Secretary of Defense Mark Esper asked Navy Secretary Richard Spencer to resign on Sunday after the Pentagon chief lost confidence in how Spencer handled the case of a Navy SEAL accused of war crimes in Iraq, according to the Pentagon.
President Trump sits next to former Navy Secretary Richard V. Spencer in July
Spencer’s resignation stems from the controversial case of Chief Petty Officer Edward Gallagher, a Navy SEAL who was accused of war crimes during a 2017 deployment and later acquitted of murder. He was convicted in July of posing with the corpse of a captive, according to the Washington Post.
Esper asked for Spencer’s resignation after learning that he had privately proposed to White House officials that if they did not interfere with proceedings against Gallagher, then Spencer would ensure that Gallagher was able to retire as a Navy SEAL, with his Trident insignia.
Spencer’s private proposal to the White House — which he did not share with Esper over the course of several conversations about the matter — contradicted his public position on the Gallagher case, chief Pentagon spokesman Jonathan Hoffman said in a statement. –Washington Post
Esper said that he was “deeply troubled by this conduct.”
“Unfortunately, as a result I have determined that Secretary Spencer no longer has my confidence to continue in his position,” Esper added in a statement. “I wish Richard well.”
Spencer made his ‘indecent’ proposal to the White House after Trump intervened in the cases of Gallagher and two other soldiers on November 15 against Pentagon advice. He also issued pardons to Army Maj. Mathew Golsteyn, who faced a murder trial next year, and former 1st Lt. Clint Lorance, who was convicted in 2013 in the murder of two unarmed men in Afghanistan.
Notably Gallagher’s legal team included Trump’s personal attorney, Marc Mukasey as well as former New York City police commissioner Bernard Kerik, who served a brief stint with Iraq’s Coalition Provisional Authority following the 2003 invasion.
Trump reinstated Gallagher’s rank after he was demoted for posing with the corpse, which Esper agreed with.
“The Navy will NOT be taking away Warfighter and Navy Seal Eddie Gallagher’s Trident Pin,” Trump tweeted last week. “This case was handled very badly from the beginning. Get back to business!”
The Navy will NOT be taking away Warfighter and Navy Seal Eddie Gallagher’s Trident Pin. This case was handled very badly from the beginning. Get back to business!
Following Trump’s tweet, the Navy was given White House guidance on November 22 that it would be allowed to proceed as planned according to an anonymous Navy official. According to the Epoch Times, however, “This would seem to have defused a conflict between the president and Navy leaders. Navy Secretary Richard Spencer said Nov. 23 at an international security forum in Halifax, Nova Scotia, that he didn’t consider a tweet by Trump an order. He said he would need a formal order to stop the Navy review board, scheduled to begin Dec. 2, that would determine whether Gallagher is allowed to remain in the SEALs.”
In 2019 through third quarter, 32 oil and gas drillers have filed for bankruptcy, according to Haynes and Boone.
Since the end of September, a gaggle of other oil and gas drillers have filed for bankruptcy, including last Monday, natural gas producer Approach Resources. This pushed the total number of bankruptcy filings of oil and gas drillers since the beginning of 2015 to over 200. Other drillers, such as Chesapeake Energy, are jostling for position at the filing counter.
Chesapeake has been burning cash ever since it started fracking. To feed its cash-burn machine, it has borrowed large amounts and has been buckling under its debt for years, selling assets to raise cash and keep drilling for another day. But its debt is still nearly $10 billion. Its shares closed on Friday at 59 cents.
On November 5, in an SEC filing, it warned of its own demise unless oil and gas prices surge into the sky asap: “If continued depressed prices persist, combined with the scheduled reductions in the leverage ratio covenant, our ability to comply with the leverage ratio covenant during the next 12 months will be adversely affected which raises substantial doubt about our ability to continue as a going concern.”
In early 2016, during Phase 1 of the oil bust — which had started in mid-2014 — Chesapeake had already used the threat of bankruptcy to push its creditors into accepting a debt restructuring. At the time, it was the second largest natural gas producer in the US.
The debt restructuring reduced its debt burden somewhat and pushed maturities out, which then allowed it to borrow new money from new investors with a series of bond sales. This coincided with the Wall Street floodgates reopening to the oil and gas sector, when PE firms, hedge funds, and distressed-debt funds piled billions of dollars into the sector, and many of the oil and gas drillers were able to raise more cash to burn.
Chesapeake’s series of bond sales that it then undertook included, in January 2018, $1.25 billion of senior unsecured convertible notes with a coupon of 5.5%, due in September 2026. It issued those bonds at a discount, but by July 2018, a few months before Phase 2 of the oil bust set in, the bonds were trading at 103 cents on the dollar. On Friday, the last trade was at 45 cents on the dollar, giving these bonds a yield of over 21% (via TRACE, FINRA’s Trade Reporting and Compliance Engine):
Other exploration and production (E&P) companies have seen their shares get crushed as reality began to re-set in.
Whiting Petroleum shares [WLL] had spiked to $370 in August 2014, when the oil bust was setting in. By the trough of Phase 1 of the oil bust, in February 2016, its shares had plunged to $14. Then new money started flowing into the sector, and its shares rallied to $55 by August last year. Then Phase 2 of the oil bust set in, and after some disastrous earnings reports, its shares closed on Friday at $5.34.
