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Submitted by Three Body Capital,

TL;DR

The rise of passive and ETF investing is turning up the heat on active managers. Change is coming to our industry, and those that fail to adapt will fade into obscurity.

The old business was highly intermediated and lucrative, while the tokenised future is likely to be far less commercially attractive and unable to support the behemoths in their current form.

Despite the doom and gloom, we believe active management can generate compelling returns for investors and survive the impending upheaval that looks set to turn our entire industry upside down.

The elephant in the room

Asset management in its current form still looks much like it did back in the 80s, or even earlier. Asset managers aggregate investor funds and deploy capital in search of investment returns, seeking to identify mispricing in the market. The ascent of passive and ETF investing has turned the table on active managers, especially in terms of fees. Here at Three Body Capital, we’re still in this line of business because we believe it can generate compelling returns for investors. And we believe it will survive the impending upheaval that looks set to disrupt our entire industry.

While other industries have experienced profound structural disruption, financial services have stayed largely the same. Asset managers still employ complex fund/manager structures (e.g. Cayman domicile with a Delaware feeder, Malta, BVI, Bermuda, Jersey etc), with a large chunk of active management fees effectively diverted to the likes of fund administrators, custodians, exchanges, brokers and service providers fulfilling a range of regulatory and administrative functions.

The hurdles to entry into the asset management industry are high, which is why large managers get bigger and small upstart managers struggle to gain traction. Case in point: BNY Mellon, one of the largest custodian banks and asset managers in the world, has about US$1.8tn of assets under management and US$35.4tn of assets under custody. Asset management is profitable at around 28% pre-tax margin, but its custodial/services business generates almost 35% pre-tax margin, represents almost 55% of its US$13bn of non-interest income, and 44% of US$17bn of total revenues.

Custody, clearing, settlement and other issuer services are big business. Add to that expansive regulation and the need for more compliance and supervisory oversight in the years since the crisis of 2008, and the regulatory cost of managing external capital is rising. This is inadvertently being passed to investors via lower net investment returns.

At the same time, a narrative has been constructed to defend super-normal profits, with investors barking up the wrong tree in search of better returns. Management fees have been paraded as the cause of poor returns, leading to the rise of passive managers offering low fees (or even zero/negative fee ETFs, as we are seeing from the likes of Fidelity and Vanguard, on the basis that less trading leads to lower costs. The end result is an investment environment that’s increasingly passive, with many “active” managers largely hugging their benchmarks, providing little outperformance against their passive counterparts and inadvertently perpetuating the story that alpha is dead.

The reality, however poorly understood, is that the high expense ratios generated by smaller active managers are not so much a function of trading commissions, but more a result of rising fixed costs relating to operations being distributed over a smaller net asset value. The end result? Investors in small funds are penalised more than those in larger funds.

As the “active versus passive” battle rages on, the market seems to have missed the elephant in the room. And it’s a very large, very aggressive elephant.

Light at the end of the tunnel

As the old joke goes, the light of the end of the tunnel might well be an oncoming train. In the case of asset management, we think this could well be true.

Our train started its journey in the heart of the 2008 crisis, with a little experiment called Bitcoin. For many years, Bitcoin was seen as a hobby for nerds and millennials who were either idealistic, impractical or naïve. Who needs a decentralised money transfer system that’s censorship proof, unless they’re engaged in drug trafficking or other illicit behaviour? Well, it turns out, lots of people do. The Bitcoin bubble of the past 3 years has captured the imagination of the retail investor, and it all came to a head last year when Bitcoin spiked towards $20k, taking with it a plethora of “utility tokens” that raised an estimated US$20bn of capital through (now-infamous) Initial Coin Offerings (ICOs).

Unfortunately for many of these investors, the vast majority of these ICOs will turn out to be worthless as far as the tokens are concerned. But this process, however painful for its participants, drew a huge pool of capital into an industry run by lots of highly intelligent and innovative people. The most fortunate unintended side effect of boom/bust cycles is the establishment of infrastructure that eventually develops compelling use cases. This was the case with the dot com bubble of 2000. Many dot com companies evaporated in the ensuing market malaise, but the bubble turned out to be an overzealous extrapolation of future developments, far too early in the life-cycle of internet infrastructure to sustain themselves.

Almost 20 years after the dot com boom, we can hardly imagine a day without being connected to the internet and big tech. Amazon, Google, Facebook, Netflix and Spotify are just a few examples of what we can scarcely afford to live without. And to think that back in the day it was normal to ask, “Now why on earth would you want to read a book on a computer screen when you can just go to the library?” Not forgetting the fact that dial-up connections used to drive our parents nuts, hogging the phone line whilst we checked our emails or chatted on ICQ and MSN Messenger.

With hindsight, we see how the dot com boom catalysed a 20 year process of infrastructure rollout which effectively made the dreams of the its original founders a reality, albeit in a different form. We now have a dot com for everything. The ensuing disruption from the rise of the internet was also far-reaching – everything from retail to recreation to communications infrastructure has been turned on its head. Skype took down IDD calling and the traditional telco; Amazon took down the shopping mall (it’s now working on the high street); Netflix took down PayTV media behemoths – the list goes on.

It’s our view that the cryptocurrency boom (and bust) have set the stage for a new age for investment management by giving form to the concept of digital assets. The beneficiaries of a high fixed-cost structure under the status quo face immense disruptive pressure. Many asset managers are going to find it impossible to change, and will fold.

Have we learnt our lesson? Can we read the signs and predict the next technological paradigm shift? It doesn’t look like it. Most industry observers are aware that asset management is evolving thanks to technology, but they’re too busy talking about black boxes and robo-advisors to recognise the paradigm-shifting implications of security tokens.

A quick word on Bitcoin

This is not an evangelical pamphlet on the benefits of Bitcoin. In a separate note co-authored with Coinshares we have provided a rebuttal to the overarching negative narrative around Bitcoin and its impact on the environment, because we believe that particular claim to be misinformed. However, whether Bitcoin replaces everything as a global currency is very much open to debate.

Where we do see Bitcoin playing a role in this new age is as an attestation chain. For those unfamiliar with the concept, it confers characteristics of information security to the Bitcoin blockchain. As the longest blockchain in existence, almost 10 years old since the first block was generated and with more than 9,800 active nodes around the world continually authenticating distributed copies of the Bitcoin blockchain, the network is practically unhackable. A hacker attempting to falsify records on the Bitcoin chain would need to launch a simultaneous attack on the chain with another 9,800++ nodes to break the 51% consensus requirement, get a false majority to agree to a falsified increment to the chain and beat the processing power of all incumbents. Amending a prior record on the record would be exponentially more difficult.

