Russia To Reduce US Dollars In National Wealth Fund As Putin’s De-Dollarization Continues
Russia’s de-dollarization effort is full steam ahead, in line with President Putin’s commitment to reduce the country’s vulnerability to the continuing threat of US sanctions.
Crossing the wires early Wednesday morning, Russian Deputy Finance Minister Vladimir Kolychev, was quoted by Reuters as saying the Russian sovereign wealth fund will reduce US Dollars and is considering adding Chinese yuan.
RUSSIAN DEPUTY FINANCE MINISTER KOLYCHEV SAYS SHARE OF US DOLLARS IN NATIONAL WEALTH FUND WILL BE REDUCED
RUSSIAN DEPUTY FINANCE MINISTER KOLYCHEV SAYS INCLUSION OF OTHER FOREIGN CURRENCIES INCLUDING YUAN IS BEING CONSIDERED
RUSSIAN DEPUTY FINANCE MINISTER KOLYCHEV SAYS FINANCE MINISTRY PLANS TO CHANGE NATIONAL WEALTH FUND’S FX STRUCTURE IN 2020
Kolychev said the change to the foreign exchange structure of the wealth fund would occur in 2020.
Last month, Russian Economy Minister Maxim Oreshkin told the Financial Times that the country would continue down the path of de-dollarization and begin trading some oil transactions in Euros and roubles.
“We have very good currency, and it’s stable. Why not use it for global transactions?” Oreshkin said in a recent interview with the FT.
“We want (oil and gas sales) in roubles at some point,” he said.
Despite less than 5% of Russia’s $687.5 billion in annual trade being with the US, it remains that over half of that trade still relies on the dollar, according to Bloomberg figures.
US sanctions have been very selective as of recent, specifically targeting Gazprom, the country’s gas giant. Sanctions have banned any US company from supplying Gazprom with equipment.
Russia’s desire to abandon the dollar is a trend that continues to gain momentum and could be fully realized by the mid/late 2020s.
The chief takeaway from David Epstein’s book Range, which investigates Why Generalists Triumph in a Specialized World, is this: think broadly, not narrowly. Risk being called a dilettante. Learn from many disciplines and experiences rather than burrow so deeply into one field that you can no longer see above ground to survey the wider world. And then apply insights from one field when some baffling question arises in another.
That is sage counsel for students and practitioners of strategy, who tap insights from history, political science, economics, and an array of related fields.
Maintains Epstein, specialists encounter trouble when tackling the problems characteristic of a “wicked” world. Wicked problems are intricate. They involve variables that combine and recombine in offbeat ways. They defy the boundaries of a single field and often vex specialists. By contrast, generalists hunt for “distant” analogies to challenges. Analogies seldom reveal answers, but they help inquisitors discover the right questions to ask. Asking penetrating questions constitutes the first step toward a solution, toward wisdom.
One imagines Epstein would approve of harnessing fiction and literature as a source of wisdom. Fiction supplies abundant analogies for students of politics and strategy. Some of them are remote indeed, bounded only by the author’s whimsy.
Exhibit A: stories about zombies!
Max Brooks’s World War Z is an imaginary oral history compiled a decade after a global war against the undead. Brooks has a researcher interview protagonists in the zombie war, not just to unearth facts about it but to record their feelings and impressions.
The interviews make up the book’s narrative. The relative lack of commentary gives the book a stark, spare quality—amplifying its impact. Warning: major spoilers ahead.
World War Z relates unfamiliar phenomena that illuminate something familiar, namely the profession of arms. The approach works not because warmaking against living, breathing foes is exactly like fighting ghouls, but because counter-zombie combat resembles war in the real world in some respects while differing from it strikingly in others. Juxtaposing the ordinary against the extraordinary compels military readers to examine their profession afresh.
Brooks’s fictional chronicle raises questions – and questions make us think. Four pointers from the living dead and those who battle them:
1. Know yourself.
Brooks has either read Thucydides or takes the same jaundiced view of human nature he did. The father of history showed how a plague peeled away the veneer of civilization from the most cultured society in classical Greece, the city-state of Athens. Athenians reverted to base instincts and passions almost overnight, and why not? If you may die tomorrow, you may as well live it up tonight. Debauchery ensues. Similarly, citizen took up arms against citizen on the island of Corcyra (modern-day Corfu). Civil strife shattered all bonds of family and fellowship as democrats and oligarchs fought to determine who would rule.
