Who Will Benefit The Most From Sears’ Collapse?

While the closure of hundreds of Sears stores will drive a new stake through the heart of the CMBS market, potentially renewing calls for CMBX BBB- as being the “big short” trade, not everyone will be a loser. And, according to new analysts by Morgan Stanley, Best Buy, Off-price, and Old Navy could be the greatest beneficiaries from the Sears Chapter 11 filing, based on on geographical overlap, hypothetical comp lift assuming full liquidation, and historical trends.

According to MS’ analysis, while SHLD’s market share is dwindling, the bank estimates ~$2.8b in Apparel sales, ~$2.7b in Appliance sales, ~$2b in Consumer Electronics sales, and ~$0.6b in Home Improvement sales up for grabs, with one caveat: “if liquidation sales occur as proposed, competitors will likely face a near term headwind, before having an opportunity to capture SHLD’s former market share in the following 12 months.”

Additionally, the analysis by analyst Simeon Gumtan notes the dynamic nature of the situation, as store closures could range from the incremental 142 closures proposed today, to a full scale shutdown.

We are not updating our store overlap analysis but based on our previous analysis, mall-centric retailers JCP, M, and Old Navy have the highest store overlap across all companies we looked at. Beyond these mallcentric retailers, BBY and TGT have the next greatest proximities.

Within Hardline/Broadline Retail, BBY stands to potentially benefit the most from SHLD’s Chapter 11 filing. This is based on high physical store overlap and potential comp lift assuming full liquidation. Geographically, BBY, along with TGT, has the highest overlap of stores using a ¼ mile, ½ mile, and 1 mile radius. Expanding the radius to 2 miles, TGT, BBY, HD, and WMT all have 60%+ overlap  each. In terms of comp, BBY could experience the highest benefit (~70 bps) from gains in appliances and consumer electronics. The next biggest beneficiaries are HD and LOW who could see a ~30-40 bps lift to comps by capturing sales in appliance and home improvement categories.

Separately, WMT and TGT would experience a negligible benefit from incremental apparel sales as the SHLD’s market share in the category has fallen to only 1% (~$2.8b). Given such small market share, dollar gains should be modest and spread across many competitors.

In estimating potential market share gains by company, MS calculates that BBY would be the biggest winner in consumer electronics and appliances, HD/LOW in appliances and home improvement, and Off-price in apparel could see the greatest sales lift.

Meanwhile, history suggests Off-price retailers and Old Navy are best positioned to benefit from SHLD store closures: JCP and M have the highest percentage of stores within a ¼ mile, ½ mile, and 1 mile radius to a Sears store.

However, department stores, including JCP, KSS, and M, have historically been unable to grow apparel revenue despite numerous, ongoing SHLD store closures and $3.8b in SHLD lost apparel sales since 2012.

As a result, Morgan Stanley concludes that Sears’ Chapter 11 filing and corresponding store closures will boost apparel revenue for ROST, BURL, TJX and Old Navy.

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Saudi Arabia Considers Itself Untouchable Due To Oil And Money

Authored by Mike Krieger via Liberty Blitzkrieg blog,

The roots of that lobby’s rise to prominence in Washington lie in the aftermath of the terrorist attacks of September 11, 2001. As you may remember, with 15 of those 19 suicidal hijackers being citizens of Saudi Arabia, it was hardly surprising that American public opinion had soured on the Kingdom. In response, the worried Saudi royals spent around $100 million over the next decade to improve such public perceptions and retain their influence in the U.S. capital. That lobbying facelift proved a success until, in 2015, relations soured with the Obama administration over the Iran nuclear deal. Once Donald Trump won the presidency, however, the Saudis saw an unparalleled opportunity and launched the equivalent of a full-court press, an aggressive campaign to woo the newly elected president and the Republican-led Congress, which, of course, cost real money.

As a result, the growth of Saudi lobbying operations would prove extraordinary. In 2016, according to FARA records, they reported spending just under $10 million on lobbying firms; in 2017, that number had nearly tripled to $27.3 million. And that’s just a baseline figure for a far larger operation to buy influence in Washington, since it doesn’t include considerable sums given to elite universities or think tanks like the Arab Gulf States Institute, the Middle East Institute, and the Center for Strategic and International Studies (to mention just a few of them).

– From the must read piece: The Saudi Lobby Juggernaut

It appears Saudi Arabia’s preparing to spin a tale about the murder of Jamal Khashoggi for the purpose of providing Donald Trump with cover to pretend nothing happened and get back to business as usual. Apparently, the Saudis plan to claim he was killed by rogue agents in a botched interrogation. No word about why it took them two weeks to admit this, why they blatantly lied about him leaving consulate and whether or not the body was hacked into pieces with a bone saw.

