeman both observed a penetrating bullet hole in the limousine windshield at Parkland Hospital. Ellis told interviewer Gil Toff in 1971: “There was a hole in the left front windshield…You could put a pencil through it…you could take a regular standard writing pencil…and stick [it] through there.” Freeman corroborated this, saying: “[I was] right beside it. I could of [sic] touched it…it was a bullet hole. You could tell what it was.” [David Lifton published these quotations in his 1980 book, Best Evidence.]

(2) St. Louis Post-Dispatch reporter Richard Dudman wrote an article published in The New Republic on December 21, 1963, in which he stated: “A few of us noted the hole in the windshield when the limousine was standing at the emergency entrance after the President had been carried inside. I could not approach close enough to see which side was the cup-shaped spot which indicates a bullet had pierced the glass from the opposite side.”

(3) Second year medical student Evalea Glanges, enrolled at Southwestern Medical University in Dallas, right next door to Parkland Hospital, told attorney Doug Weldon in 1999: “It was a real clean hole.” In a videotaped interview aired in the suppressed episode 7 of Nigel Turner’s The Men Who Killed Kennedy, titled “The Smoking Guns,” she said: “…it was very clear, it was a through-and-through bullet hole through the windshield of the car, from the front to the back…it seemed like a high-velocity bullet that had penetrated from front-to-back in that glass pane.” At the time of the interview, Glanges had risen to the position of Chairperson of the Department of Surgery, at John Peter Smith Hospital, in Fort Worth. She had been a firearms expert all her adult life.

(4) Mr. George Whitaker, Sr., a senior manager at the Ford Motor Company’s Rouge Plant in Detroit, Michigan, told attorney (and professor of criminal justice) Doug Weldon in August of 1993, in a tape recorded conversation, that after reporting to work on Monday, November 25th, he discovered the JFK limousine — a unique, one-of-a-kind item that he unequivocally identified — in the Rouge Plant’s B building, with the interior stripped out and in the process of being replaced, and with the windshield removed. He was then contacted by one of the Vice Presidents of the division for which he worked, and directed to report to the glass plant lab, immediately. After knocking on the locked door (which he found most unusual), he was let in by two of his subordinates and discovered that they were in possession of the windshield that had been removed from the JFK limousine. They had been told to use it as a template, and to make a new windshield identical to it in shape — and to then get the new windshield back to the B building for installation in the Presidential limousine that was quickly being rebuilt. Whitaker told Weldon (quoting from the audiotape of the 1993 interview): “And the windshield had a bullet hole in it, coming from the outside through…it was a good, clean bullet hole, right straight through, from the front. And you can tell, when the bullet hits the windshield, like when you hit a rock or something, what happens? The back chips out and the front may just have a pinhole in it…this had a clean round hole in the front and fragmentation coming out the back.” Whitaker told Weldon that he eventually became superintendent of his division and was placed in charge of five plant divisions. He also told Weldon that the original windshield, with the bullet hole in it, had been broken up and scrapped — as ordered — after the new windshield had been made.

When Doug Weldon interviewed Whitaker in August of 1993, his witness insisted on anonymity. Weldon reported on the story without releasing Whitaker’s name in his excellent and comprehensive article titled: “The Kennedy Limousine: Dallas 1963,” which was published in Jim Fetzer’s anthology Murder in Dealey Plaza, in 2000. After Weldon interviewed Whitaker in August of 1993, Mr. Whitaker subsequently — on November 22, 1993 (the 30th anniversary of President Kennedy’s assassination) — wrote down all he could remember about the events he witnessed involving the Presidential limousine and its windshield. After George Whitaker’s death in 2001, his family released his written testament to Nigel Turner, who with their permission revealed Mr. Whitaker’s name, as well as the text of his “memo for history,” in episode 7 of The Men Who Killed Kennedy, “The Smoking Guns.”

In “The Smoking Guns,” the text of Whitaker’s memo can be read on the screen employing freeze frame technology with the DVD of the episode. It said, in part: “When [I] arrived at the lab the door was locked. I was let in. There were 2 glass engineers there. They had a car windshield that had a bullet hole in it. The hole was about 4 or 6 inches to the right of the rear view mirror [as viewed from the front]. The impact had come from the front of the windshield. (If you have spent 40 years in the glass [illegible] you know which way the impack [sic] was from.”

(5) The sixth credible witness to a bullet hole in the windshield of the limousine was Secret Service agent Charles Taylor, Jr., who wrote a report on November 27, 1963 in which he detailed his activities providing security for the limousine immediately after the car’s return to Washington following the assassination. The JFK limousine and the Secret Service follow-up car known as the “Queen Mary” arrived at Andrews AFB aboard a C-130 propeller-driven cargo plane at about 8:00 PM on November 22, 1963. Agent Taylor rode in the Presidential limousine as it was driven from Andrews AFB to the White House garage at 22nd and M Streets, N.W. In his report about what he witnessed inside the White House garage during the vehicle’s inspection, he wrote: “In addition, of particular note was the small hole just left of center in the windshield from which what appeared to be bullet fragments were removed.”

Summary of the Eyewitness Testimony About the Windshield Bullet Hole

Summarizing, six credible witnesses — Stavis Ellis, H. R. Freeman, Richard Dudman, Evalea Glanges, George Whitaker, and Charles Taylor — all reported seeing a bullet hole in the windshield of JFK’s limousine either on the day of the assassination (for five of the six witnesses), or on the following Monday (in the case of Mr. Whitaker, who did not see the limousine and its windshield until he reported to work at the Ford Motor Company’s Rouge Plant, in Detroit, on Monday morning, November 25th, 1963).

Two of these witnesses — Evalea Glanges and George Whitaker — were absolutely positive that the bullet causing the damage had been a shot from the front, which had entered the front surface of the windshield, and exited the inside surface.

WHY IS THIS IMPORTANT? Because if true, the windshield bullet evidence alone disproves the lone assassin myth aggressively promoted by the U.S. government for 49 years now, since the accused assassin, Lee Harvey Oswald, was supposedly firing from above and behind the limousine as it traveled down Elm Street.

The Windshield Evidence Was Twice Switched-Out — Substituted — By the U.S. Government

The windshield in evidence today at the National Archives is not the windshield that was in the Presidential limousine on Elm Street, in Dallas, on November 22, 1963. It simply cannot be. Why? Remember, according to George Whitaker, Sr. of the Ford Motor Co., the original was destroyed, per company orders, after it was used as a template to make a replacement on November 25th, 1963.

But it gets much worse than that. The first replacement, the one installed by Whitaker’s two lab technicians in Detroit, was damaged on the wrong side by an incompetent Secret Service organization (incompetent not only at protecting the 35th President, but also in implementing a cover-up). Secret Service agent Roy Kellerman (who rode in the right front seat of the limousine in Dallas) testified before the Warren Commission, in March of 1964, that when he examined the windshield (obviously the replacement, installed by Whitaker’s team in Detroit) on November 27th, it was smooth on the outside, and damaged on the inside. This is consistent with damage caused by an impact on the front side of the windshield. (Safety glass exhibits damage on the opposite side from which it is struck). Researcher Robert P. Smith (as reported by David Lifton in Best Evidence) interviewed a Mr. Bill Ashby, crew leader at the Arlington Glass Company, who told Smith he removed the limousine’s windshield in Washington, D.C. on November 27th; this occurred after Roy Kellerman had felt the interior surface earlier that day and determined it to be damaged on the inside, and smooth on the outside.

But the windshield at the National Archives today exhibits long cracks — not a through-and-through bullet hole — and is damaged on the outside, which is the opposite of what Kellerman noted by physical examination on November 27th.