Pockets of Brooks’s brave new world witness similar breakdowns. Industrial civilization is not exempt from the afflictions of the ancients. Far from it.
For example, during the “Great Panic” that accompanies the rise of the living dead, the Hollywood glitterati hire private security firms to guard them from zombies within luxury residences, all while preening on camera for reality shows that showcase their supposed fortitude. Ship crews screen evacuees by race, permitting only those with the correct skin hue to board their vessels to flee the onslaught. You can only imagine what transpires in refugee camps in the far north when populations swell, food and fuel supplies dwindle, and frigid temperatures and weather descend.
And on and on. World War Z holds up a mirror, forcing us to look ourselves in the face while contemplating the impact of mass disaster and warfare on human society. This forms part of the strategic context, and the sight isn’t always pretty.
2. Know the enemy.
Strategic grandmaster Carl von Clausewitz—not among the undead legions at last report—warns commanders and their political overseers to assess the nature of the war on which they are about to embark, “neither mistaking it for, nor trying to turn it into, something that is alien to its nature.” But the living do not get the chance to undertake Clausewitzian analysis in Brooks’s account. War is thrust upon them. World War Z haunts precisely because the tale unfolds in everyday surroundings, against a deathless enemy that should not even exist.
Clausewitz counsels leaders to exercise foresight before going to war; zombie war is unthinkable, and who wastes time planning for the unthinkable? Horrors ensue when you neglect the nature of the war. Think about unthinkable situations before they become thinkable.
And about the nature of the foe. The walking dead are an enemy unlike any human antagonist. In fact, counter-zombie warfare resembles epidemiology more than warfare in the usual sense. Think about it. Public health seeks to eradicate disease, not contain it or strike a compromise peace with it. Victory means utterly wiping out a pestilence.
Like an infectious disease, zombies neither hate nor fear nor scheme. These are enemies incapable of malice or strategic thought. They infect. The undead reproduce themselves by biting human victims—much as a contagion spreads from host to host. In effect they are “vectors” spreading a virus that reanimates the slain. Thus even a lone zombie shambling around the earth represents a major threat to humanity. Victory over the living dead means slaughtering them to the last ghoul. Containment is a poor second best. So long as one remains at large, a devastating new outbreak is possible.
In other words, a zombie war is what strategists call an “unlimited” war, taken to its utmost extreme. Against an ordinary human adversary, unlimited war means crushing hostile forces or unseating the government they serve and imposing whatever terms you choose. Taken to extremes, unlimited war tends toward what Clausewitz terms “absolute” war—an unbounded spasm of violence with no political purpose. It is slaughter for its own sake.
Thankfully, Clausewitz concludes that absolute war does not exist outside the pages of books. War pits human foes against one another—and politics exerts a moderating influence on human struggles.
There is no such moderator in a fight against a mindless foe. The masters of strategy prescribe ways to get your way short of genocide. Yet the undead have no willpower to break and cannot be frightened into submission. They have no forces to smash, strategies to outwit, or alliances to break. They have no capital to conquer. They cannot conceive of compromise, let alone bargain. All they have is mass. Millions upon millions of bodies lurch along, uncoordinated yet driven toward the same goal by herd instinct.
Fictional strife in which strategic success equates to inflicting 100 percent casualties invites strategic thinkers to ponder the nature and ethics of unlimited war in our (purportedly) zombie-free world.
3. Fit strategy, tactics, and hardware to the fight—not the other way around.
Misfit armaments and maladroit tactics plague armed forces during the early phases of the zombie war. Armies and air forces built to fight high-tech antagonists have to reinvent themselves for infantry combat aimed at indiscriminate slaughter of the enemy. Easier said than done. Brooks’s historian interviews “Todd,” a jaded former infantryman. The ex-soldier recounts how heavy armaments and static defensive measures designed to halt “Ivan” in the Fulda Gap during the Cold War proved futile against mobs of reanimated corpses.