Sounds complicated? It is. And it’s very expensive too. The bottom line here is that everything that’s encrypted and posted on the public Bitcoin blockchain is effectively immutable. A permanent, constantly updated publicly-accessible record. That is what Bitcoin offers the new world. And this has huge implications for asset management.

The root of the problem: bridging physical to digital

The future we see revolves around security tokens: digital versions of physical assets, whether a share certificate, a title deed to a property, or even Michaelangelo’s Pieta. The thought experiment that became real with the advent of ICOs and “utility tokens” was that physical assets, often indivisible, could be converted into a digital, legally binding claim of ownership that in turn could be infinitely divisible.

For traditional stock market investors, this would be analogous to a stock split: when the nominal price of a stock became too expensive, to improve liquidity in the market, one approach would be to split the stock into pieces, with each piece corresponding to its pro-rata value. As a result, investors who couldn’t afford even a single stock at the old price could now buy, for example, a third of the original stock at a third of the price. There’s no change in valuation, but the asset is distributed to a much larger market, improving overall liquidity and price discovery. Security tokens take this divisibility to multiple decimal places, with no requirement for the issuer to engage in a change in capital structure. One simply decides to buy 0.00001 shares of Berkshire Hathaway Class A at an affordable $3, rather than the $300k+ at which it currently trades. Whether this still entitles the shareholder to attend Mr. Buffett’s AGM will, of course, remain at the company’s discretion.

Consider this concept applied to prime Mayfair property in London, or a portion of Banksy’s half-shredded art piece, and the possibilities are endless (or at least they approach infinity). Non-financial assets will be another topic for exploration in the future, and we are definitely of the view that lots more can be done in this space.

This development opens the door to significant transformation, specifically with regard to financial assets that represent legal claims on ownership and profits of companies. It has the potential to change public perceptions around the concept of ownership. By rendering assets truly divisible, tokens make ownership possible for everyone everywhere and can transform capital markets, making them broader, deeper, more liquid, less vulnerable to catastrophic shocks.

Couple this with another innovation of the crypto bubble – the token wallet – and you get broad and deep disruption across the asset management industry. Like the wallets we currently carry in our pockets, token wallets are built to contain the assets we own, from a cash equivalent (e.g. Winklevoss Gemini dollar) to an actual claim on a company (e.g. digitally securitised Tesla shares). The key differences are the near-infinite divisibility of the assets in the wallet, and our ability to hold programmable money and assets, with permissions granted and revoked via wallet software.

A thought experiment for asset managers (and wine lovers)

Jacques is a winemaker living in the south of France, and thanks to a series of good harvests, has built up a nest egg of €2m in cash. He invests most of this in money market funds via securitised fixed income instruments, but has about €200k set aside for more speculative investments in the equities market. He is particularly interested in two themes:

1. Robotics, because he sees the impact robotics has had on his vineyards and improvements in efficiency.

2. Electric cars, because he feels passionately about climate change and believes he must support efforts to lower greenhouse gas emissions.

His security token wallet sits on his iPhone and is activated by his interactions with Siri. As he sits down to ponder his investment strategy, he opens his wallet app and gives the following instructions:

“Siri, please allocate €1m to a high quality bond issuer that is not only socially responsible, but also is supporting a project that will make a difference in people’s lives around the world.”

Siri: “Confirmed. €1m allocated to Symmitree Foundation social impact bonds, maturing in 2028.”

“Thank you Siri. Can you also buy me €100k of Tesla shares, but only when Elon Musk tweets something silly and the stock falls more than average.”

Siri: “Confirmed. Allocation set up, buy up to €100k of Tesla shares when Elon Musk tweets and the stock reacts negatively.”

“I want €100k in a bunch of robotics companies around the world, but I don’t know what to own. Can you locate some stocks with big robotics businesses and are growing earnings at least 10% a year and relatively low risk and invest my €100k there please?”

Siri: “Confirmed. €100k has been invested in the following names: Fanuc and Yaskawa Electric in Japan, ABB in Switzerland, Google in the US, Estun Automation in China, Hiwin and Airtac in Taiwan. Would you like to enable dynamic rebalancing algorithms to manage the risk on some of the Emerging Market companies?”

“Yes please. How much more do I have left to allocate?”

Siri: “You have €800k more available.”

“I’d like to authorise my old friend David to manage €400k of that balance on my behalf, I like his investing style and he has a solid track record, please send him a notification that I’ve given him permissions. For the balance €400k, please buy me something that gives me a decent return but will leave the cash available for me to use anytime I need it.”

Siri: “Confirmed. €400k allocated to money market funds yielding 1.2% per year. I will send David a notification that he is now authorised to trade that allocation for you and set the required permissions to facilitate money laundering and other checks.”

“Merci Siri.”

Spot the difference

Right now, highly educated asset managers seem to view security tokens (at best) as an asset class, rather than a foundational technology and catalyst for wholesale change in the financial services industry. Considering the practical effects of asset digitisation enables us to glimpse the future of our industry. And it’s unrecognisable.

Custodian banks: gone.

Under a self-custody model, money never leaves the investor. Even if trading authority is handed over to an external manager, funds are managed while sitting within the investor’s wallet. No third party is needed to guarantee that the manager hasn’t run away with the investor’s cash, removing the need for an independent mediator to establish trust. Custodian fees subsequently become redundant – the investor is his own custodian, so there is nobody to pay for the privilege.

ETFs: gone.

ETFs solved the problem of imperfect divisibility of assets and gave investors a cost-efficient way to express an investment view on a specific theme e.g. robotics. However, ETFs are by nature passively managed and often track indices that end up having reverse correlation and causality with the ETFs themselves. While fees are falling and expense ratios are even negative in some cases (since the ETF provider lends out stock for interest to short sellers), the ability for software augmented with AI to dynamically tailor specific portfolios for individual investors renders ETFs obsolete. Moreover, if major indices like the S&P 500 get tokenised to an infinitely divisible level, investors can hold 500 tokens in their wallets sized to the correct weights, without having to own any ETF units. Furthermore, by not having to trade in the market with subscription and redemption flows, investment, custodian and administrative expenses can be reduced. Security tokens could spell the end of ETFs’ supposed cost advantage in the passive investment space.

Complicated compliance and identity checks: gone.

At the heart of cryptographic authentication is the idea of zero-knowledge proofs, which can generate mathematically certain yes/no answers to questions that are fully verifiable. Where a Know Your Client (KYC) check currently involves an investor disclosing personal information (e.g. passport scan) and a fund administrator checking that against a database of names known for money laundering/political exposure, a zero-knowledge proof system would see an investor holding custody of all his or her personal information, and an external party sending a yes/no query to the wallet (e.g. “Is Jacques old enough to drink?”). The wallet could respond, “Yes”, without divulging Jacques’ date of birth.