Co-owner Willard Hess of the automotive firm Hess and Eisenhardt in Cincinnati, Ohio told Doug Weldon that his company also replaced the windshield in the Presidential limousine, and that the glass removed was standard safety glass — consistent with what George Whitaker said his team reinstalled in the limousine in Detroit, immediately after the assassination. Hess and Eisenhardt replaced the standard safety glass with special bullet resistant glass made by the Pittsburgh Plate Glass Company. (Presumably, the windshield removed by Hess and Eisenhardt was the second new windshield installed — by the Arlington Glass Company — on November 27th, 1963, and is the one in the National Archives today.) Mr. Hess told Weldon that the windshield his company removed was not damaged at the time it was removed.

The clear implication here is that the windshield in the Archives today, which exhibits cracks but not a bullet hole, was intentionally damaged by someone involved in the cover-up AFTER its removal by Hess and Eisenhardt.

This distressing (and depressing) tale of cover-up, deceit, and deception mirrors what was going on with the JFK medical evidence (namely, the President’s cranial wounds and throat wound; and the autopsy photographs and x-rays), and the Zapruder film, during the weekend following the assassination — that is, alteration and gross substitution. The pattern is the same, and the pattern is one of lying, and intentionally covering up the truth, by destroying some evidence, and substituting altered evidence in its place. All of this substitution of evidence — tampering with wounds prior to the commencement of the autopsy through clandestine post mortem surgery; the alteration of some of the key autopsy photographs and x-rays (and the destruction of others); and the alteration of the Zapruder film — was all intended to suppress evidence of shots from the front (i.e., proof of conspiracy), so the government could more easily promote its lone assassin cover story.

…And the U.S. Government Later Suborned Perjury in the Matter of the Damage to the Limousine Windshield

Unfortunately for Mr. Charles Taylor of the Secret Service, he — like Galileo Galilei before the Inquisition in the 17th century — was forced to recant, for he had committed heresy when he wrote in his official report on November 27th that he had observed a bullet hole in the windshield of the limousine as the car was closely examined in the White House garage the evening of the assassination, in 1963. In his 1976 recantation, an affidavit prepared for the House Select Committee on Assassinations (HSCA), Taylor indicated that he changed his mind after examining the windshield stored in the Archives on December 19, 1975. Like Galileo, when prompted by his inquisitors, Taylor reversed himself, saying: “…I never examined this apparent hole [on November 22, 1963] to determine if there had been any penetration of the glass, nor did I even get a good look at the windshield in well-lighted surroundings…”. This is hardly credible. SA Kinney drove JFK’s limousine from Andrews AFB to the White House garage on November 22nd, 1963, and Taylor was the only passenger. The back seat bench (as revealed by horrifying color photographs taken in the White House garage) was still covered with gore, so we know Taylor did not sit there amidst the blood and brain tissue; and it is most doubtful that he sat in one of the uncomfortable jump seats in the middle of the car. Surely, he sat in the right front seat of the limousine all the way from Andrews AFB, to the garage where it was examined that evening — an ideal spot for noticing the bullet hole in the windshield, which would have been within arm’s reach for him. Inevitably, when the interior of the car was disassembled that evening inside the White House garage by FBI and Secret Service agents working together, the lights must have been on for this crucial joint inspection! Taylor reported on their activities in detail in his report, prepared on November 27th, 1963. The report makes clear that the agents could see what they were doing. In that context, consider Taylor’s written statement in his 1976 HSCA affidavit, about thirteen years later, in which he stated: “I have no doubt that the cracks [seen in the windshield placed in the Archives and in official photographs]…cracks in the inner layers of the glass only, are the ones I noticed on the trip from Andrews Air Force Base…it is clear to me that my use of the word ‘hole’ to describe the flaw in the windshield was incorrect.” Taylor’s sworn affidavit in 1976, shortly after he was asked by someone in government to examine the switched-out windshield deposited in the Archives, can only be viewed and described for what it was: perjury.

Previously Known Photographic Evidence of a Windshield Bullet Hole

As I documented in chapter 15 of my book, Inside the Assassination Records Review Board, the famous “Altgens photo” taken on Elm Street, the one reported to be equivalent to Zapruder frame 255 in the extant film, appears to many who study it to show a bullet hole in the windshield in some of the versions of that photograph that have been published: namely, in The Torch Is Passed (1964), on page 16; in Groden’s The Killing of a President, on pages 30 and 36; on page 314 of Trask’s Pictures of the Pain; and in the version published in Fetzer’s Murder in Dealey Plaza, on page 149. The apparent bullet hole detected by many viewers in the Altgens photo appears to be just to the right of the rightmost edge of the rear view mirror, as seen from the front. But there is another Altgens photo taken on Elm Street, showing Jackie Kennedy on the trunk of the limousine after the assassination, which also shows damage in the area of the windshield that is left-of-center, as seen from inside the car. Frustratingly, the damage seen in this photograph appears to be some cracks emanating from a frosted white area of the windshield that is left-of-center. It is most clearly seen in The Torch Is Passed, on page 17; in my view, it is unclear whether we are looking at a round bullet hole with two cracks emanating from it, or simply cracks. The poor quality versions of this image published in The Killing of a President (on page 42) and in Pictures of the Pain (on page 316) are useless in resolving this issue.

Therefore, any additional photographic evidence captured the day of the assassination might prove decisive in resolving the windshield debate, once and for all — which leads us back to the headline of this journal entry: “Photographic Evidence of Bullet Hole in JFK Limousine Windshield Hiding in Plain Sight.”

HIDING IN PLAIN SIGHT SINCE 2003

On pages 1473-1474 of Volume V my book (in chapter 16), I wrote about the circumstances in which The History Channel, in 2003, was forced by political pressure and by threat of legal action to stop airing the remarkably popular seventh, eighth, and ninth episodes of the series The Men Who Killed Kennedy: “The Smoking Guns,” “The Love Affair,” and “The Guilty Men.” Not only did The History Channel agree to stop broadcasting the three episodes (which were getting very high ratings), but it also pulled all of the DVDs from stores (where they were selling like hotcakes), and agreed to stop selling the three episodes, which were packaged together in a two-disc, three episode A & E network video product titled: The Men Who Killed Kennedy: The Final Chapter, Cat. No. AAE-71255. (Thanks to Phil Singer of Chicago, I own a set of these three banned DVDs.)

Not only did former LBJ aides Jack Valenti and Bill Moyers engage in a high-profile publicity campaign against The History Channel, but an enraged Jack Valenti (who had long been the chief lobbyist in the nation’s capital for the motion picture industry) summoned the executive producer of episodes 7, 8, and 9 (including the LBJ episode, “The Guilty Men”) — Dolores Gavin — to Washington, D.C., where she was given the “Valenti treatment,” i.e., browbeaten and intimidated in private, in a rather brutal fashion. (I was informed of this by a Hollywood-based professional who had worked with her on the project; Dolores Gavin herself was the source of the information.) Shortly afterwards, The History Channel succumbed to this overt censorship and all three episodes were added to a new, twenty-first century Index Expurgatorius.

The presumptive cause of this Holy Edict of the American Establishment was the LBJ episode, “The Guilty Men,” which fingered Lyndon Baines Johnson with involvement in the JFK assassination conspiracy. But in retrospect, I now wonder if perhaps the real, principal (but unacknowledged) cause of the suppression was actually the episode titled “The Smoking Guns.” The LBJ episode may have simply been the excuse to ban “The Smoking Guns,” for this episode contains multiple evidentiary proofs of a U.S. government cover-up of the Kennedy assassination evidence.