Determined to show the populace the domestic order remains intact, a panicky U.S. administration decides to stage a “decisive” stand in Yonkers, stemming the tide of zombies flowing out of Manhattan. (Bostonians insert favorite Yankees joke here.) Todd takes officialdom to task for folly. Precision munitions do some good against undead hordes, dispatching thousands; but there’s too little ammunition in the magazines to prevail. Defenders, that is, have too few uber-pricey gun projectiles, missiles, and bombs to mow down the millions of ghouls that come behind those brought down in the initial waves.
Guns, missile launchers, and tactical aircraft bereft of ordnance accomplish little. Todd also sees cultural travails at work. American troops, he recalls, are schooled to aim at the midsections of enemy soldiers, whereas it takes a shot to the head to fell a zombie. It is hard to remake the habits of a lifetime, on the fly, against enemies that should not exist, and that feel no pain or fear when struck in the torso. Of necessity, advanced armed forces cast aside gee-whiz implements of war in favor of weapons that strike down multitudes in bulk. The latest thingamabob may not be the best tool for the job.
More primal tactics are a must. Humanity starts to recover when military folk commence improvising warmaking methods for the strategic environment that actually confronts them. Governments temporarily abandon ground to the walking dead and turn terrain to advantage. U.S. citizens withdraw west of the Rocky Mountains to regroup and rearm, using the peaks as a sentinel line and garrisoning the narrow passages between. South Asians retreat into the Himalayas. Having established defensive lines, the living tend to the sinews of national power. Resuscitating moribund economies provides the resources needed to defend against the hordes and, ultimately, go on the strategic offensive and win.
It is a mistake to assume the enemy will conform to our preferred way of fighting. A savvy opponent tries to throw us out of our comfort zone—disorienting us for tactical and strategic gain. Living enemies mimic the living dead in that sense.
4. Adapt and overcome.
Inventive contenders command an advantage when going up against an adversary that—however remorseless or terrifying—is unable to learn or grow. The competitive impulse that pervades human struggle, prodding contestants to innovate and counter-innovate in an effort to outdo one another, is entirely absent from the zombie host. An enemy without ingenuity or passion to innovate is an inert enemy in strategic terms. And indeed, the zombie war is one-sided once humanity rides out the apocalypse, gains a respite to adapt, and comes out fighting.
Resourceful folk fashion new weapons and tactics while unimaginative foes plod along, doing the same thing time after time—which makes a hopeful note to close on. When facing new circumstances, get to know the circumstances and stay loose. Recognize that the nimbler contender is apt to be the victor—and broad-mindedness is the key to staying nimble. I daresay Epstein and Clausewitz would agree.
Fears Of Pneumonic Plague Outbreak After 2 Diagnosed In China – Hospital On Lockdown
Chinese authorities announced Tuesday that two people have been diagnosed with pneumonic plague at a hospital in Beijing — yes, as in the ‘Black Death’ which wiped out some 50 million of the world’s population during the Middle Ages.
Alarmingly, it’s the second instance of the plague hitting the region in a matter of months, after last May a Mongolian couple died from bubonic plague after consuming the raw kidney of a marmot, based on a local folk practice.
Bubonic plague bacteria from a January 2003 case, via the CDC/FOX News.
Officials say the two in this latest case also came from a remote area of Inner Mongolia in Northern China. To mitigate panic, the Chinese Center for Disease Control and Prevention has reportedly issued a public advisory to Beijing residents telling them the potential for contacting the disease is “extremely low,” according to The New York Times. Though considering this is literally the plague we doubt anyone will feel reassured by such official advisories.
The patients were quickly isolated by health officials after initial confusion over what they might be dealing with, and are reportedly being given treatment. Left untreated it will cause certain death, but some strains of the plague can be cured through careful administration of antibiotics, unavailable when it struck on a mass scale in medieval times.
The infected were initially treated at Beijing’s Chaoyang Hospital, which caused a special alert to go out to city health personnel and placed the emergency room under complete lockdown. China’s English news portal Caixin Global provided the following eyewitness details:
Chaoyang Hospital, where the two patients were treated, has replaced all the chairs at its emergency room, Caixin reporters witnessed.