Stock exchanges and clearinghouses: gone.

Exchange fees that currently constitute a sizeable chunk of asset management costs have little role in the future. After all, what does an exchange provide but a novation mechanism which serves as a central counterparty to two sides of a trade, with the exchange being the counterparty to both buyer and seller and guaranteeing a completed trade? Nobody wants to hand over stock and not receive payment. With programmable transactions on a blockchain, not only can transactions complete simultaneously and instantaneously (as opposed to T+2 settlement), a central counterparty is no longer needed and no transactions are reversible. They are of course offsetable, by entering into a reverse transaction. Moreover, trading digital assets can happen 24/7 – gone are the days where an exchange is only open for 6 hours a day with a 2 hour lunch break and no trading on weekends, avoiding violent gaps in opening and closing auctions when news hits exchanges that are closed.

Active management: back to basics.

With these changes comes a return to active management that focuses on identifying opportunities that are unknown or mispriced by the market. With passive investing streamlined into a mechanism that’s dynamic and adaptive, index-hugging “active” management with the aim of generating some alpha while minimising costs is unlikely to be sustainable. More likely is that passive strategies evolve into algorithms for rent, which investors can tap on (call it “Beta-as-a-Service”). Active management becomes a purely alpha-generating enterprise, since partial market beta from a strategy can be replicated in tandem with a passive algorithm at a lower fee. For the active investor, this heralds a return to the basics of stock picking. Active management evolves into an industry built on discretionary mandates, in other words, “pure alpha”.

The future is closer than you think

This vision of Asset Management might sound like something out of a science fiction novel. But change is happening, and it’s accelerating.

The announcement that NYSE will launch its fully regulated clearing and settlement security token exchange, Bakkt, in January 2019 suggests the regulatory environment is moving quickly to make this a reality. Starbucks, Microsoft and BCG are among the key partners, delivering the infrastructure and use cases for what we believe is the first step towards a regulated security token ecosystem. Even Fidelity, one of the most established “traditional” asset managers, is rolling out solutions for digital asset custody. We’re reaching a tipping point, with the backing of tokens by established financial market names set to precipitate mass adoption.

All this means that asset managers can no longer lounge in their high castles. Change is coming to our industry, and those that adapt will thrive in the new age. Those that don’t confront change with change will fade into obscurity, or explode into flames live on CNBC.

The old business was highly intermediated and lucrative, while the tokenised future is likely to be far less commercially attractive and unable to support behemoths in their current bloated form. The magnitude of the change that’s coming could be bigger than the industry can handle in its current state. The hard truth is that most incumbents won’t be needed in future.

And what of investors? To take our argument to its eventual conclusion, consider this: all active management is eradicated and every fund in the world is passively run, leading to every algorithm converging towards the passive mean as a result of backtesting. Alpha becomes extinct, only beta remains, and excess returns move to zero. What happens then?

Two alternatives:

• Give up investing.

• Try and be different. Beat the crowd.

To us, Option 2 seems like the better choice. And it looks an awful lot like active management.

via RSS http://bit.ly/2R4hidH Tyler Durden

Last week, Morgan Stanley’s chief US equity strategist, Michael Wilson, doubled down on his reputation as one of Wall Street’s biggest bears, when having predicted much of the market turbulence in 2018 – which most of his peers missed – he again warned that with (1) valuations still too high and (2) earnings downside even greater than what has been priced, he expects some further deterioration in US economic data, and thinks “the S&P 500 will suffer a re-test of the lows we experienced in December, but on less negative momentum and better breadth.“

Fast forward to this weekend, when in Morgan Stanley’s “Sunday Start” note, Wilson triples down on his warning, and urges clients to cash out of stocks ahead of an imminent retest of the 2018 lows.

We republish his note “Wait for the Retest” below, with highlights.

2019 has begun as strongly as 2018 ended badly. After the worst December since 1931, we’re on track for one of the best Januarys ever, with the MSCI All Country World Index up 4.5% and every region participating. Unfortunately, we don’t think this will hold up because the things we, and the market, have been worrying about for the past six months are now taking shape and turning out to be worse than we expected in some cases.

Specifically, economic growth is decelerating sharply and corporate earnings are being revised lower at a rate we haven’t seen since the global recession in 2015-16. Speaking of earnings, 4Q reporting season began last week. While it’s way too early to draw any conclusions, the EPS beat rate so far for the S&P 500 is only +0.75% – the lowest since 2016. As usual, financials have dominated the first week of reporting season, and this quarter the results are essentially coming in line with expectations which, in today’s world of managed earnings, amounts to a miss. Despite these weak results, financials were the best-performing sector on the week, both in the US and globally.

After a stretch of terrible performance in a stock or an index, positive price action on bad news can often be a strong buy signal, as it suggests the bad news is already in the price. In fact, it’s something I’ve been waiting for to get more constructive and blow the all-clear whistle for US equities more broadly. However, I can’t help but think that from this perspective, the strength in financials might be a bit of a trap. First, US financials were one of the worst performers last year, reaching their lowest valuations since 2011, a time when it wasn’t clear whether many of these companies would survive. In short, more was “in the price” for financials by the end of 2018 than perhaps any other sector. Second, earnings revisions have not yet troughed, in our view, and many companies have yet to report whose stocks are not pricing in bad results. Finally, the deterioration in the economic data is accelerating, thanks to the US government shutdown, ongoing trade uncertainty, unsuccessful Brexit negotiations and continued Fed balance sheet reduction.

Back in September, our call for a 2019 earnings recession in the US was out of consensus. But now that stocks have corrected and earnings are being revised lower, others are beginning to embrace our view and clients are starting to ask what the chances are that this turns into an economic recession. Our response has been that it doesn’t really matter to us because an earnings recession is the same thing to the market and it essentially got priced in this past December. I don’t know of a single prognosticator calling for an economic recession, but if that view gains traction, it’s likely to be a buying opportunity, not a time to sell.

The moment of recognition by the consensus of either bad or good news is typically the time for investors to go the other way. As an example, think about last year’s euphoria around tax cuts. The consensus got excessively bullish in January, precisely the wrong time. I think we could be setting up for the exact opposite situation this year as the negative news flow reaches a peak.

