Understanding The Tactics Of Subversive Globalism

Authored by Brandon Smith via Alt-Market.com,

When the ideology of globalism is discussed in liberty movement circles there are often misunderstandings as to the source of the threat and what it truly represents. This may in some cases be by design. In the latest era of supposed “populism” led by figures like Donald Trump, an entirely new and very green generation of liberty activists find themselves hyper focused on the political left in general, but they seem to be obsessed with attacking the symptoms of globalism rather than the source. I attribute this to a clever propaganda campaign by globalist institutions.

For example, when globalism is brought up in terms of its conspiratorial influences, the name of George Soros is usually mentioned. Soros is an obvious bogeyman for liberty activists because his money can be found flowing to numerous Cultural Marxist (social justice) organizations and his influence is easily grasped and digested in that way. Conservatives like placing emphasis on Soros because he appears decidedly leftist and thus globalism becomes synonymous with leftist movements. But what about all the globalists within the political right?

Globalism has its gatekeepers in both political camps; people that manipulate or outright control political leaders and political messages on the right just as they do on the left. While someone like George Soros acts as a gatekeeper for the left, we also have people like Henry Kissinger, a globalist gatekeeper for the right. Kissinger’s close relations with the Trump administration or his long time friendship with Russia’s Vladimir Putin are brought up far less in the liberty movement these days. Why? Because this does not fit with the false narrative that the globalists are “targeting” Trump or Putin. When you examine these leaders and their ties to a vast array of globalist proponents, this claim becomes absurd.

In 2016, months before the presidential election, the globalist media outlet Bloomberg published an article which salivated over the possibility that Trump would swallow up and assimilate what they called the “Tea Party,” ultimately destroying it. At that time the media used the term “Tea Party” as code for any sovereignty or constitutional group, just as the media tried to wrap us all up in the term “alt-right” after Trump’s election.

There was a reason why Bloomberg found particular glee in the notion that Trump would absorb the liberty movement. The movement was becoming a decentralized threat to the globalist agenda, a threat that could not be easily quantified or dominated because it had no identifiable leadership. We were a movement based on knowledge and individual action. Our best “leaders” have been teachers, not politicians, and these were people that led by personal example, not by mandate or rhetoric.

The liberty movement was winning ground in every conceivable arena, from the dismantling of the mainstream media through alternative platforms, to the great push back against social justice cultism. Something had to be done.

Enter Trump, a brash pop culture icon with a flare for sensationalism. He was no statesman like Ron Paul explaining the intricacies of America’s problems in a measured way. No, Trump was like a wrecking ball, a loud and blatant message to the left that we were tired of being on the defensive and we were coming for them. But the reality was that Trump was not a necessary element of the fight. He never was. Anti-globalism and anti-social justice were already hitting the mainstream. The left was already on the run. Trump didn’t create that wave, the liberty movement did that for him, he just rode it into the White House. You’re welcome, Donald.

The problem was that Trump was not what he seemed to be to many people. With all his rhetoric against the banking elites which he referred to as creatures of the “swamp” choking Washington, Trump then proceeded to load up his presidential cabinet with elitists and globalists as soon as he was elected. These very same cabinet members and advisers went on to attend globalist meetings like the secretive Bilderberg Group AFTER Trump had been elected. People like Rothschild banking agent and Commerce Secretary Wilber Ross who officially attended in 2017, or adviser Peter Thiel who officially attended in 2018.

This was not at all surprising to me. I predicted this would be the likely outcome (along with a Trump presidency) in my article “Clinton Versus Trump And The Co-Option Of The Liberty Movement,” published in September 2016.

The point is, simply picking the side of the political right is not enough to protect activists from globalist subversion. By rallying around controlled politicians and bottle-necking our actions the liberty movement makes itself vulnerable and decidedly impotent.

So, the question arises – how do we continue to fight against the 4th Generation warfare being levied against us? Part of the solution continues to rest in our own understanding of the enemy.

I still hold to the idea that the best way to understand globalism is to study and expose the efforts of a group called the “Fabian Society,” otherwise known as Fabian Socialists. The society was founded in England in 1884 and was an extension of the “Round Table” groups being established by global elitists in the West at the time. The Fabians have been at the forefront of almost every pro-socialist and pro-globalist movement of the past century, and while they do not get as much attention as institutions like the Council on Foreign Relations or even the Bilderberg Group, their open discussions on their own motivations and goals make them a prime source of data on the psychology of our opponents.

The Fabian Society has multiple mascots which hint at the nature of globalism. One symbol of the group is an angry turtle with the slogan “When I strike I strike hard,” indicating the slow and deliberate nature of globalism and its methodical spread into every aspect of our daily lives. Another mascot they have used in the past is a wolf dressed up as a sheep, a symbol which I think is self explanatory, but to clarify – a person that appears to be anti-globalist in rhetoric or who is criticized by people like the Fabians may still be a Fabian in disguise.  Their relationships with elitists will expose their true nature as a Trojan Horse.

I think that the best representation of these people and their thinking resides in their own words, however. Here are some choice quotes from past members:

…The Open Conspiracy will appear first, I believe as a conscious organization of intelligent, and in some cases wealthy men, as a movement having distinct social and political aims, confessedly ignoring most of the existing apparatus of political control, or using it only as an incidental implement in the stages, a mere movement of a number of people in a certain direction, who will presently discover, with a sort of a surprise, the common object toward which they are all moving. In all sorts of ways, they will be influencing and controlling the ostensible government.” — H.G. Wells: The Open Conspiracy: Blue Prints for a World Revolution, 1928.