In June 2018, Whiting sold $1 billion of callable senior unsecured bonds, with a coupon of 6.625%. The next call date is in October 2025. Through September 2018, the notes were trading at 103-104 cents on the dollar. Then Phase 2 of the oil bust took its toll. On Friday, the bonds closed at 57.8 cents on the dollar, at a yield of 18.375% (via FINRA’s TRACE):
The S&P U.S. High Yield Corporate Distressed Bond Index tracks bonds that trade at a yield that is at least 10 percentage points higher than the equivalent Treasury yield (“Option Adjusted Spread” of 1,000 basis points). Chesapeake’s bond illustrated above, trading at 21%, and Whiting’s bond trading at 18.375% qualify for this index with flying colors. Of the 182 constituents in the index, many are energy bonds. Since November 2018, the index has plunged by 28%:
Now there are stories circulating of how billionaires, who in 2016 believed the hype that the fracking bust was over, have gotten tangled up and lost tons of money on their bets. Bloomberg recounts one such story, of the brothers Farris and Dan Wilks in Texas.
In 2002, they’d turned their stone-mason expertise into Frac Tech Holdings. Chesapeake, the fracking pioneer with the collapsed shares and bonds above, acquired a 25.8% state in 2006. They became billionaires in 2011 when they sold the remainder of the company to an investor group led by Temasek Holdings, which is owned by the Government of Singapore, for $3.5 billion. They then bought large swaths of land in five states, becoming the top property owners in Montana and Idaho.
However, not all of their wealth went into real estate. In 2016, the brothers started investing heavily in the fracking industry through their investment company, Wilks Brothers LLC, including oil and gas drillers in the Permian Basin and suppliers, such as frac sand supplier Carbo Ceramics, of which the brothers are the second largest investors.
Back in 2015, Carob Ceramics [CRR] still traded at over $40 a share. By October 2016, shares had dropped into the $6-range. Then the Permian boom started, and in early 2018, shares were trading at $12. But then the long hard decline continued, as demand for frac sand vanished as drillers were running out of cash and cut back on their drilling activity, and on Friday, shares closed at 41 cents.
The brothers also invested $110 million in the above-mentioned natural-gas driller Approach Resources, which filed for bankruptcy last Monday. They invested in Alta Mesa Resources, which filed for bankruptcy in September, and they invested in Halcon Resources, which filed for bankruptcy in August (its second filing, after having already filed in 2016).
Bloomberg notes:
“Eight of the 10 biggest holdings in a portfolio spanning more than 50 investments have dropped since June 2018, when they were worth almost $1 billion. In a filing last week, they reported stakes in just seven entities worth a total of only $35.7 million. The combined value of those remaining holdings plunged by $171.2 million, or 88%, since they were initially disclosed.”
The shale oil and gas business has turned the US first into the largest gas producer in the world, and then this year also into the largest crude oil producer in the world. It’s a huge business, with lots of high-paying jobs, not only in the oil field but in technology sectors, including software and hardware, manufacturing of heavy equipment, transportation, materials, and of course construction – ranging from pipelines and housing in the oil field to now partially empty office towers in Houston where, according to JLL, the office vacancy rate in Q3 climbed to an astounding 24%.
The shale oil and gas business, when it’s hopping, is great for the US economy. Its activities feed a significant part of US industrial production, including manufacturing. It pays well, and manufacturing for the industry pays well, and construction for the industry pays well, and the tech components of the industry pay well, and these workers are spending their income on new vehicles and houses and other things, and boost the economy.
Shale oil and gas drilling is awful for the land, water, and the broader environment. But so are all other methods of supplying power and fuel to an economy, including mountain-top coal mining, burning coal, hydro (which destroys entire canyons and rivers), nuclear power (nuclear waste, Fukushima, Chernobyl), even wind and solar power (the “fuel” is free and clean but producing and placing the equipment creates its own problems). When it comes to power and fuel, there are only compromises, some worse than others, and fracking is one of them.
And it’s brutal on investors at prevailing prices. The industry has been cash-flow negative from get-go. The high prices of oil and gas the industry needs to be cash-flow positive are being prevented by prolific shale oil and gas production. Executive compensation packages have been self-designed to reward richly any increases in production, hence no-matter-what increases in production.
And investors who believed the industry’s ceaseless hype are now grappling with reality – that their money was drilled into the ground and is gone.
Elon Musk Claims There’s Already 187,000 “Orders” For Tesla’s Cybertruck
With such an impressive unveiling that included audible laughter from the audience and two broken windows, it should come as no surprise that Elon Musk fanboys are falling all over one another to throw their money at their “visionary” savior.
And this seems to be exactly what’s happening. That is, of course, if you believe Elon Musk.
Musk claimed yesterday that there were already 146,000 “orders” for Tesla’s new Cybertruck. Of course, what Musk meant to say was “pre-orders” or “reservations”, and not actual orders. We wonder if Musk’s court ordered Twitter-sitter had a chance to approve that Tweet before Musk put it out.
Today, he claims there are 187,000, meaning the reservations would amount to about $18.7 million in refundable $100 deposits.
And customers obviously have to take additional steps after pre-ordering the Truck. According to Tesla:
“After you submit your completed pre-order and the options you selected become available in production, we will invite you to complete the configuration of your Vehicle. We will then issue you the Vehicle Configuration and Final Price Sheet based on the base price of the model and any options included or that you select.”
Lest we forget Tesla, which also has a couple of additional steps of its own that it needs to take – you know, like actually manufacturing and producing the truck.
But the fact that almost any millennial living in his or her mothers’ basement can scrounge up $100 for a refundable deposit didn’t seem to bother the pro-Tesla scholars over at electrek, who figured it was fair game to extrapolate that all 146,000 of the pre-orders announced yesterday would translate to $8 billion in orders.
Recall, we covered the sh*tshow that was the Cybertruck reveal in detail late last week. As we said then, “a picture is worth a thousand words”.
And here’s that picture: a truck with two shattered windows that looks like it rolled out of a dumpster heap at a metal scrapyard, being offered for the low low price of just $39,900.