December’s sell-off was scary, with a large majority of stocks pricing in a recession and breaking support on very high volume. Some of this was due to poor Fed communication and tight year-end liquidity, but we also think the market was coming around to our view on earnings recession risk. In technical terms, this was a momentum low. Typically, the market needs to revisit that low on price but with less momentum to mark a definitive buying opportunity. We call that a retest, and it usually happens when the bad things the market has been worrying about become so glaring that they’re in every headline.

We think this time is no different and expect to see a retest as economic and earnings data deteriorate while concerns linger around the trade deadline and the Fed’s balance sheet reduction. Our advice is to lighten up here as the market rallies and wait for a retest of the December lows on what may seem like scary fundamental news, mixed in with more political theatre. In addition, we think the stocks that have been hit the hardest will prove to be the best buys as the rolling bear market turns into a rolling bottom. Think of it as a First-In, FirstOut (FIFO) process. Indeed, the recent strength in higher-beta stocks like financials, homebuilders and energy means they fit the bill.

We just think you’ll get a better chance to buy them lower, along with most other stocks.

via RSS http://bit.ly/2MlhKnr Tyler Durden

Authored by Caitlin Johnstone via Medium.com,

On the 18th of November, 1964, the FBI’s appallingly corrupt boss J. Edgar Hoover denounced Martin Luther King Jr. as “the most notorious liar in the country.” A few days later, a Hoover deputy named William Sullivan wrote King a letter posing as a disillusioned follower and using powerful, manipulative language to urge the civil rights leader to commit suicide before evidence of his extramarital affair became public. Enclosed was an FBI recording containing evidence of the affair.

Whenever America celebrates Martin Luther King Jr. Day we should remind ourselves that it is a known, undisputed fact that the Federal Bureau of Investigation engineered a psyop to manipulate one of the world’s greatest minds into committing suicide. It is also worth reviewing the compelling argument for the case that the FBI was behind King’s assassination as well.

Hoover, who headed the FBI for decades, obsessively despised King on a deeply personal level. He kept files on the civil rights leader in which he’d scribble hateful comments on memos he received about King, apparently for no purpose other than his own gratification and catharsis. On a memo about King receiving the St. Francis peace medal from the Catholic Church, he wrote “This is disgusting.” On the news of King’s meeting with the pope, he scribbled, “I am amazed that the Pope gave an audience to such a degenerate.”

FBI headquarters still wears the name of this childish pig, a brazen admission by the Bureau that it remains very much the same institution which tried to end Martin Luther King Jr.’s life, the same institution which assassinatedBlack Panthers leader Fred Hampton, the same institution which for years ran the unconstitutional COINTELPRO campaign to infiltrate and sabotage dissident political groups, and which has continued to infiltrate dissident political groups, including Black civil rights groups, to this very day.

We received yet another reminder of the FBI’s true face the other day in an interview with its former Deputy Assistant Director Terry Turchie on Fox’s Tucker Carlson Tonight. In a passing tangent largely unrelated to the rest of the interview, Turchie made the following shocking statement in relation to the ongoing Russiagate saga:

“And I think we can expect more of this, because quite honestly the electorate in some places is putting more and more progressives and self-described socialists in positions. And ironically, years ago, when I first got into the FBI, one of the missions of the FBI in its counterintelligence efforts was to try and keep these people out of government. Why? Because we would end up with massive dysfunction and massive disinformation and massive misinformation, and it seems to me that’s where we’re at today.”

Wow.

Uhhhhhhh….Fmr FBI Assistant Director just said “When I first got into the FBI one of the missions of the FBI in its counterintelligence efforts was to try to keep” progressives out of government pic.twitter.com/l1KqQMO914

— Andrew Lawrence (@ndrew_lawrence) January 19, 2019

According to his LinkedIn profile, Turchie joined the FBI in July of 1972. COINTELPRO, the program in which leftist groups were actively infiltrated and undermined, officially ended in 1971, and Hoover had died in May of 1972. This was after “Hoover’s FBI” stopped being Hoover’s FBI, yet a “counterintelligence effort” was still very much alive and thriving to undermine the will of the electorate and prevent them from electing leftists to office.

This one admission, by itself, is in my opinion more than enough to justify the FBI’s total dissolution. Leaving aside any of their other malfeasance that I mentioned earlier, leaving aside the rest of their other documented malfeasance that I haven’t mentioned, this one admission by Turchie shows clearly that America’s secret police should cease to exist.

Think about it. How can anyone justify the FBI’s continued existence after such an admission? There is an extremely powerful branch of the US government which is known to have been actively undermining the democratic will of the electorate through covert means. Even if you very trustingly subscribe to the belief that the FBI no longer engages in any such practices to any extent (and that would be extremely naive), how can you justify keeping it in power knowing that it did? Where precisely in the FBI’s history is a clear, clean, unequivocal break from what it was doing then declared, documented and evidenced? For what reason was it not razed to the ground decades ago and any of its actual necessary functions transferred elsewhere?

Imagine if the Ku Klux Klan had successfully cleaned up its image in the ’90s or something. Now you’re seeing members of the KKK interviewed on CNN and MSNBC as respectable members of society, holding powerful political positions, treated like heroes, all under the same banner it held when it was lynching people of color a few decades prior. Would that not seem weird? Would you not say something like “Wait, why are we keeping that organization around? At best they’re probably just putting a nicer face on their previous toxic agendas, especially since any good intentions existing within it could simply be taken somewhere with a less horrific history.”

The only reason the FBI is being treated any differently is because it’s got such good PR, namely the entire political/media class.

Journalist Mark Ames documents a short-lived push by the Carter administration to “transform the FBI from an extralegal secret police agency to something legal and defined.” This feeble proposition to give the Bureau an actual charter to clearly define what it is, what it does, and where the confines of its operations are was the closest America ever came to putting any kind of limitations on the powers of its secret police force, and by the time Reagan rolled around it was long forgotten.

And now you’ve got this same evil institution essentially criminalizing the act of the executive branch pursuing good relations with a nuclear superpower, launching a secret counterintelligence investigation into whether a sitting president is a national security threat for his Russia policy. This cannot be leading anywhere good.

The FBI has too much power and far too unforgivable a history to be permitted to control the reigns of the nation with the most powerful military force in the history of civilization. Get rid of it and move in a healthy direction.

*  *  *

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via RSS http://bit.ly/2sGFjhr Tyler Durden

The People’s Liberation Army (PLA) has constructed a new, underground facility (UGF) about 31 miles from the India-China border, and 37 miles from the Indian Army’s forward posts at Demchok in Ladakh.

According to The Print, satellite imagery identified a deeply buried hardened target (DBHT) under construction outside the town of Ngari, also known as Shiquanhe in Mandarin.

Construction started in December 2016, about six months before the 2017 China–India border standoff near the India-China-Bhutan tri-junction in the east.