“I also made it quite clear that socialism means equality of income or nothing, and that under Socialism you would not be allowed to be poor. You would be forcibly fed, clothed, lodged, taught, and employed whether you like it or not. If it were discovered that you had not character and industry enough to be worth all this trouble, you might possibly be executed in a kindly manner; but whilst you were permitted to live you would have to live well.” — George Bernard Shaw, The Intelligent Woman’s Guide to Socialism and Capitalism, 1928

“I do not pretend that birth control is the only way in which population can be kept from increasing. There are others, which, one must suppose, opponents of birth control would prefer. War, as I remarked a moment ago, has hitherto been disappointing in this respect, but perhaps bacteriological war may prove more effective. If a Black Death could be spread throughout the world once in every generation survivors could procreate freely without making the world too full. There would be nothing in this to offend the consciences of the devout or to restrain the ambitions of nationalists. The state of affairs might be somewhat unpleasant, but what of that? Really high-minded people are indifferent to happiness, especially other people’s.” — Bertrand Russell, The Impact of Science on Society, 1953

“I think the subject which will be of most importance politically is mass psychology. … Various results will soon be arrived at: that the influence of home is obstructive… although this science will be diligently studied, it will be rigidly confined to the governing class. The populace will not be allowed to know how its convictions were generated. When the technique has been perfected, every government that has been in charge of education for a generatio will be able to control its subjects securely without the need of armies or policemen … Educational propaganda, with government help, could achieve this result in a generation. There are, however, two powerful forces opposed to such a policy: one is religion; the other is nationalism. … A scientific world society cannot be stable unless there is a world government.” — Bertrand Russell: The Impact of Science on Society, 1953

“And it seems to me perfectly in the cards that there will be within the next generation or so a pharmacological method of making people love their servitude, and producing … a kind of painless concentration camp for entire societies, so that people will in fact have their liberties taken away from them but will rather enjoy it, because they will be distracted from any desire to rebel by propaganda, brainwashing, or brainwashing enhanced by pharmacological methods.” — Aldous Huxley, “The Ultimate Revolution” March 20, 1962 Berkeley Language Center

Today, the Fabian Society still exists and operates as a think tank much like any other globalist think tank. Their articles and essays push the latest globalist propaganda from the erasure of national sovereignty to the promotion of gender politics and gender “fluidity.” But what can we draw from these writings and the statements of past members?

First, globalists use guerrilla-like tactics to achieve their goals and they often act slowly and quietly over the course of years or decades. The Fabian Society was named after the Roman General Quintus Fabius Maximus who famously used tactics of attrition and delay to defeat his enemies. Liberty activists need to start thinking in terms of the long game, much like a chess player does, in order to grasp the globalist agenda. The events triggered today may have intended effects which are not necessarily obvious to us now unless we consider how they relate to the greater scheme.

This is especially true in terms of economics.  Globalists stage fiscal bubbles many years in advance, and use economic crisis as a catalyst for social change on a grand scale.  Usually this results in ever increasing centralization of wealth and power.  However, the shift of financial dominance is subtle to those who do not pay particular attention to the details.  A market bubble might take a decade to develop before it is deliberately popped.  In the meantime all the fundamentals are screaming that something is very wrong, but the majority of the public remains oblivious until it is too late.

Second, control of governments and political leaders is paramount to the success of globalism. The notion that ANY major political leader comes to power without globalist influence is utterly naive. Trump and his swamp creature appointed cabinet are perfect examples of this. Rhetoric is meaningless, and while such leaders may throw their base a bone now and then, in the end their actions only push the ball forward for the globalists. This may even include sabotaging their own presidency to make way for a globalist “solution.”

Third, mass psychology is a globalist obsession. All power stems from perception. Figureheads and ideological groups sometimes offer the promise of social advantage to the public without much effort on their part. The temptation of this offer can lead people to hand over their free will in exchange. But not all “progress” is actually advantageous for the masses and misery usually follows such Faustian deals with the elites. Escape is difficult.

Therefore, globalists must control the narrative at all costs. The public has to be divided as much as possible in order to keep them distracted from the guiding hand of the cabal itself. And, any group that opposes them directly has to be co-opted or destroyed. The more people focus on globalists and their organizations as the core source of social instability, the more uncomfortable they become.

Fourth, most globalist actions today rely on 4th Generation warfare; meaning, few things are exactly as they seem, ever. I suspect the success of liberty activists has forced them into more elaborate forms of theater. Nothing they do is ever simple unless you have studied the motivations and mindset of the globalists, then they become rather predictable, unoriginal and bizarrely robotic in their behavior. They appear brilliant in the execution of their agendas only because they have centuries of experience implementing the same con games over and over. They are sociopathic grifters; they are clever and without remorse, but not geniuses in any sense of the word.

For now, educating the general liberty movement and the people around us on these issues remains the best method for throwing a monkey wrench into the globalist machine. Countering their psyops should be our pinnacle task, and falling into the narrative traps they create must be avoided. They have spent a considerable amount of thought and energy trying to co-opt our efforts, and that should give everyone pause. For if we were not a true threat, why would they bother with us?

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More Evidence Of Economic Turmoil In NYC As Garment District Unravels

Yesterday we noted that New York City is turning into a retail wasteland, after the New York Times documented a plague of vacant storefronts along the city’s most popular retail corridors. 

Today, RetailDive shines a spotlight on the Manhattan-focused Garment District’s rapid unraveling, as office spaces from other industries encroach on the highly sought after real estate. 

The area, which roughly encompasses the streets between 35th Street and 40th Street, and the avenues between Broadway and Ninth, has been protected by strict zoning laws since 1987.

But times have changed. New York City has lost 95% of its manufacturing workforce since its heyday in the 1950s, and a 2011 report from the New York City Economic Development Corporation (NYCEDC), a non-profit centered on economic growth in New York City, indicated that fashion manufacturing jobs in NYC had further declined 61% since 2001. Recently, the Garment District Alliance reported that “from March 2017 to March 2018, New York City’s apparel manufacturing industry shrunk by an additional 7.7%, a loss of approximately 1,000 jobs.” And as of August 2018, the AP estimated that only 5,000 garment manufacturing workers remained. –RetailDive

New York’s Garment District isn’t the only part of the country to suffer from evaporating jobs in apparel; In 2012, the US Department of Commerce reported that “since 1990, employment in apparel, leather, and allied product manufacturing has shrunk by 912,000 jobs, or 84 percent.” Most of the remaining jobs are located in New York, California and Texas. Moreover, textile and apparel manufacturing shrunk from 0.57% of US GDP to 0.16% from 1998 – 2015, according to the Bureau of Economic Analysis

Preserving the district?