The Stunning Content of “The Smoking Guns”

There is some “B-roll” in “The Smoking Guns” episode, only a little over two seconds long, which definitely appears to show the bullet hole in the limousine windshield — the through-and-through bullet hole described by the six credible witnesses cited above. This is shown during the segment of the program in which Evalea Glanges was interviewed. This “B-roll” footage appears between the times of 14:02 and 14:04 on the DVD, and consists of a total of 84 video frames (there are 30 video frames per second in a U.S. television broadcast). The black-and-white images appear to come from standard 16 mm B & W newsreel footage, taken by a stocky man wearing a hat who had approached the Presidential limousine as it was parked outside the Parkland Hospital emergency room (and before the bubble top was installed). The point of view (POV) of the camera was that of someone sitting in the limousine, or rather standing just beside it and to the right side. The camera is pointed at the inside surface of the windshield from behind — that is the POV. One man in a suit and tie can be seen standing on the front side, or forward of, the windshield, and two DPD motorcycle patrolmen (are they Ellis and Freeman?) can be seen leaning in and examining the windshield. What looks to me like a through-and-through bullet hole is visible in all 84 video frames, left of center on the windshield (adopting the POV of the camera) and approximately halfway down from the top, although these are only rough approximations. The location appears to be entirely consistent with that described by Charles Taylor and George Whitaker (above).

I wish to make something very clear here: you cannot access the images I am describing above in the U-Tube segment in which this episode has been put up on the internet. First, the timing is different in the U-Tube segment (13:08, vice 14:02), because the U-Tube segment was copied from the broadcast. [The factory DVD location of the clip is at a later point in the program, at 14:02, because of advertising material inserted at the beginning of the DVD.] Second, the size of the U-Tube presentation is so small on one’s computer screen, and the resolution so poor in comparison with a big screen HD television, that you can forget seeing this windshield bullet hole on U-Tube. The viewer needs the factory-produced DVD; a good DVD player with functioning frame-by-frame advance; and a big screen, High Definition (1080p) TV. The bullet hole shows up clearly on my 52″ SONY Bravia television. So anyone concerned with doing research here simply must obtain the factory-produced DVD.

Now, no doubt the “lone-nutter” crowd — both those who are in denial of the reality of an American coup in 1963 (because they can’t handle the truth), and the U.S. government’s third-party surrogates in the midst of the research community (whose job it is to cast doubt on all new research pointing to conspiracy and cover-up) — will react violently to this essay, and that is predictable. But you don’t have to listen to their opinions…EXAMINE THE EVIDENCE YOURSELF AND MAKE UP YOUR OWN MIND. Just obtain a factory-produced DVD of “The Smoking Guns,” by hook or crook (or E-Bay); put it in your DVD player; go to the specified time of 14:02 into the program; and then examine the 84 video frames, one at a time, on an HD big screen TV. You will find that video frames 1, 15, 31, 37, 47, 59, and 71 best depict the bullet hole. The 16 mm camera was hand-held, so there is some motion and some blurring of the images, and that is why some video frames are more clear than others. In my opinion, the best frames are #1 and # 71 in the windshield sequence.

Then consider how dangerous this two-seconds of “B-roll” footage is to the U. S. government’s contrived position on the assassination as we approach the 50th anniversary of President Kennedy’s assassination: a through-and-through hole in the limousine windshield, made by a frontal shot traveling from front-to-back (as stated by George Whitaker and Evalea Glanges), all by itself, demolishes the lone-assassin myth still being perpetuated by the U.S. government and by its surrogates in the mainstream media in America. No wonder the establishment in America felt this episode had to be suppressed.

And consider the other reasons for its suppression. This episode also features Dr. David Mantik, M.D., PhD., eloquently and clearly discussing his conclusion — based on his nine visits to the National Archives to view the autopsy materials — that the autopsy photographs of the rear of JFK’s head are photographic forgeries. It also features former USIA photographer Joe O’Donnell discussing how White House photographer Robert Knudsen showed him two sets of post mortem photos of JFK’s head wounds late in 1963: one set that consisted of authentic, pre-alteration images, showing the true entry and exit wounds in the head (an entry wound high in the right forehead, and a large exit wound in the right rear of the skull); and another set of images that was post-alteration, with the entry wound high in the forehead no longer visible, and the back of the head seemingly intact. It also features Dr. Gary Aguilar, M.D., discussing in convincing terms G. Robert Blakey’s suppression of the content of interviews the HSCA conducted with JFK autopsy witnesses, and Blakey’s intentional misrepresentation of the contents of those interviews in the HSCA’s report; the JFK Records Act resulted in the “premature release” of the suppressed autopsy witness interviews in 1993, and the “Big Lie” in the HSCA report was exposed. (The HSCA report, in volume 7, stated that all of the Dallas doctors had to be wrong about the exit wound they recalled in the back of JFK’s head, since all of the autopsy witnesses the HSCA had interviewed said the wounds they observed matched the autopsy photos which show the back of the head intact. The release of the interview reports in 1993 revealed that the HSCA had lied about what those witnesses had said.) All of this, and more, was presented in this one key episode.

So ask your friends, go on E-Bay, and one way or another, get your hands on the banned episode of The Men Who Killed Kennedy titled “The Smoking Guns,” and see the bullet hole in the windshield yourself. Then compare it to the photographs of the windshield in the National Archives, and ask yourself what this sorry episode says about the integrity of our national government.

President Kennedy was killed in Dealey Plaza by a crossfire, meted out by shooters firing from multiple directions, from both the front and behind — therefore, he was felled by a conspiracy, by definition. The windshield bullet hole evidence, all by itself, proves a conspiracy; and its clumsy and unsuccessful suppression, all by itself, is proof of a government cover-up of the facts in President Kennedy’s assassination, since the U.S. government controlled all of the windshield evidence. The facts contained in this tale prove that we had a coup in America in 1963, and that powerful and influential people were still covering it up in 1975, and 1976, and 1979, and in 2003. Former CIA Director William Colby once said that everyone of any significance in the U.S. media was owned by the CIA. I believe it — otherwise, this windshield nonsense would have been exposed long ago on a show like “60 Minutes.”

I have expressed here my own strong opinion about what is shown in the 84 video frames visible in this documentary. A good follow-on step here would be to obtain the original 16 mm camera footage (presumably a black and white negative, not some multi-generational stock footage), perform a high-resolution digital scan of the film frames in Hollywood, and have them analyzed by motion picture professionals in the film industry who have no axe to grind — not by Gary Mack at the Sixth Floor Museum (who has never been to film school, or worked in the motion picture industry), or by any member of the JFK research community who has espoused a conspiracy or cover-up in the assassination. A true, third-party independent analysis of the camera negative, or of the earliest surviving generation of this newsreel footage, would be a good next step in the process of evaluating these images.

I have sounded the alarm here — and I am not afraid of a truly independent third-party analysis. Let’s do a little honest science here, and “let the chips fall where they may.”

*  *  *

Douglas P. Horne graduated Cum Laude from Ohio State University in 1974, with a B.A. in History. He served for ten years as a Surface Warfare Officer in the U.S. Navy, and then worked for the Navy for ten more years as a Federal civilian. In 1995 he joined the staff of the President John F. Kennedy “Assassination Records Review Board,” and rose to the position of Chief Analyst for Military Records. In that capacity, he focused on the medical evidence surrounding the JFK autopsy; the Zapruder film; and ensured the release of military records on Cuba and Vietnam. In 2009 he published the extensive five-volume work, Inside the Assassination Records Review Board, which documents the U.S. government’s coverup of the medical evidence surrounding JFK’s assassination, and the alteration of the Zapruder film of President Kennedy’s assassination.

 

via http://ift.tt/2iF35IR Tyler Durden

The World’s New Reserve Currency? Everything You Need To Know About PetroYuan

Earlier this week, we pointed out that the 'PetroYuan' is on the verge of becoming reality with Graticule's Adam Levinson noting that the birth of a yuan-denominated oil contract will be a “huge story” in the fourth quarter, and will be a “wake up call” for investors who haven’t paid attention to the plans.