The emergency room was in police blockade Monday night, people living nearby the hospital told Caixin. A resident medical school student at Chaoyang Hospital told Caixin that he received emergency notice from the school, asking them not to go to the emergency room in the following weeks.
Chaoyang Hospital told local media that the two patients have been transferred to another hospital, without disclosing the name of the hospital.
Chaoyang Hospital in Beijing’s Chaoyang district went under lockdown after two people came in with the plague. Image source: Caixin
Dr. Li Jifeng at Beijing Chaoyang Hospital, in the district where the patients sought treatment, said they came to the hospital on Nov. 3 but officials have not confirmed the claim, The Times reported.
Dr. Li wrote on WeChat that she treated a middle-aged man who had a persistent fever and cough, which his wife had also contracted.
“I couldn’t guess what pathogen caused this pneumonia. I only knew it was rare,” she wrote.
The pneumonic form of the plague is considered the most virulent and deadly,causing severe lung infection via bacterium, transmitted from small mammals and their fleas. The other forms are bubonic and septicemic — the former cause swollen lymph nodes and the latter infects the blood.
From 2010 to 2015, the World Health Organization reported a total of 3248 cases worldwide, including 584 deaths; however, there are concerns that not all cases have been reported, with China recently coming under fire over allegations of possibly withholding its true number of cases.
The WHO has now categorized the plague as a ‘re-emerging disease’ given that some 50,000 human cases have been recorded in the past two decades.
In 2015, United Nations member states adopted the Sustainable Development Goals, which include an imperative to “ensure availability and sustainable management of water and sanitation for all.” Yet, in the last four years, matters have deteriorated significantly.
The dangers of environmental pollution receive a lot of attention nowadays, particularly in the developing world, and with good reason. Air quality indices are dismal and worsening in many places, with India, in particular, facing an acute public-health emergency. But as serious as the pollution problem is, it must not be allowed to obscure another incipient environmental catastrophe, and potential source of future conflict: lack of access to clean water.
We may live on a “blue planet,” but less than 3% of all of our water is fresh, and much of it is inaccessible (for example, because it is locked in glaciers). Since 1960, the amount of available fresh water per capita has declined by more than half, leaving over 40% of the world’s population facing water stress. By 2030, demand for fresh water will exceed supply by an estimated 40%.
With nearly two-thirds of fresh water coming from rivers and lakes that cross national borders, intensifying water stress fuels a vicious circle, in which countries compete for supplies, leading to greater stress and more competition. Today, hundreds of international water agreements are coming under pressure.
China, India, and Bangladesh are locked in a disputeover the Brahmaputra, one of Asia’s largest rivers, with China and India actively constructing dams that have raised fears of water diversion. India’s government has used water-flow diversion to punish Pakistan for terrorist attacks. Dam-building on the Nile by Ethiopia has raised the ire of downstream Egypt.
And cross-border conflicts are just the beginning. Water-related tensions are on the rise within countries as well, between rural and urban communities, and among agricultural, industrial, and household consumers. Last year, water scarcity fueled conflicts in parts of eastern Africa, such as Kenya, which has a history of tribal clashes over access to water.
In fact, there are long histories of conflict over the waters of many major rivers, including the Nile, the Amazon, the Mekong, and the Danube. But the severity and frequency of such conflicts are set to increase, as climate change alters rainfall patterns, leading to more frequent, intense, and prolonged droughts and floods.
Making matters worse, dwindling water reserves are increasingly contaminated by industrial pollutants, plastics and other refuse, and human waste. In middle-income countries, less than one-third of wastewater is treated; in low-income countries, the share is much smaller. Roughly 1.8 billion people get their drinking water from feces-contaminated sources. The depletion of aquifers and inadequate investment in water infrastructure are exacerbating these problems.
Water stress affects everyone, but the agricultural sector – which accounts for 70% of all water consumption globally, and as much as 90% in the least-developed countries – is particularly vulnerable to constrained supplies. Lack of water makes it difficult to keep livestock, since every drop has to be preserved for crops or human consumption.