In February of last year, New York City Mayor Bill de Blasio said that it would rezone the Garment District; removing some outdated restrictions, while developing Brooklyn’s rapidly gentrifying Sunset Park district. The next month, the NYCEDC teamed up with the Council of Fashion Designers of America (CFDA) and the Garment District Alliance to provide financial incentives to companies who wished to relocate from Manhattan to Brooklyn. 

This did not sit well with some people…

Outrage over rumors of a Brooklyn relocation of the Garment District led to heated debates in public forums, and in summer 2017, the Garment Center Steering Committee was formed by Manhattan Borough President Gale A. Brewer, Council Member Corey Johnson, and Deputy Mayor for Housing and Economic Development Alicia Glen. The committee engaged with NYCEDC, as well as New York fashion industry interests, including costume theater industry workers and the Garment District Alliance. They released a report that provided recommendations on real estate and business development that would help the Garment District transition into a more sustainable manufacturing center. –RetailDive

The plan to pay companies to move was ultimately scrapped over the outcry.  

“People had it in their heads that the Garment District was being asked to move, but no one was being asked to move,” said Julieanne Herskowitz, vice president in the development department at NYCEDC. “But what was clear is that we had not sufficiently thought of the Garment District, and [Manhattan Borough President] Gale Brewer and [Council Member] Corey Johnson pushed the city to think about how the Garment District could remain a hub of fashion in the city if zoning were to be lifted. There are about 400 companies in the area, employing about 4,000 people. It’s still a critical hub.”

“We had agreed to help with relocation costs, and then Gale Brewer said she won’t support a plan that doesn’t include retaining a core in the Garment District,” said Garment District Alliance president Barbara Blair. “She didn’t want all these jobs being encouraged to leave for Brooklyn.”

Brewer’s office responded, insisting that “The whole fashion industry in New York depends on the tight-knit cluster of specialty suppliers and skilled workers in the heart of Manhattan, which is why we’re acting to keep it strong and successful,” adding “It’s not about choosing between the Garment Center or growth in the other boroughs. A strong foundation here lays the groundwork for success everywhere.” 

Brooklyn Exodus

Despite efforts to rescue Manhattan manufacturing, it seems nothing can stop the exodus. 

“People think this is a neighborhood-centric issue, but it’s not,” Blair said. “We used to have 150,000 manufacturing jobs in this neighborhood, and now we have 5,000 jobs. And this is a 40-year national trend.”

Blair said that although a lot of people blame the loss of jobs on rent issues, it’s more complex than that. “It’s easy to blame the landlords, but basically a lot of their business dried up,” she said. “If designers were still producing locally, [manufacturers would] be able to pay their rent. One of the manufacturers said to me, ‘if Ralph Lauren would manufacture even 1% of his product in New York City, that would be enough to save New York City manufacturing.‘ Of course, NAFTA also had a huge impact too, back in the early 1990s. There are definitely property owners in this neighborhood who have pushed people out. But that’s not the majority.”

Certainly, some brands, such as Yeohlee, still do all their manufacturing in Manhattan. But others have moved further afield, in search of bigger spaces and a different community. Complexes such as Industry City in Sunset Park, are attracting many of New York’s young creatives. “Over the past five years, we have leased more than 1 million square feet to manufacturers, including a wide range of fashion and garment production companies,” said Lisa Serbaniewicz, spokesperson for Industry City, in an email to Retail Dive. –RetailDive

Out with the old… 

While the garment district suffers, Brooklyn is flourishing. “Brooklyn is the second largest hub for apparel design [in New York City],” said Herskowitz. “The EDC manages and operates over 6 million square feet of industrial space at the Bush Terminal and the Brooklyn Army Terminal, and has been investing in these assets. And then also the Made in NY Campus, which will have a campus dedicated to the New York City fashion industry. The EDC is still actively doing that along with the city.” 

At the end of the day, however, manufacturers just can’t beat the allure of that cheap, cheap foreign labor. 

“There’s such a huge financial gap between overseas labor and local labor, and you could never close that gap,” said Blair. “We believe that manufacturing should be here [in New York City]. I always thought we would lose some manufacturing, but that eventually, the water would find its level. It just hasn’t yet. There’s an industry in decline that hasn’t found its footing in the new world.”

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On The Brink With Russia In Syria Again, 5 Years Later

Authored by Ray McGovern via ConsortiumNews.com,

The New York Times, on September 11, 2013, accommodated Russian President Vladimir V. Putin’s desire “to speak directly to the American people and their political leaders” about “recent events surrounding Syria.”

Putin’s op-ed in the Times appeared under the title: “A Plea for Caution From Russia.” In it, he warned that a military “strike by the United States against Syria will result in more innocent victims and escalation, potentially spreading the conflict far beyond Syria’s borders … and unleash a new wave of terrorism. … It could throw the entire system of international law and order out of balance.”

Three weeks before Putin’s piece, on August 21, there had been a chemical attack in the Damascus suburb of Ghouta and Syrian President Bashar al-Assad was immediately blamed. There soon emerged, however, ample evidence that the incident was a provocation to bring direct U.S. military involvement against Assad, lest Syrian government forces retain their momentum and defeat the jihadist rebels.

In a Memorandum for President Barack Obama five days before Putin’s article, on September 6, the Veteran Intelligence Professionals for Sanity (VIPS) had warned President Barack Obama of the likelihood that the incident in Ghouta was a false-flag attack.