As a reminder, nothing lasts forever…

Judging by the interest in the topic, investors are less informed than many believed and so the different teams within Société Générale Cross Asset Research examine what this contract would mean for the global oil markets and for the internationalisation of the yuan – if it gets off the ground.

 

Part 1 The proposed yuan-denominated crude oil futures contract

  • Why is a yuan-denominated Chinese crude futures contract interesting to think about?  Why is it potentially significant?
  • Would yuan-denominated Chinese crude futures affect the physical markets?
  • Has China actually proposed changing its crude buying from USD to yuan?
  • What about the crude producers and exporters?
  • How much non-USD crude trade currently exists?
  • If small volumes don’t change how the oil market operates, how big would the volumes have to be to make a difference?
  • Is there another commodity that trades in multiple currencies at different exchanges that we can learn lessons from?

Part 2 Another step towards currency internationalisation?

  • Why does China want to introduce a yuan-denominated crude oil futures contract? 
  • How can the yuan succeed in becoming a reserve currency?
  • What does the status of an international currency mean for the yuan?
  • What will an internationalised yuan mean to China’s FX reserves?

*  *  *

Part 1: The proposed yuan-denominated crude oil futures contract

In November 2013, the Shanghai International Energy Exchange (INE) was established. Fully owned by the Shanghai Futures Exchange, the INE began efforts to offer an alternative crude oil futures contract to the global oil markets. After four years, these efforts are continuing. The proposed contract is for medium sour crude oil, is physically deliverable, and – most significantly – would be denominated in yuan.

We begin with the oil markets.

Why is a yuan-denominated Chinese crude futures contract interesting to think about? Why is it potentially significant?

Such a contract would be a tool that would make it possible for crude exporters selling to Chinese refiners to hedge their sales in yuan. This could help any future effort by China to import crude using yuan; on the other side of the coin, it could also help any future effort by various crude exporters to sell crude in a currency other than USD. 

In the abstract, the potential volumes are large, which is why this is worth thinking about.  China is the world’s biggest crude importer, with net imports in January-July 2017 of 8.4 Mb/d (and trending higher); the second biggest crude importer is the US, with net imports of 7.2 Mb/d in January-July 2017 (and trending lower). 

To put this into context, according to the IEA, in 4Q17, global product demand will be 98.5 Mb/d and global crude demand will be 82.2 Mb/d (including refinery runs and direct burn).  Crude trade is much less, at 42.4 Mb/d in 2016, according to the BP Statistical Review; this excludes crude that is produced and consumed in the same country. In other words, Chinese net crude imports account for over 10% of the global crude market and almost 20% of global crude trade. 

Would yuan-denominated Chinese crude futures affect the physical markets?

No, not at all. That’s not what this is about – there would be no impact on physical supply (like the example of natural gas – see below). In theory, if this were to happen, it would purely be about pricing. The global oil markets are denominated almost entirely in USD, so it is interesting to think about that landscape changing.

Has China actually proposed changing its crude buying from USD to yuan?

No. In recent years, there has been occasional general talk from China of moving away from the USD for purchases of crude oil and other commodities; however, we are not aware of any serious or concrete proposal on the table to start buying crude in yuan any time soon. That said, it is worth acknowledging that most Chinese crude buying is done by three large stateowned oil companies. Therefore, if it so chooses, the Chinese government certainly has the ability to push such an agenda; similarly, the government has the ability to push the use of INE crude futures for hedging crude in yuan.

What about the crude producers and exporters?

This is an important question to ask because it’s not just about what the Chinese want. As with any commercial transaction, both the buyer and the seller need to agree. In the case of crude oil, they need to agree on the volume, price, type and quality of crude as well as the delivery date and delivery location, among other things. However, the currency is almost always the USD – that is not a point of negotiation.

Over the years, including 2017, major crude producers such as Iran, Russia and Venezuela have talked about selling and exporting crude in non-dollar currencies. The reasons have been general geopolitical tensions with the US and Europe, and more specifically, oil-related sanctions; the use of non-dollar currencies may offer a way to circumvent oil-related sanctions, at least partially.  

Hypothetically, if China were to have serious talks with Iran, Russia and Venezuela about importing crude and paying in yuan, that would be important because it would add another dimension to the geopolitical analysis. If sanctioned countries could simply side-step the measures by selling crude in yuan or other non-dollar currencies, it would mean that the risk of supply disruptions and potential upside risk for oil prices would be reduced.

How much non-USD crude trade currently exists?

It is very difficult to make an accurate and confident estimate. Again, depending on the political context, talk of non-dollar crude trade from the countries mentioned above comes and goes, and sometimes some deals are done more for political and public relations purposes than for anything else. 

Our “guesstimate” is that such volumes probably amount to no more than 300-350 kb/d out of the 82.2 Mb/d global crude market noted above. For reference, to put that in terms of physical crude trade, 5 VLCC-size tankers each month carrying 2 Mb each would equal 333 kb/d. We would consider that, or its equivalent in smaller vessels, to be a generous estimate. We would consider 10 VLCCs or equivalent each month, or 666 kb/d, to be an extreme upside estimate but highly unlikely. This excludes barter arrangements and loans-for-crude deals. China lent Russia large sums of money after the global financial crisis in 2008-2009 in exchange for longterm crude supply deals; more recently, China had such an arrangement with Venezuela.

The bottom line, in our view, is that actual crude trade paid in cash but not using USD has never amounted to more than a few token cargoes. Importantly, when this does happen, the entire transaction and negotiation of the price is done in USD as usual, with pricing done the normal way; for example, both Urals and Dubai, which are key marker crudes in their own right, are priced as differentials to Brent. The only difference when a non-USD currency is used is that a last step is added, where the amount for the invoice is converted from USD into a different currency.

If small volumes don’t change how the oil market operates, how big would the volumes have to be to make a difference?

The question is really: what is the tipping point? How much non-USD crude trade does there need to be for the entire negotiation to take place in yuan, or rubles, or euros?  In other words, what does it take for price discovery and price formation to take place not in USD but in another currency?

The short answer is that we don’t know. But something on the order of 7-8 Mb/d of crude trade seems to be a sensitive level from a practical standpoint. How do we come up with this?  It’s simple: we are thinking about Saudi Arabia. Saudi crude exports have averaged 7 Mb/d through the first eight months of this year; in 2016, before the current OPEC cuts took effect, they averaged 7.6 Mb/d. The 7-8 Mb/d range works out to 16-19% of the 42.4 Mb/d global traded crude volumes.

Our view is that physical efforts to shift global crude trade away from US dollars seem doomed to failure unless the Saudis fully participate. Usually in matters of pricing, the other Middle East exporters follow the lead of the Saudis, so there is a “double whammy” effect and the volumes could start to increase quickly.

In this context, the warming relationship between Saudi Arabia and Russia becomes more interesting, too. Could the two countries cooperate on this in the same way they’ve cooperated on cutting production this year, in order to stabilise prices? Perhaps. That would add even more volumes because Russia is the second-biggest crude exporter in the world.  According to the BP Statistical Review, Russian crude exports averaged 5.5 Mb/d in 2016.

However, the geopolitics of oil quickly gets complicated. Why would the Saudis want to do something (like encourage non-USD crude trade) that would benefit Iran? This is always true, but is even more true now at a time when US-Iran tensions are ramping up and the US is threatening to re-impose oil sanctions on Iran. Also, why would the Saudis want to do something that would diminish the value of their currency, which is pegged to the USD, their huge USD reserves, and other USD-denominated assets?

If it would take the Saudis to make a real fundamental change in moving the oil markets away from a sole reliance on the USD to a multiple currency market, from a Saudi perspective, the arguments “against” are at least as strong as the arguments “in favour”. In short, we are sceptical of Saudi support for such a move.