It’s been clear from the beginning that Trump would like this to go away as quickly as possible in order to keep the money flowing to defense contractors, as you can see from the clip below.

I found that statement illuminating because it reminded me of something CNN’s Wolf Blitzer said to Rand Paul back in 2016.

Donald Trump and CNN don’t agree that often, but on this issue they’re on the exact same page. This is telling and highlights the increasingly obvious fact the Saudis believe they can get away with anything they want as long as they keep oil priced in dollars and money flowing into the coffers of our country’s incomprehensibly corrupt status quo.

The Saudis have had U.S. leaders by the balls for many decades — a historical reality birthed by the petrodollar — but the monarchy’s untouchable position became more explicit after the terrorist attacks of September 11, 2001. Despite deep Saudis ties to this mass murder of American civilians, the royal family faced zero consequences. Instead, the U.S. government just went ahead and started invading other countries to advance imperial ambitions.

While many of you are intimately familiar with the key role of the petrodollar in U.S. Saudi relations, you may not be as familiar with how the Saudis systematically throw money around U.S. power centers to ensure “thought leaders” dutifully toe the Saudi line. Naturally, the swamp of fawning parasites otherwise known as Washington D.C. is a core recipient of such largess. One of the more high profile examples of such payoffs was the $140,000 per month contract the Saudis had with the now defunct Podesta Group, founded by Hillary Clinton’s 2016 campaign chair John Podesta and his brother Tony.

Of course, that’s just the tip of the iceberg. Yesterday, Glenn Greenwald noted how the Washington Post (where the murdered Jamal Khashoggi published articles) had Saudi lobbyists writing opinion pieces for the paper. Specifically, we learned:

Carter Eskew is a former top-level adviser to Al Gore’s 2000 presidential campaign and a Founder and Managing Director of Glover Park Group which, according to the Post’s own reporting, is one of the Saudi regime’s largest lobbyists. Glover Park, says the Post, has “remained silent amid growing public outrage over reports that Khashoggi was killed inside the Saudi Consulate.” Indeed, as the New York Times reported this week, Eskew’s firm, “which was started by former Clinton administration officials,” is the second-most active lobbying firm for the Saudi regime, “being paid $150,000 a month.”

In addition to his work as a Managing Director in one of the Saudi regime’s most devoted lobbying firms, Eskew is also a Contributing Opinion Writer at the Washington Post.

There’s more:

Given all the moral decrees and shaming campaigns the Post has issued over the past ten days, how can they possibly justify their ongoing relationship with Eskew as his firm lobbies for the Saudi regime and he attends the regime’s P.R.-building event?

That question is even more compelling when it comes to Ed Rogers, the long-time GOP operative who is currently an Opinion Writer for the Washington Post. In addition to his work for Hiatt on the Post’s Op-Ed page, Rogers himself is receives substantial financial rewards for his work as an agent of the Saudi regime. Just two months ago, the lobbying firm of which he’s the Chairman, BGR Group (headed by former RNC Chairman and GOP Mississippi Governor Haley Barbour), signed a new contract that includes “assist[ing] the Saudis in communicating priority issues regarding US-Saudi relations to American audiences including the media and policy communities.”

According to the firm’s own press release, “BGR chairman Ed Rogers” – also an Opinion Writer for the Washington Post – “handles the Saudi work.”

Democracy doesn’t die in darkness, but with Saudi lobbyists shamelessly writing opinion pieces for major newspapers.

(*Note: Following the publication of the Intercept article referenced above, both lobbying firms in which Washington Post writers are partners, Glover Park and BGR, have ended their contracts with Saudi Arabia.)

Moreover, there seems to be a direct correlation between the number of civilians killed in Yemen and the amount of money the Saudis throw around D.C. As a must read article in Tom Dispatch noted: “In 2016, according to FARA records, they reported spending just under $10 million on lobbying firms; in 2017, that number had nearly tripled to $27.3 million.”

Moving along, the Saudis are adept at spreading their money around, with Hollywood’s another key target. As Forbes noted earlier this year:

Saudi Arabia’s $230 billion sovereign wealth vehicle, the Public Investment Fund, is on track to invest hundreds of millions in Hollywood as the first new screens go up in the Kingdom. Its hallmark purchase is a soon-to-close $400 million deal for an estimated 7% in Endeavor, the sprawling entertainment conglomerate that includes powerful talent agency WME, several live event brands and a burgeoning production business.

Side note: WME, also known as William Morris Endeavor, was co-founded by Ari Emanuel (Rahm Emanuel’s brother).

Beyond D.C. and Hollywood, we all know how Silicon Valley oligarchs swarmed to pucker up to MBS when he came stateside on is propaganda tour earlier this year.

Meanwhile, don’t think for a moment that the titans of Wall Street would be left out.