Despite his concern of a U.S. attack, Putin’s main message in his op-ed was positive, talking of a growing mutual trust:

“A new opportunity to avoid military action has emerged in the past few days. The United States, Russia and all members of the international community must take advantage of the Syrian government’s willingness to place its chemical arsenal under international control for subsequent destruction. Judging by the statements of President Obama, the United States sees this as an alternative to military action. [Syria’s chemical weapons were in fact destroyed under UN supervision the following year.]

“I welcome the president’s interest in continuing the dialogue with Russia on Syria. We must work together to keep this hope alive … and steer the discussion back toward negotiations. If we can avoid force against Syria, this will improve the atmosphere in international affairs and strengthen mutual trust … and open the door to cooperation on other critical issues.”

Obama Refuses to Strike

In a lengthy interview with journalist Jeffrey Goldberg published in The Atlantic much later, in March 2016, Obama showed considerable pride in having refused to act according to what he called the “Washington playbook.”

Clapper (far right): No slam dunk Assad did it. (Office of DNI)

He added a telling vignette that escaped appropriate attention in Establishment media. Obama confided to Goldberg that, during the crucial last week of August 2013, National Intelligence Director James Clapper paid the President an unannounced visit to caution him that the allegation that Assad was responsible for the chemical attack in Ghouta was “not a slam dunk.”

Clapper’s reference was to the very words used by former CIA Director George Tenet when he characterized, falsely, the nature of the evidence on WMD in Iraq while briefing President George W. Bush and Vice President Dick Cheney in December 2002. Additional evidence that Ghouta was a false flag came in December 2016 parliamentary testimony in Turkey.

In early September 2013, around the time of Putin’s op-ed, Obama resisted the pressure of virtually all his advisers to launch cruise missiles on Syria and accepted the Russian-brokered deal for Syria give up its chemical weapons. Obama follow public opinion but had to endure public outrage from those lusting for the U.S. to get involved militarily. From neoconservatives, in particular, there was hell to pay.

Atop the CNN building in Washington, DC, on the evening of September 9, two days before Putin’s piece, I had a fortuitous up-close-and-personal opportunity to watch the bitterness and disdain with which Paul Wolfowitz and Joe Lieberman heaped abuse on Obama for being too “cowardly” to attack.

Five Years Later

In his appeal for cooperation with the U.S., Putin had written these words reportedly by himself:

“My working and personal relationship with President Obama is marked by growing trust. I appreciate this. I carefully studied his address to the nation on Tuesday. And I would rather disagree with a case he made on American exceptionalism, stating that the United States’ policy is ‘what makes America different. It’s what makes us exceptional.’ It is extremely dangerous to encourage people to see themselves as exceptional, whatever the motivation. There are big countries and small countries, rich and poor, those with long democratic traditions and those still finding their way to democracy. Their policies differ, too. We are all different, but when we ask for the Lord’s blessings, we must not forget that God created us equal.”

In recent days, President Donald Trump’s national security adviser, John Bolton, has left no doubt that he is the mascot of American exceptionalism. Its corollary is Washington’s “right” to send its forces, uninvited, into countries like Syria.

“We’ve tried to convey the message in recent days that if there’s a third use of chemical weapons, the response will be much stronger,” Bolton said on Monday. “I can say we’ve been in consultations with the British and the French who have joined us in the second strike and they also agree that another use of chemical weapons will result in a much stronger response.”

As was the case in September 2013, Syrian government forces, with Russian support, have the rebels on the defensive, this time in Idlib province where most of the remaining jihadists have been driven. On Sunday began what could be the final showdown of the five-year war. Bolton’s warning of a chemical attack by Assad makes little sense as Damascus is clearly winning and the last thing Assad would do is invite U.S. retaliation.

Haley: Already knows who did it. (UN Photo)

U.S. Ambassador to the UN, Nikki Haley, with remarkable prescience, has already blamed Damascus for whatever chemical attack might take place. The warnings of direct U.S. military involvement, greater than Trump’s two previous pin-prick attacks, is an invitation for the cornered jihadists to launch another false-flag attack to exactly bring that about.

Sadly, not only has the growing trust recorded by Putin five years ago evaporated, but the likelihood of a U.S.-Russian military clash in the region is as perilously high as ever.

Seven days before Putin’s piece appeared, citizen Donald Trump had tweeted: “Many Syrian ‘rebels’ are radical Jihadis. Not our friends & supporting them doesn’t serve our national interest. Stay out of Syria!”

In September 2015 Trump accused his Republican primary opponents of wanting to “start World War III over Syria. Give me a break. You know, Russia wants to get ISIS, right? We want to get ISIS. Russia is in Syria — maybe we should let them do it? Let them do it.”

Last week Trump warned Russian and Syria not to attack Idlib. Trump faces perhaps his biggest test as president: whether he can resist his neocon advisers and not massively attack Syria, as Obama chose not to, or risk the wider war he accused his Republican opponents of fomenting.

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Tepper: Trump’s China Tariffs Could Trigger A 20% Pullback In US Stocks

David Tepper was probably riding high after his Carolina Panthers bested the Dallas Cowboys in Sunday’s NFL season opener until Thursday afternoon, when he was forced to reckon with the fact that he’s been underweight US equities since he predicted back in April that the “highs are in.”

Of course, Tepper isn’t the only hedgie who dialed back his exposure after February’s volocaust whiplashed many funds and forced them to adopt a defensive posture as they waited for the other shoe to drop. And he deserves at least some credit for readily admitting during Thursday afternoon’s interview with CNBC’s Scott Wapner that he’s only been “about 25% exposed” to US equities – which, in retrospect, is about 75% short of the ideal allocation.