Rather than support from Saudi Arabia or a cooperative effort between Saudi Arabia and Russia, a more realistic and higher-probability scenario would be a move to non-USD crude exports led by Russia on its own or perhaps a cooperative effort between Russia and Iran – with China being the key crude buyer, using yuan, in all the scenarios. Without the inclusion of Saudi Arabia and other Middle East exporters such as the UAE, Kuwait and Iraq, the volumes involved with Russia and Iran would be much less; this would make a fundamental change in oil price formation away from USD slower and more difficult but not impossible.

Is there another commodity that trades in multiple currencies at different exchanges that we can learn lessons from?

The answer to this question is yes and the best example is natural gas. The point of making this comparison is that ultimately different denominated prices in the same underlying commodity do not affect the physical balances but do influence trade flows, arbitrage and market analysis.

The US natural gas market is the largest regional market in the world (IEA estimates it alone represented 21% of total global gas demand) and is almost entirely priced in USD (AECO, Canada’s most liquid supply point, prices in CAD/GJ). The US LNG market (imports and exports) are also denominated in USD.

The global LNG market is heavily indexed to USD as well, but that is due to the dominance of oil indexation in long-term LNG sales agreements; the USD dominance of the global LNG market thus reflects the dominance of USD in oil prices.

In Europe (which represents 13% of total global gas demand according to IEA estimates), there are two main natural gas price points. In the UK, the National Balancing Point (NBP) – the hub of UK gas trading – is denominated in GB pounds and pence/therm. In the Netherlands, the hub of natural gas trading is known as Title Transfer Facility (TTF), and this contract is in euros and euro cents per MWh. Recently, there has been an observed shift in the dominance of these price points regionally; critically, this is a function of the physical characteristics of the market rather than the currency used or the exchange rate.

Historically, NBP was the most liquid point and also the price structure included in European LNG sales contracts, making it the dominant global representation of the European market. Recently, however, TTF has seen an increase in liquidity (increased open interest) and has become increasingly reflective of the physical continental European market. Factors such as the higher carbon price in the UK, which has an impact on gas competitiveness/pricing within the regional power generation stack, the declining trend of the UK production profile, and the region’s increased dependence (seasonal switching) on the Interconnector pipeline between the UK and continental Europe have all contributed to the reduced ability of NBP to reflect the wider European market; hence the rise of TTF. Importantly, it is the changes in the physical market that have changed the competitive landscape among TTF and NBP, and it has little to nothing to do with the different exchange rates (although Brexit may have decreased NBP’s popularity).

The existence of varying price structures in the global natural gas market is a critical comparison to make for oil, which has the potential to see a rise in pricing in currencies other than the USD. It is important to emphasise that even with multiple price structures, global natural gas trading behaviour is dominated by physical market conditions. At the same time, there is sometimes an influence from fluctuations in exchange rates, making analysis of flows, arbitrage, and trading somewhat more complicated; however, supply and demand dynamics are not fundamentally affected.

Part 2: Another step towards currency internationalisation? 

Why does China want to introduce a yuan-denominated crude oil futures contract? 

The Chinese government wants the yuan to become an international currency. This means that it wants the yuan to be used widely in international transactions (a settlement currency), to be adopted as a pricing currency for goods and services in global markets (an invoicing currency), and to be considered as a store of value by international investors (an investing currency). The goal of internationalisation also goes hand in hand with the profile objective for the yuan to obtain a reserve currency status since these two are highly correlated. While it is currently unclear (or too early to discern) whether China is aiming for the yuan to become the reserve currency – dethroning the dollar – Chinese policymakers are certainly eyeing the yuan as one of the major reserve currencies.

China has been working much harder on this project since 2009. The process has moved at varying speeds depending on capital account pressures, domestic asset prices and growth considerations, but much progress has been made (see the timeline on the next page). A quarter of China’s exports and imports are settled in yuan, although most of them are still invoiced in other hard currencies.

The proposed yuan-denominated crude oil futures contract to be listed on the Shanghai International Energy Exchange (INE), fully owned by the Shanghai Futures Exchange, is another step on the road to promote internationalisation and erode the USD hegemony in the global financial system. While over the years, there have been some relatively small volumes of oil traded in non-USD currencies, including the yuan (as discussed in the oil section above), the value of oil is still priced in dollars. One of the main impacts of the proposed new crude futures contract, and presumably one of the intentions behind the proposal, is that by providing a yuandenominated financial hedging tool for crude oil, this will likely help to promote the appeal of the yuan as a pricing currency in global oil trade.

From the Chinese policymakers’ perspective, China should arguably have a bigger say in the pricing of commodities since it has become the biggest consumer of many of them. Also, the petro-dollar system seems to be a successful model to imitate: first, the yuan would be more widely accepted by natural resource exporters, and in turn, these exporters could invest their yuan revenues (as FX reserves) into yuan-denominated financial assets.

How can the yuan succeed in becoming a reserve currency?

To improve the yuan’s chances of becoming an international and reserve currency, the main areas of development would be strengthening the institutional framework, fully opening the capital account to foreign residents, allowing market forces to play a greater role and establishing and managing a policy framework that alleviates the risk of crisis over an extended period.

China technically joined the reserve currency club when the IMF added it to the SDR basket in September 2016. The narrow definition of a reserve currency is for currencies used for international trade and willing to be held by other central banks as part of their reserves. On these narrow criteria, China has achieved what few currencies have been able to do.

Realising “true” reserve status and supplanting or even meaningfully competing with the USD in the global financial system is a very high hurdle that will take time (maybe 10-20 years) and require further enhancements in various areas. A broader set of criterion (listed below) of a reserve currency highlights the enormous challenges that China faces:

Medium of exchange. Entities outside China would need to widely adopt the RMB for transactional purposes (i.e. trade settlement). The yuan trade/investment settlement, the offshore yuan market and the Belt & Road Initiative (BRI) would need to be promoted. China is making steady strides in this area, with now 25% of China’s cross-border transactions settled by yuan. According to the SWIFT, however, the yuan share in international payments has not been able to advance and has hovered around 2% since late 2014.

 

Store of value. Individuals, companies and central banks would need to have faith in the currency as able to preserve wealth. About 60 central banks now hold some RMB assets in their portfolios, but this amount only represented 1% of total global reserves at the end of 2016.

 

Liquidity and market access. To become widely accepted, a currency would need to have high liquidity with foreigners having unencumbered access to local financial markets. China has created numerous schemes for global investors to access its equity and bond markets, but it is only a start, with foreign investors’ share in onshore capital markets at merely 2%. Further liberalising the capital account for foreign residents would be a necessary condition.

 

Institutional framework. Ultimately, confidence in the legal, regulatory and policy framework would need to be paramount for foreigners to hold large quantities of the currency. The current (USD) and previous (GBP) dominant global reserve currencies already had these qualities before attaining their status.

In many ways, China is working in reverse order – pushing internationalisation before the others condition are in place. Critically, policy priorities would need to be reoriented. It will be a challenge for China to meaningfully challenge the USD’s dominance, but it is not insurmountable over the next 10-20 years provided China takes steps in opening up (full capital account convertibility), giving up control of markets and strengthening and improving transparency in its legal, regulatory and policymaking framework.

What does the status of an international currency mean for the yuan?

Before the reserve currency status can support the yuan, the yuan may have to continuously prove itself as a stable currency to boost its status as a reserve currency. We think that the fundamental factors of economic growth, debt risk and interest rate differentials will continue to play dominant roles in the yuan’s FX trends over the medium term.  
A quick check of the history of the four major currencies – the dollar, euro, yen and sterling – since the 2000s suggests a visible and positive correlation between a currency’s traded weighted performance and its share in global FX reserves. However, correlation does not necessarily mean causality, and the causality can go both ways.