We also noted on Saturday that Inside EVs had speculated that 200,000 Cybertrucks had already been reserved.
Reminding its readers that the Model 3 received over 400,000 reservations and that “trucks are considerably more popular than sedans in the U.S.,” the blog speculated that “Tesla could already have over 200,000 deposits” for the Cybertruck. The blog based its prediction on “several people who are tracking Cybertruck interest” and reservations that have been posted on Twitter.
My NYU colleague professor Adam Alter has conducted research confirming that the most enduring of the senses is smell. Smell can take you back to age five, to that anxiety that sharply arose when your mother was tucking you in. Mom dousing herself in Revlon’s Charlie meant one thing, she and dad were leaving you with a stranger/babysitter. No other sense works as fast as the scent of burnt cashews will take you back to walking along Broadway, feeling inspired after seeing Cats.
Big tech has decided that original scripted television will foment enduring loyalty across platforms that sell many things. So, for the foreseeable future, the deepest pockets in the world will spend more on scripted television each year than Canada or Australia spend on defense. If Netflix continues to increase its content budget at the same rate, by 2025 Netflix will spend more on Stranger Things, You, The Crown, and other original content than the US spends on food stamps (SNAP).
Who says capitalism isn’t working?
Let’s break down the key players, their strengths and weaknesses, the winners/losers, and make some predictions. For my money the criteria are content, value, distribution (control of purchase/experience), and flywheel (ability to monetize content/loyalty across other business units).
Carpe Stream — Netflix
Netflix, the original gangster, has the largest budget and the best technology. For all the talk about AI, the only tangible way AI has changed my life is the Netflix algorithm. Those endorphins still hit when it figures out I’d like to watch episode six of House of Cards after watching episode five, in 3, 2, 1. If you want to understand someone, I mean really understand them, pull up their Netflix home screen. I’m depressed and angry, as evidenced by my love of documentaries about the crimes against humanity we’ve levied on each other (WWII in Color, Hitler: A Career).
Netflix has first-mover advantage, 159 million subscribers, access to Amazon-like cheap capital, and one of the best leadership teams in tech. Its weakness? A lack of control over their distribution and a pure-play model that has one revenue stream — no flywheel. There are few (i.e, none) firms that have grown much beyond Netflix’s $135 billion in value without control over their distribution or other ways to monetize the enduring scent of media.
At Netflix, content is the main course, and consumers, for now, think of other streaming services as side dishes. Netflix is less vulnerable to the Allied forces invading their shores in force, as it will likely hold its subscriber base in the US, and will live or die by international growth.
Midlife Crisis
I believe Amazon’s $6 billion spend on original content is the most expensive hair plugs in history. Put another way, it costs a tech guy who looks like Jeff Bezos $6 billion to take his new girlfriend to the Emmys. To be fair, Fleabag may sell a sh*t-ton more paper towels. It’s another reason, which we didn’t need, to renew Prime. If the worst poker players in the world (Cuomo and De Blasio) hadn’t had their bluff called, Mr. Bezos’s midlife crisis would have cost NY taxpayers another $3 billion. But I digress.
Amazon Prime is number two in the space due to second-mover advantage and access to the cheapest capital in history. The most expensive Emmys in history have been purchased by the Seattle firm. The offering, despite its investment, has mediocre content (quantity over quality). However, the value is there, as it’s bundled with Prime.
Amazon is likely a winner in the streaming wars due to their vertical distribution, via the Fire Stick, and their ability to monetize content across the second most valuable recurring revenue bundle in business, Prime. (Microsoft Office still #1.)
HBO Max = HBO WTF
HBO changed the landscape and will go down in history as one of the greatest collisions of talent and storytelling in media history. However, HBO is now history, as it embarks on a strategy that could best be described as fu*king stupid. HBO built one of the great cultures of creativity in history. Think Disney’s animation studios in the forties, or Athens, Georgia, in the eighties (REM, B-52s), or … ok, I’m reaching, My. Damn. Blog.
Anyway, HBO does so much more… on so much less than other media players because of the secret sauce of their culture, which has continued to attract A-list talent. Junking it up with Big Bang Theory (Warner content) is to take Hermès and decide selling cargo pants is a better business. It isn’t. HBO’s value is not about more, its value is derived from offering less. Less is more … the DNA of any luxury brand.
HBO has the fewest programs of any SVOD, but the best. The green light gets lit less often at HBO, so subscribers are more inclined to try out new programs. To move to a mass strategy makes no sense. The only thing that will win at the mass level (bumping up against Amazon/Netflix) will be capital they just don’t have. I could cry, seriously cry. The biggest strategy/brand f*ckup of 2020.
This error in judgment coupled with a parent that’s the most indebted in the corporate world will lead to a write-down of AT&T’s acquisition of Time Warner that is second only to Time Warner’s write-down (20 years previous) of AOL. You broke my heart, John Stankey.
HBO Max: great content going to mediocre. Weakest value proposition and good distribution (AT&T and DirecTV). A flywheel effect that hasn’t lived up to the purchase price.
The Empire Finally Strikes Back — Disney+
Pedro Pascal + Baby Yoda = genius. It’s rewarding to welcome the Mouse to the digital age. The Disney+ launch, and its glitches, validated the tech investment at Netflix. However, content does appear to be king, and 10 million sign-ups is validation that being in the business of content creation means you create better content. A flywheel that includes cruise ships, Chewbacca dolls, and a Galaxy’s Edge theme area make Disney+ the most shareholder accretive of the SVOD efforts, as evidenced by the 9% increase in DIS stock ($21 billion) the week of the launch.
Similar to Netflix, the Mouse’s achilles heel is distribution.