I probably don’t have enough exposure I’ve taken down my exposure. So I’m still long. But you know, not – I would in percentage terms of s&p-type exposure, might be 25% or something of that. And that’s been wrong, because the market has been very hot and the problem for people like me is I’ve had that express with long individual stocks and short you know, futures of some sort or the market in some fashion. And quite frankly our stocks have not done that well this quarter. Which you probably know, you’re going to ask me next or something like that, right

All things considered, assuming the market was fairly valued, a reasonable investor might expect to reap returns of up to 8% over the next year. But Tepper feels like some caution is warranted, which is why he still has cash he can put to work. Because anybody who has taken the president at his word would probably agree that the market has been too naive in pricing in the possibility that Trump’s trade conflict with China will come to an amicable resolution. In fact, Tepper said, he’s been surprised by investors unflinching optimism in the face of a conflict that could potentially disrupt the global free-trade order – particularly after Trump’s declaration that he’s ready to slap tariffs on another $267 billion worth of Chinese goods.

Trump, Tepper believes, will probably slap tariffs on most, if not all, of the Chinese goods streaming into the US. And when that happens, stocks could experience a pullback in the range of 5% to 20%.

Yeah. I have cash I can put to work.Listen I can change things very fast, okay, if we did something, china was solved, somehow which I don’t think is so easy to do. It may be this, we may have to get used that the tariffs just may be on, okay? Then there will be an adjustment in the stock market. Whatever it is, a 5%, 10%, to whatever, 15%, 20% adjustment. Then you’ll move up from there and look, that’s what will be. You know whatever that adjustment, because the currency adjusts, that’s what will happen if that’s the way it goes.

Tepper has taken some widely publicized swipes at President Trump’s trade policies in the past. But when asked for his assessment on the administration’s policies – and, more to the point, whether they’ve been responsible for the market’s resilience (not to mention the booming economy – Tepper had a few kind words to say about Trump and his policies.

While he isn’t convinced that Trump’s confrontational trade policies were the best response, as a “patriotic American” Tepper agreed that something needed to be done about China’s predatory IT policies.

Tepper: I’m a little surprised at the level it is right now. Okay a little surprised I’m not totally surprised. But a little surprised like I said, I don’t think everything is discounted in this price right now. I do think if you do get — again, I’m, listen, I’m a very patriotic American citizen, okay I do think we have to protect our national jewels, our technology so this is a very serious matter when you have very serious matters, sometimes you might have it take a little pain it’s just the way it goes. And I don’t know if this is the right strategy or not. That we’re taking, but we may have to. If it is the right strategy, it’s the right strategy. And we got to make a point I think that that’s not wrong because it’s been going on, I mean listen, as you asked me, trying to avoid it you asked me about some of my stocks, micron. Micron has a very famous case where they stole technology in Taiwan.

Wapner: Been getting beaten up a lot lately.

Tepper: I’m talking about the technology stuff. Absolutely happened in Taiwan with a Chinese basically were trying to steal technology from micron that can’t happen. We can’t allow that to happen. There’s other cases across the country I could bring up and stuff. We have to figure out a way to stop them and there’s been other things where they force the technology transfers I don’t know if this is the right policy but attacking it is not wrong. I think that is probably right policy.

To be sure, Tepper is also anxious about Trump’s decision to blow out the budget deficit, particularly at a time when growth was already robust as the economic expansion enters its ninth year. But will there definitely be a reckoning for these rising debt levels? It’s certainly possible, Tepper said. But as for when that reckoning will arrive, it’s just too difficult to try and time it. Particularly after the market and economy have proven so many doomsayers wrong.

Watch some excerpts from Tepper’s interview below:

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Chinese Data Dump Shows Continued Slowdown In Local Economy

One month after China’s latest data dump disappointed across the board, moments ago the National Bureau of Statistics, released the latest Retail sales, Industrial output and Fixed investment data, which was a modest improvement with 1 beat, 1 meet, and 1 miss as follows:

  • China Jan.-Aug. Fixed Investment Miss; Rises 5.3% Y/Y; Est. 5.6%
  • China Aug. Industrial Output Meet: Rises 6.1% Y/Y; Est. 6.1%
  • China Aug. Retail Sales Beat: Rise 9.0% Y/Y; Est. 8.8%

While the rebound in retail sales was welcome (if modest) after several months of missing analyst expectations, China’s fixed investment – historically the biggest driver behind the economy – rose at the lowest pace on record.

On the positive side, property investment continues to be strong:

  • China Jan.-Aug. Property Dev. Investment Rises 10.1%
  • China Jan.-July Property Dev. Investment Rises 10.2% Y/Y

This was offset by another drop in car sales, while jewelry demand rose 14.1%.

While some have praised the beat in retail sales, recall that over the weekend Goldman showed the wide divergence between public (strong) and private (weak) consumption data, suggesting that Beijing is goalseeking yet another data set in addition to GDP.

That said, the latest drop in fixed investment – potentially a consequence of the trade war with the US and China’s own shadow deleveraging – will probably mean more pressure on the government to push growth, meaning more fiscal stimulus. In fact, the record low fixed investment suggests that contrary to the trade war rhetoric, China’s growth woes are homegrown, not just the trade tensions. And, as we have discussed previously, the ongoing sharp decline in investment spending by local governments due to develeraging campaign may be to blame.

Commenting on the data, Tring Nguyen of Natixis, summarized that “retail sales up but fixed asset investment down again. Not great news for growth expectations & growth is increasingly more dependent on consumption. So what is the reaction from the government? More pump priming? The worse the data, the more the easing?”

Meanwhile, as Bloomberg also notes, an August jump in local government bond sales from a year ago may be a signal that China’s infrastructure projects are kicking off again to support a wilting economy which has been hit by the twin risks of trade wars and deleveraging.

  • The data dump release was accompanied by the usual propaganda from the NBS in Beijing which claimed that:
  • There is no stagflation or stagflation-like conditions in China
  • China’s infrastructure investment may stabilize in the next few months
  • China fixed-asset investment may stabilize
  • China household debts remain at reasonable level
  • Effects of China pro- growth measures are showing up
  • China inflation pressure remains moderate

Maybe, but for now China’s modest slowdown is a sharp contrast to the sharp uptick up in U.S. growth, which has helped to explain why Chinese stocks have fallen into a bear market while the U.S. has hit record highs, and why Trump continues to press China on trade concessions: after all he is confident that the US is winning the trade war.