For instance, in the case of the yen and sterling, however, changes in their valuations look to have led their changing popularity among global reserve managers. The strength of the yen between 2009 and 2013 did not attract significantly more reserve inflows right away, probably because of the lacklustre economic development at the time. Sterling only started to gain a share in global reserves in 2003 despite its persistent strength since late 1990s.

For the yuan, we observe that the pace of yuan internationalisation was faster during the phase of currency appreciation or stability and slower when the yuan depreciated. This came despite the continuous policy efforts.

For the past seven years, USD/CNY has moved surprisingly closely with US-China yield differentials, and in the past three years the correlation of CNY to broad dollar moves has increased. Contrary to popular belief, the CNY shows few idiosyncratic tendencies and rather behaves in a similar manner to other EM/G10 currencies.

No matter what happens, the correlation between the CNY and the USD could remain high. The simple fact is that the correlation across most currencies is high over the cycle given that many top-down macro factors tend to drive FX over the medium term. 

The CNY may, however, play an increasing role in leading currency cycles, just as the USD does now. This would mean an increasing importance of Chinese data, monetary and fiscal policy in affecting global currency trends.

What will an internationalised yuan mean to China’s FX reserves?

The project of yuan internationalisation comprises currency liberalisation, capital account open-up and domestic capital market deepening. Liberalising the currency implies that the central bank will intervene less and less in the currency market, and a relatively stable level of FX reserves is therefore most consistent with the goal of making the yuan an international currency. 

Indeed, Chinese policymakers have repeatedly expressed their commitment to making the yuan a more flexible currency, freer from direct currency interventions by the central bank. However, it is also a stated goal for the yuan to maintain relatively stability against a basket of China’s major trade partners’ currencies. These two goals are only compatible when there is no major depreciation (or appreciation) pressure on the yuan resulting from major outflow (or inflow) pressure. 

China’s FX reserves can recover this year after the $1tn drop over the previous 2.5 years because the yuan has managed to stabilise against the dollar and a basket of currencies. The yuan’s stability should be a function of 1) dollar weakness, 2) capital controls and 3) China’s stable growth this year. These three factors will likely be the main drivers of the trend in China’s FX reserves over the next few years. While there remains much uncertainty around the dollar, it seems that Chinese policymakers have honed the skill of capital controls. This ought to reduce the risk of sharp declines in FX reserves going forward.

In the meantime, we think the chance of China persistently increasing its FX reserves is also limited unless the weak dollar trend continues and accelerates. The relationship with the US is one factor, and domestically there will likely remain strong demand from Chinese households and corporates for investment diversification if China continues to rely on rapid debt growth and money creation to sustain its economic model (see Anatomy of China's outflows). As the developments in 2015 and 2016 proved, such capital outflow pressure could outweigh the support from a decent current account surplus for the yuan.

What will the yuan’s internationalisation mean to global FX reserves?

China’s share of global reserve portfolios should increase over time. Depending on whether it achieves true reserve currency status in the eyes of foreign participants, that share will be either low (5%), high (25%) or very high (25%+). 

Emerging market central banks still need a significant amount of dollars to undertake intervention assuming their currency regimes are not fully flexible, and a precautionary stockpile is desired to manage balance of payments shocks. Against all EM currencies, except most notably the CEE euro bloc, the dollar is by far the most widely traded and liquid FX cross. Virtually all intervention is done in USD crosses, and one prerequisite for central banks to shift their anchor currency to the RMB would be CNY crosses that are tradable without underlying dollar transactions being required. For instance, while EUR/CNY is quoted and traded onshore through the CFETS, it requires dealers to facilitate the trade through two separate transactions (USD/CNY and EUR/USD). The sheer size of the Chinese economy, growing global financial linkages and increasing RMB trade settlement will see a shift in this direction over time, but it will be a very long and slow process. Products such as the proposed yuan-denominated crude oil futures contract will help to marginally speed up the progression. 

Reserves can be divided into two broad categories: precautionary and excess. The precautionary portion needs to be in liquid assets to meet demand for foreign currency/dollars on short notice and mitigate balance of payments stress. Currently, these are mostly held in US government bonds or deposits, followed by European bonds, then UK, Japan, Canada and Australia down the list. China is below these. Gold is liquid but somewhat lower on the scale compared to deposits or government bonds, so there are natural limitations to how much central banks would hold. 

The excess portion of reserves can be invested in anything, and central banks have an excess globally. Central banks have undertaken various diversification efforts over the past few decades, with the share of euros in global reserve portfolios for example having increased from 20% in 2002 to 27% in 2008 before falling back to 20% in 2016. Central banks have been more active in holding commodity currencies (CAD and AUD) over the past five years.  
Russia has been buying a lot of gold. To do this, it either sells existing USD or other currency holdings, or when it intervenes and accumulates dollars it then diverts the currency to gold instead of treasuries. If central banks have excess reserves or do not want to accumulate more dollars, they could hold gold instead. 

The proposed yuan-denominated crude oil futures contract reduces the need to use dollars for the transaction, but it does not change the outcome or address the fundamental question: do central banks want/need USD or yuan? They could have bought yuan previously. The proposed yuan-denominated crude oil futures contract does not make it an easier process. But for those countries subject to sanctions, it might be attractive. According to the 4Q16 IMF COFER report (link), foreign central banks held USD85bn in allocated reserves in the CNY (or 1% of global reserves). Total foreign holdings of Chinese bonds amounted to USD135bn, according to ChinaBond, suggesting the vast majority of holdings are from central banks.

If reserve manager allocations to the RMB doubled over the next five years, and if those inflows were spread out evenly over the period, they would amount to roughly USD6bn per quarter (or another USD100bn). While not insignificant, that is still a drop in the ocean compared to other balance of payments components. However, if reserve manager allocations reached the weighting of the JPY in allocated global reserves (4%), the inflows could be closer to USD500bn over five years. An allocation equivalent to the euro (around 20% of global) reserves could see nearly USD1.5trn in inflows.

It could be challenging for the CNY to reach a high weight if global reserves are not rising. In 2002-2008, when central banks were diversifying into euros, global FX reserves were rising sharply and a significant portion of the growth in reserves was due to China. During this period, central banks were buying dollars through intervention (in an attempt to keep their currencies weaker than otherwise) and with some of those newly acquired dollars they decided to diversify their holdings and buy euros. However, in the absence of a strong increase in global FX reserves going forward, it would present a significantly higher hurdle for reserve managers to diversify into the CNY. It would require active diversification out of other currency holdings (i.e. sell existing dollar assets) to acquire the CNY.

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Even Obama’s CIA Director Thinks Clinton’s Dossier Payments Need To Be Investigated

Over the past couple of days, various senior members of Hillary’s team have all come forward to deny any knowledge that her campaign funds were used to pay for the now-infamous “Trump Dossier.”  Just yesterday, Clinton’s former spokesman, Brian Fallon, appeared on CNN to imply that Hillary likely had no idea and John Podesta, Hillary’s campaign Chair, apparently testified to congressional Russia investigators, presumably under oath, that he too was not aware of the controversial payments.  Per CNN:

“Hillary Clinton’s campaign chairman John Podesta and former Democratic National Committee chairwoman Debbie Wasserman Schultz both privately denied to congressional Russia investigators that they had any knowledge about an arrangement to pay for opposition research on President Donald Trump, three sources familiar with the matter told CNN.

 

“The interviews happened before this week’s disclosure that the Clinton campaign and DNC paid for the research. Senate investigators may seek to further question the two top Democrats and dig deeper on the origins of the so-called Trump dossier, one of the sources briefed on the matter said.”

Of course, it would seem highly unlikely that literally millions of dollars could be spent by a political campaign on “opposition research” without a single senior representative of said campaign approving such expenditures.  Moreover, if that did happen then it raises a whole other set of questions about what financial controls the Hillary campaign had in place, if any, and what else her political donations may have been used to purchase that went completely “unnoticed” by anyone who matters.