The Print, specified that special personnel are being used instead of locals, to maintain secrecy and security of the project.

The UGF appears to have four large tunnel entrances and three small ones; all have hardened entrances with reinforced concrete. Judging by the images, the openings would soon be covered with other material to withstand a direct military strike.

Some of the construction material can be seen outside the entrances, including cement and metals plants sufficient for construction activity inside the tunnels.

The tunneled facility had a support garrison constructed in 2016 and 2017. Another support garrison has just been started, said The Print.

Both the garrisons are close to the main road. Surrounding roads have been widened to allow large transport vehicles to operate safely and smoothly.

Although it is hard to indicate the exact purpose of this facility, these underground bases generally perform numerous strategic functions, such as command and control of military forces, protection of national leadership, WMD production or storage, and ballistic missile production, storage, or launch.

Both countries border one another in two locations, northern India/western China and eastern India/southern China, with constant territorial disputes in both areas.

A hypothetical war between India and China would be catastrophic for the Indo-Pacific region, cause thousands of casualties on both sides and crash the global economy.

With that in mind, the underground military bases near the Indian border shows us that China is preparing for a fight.

via RSS http://bit.ly/2DpUjqc Tyler Durden

Authored by David Haggith via The Great Recession blog,

In a surprisingly candid admission, two former Federal Reserve chairs have stated that the Federal Reserve alone is responsible for creating all recessions in the United States.

First, former Fed Chair Ben Bernanke said that

Expansions don’t die of old age. They get murdered.

– MarketWatch

To clarify this statement, former Chair Janet Yellen placed the murder weapon in the Fed’s hands:

Two things usually end them… One is financial imbalances, and the other is the Fed.

Think that through, and you quickly realize that both of those things are the Fed. Is there anyone left standing who would not say the Fed’s quantitative easing in the past decade was the biggest cause of financial imbalances all over the world in history? Moreover, whose profligate monetary policies led to the Great Financial Crisis that gave us the Great Recession?

So, the Fed loads the gun with financial causes and then pulls the trigger. In fact, I think it would be hard to find a major financial imbalance in the US that the Fed did not have a hand in creating or, at least, enabling. Therefore, if those are the only two causes, then it is always the Federal Reserve that causes recessions by its own admission.

And, yet, those Fed dons look so pleased with themselves.

Yellen went on to say that when the Fed is the culprit, it is generally because the central bank is forced to tighten policy to curtail inflation and ends up overplaying its hand. (She didn’t mention that the Fed’s monetary policy may have a hand in creating financial imbalances.)

Exactly, nor did she mention that the inflation they were “forced” to curtail always happens because of financial imbalances the Fed created or enabled. That is why I call our expansion-recession cycles, rinse-and-repeat cycles. Therefore, the Fed is only forced by its own ill-conceived actions. First you have to create the imbalance, which causes the economy and stocks to inflate, then you have to pull the trigger to shoot that down by tightening into a recession, which the Fed always does:

Bernanke elaborated on Yellen’s point, accusing the central bank of, in essence, murder. It takes an aggressive act on the part of the monetary authority to bring an expanding economy to a halt and cause it to shift into reverse.

Yellen and Bernanke were speaking at the annual meeting of the American Economic Association in Atlanta earlier this month in the company of current Fed Chair Jerome Powell.

As I demonstrated in my two earlier articles this week (“Does Inverted Yield Curve Indicate Recession?” and “What is an inverted yield curve and what does it mean?“), the Fed carries out this act of econocide by getting the yield curve to invert via its forced interest changes. As shown in those articles, every recession has been immediately preceded by a Fed-created inversion of the yield curve — the Fed’s smoking gun.

The Fed Fix Is Almost In

As noted in those articles, today’s yield curve has already slipped into its penultimate inversion. First (on December third), three-year notes started paying more interest than five-year notes. (The five-year was at 2.83% interest, while the three-year hit just over that at 2.84%.) In essence, investors were betting the economy would be a tad better in five years than it would in three.

Within a matter of weeks, the three-year notes were paying more than seven-year notes. Then, just about Christmastime, they started paying more than eight-year notes, inverting the yield curve even further out. The orange recession indicator light comes on when they take the next step of paying more than ten-year notes; and above that we go full recessionary red! The first three came all within in a month, so the rest may come just as quickly.

In fact, we’re so close that one more rate increase by the Fed could pull the trigger. This is why Powell can be so reassuring about pulling back soon on targeted interest-rate increases. He knows he’s already operating with a hair trigger because of the Fed’s other tightening action in rolling bonds off of its balance sheet.

Like a skilled sharp-shooter, Powell recently said the Fed is “watching and waiting” before it pulls the trigger with its next rate increase. At the same time, he suggested his balance-sheet reduction won’t end for awhile (and, of course, the Fed knows that its balance sheet reduction is skewing the yield curve faster than the Fed’s targeted interest-rate increases.

I’ve said before that those interest-rate increases are now just playing verbal catch-up to what the balance sheet reduction is doing in the open market. In other words, the balance sheet reduction is pulling the Fed’s targeted interest rates up, regardless of what is says, so it is pressed to state it intends an increase just to keep up with the effects of balance-sheet reduction. Last summer the Fed tactic admitted this when…

The Fed raised the target range for its benchmark rate by a quarter point to 1.75 percent to 2 percent, but only increased the rate it pays banks on cash held with it overnight to 1.95 percent. The step was designed to keep the federal funds rate from rising above the target range. Previously, the Fed set the rate of interest on reserves at the top of the target range. –Bloomberg

In other words, the Fed had to change the way it calibrates some interest rates because other factors than their change in their stated target rate were driving rates up. In order to keep bank demand for Fed funds from pushing the rate above 2%, the Fed set its stated rate at 1.95% to create some headroom. That’s explained as…

Officials have said that, as they drain cash from the system by shrinking the balance sheet, a rise in the federal funds rate within their target range would be an important sign that liquidity is becoming scarce…. The increase appears to be mainly driven by another factor: the U.S. Treasury ramped up issuance of short-term U.S. government bills, which drove up yields on those and other competing assets, including in the overnight market.

And that is what is now happening, but they are still planning to keep tightening by reducing their balance sheet. What is not said there is that the major reason the US Treasury is ramping up its issuance of government bills is that the Fed’s unwind is forcing them to refinance maturing bills on the open market as the Fed now refuses to refi those bills. I’ve maintained for a couple of years that the unwind will drive up other interest rates, causing problems throughout the economy.