Ultimately, the biggest risk to China is whether the ongoing slump in the credit impulse accelerates. And if Goldman’s forecast is correct, and the credit impulse is about to plummet, China is about to unleash the biggest global recession since the financial crisis.

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US Biological Warfare Program In The Spotlight Again

Authored by Peter Korzun via The Strategic Culture Foundation,

This is a scoop to bring the US biological warfare effort back into the spotlight. On Sept. 11, Russian media reported that the Richard Lugar Center for Public Health Research laboratory, a research facility for high-level biohazard agents located near Tbilisi, Georgia, has used human beings for conducting biological experiments.

Former Minister of State Security of Georgia Igor Giorgadze said about it during a news conference in Moscow, urging US President Donald Trump to launch an investigation. He has lists of Georgians who died of hepatitis after undergoing treatment in the facility in 2015 and 2016. Many passed away on the same day. The declassified documents contain neither the indication of the causes of deaths nor real names of the deceased. According to him, the secret lab run by the US military was established during the tenure of former Georgian President Mikheil Saakashvili. The viruses could spread to neighboring countries, including Russia, Igor Giorgadze warned.

The laboratory’s work is tightly under wraps. Only US personnel with security clearance have access to it. These people are accorded diplomatic immunity under the 2002 US-Georgia Agreement on defense cooperation.

Eurasia Review reported that in 2014 the Lugar Center was equipped with a special plant for breeding insects to enable launching the Sand Fly project in Georgia and the Caucasus. In 2014-2015 years, the bites of sand flies such as Phlebotomins caused a fever. According to the source, “today the Pentagon has a great interest to the study of Tularemia, also known as the fever of rabbits, which is also equated with biological weapons. Distributors of such a disease can be mites and rodents”.

It makes remember the statement made by Nikolai Patrushev, Head of Russia’s Security Council, in 2015. He warned about the threat stemming from biological weapons laboratories that operate on the territories of the Commonwealth of Independent States (CIS). He specifically mentioned the Richard G. Lugar Center in Georgia.

The US has bio laboratories in 25 countries across the world, including the post-Soviet space. They are funded by the Defense Threat Reduction Agency (DTRA). Foreign inspectors are denied access to them. It should be noted that independent journalist investigations have been made public to confirm the fact that the US military conducts secret research to pose a threat to environment and population. Jeffrey Silverman, an American journalist who has lived in Georgia for many years, is sure the Richard Lugar Center, as well as other labs, is involved in secret activities to create biological weapons. Georgia and Ukraine have been recently hit by mysterious disease outbreaks, with livestock killed and human lives endangered. The US military operates the Central Reference Laboratory in Kazakhstan since 2016. There have public protests against the facility.

In 2013 a Chinese Air Force Colonel Dai Xu accused the US government of creating a new strain of bird flu now afflicting parts of China as a biological warfare attack. According to him, the American military released the H7N9 bird flu virus into China in an act of biological warfare. It has been reported that the source of Ebola virus in West Africa were US bio-warfare labs.

Russian experts do not exclude the possibility of using a stink-bug by the US military as a biological weapon. A couple of years ago, mosquitoes with Zika virus have been spotted in Russia and South Ossetia to cause outbreaks of human and animal flu.

The US activities violate the Biological Weapons Convention (BWC), a legally binding treaty that outlaws biological arms. It effectively prohibits the development, production, acquisition, transfer, retention, stockpiling and use of biological and toxin weapons and is a key element in the international community’s efforts to address the proliferation of weapons of mass destruction. In force since 1975, the convention has 181 states-parties today. The BWC reaffirms the 1925 Geneva Protocol, which prohibits the biological weapons use. In 1969, US President Richard Nixon formally ended all offensive aspects of the US biological warfare program. In 1975, the US ratified both the 1925 Geneva Protocol and the BWC.

Negotiations on an internationally binding verification protocol, which would include on-site inspections by an independent authority to the BWC, took place between 1995 and 2001. The US did not sign up. Its refusal to become a party to the verification mechanisms makes any attempt to enhance the effectiveness of the BWC doomed. A Review Conference is held every five years to discuss the convention’s operation and implementation. The last one, which convened in November 2016, was a frustration with minimal agreement on the final document and no substantive program of work to do before the next event takes place in 2021. There is little hope the BWC will ever be strengthened to have teeth. With no verification mechanism, the US military bio-warfare labs will always be a matter of concern. The issue is serious enough to be included into global security architecture. The UN General Assembly is the right place to raise it. Its 73rd session will open on September 18. 

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Catastrophe Bondholders Panic As Insurers’ Models Failed To Predict Hurricane Florence

Though it’s still more than 500 mile out from the US coastline, Hurricane Florence is already pummeling the financial models that insurance companies – not to mention the investors who help capitalize insurers – use to price risk. Because of this, institutional and retail holders of so-called “catastrophe bonds” could brook huge losses that could deter them from buying these types of bonds in the future – which could deprive insurers of a crucial source of funding.

The bonds, which gained popularity in the aftermath of Hurricane Andrew, allow insurers and reinsurers to transfer risk to a pool of investors. Basically, investors receive a premium if insurers go a set amount of time without paying out a major claim. But if a natural disaster strikes, bondholders will lose some or all of their principle.

Florence

But unfortunately for these investors, the risk models that banks and buyers use to price this risk are moot in the face of extremely rare storms like Florence, which appears to be much more devastating than these models would have reflected. The problem with this, according to WSJ, is that, in situations like this one, investors must struggle with true uncertainty, rather than risk (which can be priced). Plus, storm surges and torrential rains are expected to lead to catastrophic flooding in coastal areas – something that is difficult for financial models to measure.