Apple TV+
Because I co-host a podcast with Kara Swisher, I’m considered an influencer now and was invited to the premiere of The Morning Show. It was a great event with fabulous people watching a mediocre TV show at … Lincoln Center. Apple TV+ is exactly what you’d expect when a deep-pocketed tech firm hardware starts making TV shows. For the cost of Game of Thrones (each show is $15 million per episode), the viewer gets Murphy Brown. Actually, that’s not fair to Murphy Brown, a great show.
Distribution is off the charts with rails that run through a 1.4 billion strong neighborhood of the globally affluent. On a dollar charged per billion spent on content, Apple TV+ is the best value. Couple this with a flywheel effect that includes the most profitable product ever sold, and it was over before it started, in a good way. Apple TV+ will fail up faster than Adam Neumann.
Peacock
Last mover advantage (none). Good content, good distribution … but does anybody know or care about Peacock?
Quibi
Watches YouTube once …
Hulu
A cool trivia question about the tens decade. Will become a sub-brand of Disney+.
Winners
The winners of the streaming wars, as defined by which platforms add the most incremental stakeholder value, will be Disney+, Amazon Prime Video, and Apple TV+. Media has now become a customer acquisition vehicle, vs. a stand-alone business. So, the firms with the most seamless means of speedballing the media crack will win. The media business is now about phones, cruises, and paper towels.
And, as is increasingly the case in our economy, big tech wins. These firms must all spend billions to raise awareness and acquire customers. Spoiler alert: the best place to acquire customers for online media is online media (Facebook and Google). In addition, Apple and Amazon are tollbooths for most/all SVOD, as the app store and Amazon (Fire Stick, Prime) tax or touch most SVOD sign-ups.
Predictions
Netflix and/or Disney acquires Roku or other distribution
Roku and Hulu will not remain independent
Quibi and Peacock underwhelm
Apple and Disney add $300 billion in market cap combined by launching recurring revenue bundles, “rundles,” with media at the center.
The defense budget of Australia spent on scripted television. The American Dream is alive and well.
In Apparent Trade War Compromise, China Issues Guidelines For IP Theft
The general offices of the Communist Party of China (CPC) Central Committee and the State Council published a new report Sunday titled “The Guideline on Strengthening Intellectual Property Rights Protection,” which states the government will increase fines on violations of intellectual property rights (IPR) in an effort to satisfy the US for the possible signing of a ‘Phase One’ US/China trade deal. Though last week’s trade headlines suggest, both countries are still far apart from an actual agreement that might not be signed until next year.
“Strengthening the protection of intellectual property rights is the most important content to improve the system of property rights protection and the biggest incentive to improve China’s economic competitiveness. In order to implement the decision-making arrangements of the Party Central Committee and the State Council on strengthening intellectual property protection, and further improve the system and optimize the mechanism, the following opinions are proposed,” the report said.
The report said the CPC would strengthen protections through both the civil and criminal justice systems and the implementation of stricter fines.
The thresholds for someone violating IPR laws will be lowered, but there were limited details that specified where the bar would be set.
By 2022, China wants to stomp out IPR infringement:
“Strive to achieve effective containment of infringement and prostitution in 2022, and the situation of rights holders’ rights protection is difficult to prove, long cycle, high cost and low compensation. By 2025, the social satisfaction of intellectual property protection will reach and maintain a high level, the protection capacity will be effectively improved, the protection system will be more perfect, the business environment that respects the value of knowledge will be more optimized, and the basic guarantee function of the intellectual property system to stimulate innovation will be more effectively played,” the report said.
China will also strive towards increasing punishment for infringements and counterfeiting, along with improving international cooperation in IPR protection.
Though these are just guidelines at the moment, the larger question is, how does China enforce IPR rules?
On the sixth of July last year, the Organisation for the Prohibition of Chemical Weapons (OPCW) released its interim report on its findings regarding an alleged poison gas attack in Douma, Syria in April 2018. The incident, which resulted in dozens of civilian casualties, was blamed on the Syrian government by the US, UK and France, who launched retaliatory airstrikes on multiple targets in that nation.
The interim report claimed that “various chlorinated organic chemicals were found” in different locations on the scene, but strangely said nothing about the levels at which those chemicals were found. The Moon of Alabama blog highlighted this suspicious exclusion on the day the report came out, noting that levels are absolutely essential in determining chemical weapons use when you’re talking about compounds which are found virtually everywhere at some level in any industrialized region.
“The preliminary OPCW report says nothing about the concentrations in which these substances were found,” MoA observed.
“Without knowing the concentrations, which may be extremely low, one can not come to further conclusion.”
“The ‘various chlorinated organic chemicals’ are unsurprising,” MoA wrote.
“Chlorine is widely used for water purification and cleaning and ‘chlorinated organic chemicals’ will be found in any household.”
A new addition to the body of leaks which have been hemorrhaging from the OPCW shows that such skepticism was indeed entirely warranted. A leaked email sent shortly before the interim report was published reveals that the chlorinated organic chemicals which OPCW investigators found on the scene were as low as one or two parts-per-billion, meaning, just as Moon of Alabama speculated last year, that they were found at trace quantities you’d expect to find in any industrialized area.
RELEASE: Secret internal e-mail from OPCW whistleblower, a member of the fact-finding mission sent to Douma, Syria, after the alleged chemical attack in April last year, accusing OPCW management of doctoring report on the incident and distorting facts. https://t.co/ndK4sRikNk
The leaked email, which has been published by WikiLeaks and several other outlets, was sent by an unnamed OPCW investigator to the OPCW’s then-cabinet chief Bob Fairweather, outright accusing OPCW leadership of misleading the public with the information it was omitting from the report it was drafting. Those who’ve been following this scandal closely may remember Fairweather as the man who journalist Jonathan Steele recently reported was responsible for calling investigators into his office to be intimidated by unknown officials from the United States government.