Many of you have already seen these photos, but the point is to hammer home that US. power players are, generally speaking, utterly depraved and entirely void of any sort of ethical framework whatsoever. While many have been forced to back out of the upcoming Saudi conference for public relations reasons, all of them, including Trump, just want this thing to go away so they can get back to business.

The Saudis think oil and money make them untouchable. Perhaps they’re right. For now.

*  *  *

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4Chan Sparks Mass Triggering With NPC Meme; Twitter Responds With Ban Hammer

The “weaponized autists” at 4Chan have done it again, because they can; a new meme suggesting that liberals are soulless idiots who can’t think for themselves has gone viral. The concept compares Democrats to “nonplayable characters,” or NPCs – the recurring characters in video games with repetitive lines and limited knowledge. Lack of an “inner voice” is a dead giveaway that someone may be an NPC.

The NPC meme is essentially ridiculing the perpetual post-election outrage culture in which liberals simply parrot the latest talking points from their favorite pundits, who do their thinking for them. 

The 4chan version is a simple greyed out, expressionless face known as “NPC Wojak” – which has triggered the left so hard that Twitter conducted a mass-banning campaign for accounts promoting the meme, and the New York Times wrote an entire article trying to figure it out. 

Twitter did not take kindly to the meme: 

Over the weekend, Twitter responded by suspending about 1,500 accounts associated with the NPC trolling campaign. The accounts violated Twitter’s rules against “intentionally misleading election-related content,” according to a person familiar with the company’s enforcement process. The person, who would speak only anonymously, was not authorized to discuss the decision. –NYT

There is precisely zero evidence that the accounts were spreading “intentionally misleading election-related content,” so we’re just going to have to take Twitter’s word for it. 

Origins: 

According to KnowYourMeme, the NPC meme was created in 2016 after an anonymous 4chan user made a threat titled “are you an NPC?” to the /v/ video games board. 

On September 5th, 2018, several threads were submitted to 4chan discussing people who did not have an “inner-voice.” In the comments sections, many described those who do not have an internal monologue as “NPCs.” On September 7th, a grey-colored variation of Wojak began appearing in threads about NPCs (shown below). KnowYourMeme

The triggering begins

After the meme began to spread, Twitter user @brightabyss accused those who “refer to living humans being as NPCs” as being “facist”” 

And according to KnowYourMeme, “On September 15th, Twitter user @DreddByDawn tweeted that NPC was “dog whistle” used by “fascists.” The same day, Twitter user @Sharessan accused a centrist of being a “fascist in denial” after labeling them an NPC. Meanwhile, Twitter user @stackflow33 tweeted a screenshot of the tweets along with the message “What the fuck is even going on anymore? Lmao.””

Angry NPCs Twitter users continued their opposition to the meme, telling users to “report and block” anyone using the “dehumanizing” NPC meme.

Once the meme reached critical mass, it was only a matter of time before Silicon Valley did something about it: 

And before they’re totally scrubbed from the internet, here are a few NPC memes that slipped through the cracks: 

NPCs are even getting ready for Halloween: 

More:

 

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UN Climate Change Report: A Choice Between “Mad Max And Hunger Games”

Authored by Jonathan Miltmore via The Foundation for Economic Education,

Humanity, we’re essentially told, is doomed lest people concede their freedom to the experts, lawmakers, and bureaucrats who can save us.

The Intergovernmental Panel on Climate Change (IPCC) this week released a special report detailing all the ways climate change is predicted to wreak havoc on humans.

The report is about 800 pages long, so I’ll offer a summary to save you some time:

  • Global temperatures today are 1.0°C above pre-industrial temperatures.

  • We’re seeing an increase in extreme weather and other negative consequences as a result of the increase, including receding sea ice in the Arctic and rising global sea levels.

  • A 1.5°C increase will be (much) worse than a 1.0 increase; 2°C would be much worse than that.

  • We’re currently on track to exceed 3°C.

  • Only broad and drastic changes in the world economy can prevent global calamity.

The report’s glum findings were announced at a press conference by a United Nations panel in Incheon, South Korea. Panelists tried to sound optimistic, but there was no sugar-coating the report’s key finding.

“If you would like to stabilize global warming to 1.5°C, the key message is that net CO2 emissions at the global scale must reach zero by 2050,” said panelist Valerie Masson-Delmotte, a French climate scientist and research director at the French Alternative Energies and Atomic Energy Commission. “That’s the most important finding of the report.”

Barring these substantial reductions, we’re told, millions will die. Literally.

The report made it clear that fossils fuel—oil, gas, and coal—which the world heavily depends on, must be phased out to achieve this goal: especially coal.