Urban areas are also headed for disaster. Last year, Cape Town, South Africa, faced such severe water shortages that it began preparations for a “day zero,” when the municipal water supply would be shut off. (Thanks to supply restrictions and other government measures, that day never came.) Similarly, Mexico City has struggled with a water crisis for years.
Indian metropolises are lurching toward even bigger catastrophes. A 2018 government report warned that 21 cities (including the capital, Delhi, and the information-technology hub Bengaluru) would reach zero groundwater levels by next year, affecting at least 100 million people.
As with climate change, the most severe consequences of water stress disproportionately affect those in the world’s poorest regions – especially Africa and South and Central Asia – who contributed least to the problem. In one part of rural Maharashtra, India, women and girls walk up to 25 kilometers (15.5 miles) per day to collect drinking water. In other villages, as local wells run dry, households have had to designate a member to be on full-time water-collection duty. Wealthier families might pay someone else to do the job, but most households do not have that luxury.
Meanwhile, the advanced economies not only avoid many of the consequences of water stress (at least for now); they also maintain the lifestyle excesses that have propelled climate change and environmental degradation, including water depletion. Rice cultivation is often cited as a major water guzzler, but a kilo (2.2 pounds) of beef requires five times more water to produce than a kilo of rice, and 130 times more than a kilo of potatoes. And since agricultural crops account for a significant share of many developing countries’ exports, these countries are, in a sense, exporting the limited supply of water they have.
Moreover, current land grabs in Africa are actually about water, with foreign investors targeting areas with big rivers, large lakes, wetlands, and groundwater, and thus with high agricultural potential and biogenetic value. (As it stands, less than 10% of Africa’s irrigation potential is being used.)
In 2015, United Nations member states adopted the Sustainable Development Goals, which include an imperative to “ensure availability and sustainable management of water and sanitation for all.” Yet, in the last four years, matters have deteriorated significantly. The international community might be able to fool itself for a while – as it has proved so adept at doing, not least with regard to environmental destruction – but the threat of water wars is only drawing nearer. For many in Africa, Asia, and elsewhere, it has already arrived.
“Apocalyptic Flooding”: Stunning Images As Venice Endures 2nd Highest Tide In History
Stunning images have come out of the historic city of Venice, which has been hit with catastrophic floods due to the second-highest tide recorded in the city’s history bringing water levels high over city squares and foot paths, also amid extreme winds and rain.
Mayor Brugnaro has declared a state of emergency after the Tuesday tide peaked at just over 6-feet during the evening. The only time in recorded history the waters reached that high was in 1966, when the tide reached nearly six-and-a-half feet.
St. Mark’s Square, Getty Image.
Early Wednesday about 50% of the city had been reported flooded by the unusual tide, and some reports into overnight Wednesday say 85% is now under water, given it sits at sea level as it was famously built on a network of over 100 small islands in a lagoon on the Adriatic Sea, and is connected by canals. This impacts a total of 53,000 residents, at a low point in the tourism cycle.
At least two people have died, one described as an elderly man who was electrocuted when he attempted to operate electric pumps at his home, according to Italian authorities, following a mass power outage across much of the city.
Head clergyman over St Mark’s Basilica, Francesco Moraglia, told reporters: “I have never seen something like what I saw yesterday afternoon [Tuesday] at St. Mark’s square. There were waves as if we were at the beach.”
Water has entered churches and historic sites. Getty Image.
Mayor Brugnaro has warned the flooding “is going to leave an indelible wound” on Venice, as efforts are underway to protect homes, property, and world heritage sites.
Image source: Beanotown Photography
“We are not just talking about calculating the damages, but of the very future of the city,” Brugnaro said. “Because the population drain also is a result of this.”
The governor of the region, Luca Zaia, also described: “We faced a total and apocalyptic flood, I will not exaggerate in words, but 80% of the city is under water. Unimaginable damage has been done.”
In some parts of the city residents were seen “swimming for their lives” according to eyewitness accounts.