The email was sent to Fairweather on June 22nd, laden with pointed words and phrases like “misrepresents the facts”, “selectively omitting”, “highly misleading”, “disingenuous”, “inaccurate”, and “a major deviation from the original report.” Less than two weeks later, on July the fourth, the investigators were reportedly called into Fairweather’s office for a disturbing meeting with US officials which deeply rattled them.
“On July 4 there was another intervention,” Steele’s report reads.
“Fairweather, the chef de cabinet, invited several members of the drafting team to his office. There they found three US officials who were cursorily introduced without making clear which US agencies they represented. The Americans told them emphatically that the Syrian regime had conducted a gas attack, and that the two cylinders found on the roof and upper floor of the building contained 170 kilograms of chlorine. The inspectors left Fairweather’s office, feeling that the invitation to the Americans to address them was unacceptable pressure and a violation of the OPCW’s declared principles of independence and impartiality.”
It’s worth noting at this time that the US government already has a known and established history of leveraging the ostensibly neutral and international OPCW to conform to its preexisting military agendas.
Fairweather’s intimidation ploy appears to have been a response to comments made in the email, and probably other similar internal objections made by other investigators at that time. The email reads as follows (transcript and parenthetical annotations made by Daily Mail):
Dear Bob,
I wish to express, as a member of the FFM (Fact Finding Mission) team that conducted the investigation into the alleged chemical attack in Douma on 7 April, my gravest concern at the redacted version of the FFM report, which I understand was at the behest of the ODG. (Office of the Director General). After reading this modified report, which incidentally no other team member who deployed into Douma has had the opportunity to do, I was struck by how much it misrepresents the facts. Many of the facts and observations outlined in the full version are inextricably interconnected and, by selectively omitting certain ones, an unintended bias has been introduced into the report, undermining its credibility. In other cases, some crucial facts that have remained in the redacted version have morphed into something quite different to what was initially drafted. If I may, I will outline some specific aspects to the redacted report that are particularly worrisome.
The statement in paragraph 8.3 of the final conclusions ‘The team has sufficient evidence at this time to determine that chlorine, or another reactive chlorine-containing chemical, was likely released from cylinders’, is highly misleading and not supported by the facts. The only evidence available at this moment is that some samples collected at Locations 2 and 4 were in contact with one or more chemicals that contain a reactive chlorine atom. Such chemicals could include molecular chlorine, phosgene, cyanogen chloride, hydrochloric acid, hydrogen chloride or sodium hypochlorite (the major ingredient of household chlorine-based bleach). Purposely singling out chlorine gas as one of the possibilities is disingenuous. It is also worth noting that the term ‘reactive chlorine-containing chemical’ used in the redacted report is, in fact, inaccurate. It actually describes a reactive chemical that contains chlorine which itself (the chlorine) is not necessarily reactive e.g. chlorophenol. The original report uses the more accurate term ‘a chemical containing reactive chlorine’.
The redacted report states that the gas was likely released from the cylinders (in Locations 2 and 4). The original report purposely emphasised the fact that, although the cylinders might have been the source of the suspected chemical release, there was insufficient evidence to affirm this. It is possible the error was simply a typo. This is a major deviation from the original report.
Paragraph 8.2 states that ‘based on the high levels of various chlorinated organic derivatives, […] detected in environmental samples’. Describing the levels as ‘high’ likely overstates the extent of levels of chlorinated organic derivatives detected. They were, in most cases, present only in parts per billion range, as low as 1–2 ppb, which is essentially trace quantities.
The original report discusses in detail the inconsistency between the victims’ symptoms, as reported by witnesses and seen in video recordings. Omitting this section of the report (including the Epidemiology which has been removed in its entirety) has a serious negative impact on the report as this section is inextricably linked to the chemical agent identified. It either supports or detracts from the confidence in the identity of any possible chemical. In this case the confidence in the identity of chlorine or any choking agent is drawn into question precisely because of the inconsistency with the reported and observed symptoms. The inconsistency was not only noted by the FFM team but strongly noted by three toxicologists with expertise in exposure to CW (Chemical Weapons) agents.
The original report has extensive sections regarding the placement of the cylinders at both locations as well as the relative damage caused to the impact points, compared to that caused to the cylinders suspected of being the sources of the toxic chemical. These sections are essentially absent from the redacted report. This information was important in assessing the likelihood of the ‘presence’ of toxic chemicals versus the ‘use’ of toxic chemicals.
A feature of this investigation and report was the robust and extensive scientific basis for sampling plans and analysing the data collected. A comprehensive bibliography of peer-reviewed scientific literature was attached to support and enhance the credibility of the work of the mission. This has unfortunately been omitted from the redacted report.
By singling out chlorine above other equally plausible substances containing reactive chlorine and presenting it as a fact in isolation creates, I believe, a level of partiality that would negatively impact on the perceived credibility of the report, and by extension that of the Organisation. I am requesting that the fact-finding report be released in its entirety as I fear that this redacted version no longer reflects the work of the team. The original report contains facts and observations that are all equally valid. The fact that inconsistencies are highlighted or observations not fully understood does not justify their omission. The inconsistencies and observations are based on the evidence and data collected. Further information in the future may help resolve them but the facts as they stand at present will not alter and need to be reported.
If the redacted version is to be released, I respectfully request to attach my differing observations, in accordance with the spirit of paragraph 62 of part II of the Verification Annex of the CWC.