Gunsmoke And Mirrors

So, the Fed’s recent talk about reducing the number of rate increases in the Fed’s interest target is slight of hand because the Fed’s unwind is doing the heavy lifting here, driving up rates faster than the Fed changes its stated target rate. Powell assures everyone the Fed will slow down its interest-rate increases, even as the Fed pushes right ahead with its balance-sheet unwind, which is doing the most to invert the yield curve.

Powells only defense against concerns expressed about balance-sheet reduction was…

“We are looking carefully at that, and the truth is, we don’t know with any precision,” Fed Chairman Jerome Powell told reporters on Wednesday when asked about the increase. “Really, no one does. You can’t run experiments with one effect and not the other.”

Not too reassuring to hear the Fed Head say no one really has any idea what impact its balance-sheet unwind will have on other interest rates. Does the Fed not know, or does the Fed just not want to say what it does know?

For additional cover as to whether the yield-curve inversions the Fed creates will cause a recession this time as they did in all previous times, Yellen, protested, as I noted in an earlier article this week, that this time is different:

Now there is a strong correlation historically between yield curve inversions and recessions, but let me emphasize that correlation is not causation, and I think that there are good reasons to think that the relationship between the slope of the yield curve and the business cycle may have changed.

It’s not every day that the Fed admits total culpability for the death of every expansionary period. Nor that it admits that the inflation its expansionist monetary policies create force it to become the culprit. Nor that it routinely overplays its hand.

Apparently, the Fed Heads are so comfortable with all of this (hence the smarmy looks in their photos above) that the economic murderers can confess in broad daylight every murder they are responsible for with complete impunity, even as they tell you where the bodies are buried. However, because they still have their next economic massacre to commit right before your eyes and don’t want you to stop them, they wish to assure you that “we can’t possibly know what will happen” now or “this time is different. Things have changed.”

The words “I can’t know what will happen” when a gunslinger is twirling his cocked and loaded pistol with his finger on the trigger, should not give you comfort.

Perhaps all these confession now will enable them to smile even bigger when the slaughter is over, and they know they did it this time in broad daylight.

Of course, there is one major difference this time. In all previous times, the Fed didn’t have the most massive balance-sheet unwind pushing interest rates all around so it had to rely more on its conventional tool of incremental changes in the its targeted interest rate. The new existence of that big gun mean it can who you it is putting away the little gun to disarm you because it has a cannon pointing at you from just inside the woods to your left. Thus, Powell said disarmingly,

More rate hikes wasn’t a pre-set plan and the forecast of two moves was conditional on a “very strong outlook for 2019.” – MarketWatch

In other words, keep your eye on the rate hikes I keep talking about (the little gun), not on the big balance sheet reductions that we put on autopilot so we don’t have to talk about them. Like a great hunter, Powell said the Fed can be patient.

Some analysts believe the Fed’s runoff of its balance sheet is hurting financial markets and want the central bank to end the program.

Gee, ya think? A runoff that intends to force the US government to refinance an additional $2 trillion over the next 3-4 years on the open market might be hurting financial markets more than a quarter-point increase in the Fed’s interest target every few months?

One analyst who disagrees with Powell is Peter Boockvar, chief investment officer at Bleakley Advisory Group:

“It’s no coincidence that accidents begin to pick-up the deeper you get into tightening … QE inflated markets to very high valuations. It’s wishful thinking to believe QT isn’t going to have an impact.”

By shrinking its balance sheet, the Fed is draining the liquidity that sent stocks booming. – CNN

Some of the Fed’s colleagues at other central banks also agree and express concern about what this will do to them:

Last month, Irjit Patel, the governor of the Reserve Bank of India, pleaded with the Fed to slow plans to shrink its balance sheet. If the Fed doesn’t shift course, “a crisis in the rest of the dollar bond markets is inevitable,” he wrote in an op-ed in the Financial Times.

Other Fed members are just as aware of the Fed’s institutional murder rates as Bernanke and Yellen. St. Louis Fed President James Bullard told the Wall Street Journal this month that a recessionary risk is being telegraphed by what is now happening in the yield curve and that the Fed is causing the flattening of the curve toward inversion. So, these guys all appear to be well aware of what they are doing.

However, to maintain the distraction, Bullard also said,

In separate remarks to reporters …. he was open to a revisiting the balance sheet runoff but doesn’t think it is damaging markets as some argue. Bullard [said] that if the balance sheet runoff was impacting bond market as some suggest, then yields would be moving higher instead of the steady decline seen since November.

The latter would be happening, except that money has been pouring rapidly out of stocks and into bonds due to the rate increases the unwind created in September and October. What he ignores is the fact that rate increases were so substantial they sucked massive amounts of money out of the stock market in a flood of capital flight because all of a sudden treasury interest looked quite enticing. That, of course, pushed those rates down some in November.

So, “Nothing to see there, folks. Keep your eye on the little gun; and, oh, did we tell you that we have murdered every economic expansion in history?”

Who’s your daddy?

Now that we’ve heard the confessions from the murderers and have experienced the diversions that will allow the next murder to happen as much in plain sight as the confessions just happened, let’s look at the case from another angle: What has been keeping the stock market alive and hopping over the past decade?

Let me lay out evidence that it is clearly the Fed.

Exhibit A: What turned around the market’s major crash in 2009? The Fed’s QE1. Does anyone think the market would have turned around without that massive intervention? Was that intervention with hundreds of billions of dollars mere window-dressing, or was it the greatest financial intervention to a financial crisis the world had ever seen?

Exhibit B: What turned the market around the next time it “corrected” as soon as QE1 ended? Was it not instant QE2? More hundreds of billions of dollars?

Exhibit C: What saved the market when Republicans played roulette with the nation’s credit rating in the summer of 2011 and shot themselves in the foot politically when Standard & Poor’s gave the nation its first credit downgrade before Republicans even had the chance to let the nation default? Was it not the immediate promise of an ever bigger, indefinitely ongoing new kind of QE called Operation Twist, which morphed into QE3?

Exhibit D: Then, when markets tumbled in 2015 and 2016, because the Fed was backing off from monetary stimulus, their colleagues in other countries jumped in with their own QE. More than $5 trillion worth in 2016! All told, the world’s central banks have pumped in $15 trillion since then.

But now they are all stopping!

Exhibit E: The prosecution presents a full picture of all central-bank stock salvation:

The Fed may claim that it does not attempt to rescue markets and that it looks only at economic indicators, yet somehow every time the market took a major plunge in the graph above, the Fed was instantly on the scene with a new invention of monetary stimulus in massive doses. Of course, “correlation is not causation.” Correlation is pretty interesting, though, especially when it happens at every plunge, except the one at the top that is plunging much further than any other time on this graph … because one thing IS different: No one is stepping in with salvation this time.