Investors don’t like unexpected losses: They represent uncertainty, which can’t be calculated, rather than risk, which can be priced. A major unexpected loss is likely to make investors think twice before rushing back into alternative capital, so the industry could take longer to recover and prices could rise more sharply. That is good for the insurers left behind—so long as their losses haven’t been too great—but makes insurance more costly for everyone else.

Florence is unusual not only because of where it is heading, but also because it is expected to slow down dramatically when it nears the coast, according to AIR Worldwide, a risk modeling firm. This slow speed and the peculiar shallow coastal shelf off the Carolinas are likely to help the storm suck up more water and gather power, producing a bigger storm surge, pushing more seawater inland and bringing much more rain over several days. That means higher winds for longer and more flooding.

Flood risk is much harder to model than other perils because the high resolution that models need, which requires detailed land survey data and extra computing power. Flooding was a big problem after Hurricane Harvey in Texas last year, but there was limited flood insurance cover in the state. Analysts at Jefferies think there is much more private flood insurance in North Carolina for homes and businesses. Also, since last year, the National Flood Insurance Program has bought more private reinsurance including the sale of its first catastrophe bonds, increasing the amount of money at risk from flood losses in general.

With at least three other powerful storms forming in the Atlantic, this year’s hurricane season could match, or even exceed, the colossal toll suffered during last year’s hurricane season.  However, cat bond trading on the secondary market experienced a notable bump ahead of the hurricane season. 

Hitters

Only two hurricanes as strong as Florence have hit the Carolinas in modern history: Hazel (1954), which caused $15 billion worth of losses when adjusted for inflation, and Hugo (1989), which cost $20 billion, according to modeling firm RMS.

The industry has seen a big increase of new capital since the financial crisis, mainly through flows of fast-moving, alternative capital into catastrophe bonds and similar products. In 2008, alternative capital represented $19 billion, or 6%, of total reinsurance capital; at the end of the first quarter this year that had grown to $95 billion, or 16%, of industry capital, according to Moody’s Investors Service.

To be sure, losses incurred by policy holders last year far exceeded the $100 billion forecast, which is giving insurers some hope. Even after photos of Hurricane Maria flooded cable news, pricing on cat bonds barely budged. Some companies now believe that losses would need to not just exceed, but more than double, expectations to impact pricing in the cat bond market. But others are less confident.

Last year, people in the industry spoke of a $100 billion loss as the kind of event that would finally push up pricing after years of declines or low growth. But the three Atlantic storms that hit the U.S. and Caribbean in 2017 caused losses greater than that and pricing still barely moved. Now industry participants think it would take $250 billion in losses, according to a survey this week from specialist research firm, Artemis. However, if the losses were more surprising, because they were beyond what models typically predicted, then a smaller loss of $150 billion could cause a contraction in the supply of capital to insurance markets and a rise in prices.

Still, given the storm’s unusual path, which could hammer areas not accustomed to hurricanes, there’s a chance that some bond buyers might balk. What’s worse, one meteorologist highlighted a disturbing sign that the storm could be even more damaging than analysts presently expect.

But insurance companies aren’t the only financial services companies that could suffer as a result of the storm. Over a longer time horizon, regional banks that sport a large depositor base in the affected areas could face difficulties as demand for residential mortgages and other consumer financial products slackens. Raymond James’s David Long highlighted a few of these banks in a note published this morning, adding that since most homes in coastal areas of North Carolina, South Carolina and Virginia don’t have flood insurance, meaning that default rates on residential mortgages could spike. Fortunately for these lenders, the losses will be borne by the firms that bought up and bundled the mortgages, rather than the originating bank.

Separately, Fig Partners analyst Kevin Fitzsimmons said there are 14 publicly-traded banks headquartered in Florence’s projected landfall zone, a swath of coastline that includes Charleston, S.C., Myrtle Beach, S.C., Wilmington, N.C. and Norfolk, VA.

Here’s a summary of their points, courtesy of BBG:

  • 19 of Raymond James’s covered banks have exposure to 10 coastal areas likely to be in the storm’s path; as a percentage of deposits, Towne Bank has the most exposure (~73% of total deposits in impacted regions), followed by Carolina Financial (~47%); Union Bankshares has 14.5%, United Community ~8%, First Bancorp 7.5%, Synovus 5.4%, BB&T 5.3%; remaining 12 banks have 5% of their deposit base in impacted regions

  • Banks with commercial real estate (CRE) exposure may see some material impacts, with construction/land development loans, farming/agriculture loans likely most impacted

  • C&I loans may suffer if businesses can’t operate/suffer damages, though some businesses may benefit (hardware stores, contractors), and insurance will be big factor

  • Banks may see more deposits from insurance claims, government assistance, grants/other fundraising efforts; banks providing low-rate loans to those affected may stimulate local economy

While the future is, of course, uncertain, the anxieties engulfing the cat bond market are just one more healthy reminder that financial models have their shortcomings. And when investors become too reliant on their outputs, they’re vulnerable to a potentially devastating surprise.

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Mystery Trader Makes Big Bet On November VIX Surge

Following the unprecedented market calm of 2017, which saw the longest stretch on record of the VIX trading below 10, 2018 started off with a bang, and the infamous Feb 5 VIXplosion which in the span of minutes wiped out several inverse VIX ETNs and resulted in the biggest spike in the VIX on record.

Since then, however, complacency has returned – if not to the rest of the world which as a result of the dollar’s ascent and sharp declines in asset prices is approaching a bear market…

… then to the S&P500, where no matter what happens, the S&P just keeps grinding higher as the VIX continues its descent back to single digit territory.

Or perhaps not: an unknown options trader is betting that the VIX is about to head back to where it was at during the market turmoil of February. While the VIX slumped to 12.37 on Thursday as the S&P rebounded over 2,900, and is down more than 66% from its Feb. 5 peak, one options investor is expecting a 60% surge in the VIX heading into November, just around the time the Republicans are expected to lose control of the House in the midterm elections.