Yours sincerely
Today’s @OPCW final report on 7 April 2018 attack in Douma confirms chemical weapons used, demonstrating the vital importance of @OPCW’s work. This confirmed chlorine attack was only the latest example of Asad regime’s CW attacks on its own population. https://t.co/cXXJTCiZI7
The OPCW’s final report published March of this year continued the pattern of crucial omissions even more egregiously than the interim report.
“Regarding the alleged use of toxic chemicals as a weapon in Douma, the evaluation and analysis of all the above-referenced information gathered by the FFM provide reasonable grounds that the use of a toxic chemical as a weapon has taken place on 7 April 2018,” the final report claims.
“This toxic chemical contained reactive chlorine. The toxic chemical was likely molecular chlorine.”
Again, the information complained about in the leaked email remained omitted.
This is really important. Why aren’t we talking about it?
“We may have just discovered a major piece of the puzzle explaining how seemingly independent international organizations help deceive us into consenting to wars and regime change interventionism around the world.” https://t.co/yH8mfU9eBC
The unfolding scandal about the US and its allies once again deceiving the world about yet another military intervention in yet another Middle Eastern nation is a major story, and hardly anyone’s been on top of it.
Back when I published an article about the first OPCW whistleblower this past May it was shared by actress Susan Sarandon on Twitter, who captioned it with the question, “This is really important. Why aren’t we talking about it?” Click on the tweet and read through the comments if you want to see the platoon of blue-checkmarked narrative managers who converged on her post telling her I’m a crazed conspiracy theorist who mustn’t be listened to. I got this story right, and everyone who’s been ignoring it or dismissing it has made an ass of themselves.
So congratulations to me. Congratulations to Moon of Alabama for getting this story right from day one. Congratulations to Piers Robinson, Tim Hayward, and the Working Group on Syria, Propaganda and Media who published the first OPCW leak back in May of this year in the face of numerous obnoxious smear pieces from the mainstream media. Congratulations to Jimmy Dore, Aaron Maté and the handful of other alternative media figures who’ve been keeping this story alive while all the “reputable” mainstream news outlets tried to let it die.
We were right, they were wrong. Maybe going forward people should listen to us a bit more and listen to them a bit less.
Hong Kong Election: Pro-Democracy Candidates Surge Amid Record Turnout; Protest Organizer Wins Seat
Pro-democracy candidates are scoring overwhelming victories amid the city’s first district council elections since anti-government protests erupted earlier this year, according to SCMP.
Lines at 7am for Hong Kong district elections (via @mnandita)
According to SCMP, 140 of the first 160 seats declared have gone to pro-democracy candidates. There are a total of 452 seats, of which nearly 69% remain undeclared as of this report.
The wins come amid a record number of Hong Kongers turning out to cast ballots, according to Bloomberg.
More than 2.94 million people, or roughly 71.2% of the financial hub’s electorate, had voted, according to Barnabas Fung, chairman of election affairs committee. The previous highest turnout was 1.47 million in 2015. Residents faced unusually long lines at polling stations across the city as they came out to vote in the election.
The vote unfolded peacefully despite concerns it could be delayed or disrupted by violence following unrest in the leadup. More than 6,000 complaints relating to the election were received, Fung said. Logistical issues including the long lines at the polling stations topped the list, he added. Results are expected early Monday. –Bloomberg
“There’s so many people it’s brought tears to my eyes,” said Ng Siu-hong, who represents the city’s Central and Western District. “It’s good for me but more importantly good for democracy.”
This is looking like a thumping victory for the pro-democracy camp in #HongKong and complete wipe out for the pro-Beijing camp. Right now Democracy camp 115 v pro-establishment 9 !!! Catastrophic loss for Carrie Lam’s administration.
Also scoring pro-democracy victories were Civil Human Rights Front organizer Jimmy Sham, who was attacked with hammers and hospitalized last month while eating lunch at a local restaurant. Also elected was Kelvin Lam who is supported by activist Joshua Wong.
Jimmy Sham
“The high turnout rate did benefit the pro-democracy camp,” said Lam, adding “The result is like a referendum of the current administration, like a confidence vote.”
Some candidates came under attack and the city was paralyzed by days of chaos in the weeks leading up to the election, with schools suspended, protesters disrupting commutes and riot police laying siege to a university. Police dispatched at least two officers clad in riot gear to each polling booth Sunday.
“Recent social events make people want to voice their opinions,” said a 22-year-old voter who gave his name as Mr. Yip, as he stood in a line to vote that stretched some 500 meters down central Caine Road under the watchful eye of four riot police. “The people’s voices won’t necessarily be reflected in the governments’ real life decisions and our power is quite weak, but it is still our right to show our voices.” —Bloomberg
As Bloomberg notes, Hong Kong is extremely polarized right now amid increasingly violent protests. While most residents support the goals of the movement – including an independent inquiry into policy abuses, some have become divided over tactics employed by more extreme factions.
“It’s kind of a referendum on the government and everything that’s happened over the past five months,” said Chi-Jia Tschang, a senior director in the Hong Kong office of BowerGroupAsia, which advises companies on business and political risk in the region (via BBG), “People still want an opportunity to work within the system to have their voices heard. That’s why there’s so much focus on this.”
Oops, forgot the photo with last tweet. Two block long line to vote in Tsim Sha Tsui, Hong Kong. Mostly middle-aged and older people. pic.twitter.com/04isKYHZ6T
— “Mikal, do you really think that’s a good idea?” (@MikalJakubal) November 24, 2019
That said, Sunday’s election of what are ultimately lower-ranking bureaucrats be more of a harbinger for what’s to come than anything else, given that it’s the first democratic exercise since protests broke out in June.
“The district council is the lowest rung of government in the city and councilors have few real powers, mostly advising the chief executive on matters like fixing up parks and organizing community activities. Its elections have typically been plagued by low voter turnout and aren’t hugely competitive, compared with those for the Hong Kong’s more powerful Legislative Council.