Getty Image
Plans have long been in place for a massive emergency protection project that would see a series of 78 ‘floating gates’ set up around the city to control the impact of high tides, but it’s been beset by cost-related delays.
When Errol Morris debuted American Dharma, his documentary about Stephen Bannon, last year at the Venice Film Festival, he received an ovation. But after early reviewers accused the Oscar-winning director of letting the former Breitbart.com head and adviser to President Trump “off the hook,” Morris found it impossible to get a distribution deal in the United States.
It was the first time in decades that the acclaimed director of The Thin Blue Line and The Fog of War couldn’t get a movie into theaters. “The experience was so damn weird,” Morris tells Reason. “People became so angry with me and with the movie, they certainly wanted to deplatform not just Bannon, but they wanted to deplatform me.”
But now his film, American Dharma, is finally in theaters.
Nick Gillespie sat down with the 71-year-old Morris, whom Roger Ebert called “as great a filmmaker as Hitchcock or Fellini,” for a wide-ranging conversation about the censorious first reactions to his new film, his history with Elizabeth Holmes and Theranos, and what he learned—and didn’t learn—about Steve Bannon’s philosophy. He also talks about why he thinks we’re in a golden age of documentary filmmaking, his heated grad-school confrontations with philosopher Thomas Kuhn (detailed in his recent book The Ashtray: Or the Man Who Denied Reality), and Wormwood, his 2017 Netflix docudrama series about the CIA’s notorious MKUltra mind-control program.
Audio production by Ian Keyser.
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If you want to know which investment houses have been getting the infamous “repo” loans from the Federal Reserve Bank of New York in recent weeks, as GATA has wanted to know, you’ll have to wait two years, according to a letter received from the bank today in response GATA’s request for the information.
The delay, the New York Fed’s letter says, is authorized by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Perhaps more interestingly, the New York Fed’s letter, signed by Corporate Secretary Shawn Elizabeth Phillips, contends that the bank is exempt from the federal Freedom of Information Act but tries to comply with its spirit.
Such a claim of exemption was not made by the Federal Reserve’s Board of Governors during GATA’s FOIA lawsuit against it in 2011, in which GATA sought access to the board’s gold-related documents. GATA technically won the case when U.S. District Judge Ellen Segal Huvelle ruled that one such document was illegally withheld and ordered the board to disclose it to GATA and pay the organization court costs of $2,670:
What kind of system of government is it when every week an entity created by ordinary legislation can create enormous amounts of a nation’s currency and disburse it to unidentified parties without any oversight by the people’s elected representatives, news organizations, and ordinary citizens? It sure doesn’t sound like “the land of the free and the home of the brave.”
The New York Fed’s response to GATA can be read below (pdf link):
When Errol Morris debuted American Dharma, his documentary about Stephen Bannon, last year at the Venice Film Festival, he received an ovation. But after early reviewers accused the Oscar-winning director of letting the former Breitbart.com head and adviser to President Trump “off the hook,” Morris found it impossible to get a distribution deal in the United States.
It was the first time in decades that the acclaimed director of The Thin Blue Line and The Fog of War couldn’t get a movie into theaters. “The experience was so damn weird,” Morris tells Reason. “People became so angry with me and with the movie, they certainly wanted to deplatform not just Bannon, but they wanted to deplatform me.”
But now his film, American Dharma, is finally in theaters.
Nick Gillespie sat down with the 71-year-old Morris, whom Roger Ebert called “as great a filmmaker as Hitchcock or Fellini,” for a wide-ranging conversation about the censorious first reactions to his new film, his history with Elizabeth Holmes and Theranos, and what he learned—and didn’t learn—about Steve Bannon’s philosophy. He also talks about why he thinks we’re in a golden age of documentary filmmaking, his heated grad-school confrontations with philosopher Thomas Kuhn (detailed in his recent book The Ashtray: Or the Man Who Denied Reality), and Wormwood, his 2017 Netflix docudrama series about the CIA’s notorious MKUltra mind-control program.
Audio production by Ian Keyser.
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The federal government in 2013 told Defense Distributed—a company whose business involves the distribution of tools and software for the 3D-printing or otherwise home-milling of weapons—that certain software files it distributed constituted the illegal export of armaments under International Traffic in Arms Regulations (ITAR) and the Arms Control Export Act (AECA).