Alas, it seems as though at least one person with ties to the Clintons, Obama’s former CIA Director Leon Panetta, is not buying the narrative.  In speaking with CNN’s Wolf Blitzer, Panetta admitted that a Congressional intelligence committee needs to investigate “who knew what when.”  Per the Daily Caller:

“Well, it’s obviously something that the intelligence committee is going to have to look at,” Panetta said.

 

“You know, knowing presidential campaigns, they’re big operations and somehow the left hand may not know what the right hand is doing. And that could be the case here, but I really do think that the committee is going to have to get into this, determine just exactly what happened. Who knew what and when.”

Meanwhile, and to our great shock no less, it was Wolf Blitzer who notes that Marc Elias, the Pekins Coie attorney and Hillary Clinton general counsel who sent the money to Fusion GPS, was sitting right next to John Podesta when he allegedly denied to congressional investigators that the Hillary campaign had any part in funding the dossier…which begs the question of whether Elias had a legal obligation to correct the record in that instance.

Adding further mystery to the “who knew what and when” question was the revelation on Thursday that Podesta testified to the Senate Intelligence Committee earlier this month that he was not aware of who paid for the dossier.

 

But Podesta happened to be sitting next to Marc Elias, the Perkins Coie lawyer who orchestrated the deal to pay opposition research firm Fusion GPS to conduct the investigation that led to the dossier. Elias was general counsel for the Clinton campaign and DNC. He is also Podesta’s attorney.

 

In his interview with Panetta, CNN’s Wolf Blitzer wondered why Elias did not inform Podesta during the Senate interview that he was involved in the dossier.

 

“It certainly makes the situation very awkward,” Panetta responded.

 

“If you’re testifying and saying you have no knowledge and the attorney sitting next to you is one of those that knew what, what was involved here, I think it does raise an issue that the committee is going to have to look at and determine just exactly what knew what,” he added.

So what say you?  Will someone from the Hillary team have to answer for this scandal or is it just more “extreme carelessness” that will be promptly dismissed?

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“If You Want To Get Rich…Climb Into A Time Machine”

Authored by Charles Hugh Smith via OfTwoMinds blog,

There's a profound difference between assets that produce no income and those that produce net income.

To those of us nutty enough to pore over dozens of pages of data on wealth and income in the U.S., the Federal Reserve's quarterly Z.1 reports and annual Survey of Consumer Finances (SCF) are treasure troves, as are I.R.S. tax and income reports.

Allow me to share a few observations on family wealth and income drawn from my review of these documents:

Changes in U.S. Family Finances from 2013 to 2016 (42 pages)

Financial Accounts of the United States (198 pages)

Corporate profits clock in at $2.135 trillion annually, around 11% of the nation's GDP (gross domestic product). (Page 10 of Z.1) This has changed very little over the past few years; corporate profits totaled $2.140 trillion in 2014.

Most people who follow financial matters closely probably know corporate profits have been around $2 trillion annually for awhile.

But how many know that proprietors' income from small businesses ($1.375 trillion) and rental income of persons–i.e. not corporations–($740 billion) together equal corporate profits? ($2.115 trillion for small biz/rentals, $2.135 trillion for corporate profits.

How many financially savvy people know that proprietors' income and private rental income rose by $189 billion since 2014, while corporate profits flatlined?

Clearly, the families that own the proprietorships and rentals pulling down $2.1 trillion in annual profits are doing a bit better than OK.

As the charts below reveal, most of this profitable business equity is owned by the top 10% of families. There are a few clues that suggest that family-owned business equity is distributed along a power-law curve, i.e. the majority of wealth and income is held by the top and the rest is distributed over the rest of the owners.

On Page 28 of the Survey of Consumer Finances (SCF), we find that the business equity owned by families in the bottom 50% of family incomes has a mean value of $208,000, up marginally from $204,000 in 2010, the business equity held by the top 10% of families rose from $2.265 million in 2010 to $3.3 million in 2016–a gain of over $1 million.

As always, I want to stress the profound difference between assets that produce no income and those that produce net income. This excludes hobby businesses that lose money or tax shelters that are intended to lose money. I'm talking about businesses that generate revenues in excess of all expenses: net profit that is taxable.

Owning a vacation home that is rented out a few weeks a year is one thing, owning a rental property that's rented out 50 weeks a year is considerably different. The first is an expense, the second generates net income.

Somewhat to my surprise, almost 14% of households own some residential property equity other than their primary residence (page 18 of the SCF). Unfortunately, the Fed lumps second homes and vacation properties in with rental properties of up to 4 units, while rentals with 5 or more units are lumped in with farmland and commercial properties in equity in nonresidential property.

Only 6% of households own any equity in nonresidential property, a category of wealth that gained 72% from 2013 to 2016. Interestingly, the percentage of families owning this form of wealth actually declined from 7.2% in 2013 to 6.2% in 2016, suggesting to me that the corporations and hedge funds snapping up multi-unit residential properties are buying properties from families.

Based on my previous surveys of I.R.S. income tax data, much of this small-business equity and family owned-rental property is owned by the top 4% to 5% of families, with the majority owned by the top 10%, as shown in the chart below.

The number of families with business equity has been declining, eroded by recession and stagnation, despite the recent bounce higher.

Most of the biz-equity is owned by the top 10%:

While the financial media focuses on billionaires and hedge fund managers playing for billions, much of the wealth and income of the nation is firmly in the hands of families that own proprietorships and rental properties.

These assets have risen sharply in value, and they've also generated gains in income.

If you want to get rich, you can climb into a time machine, return to 2010 and buy a couple thousand bitcoin for $1 each. Alternatively, you can marry extremely well. If neither of these options is available, then starting a profitable proprietorship that enables the purchase of rental properties is another option.

*  *  *

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Republican Group That Helped Finance ‘Trump Dossier’ Revealed

In what will probably be remembered as a footnote in the Congressional inquiries into the credibility of the infamous "Trump dossier", the mysterious Republican anti-Trump group that retained opposition research firm Fusion GPS during the Republican primary has finally been revealed.

And surprisingly, it wasn't John McCain, the RNC or the Cruz campaign. It was…the Washington Free Beacon? The conservative website reportedly told a Congressional panel that it paid Fusion GPS to conduct opposition research on Trump during the primary, but asked it to stop in May 2016 when it became apparent that Trump would be the nominee. The DNC and Clinton campaigns, through lawyer Marc Elias, contracted Fusion to dig into Trump's background in April 2016, which is when the real work that led to the dossier's creation began.

The Free Beacon famously is funded in large part by New York hedge fund billionaire Paul Singer of Elliott Management Corp. Singer strongly opposed Trump during the primary. The conservative-leaning news website confirmed its relationship with Fusion in a post published Friday night. In the post, the Free Beacon explained that it had withdrawn its financial support before former British spy Christopher Steele was brought on to begin the research that led to the dossier. The Free Beacon also paid to fund opposition research into other candidates besides Trump.

Lawyers for the conservative publication Washington Free Beacon informed the House Intelligence Committee Friday that the organization was the original funder for the anti-Trump opposition research project with Fusion GPS.

The Free Beacon funded the project from the fall of 2015 through the spring of 2016, whereupon it withdrew funding and the project was picked up by the Democratic National Committee and the Hillary Clinton campaign.

The original arrangement between the Free Beacon and Fusion GPS involved opposition research into multiple Republican candidates, not just front-runner Donald Trump.

Sources close to the Free Beacon stress that the project, when the Free Beacon funded it, had nothing to do with Russia and did not involve Christopher Steele, the former British spy who gathered anti-Trump dirt in Russia. Steele was retained by Fusion GPS when the project was funded by Democrats, and not in its initial phase, when the Free Beacon was involved.