“I came out to vote because of the current situation in society now,” said student Ken Lam, a first-time voter. “The government is ignoring voices in the public. Policy-making lacks transparency in every aspect.”
Meanwhile, the CCP’s resident Twitter mouthpiece is not happy:
The West has been helping HK opposition in district council elections in the past week. Australian media suddenly broke a story of a Chinese spy infiltrating in HK defected to Australia (The man is a convicted fraudster).
I’m of the long standing view that Fed chairs have one prime responsibility above all others: Keeping confidence up, and if it requires to sweet talk problems then that’s what it takes.
The often classic quote by Ben Bernanke of “subprime is contained” right before it blew up in everybody’s face being a prime example.
Is the Fed that blind to reality or just on an elaborate marketing mission to ensure that nobody panics and sells stocks? I leave that judgment to the reader.
But I can see differing messaging coming out the Fed when people are in office and when not.
“Business debt does not present the kind of elevated risks to the stability of the financial system that would lead to broad harm to households and businesses should conditions deteriorate. Moreover, banks and other financial institutions have sizable loss-absorbing buffers,” he said. “The growth in business debt does not rely on short-term funding, and overall funding risk in the financial system is moderate.”
“I have expressed concerns about leveraged lending,” Yellen said during a keynote discussion that was closed to the press. “I do think non-financial corporations have run up, really, quite a lot of debt.”
“What I would worry about is if the economy encounters a downturn, we could see a good deal of corporate distress. If corporations are in distress, they fire workers and cut back on investment spending. And I think that’s something that could make the next recession a deeper recession,” “I have concerns about the deterioration in lending standards that we have seen,” Yellen said. “A large share of it is covenant-lite and some of the explicit ways in which covenants have weakened are a concern to me.”
No worries from Powell, worries from Yellen.
What’s reality?
Well, for one corporate debt has increased by 64% in the last 9 years now reaching $10 trillion:
Good thing profits have vastly increased in that time:
Oh wait, corporate profits have actually peaked in 2014. Well that’s odd, as markets keep racing higher from high to high you’d think there’d be this massive expansion in profits. Well of course not, profit growth peaked last year on the heels of the corporate tax cuts resulting in corporate tax payments collapsing to levels only seen during big recessions:
Ponder this: Corporations now pay roughly the same about of taxes as they did in the mid 90’s when the economy and aggregate profits were much smaller.
Quite the historic deal.
No, we know why stock markets kept rising in 2019: Thanks to Fed intervention:
Goldman admits reality: “With S&P 500 earnings on track for roughly 0 growth from this time last year, solid returns likely would not have been possible without central bank support. Central bank easing accounts for almost all of the price return since the start of the year” https://t.co/Akv3Zll7HL
And of course EPS growth is in the eye of the beholder as earnings are regularly overstated via non GAAP versus GAAP accounting:
Not to mention the insidiously deceiving growth illusion created by buybacks.
So what you have is a market disconnecting ever farther from the underlying already weakening and overstated earnings growth picture, earnings that require an exorbitant amount of debt expansion to produce with much of the tax cut benefits going toward buybacks while half of the debt expansion is running on BBB fumes:
“The growing universe of triple-B rated US corporate debt — the lowest rung of the higher-quality bond market — has garnered the most attention. At $2.5tn, it is now twice as big as the entire junk bond market beneath it. The hunger for yield has “paved the way for unprecedented erosion in capital structures and credit quality”, Moody’s noted in a recent report.”
Do worry says Janet Yellen, but don’t worry says Jay Powell. The economy is in a good place he says apparently instructing all the Fed speakers to read off the same script:
Sweet. How do they all get on the same page when determining their market communication strategy? Sadly the Fed minutes are void of any such discussions. Must be a different meeting.
And subprime is contained and corporate debt is not a problem as long as you are Fed chair. It only becomes a problem when you’re no longer Fed chair.
No, corporate debt is a massive problem, it’s a ticking time bomb that millions of workers get to pay for during the next recession. That’s not my hyperbole, no Sir, or have you already forgotten what Janet Yellen already told you?
“if the economy encounters a downturn, we could see a good deal of corporate distress. If corporations are in distress, they fire workers and cut back on investment spending. And I think that’s something that could make the next recession a deeper recession”.
She knows and so does Jay Powell, he’s just busy keeping confidence up by telling you everything is fine and dandy. After all that’s precisely why he cut rates 3 times and expanded the Fed’s balance sheet by over $280B in 2.5 months. Cause that’s exactly what you do when the economy is in a good place.
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Democrats Getting ‘Cold Feet’ As Impeachment Support Evaporates
After weeks of secret impeachment testimony followed by public testimony from House Democrats’ cherry-picked witnesses, support for impeaching President Trump is sinking.
While witnesses have testified that Trump requested Ukraine investigate former VP Joe Biden for corruption, support for impeachment has decreased significantly, while opposition has increased
According to the FiveThirtyEight average of national polls, support for impeachment has shrunk from 50.3 percent in mid-October to 46.3 percent presently, while opposition has risen from 43.8 percent to 45.6 percent.
Among independents in the FiveThirtyEight average, support for impeachment topped out at 47.7 percent in late October but has sunk to 41 percent over the past three weeks. –The Hill
“After three years, the country was sick of hearing about Russia, and now the average American either doesn’t understand or doesn’t care about the case we’re making on Ukraine,” one Democratic fundraiser told The Hill.
Another poll registering declining support for impeachment is YouGov, which has independent support dropping from 39% weeks ago to 35%, while opposition has grown from 35% to 40%.