Seeing the files as analogous to a book containing instructions on how to make a gun, Defense Distributed, along with other parties, sued the State Department in 2015 on First Amendment grounds. The federal government settled that lawsuit in July 2018. As part of the settlement, the feds announced certain such software files, known generically as CAD files (for computer-aided design), would be removed from the United States Munitions List (USML). Items on that list require a license to export.
Within days of that announcement, various states and the District of Columbia sued the federal government for taking the files off the list, claiming that the removal was done “in violation of the Administrative Procedure Act [APA].” The plaintiffs claimed that “there is no indication in the settlement agreement or elsewhere that any analysis, study or determination was made by the government defendants in consultation with other agencies before the federal government agreed to lift export controls on the downloadable guns.” The plaintiffs also said the decision “violates the Tenth Amendment by infringing on states’ rights to regulate firearms.”
This week, Judge Robert A. Lasnik of U.S. District Court for the Western District of Washington, in deciding on motions for summary judgment in that suit, agreed that removing those files from the USML was unlawful based on the APA arguments (though not the 10th Amendment ones), and reversed the federal government’s choice to allow free distribution of the files.
As discussed in Lasnik’s decision, the federal government’s initial reaction to the states’ suit “justified the deregulation of the CAD files [that could help make weapons]…by pointing to a Department of Defense determination that the items ‘do not provide the United States with a critical military or intelligence advantage’ and ‘are already commonly available and not inherently for military end-use.'”
However, the government has been temporarily enjoined from following through on their “temporary modification of the USML” as the suit progressed. In practical terms, this has been meaningless to any actual interest of the states suing, unless that interest was just to bedevil Defense Distributed, as the files—like most things on the internet—can be and are widely distributed by anyone else who pleasedbesides Defense Distributed. They’re just files, after all, and nothing on the internet is easier to share.
Defense Distributed argued that the State Department’s decision should lawfully be at the government’s discretion with no judicial overview. Lasnik admits that “The AECA expressly commits one type of decision to agency discretion, namely the decision to designate an item as a defense article or defense service.”
But the rub, as Lasnik sees it, is that the regulatory decision the plaintiffs were challenging was not about designating files, but rather removing them from USML. Lasnik thinks the suing states have legitimate cause to challenge the government’s “failure to comply with statutory procedures and/or to consider certain congressionally-specified factors when making removal decisions under AECA. Congress did not expressly make such removal decisions unreviewable.”
The federal government, for its part, argued that the suing states were not legitimately injured parties who should have legal standing to sue, though Lasnik concluded that “the States’ interests in curbing violence, assassinations, terrorist threats, aviation and other security breaches, and violations of gun control laws within their borders are at least marginally related to the interests protected or regulated by the AECA.”
Lasnik concluded that the removal of the CAD files from USML was done illegitimately without legally required 30-day notice to Congress, and that, despite arguments to the contrary from Defense Distributed,
this procedural failure cannot be rectified by providing Congressional notice thirty days in advance of making the ‘temporary’ removal ‘final:’ the temporary modification implemented the removal immediately, without waiting for the proposed rule to become final and without giving Congress notice and an opportunity to exercise its oversight role. Because the removal to which the States object occurred as of July 27, 2018, a subsequent notice is obviously not timely under the statute.
Thus, the removal “must be held unlawful and set aside under §706 of the APA.”
Lasnik also finds the removal decision to be illegally “arbitrary and capricious” because “Congress directed the agency to consider how the proliferation of weaponry and related technical data would impact world peace, national security, and foreign policy,” and that the State Department seemed to evaluate “export controls on small caliber
firearms only through the prism of whether restricting foreign access would provide the United States with a military or intelligence advantage,” which is too narrow.
Judge Lasnik thus believes “the delisting was not ‘based on consideration of the relevant factors and within the scope of the authority delegated to the agency by the statute,’ [thus] it must be invalidated under the APA.” Lasnik believes the State Department should be required to give more detailed reasoning for why they changed their mind on the USML listing of those files, since the government “failed to identify substantial evidence in the administrative record explaining a change of position that necessarily contradicts its prior determinations and findings regarding the threats posed by the subject CAD files and the need to regulate the same under the AECA.”