The Free Beacon has a history of employing so-called opposition research firms to assist in news articles critical of targets ranging from Mr. Trump to Mrs. Clinton, according to the New York Times.

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The Government Has Created Every Step In The Development Of The Opiod Crisis

Authored by Mark Thornton via The Mises Institute,

The Washington Post and “60 Minutes” have just peeled back another sordid layer in the War on Drugs by exposing Big Pharma’s role in expanding the Opiod Crisis that has resulted in more than 30,000 deaths per year.

All the disgusting details can be found here, but it is really a straight forward case of legal bribery and corruption in the market for legal opiates — the driving force in this crisis as doctors continue to turn untold thousands of innocent people into opiate addicts.

Opiate medicines have been a Godsend to humanity, but it comes also with scourge of addiction, dependence, and overdose deaths. The Harrison Narcotics Act of 1914 made the situation worse thanks to the meddling of federal bureaucrats who turned regulation and oversight into prohibition.

One of the most demaging side effects of federal meddling in drug markets, however, has been the Opiod Crisis. I have detailed here and here the primary cause as Big Pharma bribing the board responsible for setting pain maintenance guidelines and the resulting explosion of prescriptions for Opiod drugs by doctors.

The newest wrinkle uncovered shows that pharmaceutical drug distributors have paid off select members of Congress to rewrite the enforcement guidelines for the Drug Enforcement Agency (DEA). A good case in point is Representative Tom Marino who withdrew his name from consideration as President Trump’s Drug Czar.

The new guidelines and their enforcement have effectively neutered any restraint on pharmaceutical producers and distributors. They can sell untold millions of these pills to pharmacies and pain clinics without any constraints. The additional cost of producing these heroin-like pills is virtually zero.

Is Bribery and Corruption a Good Thing?

Normally, bribery and corruption of public officials is a good thing because it allows more producers and more consumers to obtain gains from trade from each other. Such is not the case with prescription opiates in this environment.

The problem here is that there is not a functioning marketplace at all when it comes to distribution of prescription opiates. It is a government-granted monopoly in every respect. The products we are examining have not passed the market test and the producers are effectively protected by the government against torts, liability, and claims of misrepresentation.

In addition, pharmaceutical drugs have been approved by the Food and Drug Administration (FDA) and, essentially, the FDA grants monopolies to drug companies for their patented drugs and gives them an FDA seal of approval that the drugs are safe and effective.

Then another government-created monopoly, the American Medical Association (AMA) and its doctor-members have the monopoly on writing the necessary prescriptions to obtain drugs from yet another monopoly the pharmacists.

A doctor’s prescription is essentially another AMA seal of approval that the vast majority of people do not even question or even concern themselves with what they are taking. All of these monopolies are usually protected when consumers die as long as it happened when all the monopoly rules are followed.

Thus, with these products, like Oxycontin and Vicodin, there is no attempt to pass the "market test" by seeking to primarily please consumers. Instead, consumers end up being an afterthought after producers of the drug have catered to the needs and desires of countless regulatory agencies.  In real free market competition, an entrepreneur of dangerous products has to assure consumers that the products are safe and effective enough to use compared to the alternatives.

Opiates in Unhampered Markets

In other words, pain medications do not have to be perfectly safe and perfectly effective to be the best alternative choice for people who suffer with pain. However, they have to be reasonably safe and effective. The high potential for addiction, harm to health, and even death would be a “competitive disadvantage” in a real free market.

Just the opposite is the case here.

The government has created and overseen the creation of every step in the development of this crisis. The fact that crony capitalists have taken advantage of the situation should not be a surprise, especially when it is the only way to legally participate in the pharmaceuticals "market." 

 

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Rental Nation: Unique ‘Solution’ Emerges To Address Flood Of Off-Lease Vehicles…Lease Them Again

We’ve written frequently of late about the coming wave of off-lease vehicles that threatens to flood the used car market with excess supply, crush used car prices and simultaneously wreak havoc on the new car market as well. 

As we recently noted (see: “Flood Of Off-Lease Vehicles” Set To Wreak Havoc On New Car Sales), the percentage of new car ‘sales’ moving off dealer lots via leases has nearly tripled since late 2009 when they hit a low of just over 10%.  Over the past 6 years, new leases, as a percent of overall car sales, has soared courtesy of, among other things, low interest rates, stable/rising used car prices and a nation of rental-crazed citizens for whom monthly payment is the only metric used to evaluate a “good deal”…even though leasing a new vehicle is pretty much the worst ‘deal’ you can possibly find for a rapidly depreciating brand new asset like a car…but we digress.

Of course, what goes up must eventually come down.  And all those leases signed on millions of brand new cars over the past several years are about to come off lease and flood the market with cheap, low-mileage used inventory.  By the end of 2019, an estimated 12 million low-mileage vehicles are coming off leases inked during a 2014-2016 spurt in new auto sales, according to estimates by Atlanta-based auto auction firm Manheim and Reuters.

So, what do you do when you’re industry is being threatened with a massive oversupply situation that could wipe out all pricing power for years to come?  Well, since reducing production is simply not tenable, one group of used car dealers in Wisconsin has an alternative solution…delay the problem for as long as possible by starting up a new used car leasing program. Per Ward’s Auto:

In a pioneering move, the 10-store Van Horn Group now leases used cars.

 

The 10-store dealership group in Plymouth, WI, began doing it to serve more customers and expand its pre-owned vehicle inventory, says Mark Watson, vice president-variable operations.

 

Used-car leasing is something of a rarity. But more and more dealers – such as George Glassman of the Southfield, MI-based Glassman Automotive Group – say it’s a good idea whose time has come and manufacturers should get behind it to help remarket waves of vehicles coming off-lease. That number is approaching 4 million a year.

 

“We are trying to create with used vehicles a unique position, one that allows us to put the client into more vehicle at a lower payment through a lease,” he says.

 

“Used car leases are an additional revenue opportunity and keep relationships strong with the bank,” says Tonya Stahl, Wisconsin Consumer Credit’s vice president-operations. “It helps us exceed customer expectations by providing flexible finance options for a successful and continual business relationship.”

Of course, while Van Horn’s used car leases provide a great opportunity for him to “double-dip” by effectively selling his used car inventory twice, it does very little to address the underlying problem of oversupply aside from marginally expanding the pool of potential buyers by lowering monthly payments.

Moreover, as Wards notes, used car leasing is not necessarily a new phenomenon as it has historically popped up during previous economic cycles when the auto industry faced similar problems.  That said, in past cycles at least, the concept was quickly scrapped after banks realized it’s nearly impossible to accurately underwrite the risk on a used vehicle when you have absolutely no idea how badly the car may or may not have been abused by it’s first owner.

Used-car leasing is not a new idea, although in the past it has been promoted sporadically, at best.  Could used-car leasing now become more mainstream, with a combination of the right new technology and, to put it bluntly, the renewed motivation to forestall a residual-value crisis?

 

Back when I was in auto retail, some banks did used-car leasing, as some captives do now, and some retailers did well with it, but it was not sustained by financial institutions.

 

Used-car lease retailers were hard to find, and not that well promoted. Worse, if trying to calculate a new-car lease back then was difficult (we are talking 1980s and 1990s), cyphering a used-car lease was pretty much impossible.

 

Unlike a new car, every used vehicle is unique, with a unique payment and residual (and forecasting wasn’t as sophisticated back then). Of course, we didn’t have automated vehicle-history reports (so some finance institutions were the victims of fraud on occasion, which no doubt led to the demise of used-vehicle leasing programs.

In the end, of course, this just moves most Americans one step closer to eternal financial hardship as profits are increasingly consolidated into the hands of monopolistic financial institutions who are all too happy to make you think that lower monthly payments are a “great deal” for you when in fact they only serve to insure that you never build any wealth and you never actually own any assets.

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