“American public loses enthusiasm for impeachment despite blockbuster hearings”
Impeachment support began fading during the House hearings, with a POLITICO/Morning Consult Poll from last week revealing a 2% decline in support and a 3% increase in opposition to the inquiry.
Polls have now turned very strongly against Impeachment, especially in swing states. 75% to 25%. Thank you!
Adam Schiff says that public support for impeachment has grown dramatically in the past two months.
He conveniently left out the polls from this week showing a decrease in support, especially among independents, after finally allowing public testimonies. pic.twitter.com/rLalX1PEqb
Whatever the case, according to Rep. Eric Swalwell, who farted on live TV last week, “I’m not focused on the polls, I know my colleagues aren’t either… this president used his great vast power to ask a foreign government to help him cheat an election,”
For some bizarre reason, The New York Times asked Paul Wolfowitz to write about U.S. foreign policy in the Middle East:
If we abandon the allies who made possible the victory over ISIS, and perhaps now also abandon the Afghan allies who enabled us to drive Al Qaeda out of their country in 2001, the United States will make the same mistake as Mark Twain’s cat, viewing everything in the greater Middle East through the prism of the painful experiences of the “hot stoves” — the Iraq and Afghanistan wars [bold mine-DL]. Abandoning allies who have advanced American interests, while fighting courageously for their own, is not a formula for avoiding another large-scale United States military engagement in the Middle East, but rather for ending up in another one. Next time, however, will be without the local allies we need.
Before we get to Wolfowitz’s argument, such as it is, can we just marvel at the shamelessness of Wolfowitz when he presumes to lecture anyone about sound foreign policy decision-making? Wolfowitz was one of the most enthusiastic supporters of the invasion of Iraq, and in his role at the Pentagon he was also one of the top officials most responsible for the ensuing debacle. He then has the gall to liken that war and the war in Afghanistan to “hot stoves,” as if the consequences of these wasteful wars were no more than being briefly burned. What an awful way to trivialize almost two decades of failure and massive loss of life.
No one needs to hear from Wolfowitz on this or frankly any other foreign policy issue. There must be dozens of other writers who would argue for the same general position without helping to rehabilitate one of the architects of the biggest U.S. foreign policy blunder in the last forty years. If we want to know why there is no accountability in U.S. foreign policy, this Wolfowitz op-ed is Exhibit A. Former officials and policymakers can get things as wrong as can be, advocate for truly disastrous policies that claim hundreds of thousands of lives, and yet their opinions will still be taken seriously and published as if nothing had ever happened. There have been no professional or legal consequences for the officials responsible for the great crime that was the Iraq war, and instead they are asked for their advice on what the U.S. should do next in the same region that they set on fire.
The main flaw in the substance of Wolfowitz’s op-ed is that he assumes that the U.S. will always be “sucked back in” to more regional conflicts if it ever tries to leave any of them. According to this view, withdrawal is more destabilizing than intervention, and so while Wolfowitz never disagrees with the interventions he is dead-set against the withdrawals. If the U.S. can’t ever leave a foreign conflict that it has chosen to fight for fear of creating a “vacuum,” that amounts to saying that some U.S. forces must remain in these countries in perpetuity. No U.S. interests are being served by refusing to bring these wars to a conclusion. It just traps the U.S. in prisons of our own making. Instead of thinking about how to prepare local partners for the inevitable U.S. departure, our politicians and policymakers waste that time by concocting implausible stories for why we can never leave.
Syria is the more straightforward example. Even when ISIS was in control of a significant amount of territory, the U.S. did not have to go to war there. The U.S. was not defending itself, and our forces had no business going into Syria five years ago. Now that ISIS is a fraction of its former self, there is really no reason for U.S. forces to stay. The U.S. should be able to avoid another “large-scale military engagement” in the region because there is no good reason for the U.S. to get involved in another one. The idea that the U.S. has to keep forces in Syria illegally in Syria to prevent our government from launching another war on the scale of the Iraq invasion is preposterous, but Wolfowitz presents it as if it needs no argument.
Wolfowitz likes to fault the U.S. for its “inaction” in the region, by which he always means that the U.S. chose not to become even more actively involved in conflicts inside other countries. It is telling that he repeats the falsehood that the U.S. didn’t support the Syrian opposition, when support for the opposition from the U.S. and our allies and clients helped to fuel the war and keep it going longer than it otherwise might have. In one breath, he lists the terrible human costs of the war, and then in the next condemns the U.S. for not having done more to add to them. There is no acknowledgment anywhere in his op-ed that U.S. intervention frequently makes things worse, and there is no consideration that avoiding deeper involvement in these conflicts was actually in the best interests of the United States. Of course there isn’t. Wolfowitz is a tired neoconservative ideologue and he isn’t going to learn anything from the catastrophic failures of policies he supported.
Of course, there is no ineluctable force that drags the U.S. into these conflicts. It is the faulty assumptions of ideologues like Wolfowitz who imagine that there are vital American interests at stake in conflicts where there aren’t any. The U.S. is never “sucked back in.” Our government goes running back in at the first chance it gets. Sometimes this is driven by threat inflation, sometimes it is driven by headlines that prompt calls for “action,” sometimes it is driven by a misguided need to show “leadership,” and sometimes it is just old-fashioned “do-somethingism” where the U.S. intervenes because it can. It is almost never driven by a need to protect the United States or even our treaty allies. One president after another chooses to entangle the U.S. in conflicts in the Middle East that the U.S. could easily avoid. Having failed to avoid these entanglements, we are then told that disentanglement is never an acceptable option. If the U.S. is ever going to extricate itself from endless wars, we have to learn that our ongoing military involvement in these conflicts is a greater source of instability than our departure ever could be.