Nothing in Lasnik’s decision gives any consideration to the notion that the very lawsuit against the government, which the government was settling when they made that decision, argued that having those files on the USML violated the First Amendment rights of Defense Distributed. Because it was a settlement and not a decision on the merits, the government is not on record as saying it agreed its previous actions violated the First Amendment.
The Lasnik decision ignored free speech in his close-focus on APA consideration, though the judge did point out that the federal government “has not relied on the First Amendment as justification for its action, and neither the Court nor the private defendants may supply a basis for the decision that the agency itself did not rely upon.”
Chad Flores, lead counsel for Defense Distributed, said in an email today in reaction to Lasnik’s decision that “The First Amendment protects the freedom of speech from all abridgment, including this lawsuit’s indirect censorship methods. The APA is important, but no statute can require the federal government to violate the First Amendment.”
In Flores’ eyes, “with today’s unprecedented ruling, a few rogue state officials have commandeered the State Department to do their unconstitutional bidding nationwide. Defense Distributed will be appealing and fully expects a swift reversal.”
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WeWork’s Quarterly Loss Exploded To $1.3 Billion Ahead Of Failed IPO
WeWork went on a spending spree in the days ahead of its now failed IPO.
The recently insolvent company which until a few months ago had a valuation of $47 billion before it had to be bailed out by SoftBank saw its losses more than double in the third quarter, soaring to $1.25 billion, not much below its loss for the entire 2018. The results, which were reported in a presentation for WeWork creditors – the company has to file financials to the group of creditors who hold its “public” debt – seen by Bloomberg and the Financial Times, revealed why the cash incinerating office sublettor careened towards a cash crunch when its IPO plans and a linked debt financing collapsed in September.
In a furious money-burning attempt to impress investors with its market share, WeWork opened almost 100 offices in the third quarter, bringing its total to 625, and helping lift WeWork’s net revenues in the period by 94% from 4482 million a year earlier to $934 million. That was the good news: the bad news is that WeWork affirmed that it continues to lose more than two dollars for every dollar the group generated in sales in the period.
In its unprecedented spending spree to spend all of its IPO proceeds before it even went public, the company also said it added 115,000 desks in the third quarter, taking its total to 719,000. However, the reason why such hollow growth would end up resulting in an even greater loss is that WeWork reported 609,000 memberships at the end of Q3, meaning its overall occupancy rates slid as it raced to open new locations to 79 per cent at the end of the third quarter from 82 per cent at the end of June.
WeWork’s bizarre growth at any price would turn out to be its former messiah CEO’s last decision: Adam Neumann stepped down as chief executive in September as the IPO fell apart as investors balked at the thought of making the megalomaniac the world’s first immaculately coiffed, immortal trillionaire.
After the IPO fell apart, WeWork’s biggest shareholder, SoftBank, pumped another $1.5 billion into the company in October to prevent the company from running out of cash in November, and stabilize its finances while taking majority control of the company, installing the former boss of its US telecom unit Sprint, Marcelo Claure, as executive chairman. The Japanese telecom-turned-venture capitalist group also arranged a new $5bn loan for WeWork and has agreed to buy $3bn of the company’s shares from investors and employees including Mr Neumann in the coming weeks. Because who more deserves a $1+ billion golden parachute than Neumann.
Since his arrival, Claure embarked on a cost-cutting drive and is in the process of firing 4,000 of the company’s roughly 14,000 employees, with large cuts in the US expected to begin next week, according to multiple people briefed on the plans. It remains unclear how the company plans on growing its revenue if it no longer has access to unlimited funds; for the answer check in next quarter when we expect both WeWork’s revenue and net income to take another sharp leg lower.
WeWork is also selling several of the companies it acquired in recent years and has drastically slowed its pace of new lease signings.
The company is seeking a new CEO, and T-Mobile’s John Legere is among the candidates.
But for now, none of this post-failed IPO activity is reassuring bond investors at all…