So convinced is the vol buyer that VIX is about to soar that he or she left a sizable mark on today’s orderbook, with VIX options volume soaring to more than double the 20-day average as a result of the purchase of 76,000 November $20 calls offset by the sale of the same amount of November $26 calls and approximately 95,000 October $13 puts.

Whoever the trader behind this spread trade is, it is unlikely to be the infamous “50 cent” VIX buyer, who preferres unhedged, deep out of the money vol positions, which mostly tends to expire worthless with the occasional exception that more than pays off for the theta, such as what happened in February.

The MO of this particular “mystery vol trader” is more nuances, especially since he has put a cap on his gains. And more notably, as Bloomberg points out, while the trade’s ultimate goal is to profit off a surge in volatility, it appears it will be profitable even if the VIX doesn’t move given the trader collected about 8 cents per contract when it was executed.

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Sex And The City Star Cynthia Nixon Loses To Andrew Cuomo In NY Gov Primary

New York Governor Andrew Cuomo easily defeated Sex and the City star Cynthia Nixon, shutting down the Democratic Socialist who framed her first-time candidacy as a fight for the direction of the Democratic party in New York and beyond. 

In the end, the governor’s record of achievements — on gun control, gay marriage, the minimum wage, paid-family leave and more — and his gargantuan fund-raising advantage spoke louder than Ms. Nixon’s objections over legislation he sidelined in the byzantine corridors of Albany’s capital. –NYT

Cuomo, 60, will go on in November to seek a third term – matching his father Mario Cuomo’s tenure as Governor. His strategy during primaries was largely to ignore Nixon – instead tapping into his base’s hatred of President Trump, while his campaign worked meticulously to undermine Nixon at every turn by suggesting that New York needs an experienced leader. 

The Governor next faces Republican Marcus Molinaro  in November – once the youngest mayor in the country. Cuomo is expected to drastically outspend Molinaro and waltz into his third term in the heavily Democratic state. 

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Global Shipping Rates Collapse As Trade War Spreads

When President Donald Trump fired the first shot of his trade war cannon at China, the market for international shipping rates spiked higher in April through July amid a jump in demand for hauling of bulk commodities that are essential in powering the Asian country’s economy, as traders sought to front-run the implementation of tariffs.

Fast forward several months, with the Trump administration on the verge of slapping even more tariffs on Chinese goods worth $200 billion, and the uncertainties around global trade appear to have finally collapsed some shipping rates.

BIMCO’s chief shipping analyst Peter Sand said, “85.3% of Chinese seaborne imports from the US and 58.5% of US seaborne imports from China could become affected by the trade war, if the US and China implement tariffs on a further USD 200 and USD 60 billion worth of goods respectively.” And with no demand to pull forward from the future left, Bloomberg reports that demand for the transportation of iron ore and coal on 1,000-foot Capesize vessels has collapsed by 39% since reaching a 2018 peak in early August.

“Some of the weakness we have seen in dry bulk freight rates can to some extent be attributed to growing uncertainty around the trade war,” said Sand, who provides industry trends for more than 2,000 ship owners and operators.

“It is an increasing worry that we hear amongst our members.”

Shipping analysts say freight costs offer insights into turning points of the global economy and trade growth. That was the basis behind our late August post “Latest Freight Data Confirms Alarming Slowdown In Global Trade” because a normal environment, increased shipping volumes of iron ore to China’s steel mills are a sign that the country’s construction industry is humming along. Coal is also used to monitor power generation in the region.

However, things have reversed recently, and capesize day rates dropped 3.9% to $16,559 a day on Wednesday, according to data from the Baltic Exchange. Last month, the prices stood at $27,283 on Aug. 06. Fourth-quarter forward freight agreements declined to $23,750, having been at $26,600 on Aug. 21, data from Clarkson Securities show.

At the same time, the popular Baltic Dry Index – a more comprehensive measure of commodity transportation costs – sank to 1,411 points, its lowest since late June.

Adding to the confusion, Trump said last week that he has lined up an additional $267 billion of Chinese products to tax “on short notice if I want.” That is on top of the already proposed $200 billion in tariffs that could severely damage US consumers.

For the first time in the ongoing trade war, the latest tit-for-tat round has seen China unable to respond proportionately to the $200 billion. And since China imports much less than it exports to the US, if the trade war expands Beijing will have to look at alternative ways for its retaliatory measures.

According to Hellenic Shipping News, China is expected to unleash new “weapons” in the trade battle including targeting US consumer products (Apple) or hitting US investments in China.

Whatever format the next round of the trade war takes, the impact on the global shipping industry will be promptly realized, as uncertainty is about to create a global growth shock that could reprice many assets around the world.

Last week, Bloomberg highlighted that the world trade monitor compiled by the CPB Netherlands Bureau for Economic Policy Analysis showed the rolling three-month trade volumes are not only in decline but have entered into negative territory, an ominous harbinger of economic trouble.

As Bloomberg notes, “the drop is particularly striking given that commodities, one of the largest and most volatile subsets of globally traded goods, have been doing quite well – the CPB’s indexes of fuels and non-fuel commodities both reached the highest levels since 2014 in May.”

Instead, confirming the ominous recent developments in Brazil, where a clustering of supply-chain linked problems has resulted in a near paralysis in the country’s shipping industry, Bloomberg notes that “the weakness is coming not from materials but from manufactured goods, as global supply chains seize up.

With the CPB index printing negative throughout the second quarter of the year, that echoes the numerous reports of a slowdown in the US. Manufactures “reported higher prices and supply disruptions that they attributed to the new trade policies,” according to the Federal Reserve’s July Beige Book, in addition to “higher input prices and shrinking margins.”

There are strong indications that the trade war – as it progresses into the fourth quarter and beyond – is starting to leave noticeable and severe consequences on the international shipping market that could result in a global growth shock. With that in mind, the dangers of the next US recession could soon be realized as early as late 2019/20. As for who gets the blame, it seems the Trump administration could be the scapegoat.

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