If the Fed has been the salvation of the market again and again, lifting it higher and higher, what happens if the Fed and other CBs let the stock market drop? Do you think they won’t do that? The highest authorities in the Fed just told you they did it every other time. First, they create massive “financial instability,” as Yellen said, otherwise known as “bubbles,” which grow due to the Fed’s infinite capacity to create monetary stimulus. They let these grow until inflation finally “forces” them to tighten until they crash them.

The prosecution presents Exhibit F:

This one is the Fed and all its major partners in crime. When did stock markets start to plunge all over the world? Wasn’t it as soon as global QT started to reverse at the end of that graph in 2018? Ah, but “correlation is not causation.” Except that it kind of is when you keep finding correlation everywhere you turn.

If the defense wants to argue the US market is not utterly dependent on the Fed’s constant protection, let me ask, “What did the market do in September of 2018 when the Fed removed one little word from its market-soothing speeches? Accommodative. Just as it watched its balance sheet-reduction up to full rewind speed.” It took its biggest plunge by far in the entire ten-year recovery period. As nearly everyone was saying, nothing bad suddenly emerged in the economy. All that changed was the Fed to merely implying it would be less accommodative to market concerns as it moved to full unwind.

If you still think the Fed isn’t going to kill the economy this time, I have one more question for you: When was the last time the Fed raised rates in the middle of a major market “correction?” How about never. Yet, now it is raising rates and reducing money supply via balance-sheet reduction at the same time that it hints it is removing accommodation.

But balance-sheet reduction doesn’t matter, right?

“We don’t believe that our issuance [new bond to replace those rolling off the balance sheet] is an important part of the story of the market turbulence that began in the fourth quarter of last year. But, I’ll say again, if we reached a different conclusion, we wouldn’t hesitate to make a change,” Powell said. “If we came to the view that the balance sheet normalization plan — or any other aspect of normalization — was part of the problem, we wouldn’t hesitate to make a change.” – MarketWatch

In other words, “Don’t look at the big gun. Nothing to see there.” Said the people who have just told you that none of their expansions ever ended until they murdered it!

Does the Fed have motive?

Don’t ask me why the Fed will kill its own recovery. It is enough that it admits it always does. So, I’ll leave determining which of the many possible “why’s” up to you. Maybe the Fed will cop an insanity plea and say that even it doesn’t know why it does the things it does. Whatever their actual motive, this sure has the Fed’s unswerving M.O. all over it. It has their fingerprints and their multiple confessions of guilt.

Still, let me lay out a couple of motives that are popular among those many people attribute to the Fed just to show there are plenty of possible motives out there:

Maybe the Fed’s member banks, who own and run the Fed (as its only shareholders and as governing board members who have huge influence over who the additional government-appointed board members are), like to repossess things. That would be a motive.

Or maybe they want to create a new cashless, digital, global monetary system. That would be a motive.

Or maybe, if they can crash things as perennially as Japan has done for score or more of years, they can get permission to start buying stocks directly, and use their infinite money supply, as Japan, has done to take major ownership in all the stocks of the nation.

Numerous conspiracy theories spend entire books making a strong case for different motives. I won’t land on one, but will note that all that matters is that there are plenty of motives to choose from.

Sure, Yellen protested that “correlation isn’t causation,” but, on the other, she admitted causation by saying that, when the Fed is the culprit, it is generally because the central bank is forced to tighten policy to curtail inflation — inflation that only the Fed causes by creating trillions of dollars monetary stimulus. There only struggle this time to stay within their M.O. is that they have failed to create inflation in the general economy that they are supposed to govern. Maybe that is why they have pushed the expansion into the longest in history because they are obsessed with following their usual M.O., and inflation didn’t cooperate this time to “force” them to tighten into recession (their cover story).

So, we have multiple confessions of murder by known Fed ringleaders. We have numerous pieces of circumstantial evidence that support their confessions. We have many possible motives. And, even the fact that the Fed continued pushing expansion longer than it has with more and more rounds of QE can be explained by its M.O. How many times has the Fed said they don’t understand why they couldn’t get inflation to rise to their 2% target for years. They could hardly claim inflation concerns when everyone knew CPI was under the target they’ve always said they want. Now it’s there. So, everything is in place.

I rest my case.

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The head of Iran’s air force said on Monday that the Islamic Republic’s pilots are looking forward to facing Israel, and will “eliminate it from earth” after Israeli airstrikes on alleged Iranian targets inside Syria killed 11 people, including four Syrian soldiers. 

Brigadier General Aziz Nasirzadeh, commander of the Islamic Republic of Iran Air Force (IRIAF) made the comments to the Young Journalist Club news agency following Israel’s strike on munition storage facilities within Damascus International Airport, a military training camp and an Iranian intelligence site, according to The Independent. 

“The young people in the air force are fully ready and impatient to confront the Zionist regime and eliminate it from the Earth,” said Nasirzadeh.

Israel claims it launched the strikes in retaliation for a surface-to-surface rocket fired on Sunday by Iran’s Quds Force from within Syria at a ski resort in the Israeli-occupied Golan Heights, which was intercepted by Israeli air defenses. 

“That’s a civilian site and there were civilians there,” said Israeli army spokesman Lt. General Jonathan Conricus Monday morning, adding “We saw that as an unacceptable attack by Iranian troops, not proxies in Syria.” 

“In addition to that, the area from which the Iranians fired their missile is an area we have been promised that the Iranians would not be present in. We know it was not done in the spur of the moment, it was a premeditated attack.”

The Israeli military said the sorties hit Iran’s “main storage hub in Syria” used to transport Iranian weapons to allies in Syria including Lebanese militant group Hezbollah.

Israel recently acknowledged carrying out hundreds of strikes in Syria over the last few years but has previously refrained from commenting for fear of triggering a reaction and being drawn into the deadly fighting in Syria, which is in the grips of an eight-year civil war. 

Monday’s announcement marked the first time they had reported strikes in real time and released detailed information since last May 2018, when Israel claimed to have struck almost all of Iran’s military infrastructure in Syria, following another rocket attack on its positions in the Golan. –The Independent

Israel said on Monday that Syria had ignored its warning over the upcoming strikes, so they were forced to target Syria’s aerial defense batteries which fired “dozens” of surface-to-air missiles at Israel’s planes. 

“The [army] holds the Syrian regime responsible for everything taking place within Syria and warns the Syrian regime against targeting Israel or permitting it to be targeted,” read a statement by the Israeli army. 

“Israel is determined to continue to prevent Iranians from building an independent war machine in Syria and is ready to take the risk of exchange of fire,” he told reporters in a briefing,” said retired Israeli Maj. Gen Yaakov Amidror, who was Prime Minister Benjamin Netanyahu’s national security adviser until 2013 – calling the airstrikes a signal to Iran about har far Israel is willing to go. 

“The more Iranians try to launch rockets into Israel the more severe will be the attack in response,” he added. “It is about a strong signal to Iranians. We’re ready to escalate if you don’t stop.”

The Israel Defense Force, meanwhile, trolled Iran over Twitter with a map of the Middle East showing an arrow to Syria labeled “where Iran is,” and arrows over Iran which read “where Iran belongs.” 

Iran, you seem to be lost. Here: pic.twitter.com/ByrDyUjWDr

— Israel Defense Forces (@IDF) January 21, 2019

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Authored by Edward Curtin via OffGuardian.com,

As Martin Luther King’s birthday is celebrated with a national holiday, his death day disappears down the memory hole. Across the country – in response to the King Holiday and Service Act passed by Congress and signed by Bill Clinton in 1994 – people will be encouraged to make the day one of service. Such service does not include King’s commitment to protest a decadent system of racial and economic injustice or non-violently resist the U.S. warfare state that he called “the greatest purveyor of violence on earth.”

Government sponsored service is cultural neo-liberalism at its finest, the promotion of individualism at the expense of a mass movement for radical institutional change.

“Nothing in all the world is more dangerous,” warned Dr. King, “than sincere ignorance and conscientious stupidity.”

How true those words. For the government that honors Dr. King with a national holiday killed him. This is the suppressed truth behind the highly promoted day of service. It is what you are not supposed to know. It is what Thomas Merton, as quoted by James W. Douglass, called The Unspeakable:

It is the void that contradicts everything that is spoken even before the words are said; the void that gets into the language of public and officials declarations at the very moment when they are pronounced, and makes them ring dead with the hollowness of the abyss. It is the void out of which Eichmann drew the punctilious exactitude of his service.”

The word service is a loaded word; it has become a smiley face and vogue word over the past 35 years. Its use for MLK Day is clear: individuals are encouraged to volunteer for activities such as tutoring children, painting senior centers, or delivering meals to the elderly, activities that are good in themselves but far less good when used to conceal an American prophet’s radical message. After all, Martin Luther King’s work was not volunteering at the local food pantry with Oprah Winfrey cheering him on.

THE ASSASSINATION

King was not murdered because he had spent his heroic life promoting individual volunteerism. To understand his life and death – to celebrate the man – “it is essential to realize although he is popularly depicted and perceived as a civil rights leader, he was much more than that. A non-violent revolutionary, he personified the most powerful force for a long overdue social, political, and economic reconstruction of the nation.” Those are the words of William Pepper, the King family lawyer, from his comprehensive and definitive study of the King assassination, The Plot to Kill King, a book that should be read by anyone concerned with truth and justice.

Revolutionaries are, of course, anathema to the power elites who, with all their might, resist such rebels’ efforts to transform society. If they can’t buy them off, they knock them off. Fifty one years after King’s assassination, the causes he fought for – civil rights, the end to U.S. wars of aggression, and economic justice for all – remain not only unfulfilled, but have worsened in so many respects. And King’s message has been enervated by the sly trick of giving him a national holiday and then urging Americans to make it “a day of service.” The vast majority of those who innocently participate in these activities have no idea who killed King, or why. If they did, they might pause in their tracks, and combine their “service” activities with a teach-in on the truth of his assassination.

Because MLK repeatedly called the United States the “greatest purveyor of violence on earth,” he was universally condemned by the mass media and government that later – once he was long and safely dead and no longer a threat – praised him to the heavens. This has continued to the present day of historical amnesia.

Educating people about the fact that U.S. government forces conspired to kill Dr. King, and why, and why it matters today, is the greatest service we can render to his memory.

William Pepper’s decades-long investigation not only refutes the flimsy case against the alleged assassin James Earl Ray, but definitively proves that King was killed by a government conspiracy led by J. Edgar Hoover, the FBI, Army Intelligence, and the Memphis Police, assisted by southern Mafia figures.

THE TRIAL

This shocking truth is accentuated when one is reminded (or told for the first time) that in 1999 a Memphis jury, after a thirty day civil trial with over seventy witnesses, found the U.S. government guilty in the killing of MLK. The King family had brought the suit and Pepper represented them. They were grateful that the truth was confirmed, but saddened by the way the findings were buried by the media in cahoots with the government.

Pepper not only demolishes the government’s self-serving case with a plethora of evidence, but shows how the mainstream media, academia, and government flacks have spent years covering up the truth of MLK’s murder through lies and disinformation. Another way they have accomplished this is by convincing a gullible public that “service” is a substitute for truth.

But service without truth is a disservice to the life, legacy, and radical witness of this great American hero. It is propaganda aimed at convincing decent people that they are serving the essence of MLK’s message while they are obeying their masters, the very government that murdered him.

It is time to rebel against the mind manipulation served by the MLK Day of Service. Let us offer service, but let us also learn and speak the truth.

“He who lives with untruth lives in spiritual slavery,” King told us, “Freedom is still the bonus we receive for knowing the truth.”

via RSS http://bit.ly/2U730Ls Tyler Durden

At least 11 sailors have died after two ships caught fire while moving through the Kerch Strait separating Crimea from mainland Russia  – the location of the latest escalation in tensions between Russia and Ukraine in November – after one of them was apparently rocked by an explosion the Russian Maritime Agency said. One vessel was “allegedly struck by a blast” RT reported, which caused the fire that then spilled over to another ship, an official with the Russian Maritime and River Transport Agency said.

Clouds of black smoke could be seen billowing over a vessel engulfed by a blaze on YouTube footage, which shows the scene of the incident. Another ship can be seen floating nearby.

The fire reportedly broke out as the two ships were transferring fuel from one to the other. According to RT, approximately three dozen sailors managed to escape the burning ships by jumping into the sea but at least 11 people died in the incident and 12 have so far been rescued from the sea.

The crews of the affected ships included Turkish and Indian nationals, the emergency services said, adding that there were no Russian sailors. Turkey confirmed that 16 of its citizens were aboard the affected vessels.

Emergency services said that between eight and ten ships have been sent to the rescue and are picking up the sailors. The explosion might have been caused by a safety rules violation during the fuel transfer, according to some reports.

One of the ships was a liquefied natural gas carrier and another one was a tanker; both vessels were flying Tanzanian flags.

According to the director of the Crimean Sea Ports, the maritime traffic through the strait was not affected by the incident and navigation across Kerch remains open.

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