“Coal will have to be reduced very, very substantially by the middle of the century,” said Jim Skea, a Scottish academic and IPCC panelist. “Coal has the highest carbon content of all the fossil fuels.”

Barring these substantial reductions, we’re told, millions will die. Literally.

One hates to describe the UN’s latest effort as a “scare report,” but consider the reactions it precipitated. One New York Timesclimate reporter put it this way:

I’m listening to the UN’s climate change panel and they’re basically saying, it would take a herculean effort to stop us from hitting 1.5C. Based on their description the difference between 1.5C and 2C is basically the difference between the Hunger Gamesand Mad Max.

A college professor who worked on the report said it brought her to tears.

“I am overwhelmed by the challenge we face,” University of Arizona Professor Diana Liver toldGrist. “I had a good cry on the plane home from exhaustion and thinking about implications of the report.”

I cite these example not to mock people who appear genuinely concerned about climate change, but to demonstrate a point: these findings are supposed to scare us.

The Use of Fear

Fear, of course, is perhaps the greatest motivator in the world. And in this case, fear is entirely rational if one accepts the premise that the world will face a climate apocalypse if net CO2 emissions are not brought to zero. Because that’s almost certainly not going to happen.

Fortunately, scientists generally and environmentalists specifically have a rather poor track recordwhen it comes to dire predictions. Yet government’s ability to use perceived threats to expand power is more impressive (and more dangerous).

Panelists made it clear that state action was the primary, if not sole, mechanism to address the looming catastrophe.

And unsurprisingly, some are already citing the report’s conclusions as evidence that the governments of the world must drastically ramp up regulation of the free market to save us.

“The world’s top scientists just gave rigorous backing to systematically dismantle capitalism as a key requirement to maintaining civilization and a habitable planet,” tweeted meteorologist Eric Holthaus, who covered the press conference for Grist.

To some extent, this statement is hyperbole on the part of Holthaus, a passionate advocate in the fight against climate change. No “rigorous” case for dismantling capitalism was made during panel discussions, to my knowledge. (I watched all 90 minutes of the less-than-riveting conference, although I confess I may have nodded off near the end.)

Either way, Holthaus is not wrong that panelists made it clear that state action was the primary, if not sole, mechanism to address the looming catastrophe. With the possible exception of South Korean economist Hoesung Lee, the current IPCC chair, there was little focus on how human innovation and technology might be utilized in the effort.

The Means, Not the End

This has long been my problem with the science of climate change: it has always felt a bit like a means to an end. A burning problem so vast, requiring such sweeping collective action, that nothing but the broadest central planning could address it. Humanity, we’re essentially told, is doomed lest people concede their freedom to the experts, lawmakers, and bureaucrats who can save us.

Is there reason to be skeptical? Of course. The wise words of the British historian Paul Johnson, recently highlighted in an article by FEE’s Lawrence Reed, help us understand why.

Johnson observed that many of the horrors of the 20th century stemmed from the ideas of intellectuals, experts, and utopianists eager to “correct” supposed imbalances in our world. Here is what he wrote:

One of the principal lessons of our tragic century, which has seen so many millions of innocent lives sacrificed in schemes to improve the lot of humanity, is—beware intellectuals. Not merely should they be kept away from the levers of power, they should also be objects of particular suspicion when they seek to offer collective advice.

That’s sound advice.

And if the “solution to climate change” requires ceding individual and corporate autonomy to the state, well, that’s no solution at all. That’s a road to serfdom. And unlike Mad Max and The Hunger Games, history shows there’s nothing fictional about it.

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NYT Identifies Four Suspected Saudi Hit Squad Members As ‘Close Associates’ Of Crown Prince

After two days of non-stop news pertaining to the widening backlash to the disappearance of Saudi insider-turned dissident journalist Jamal Khashoggi, who is widely suspected to have been murdered inside the Saudi consulate in Istanbul during a trip to obtain a marriage license, the New York Times waited until 6:30 pm ET to drop one of the biggest bombshells yet. Citing sources from within the Turkish government (who have taken the lead in directing the international outrage by first leaking information about Khashoggi’s killing, then following that up with claims that they had substantive evidence), the NYT reports that Turkish officials have linked four members of the 15-man Saudi hit squad purportedly sent to ambush Khashoggi to Crown Prince Mohammad bin Salman, who earlier today denied having any knowledge of the killing during a conversation with President Trump and Secretary of State Mike Pompeo.

One of the men is a diplomat who has been frequently spotted in the Crown Prince’s company, including being photographed with MbS during his visit to the US earlier this year. Three others have been linked to MbS’s security detail. A fifth was a doctor and autopsy expert, whose presence suggests that Khashoggi’s murder was a premeditated hit – not the actions of “rogue operatives” as the Saudi government and Trump have suggested. The news is bound to produce a fresh round of outrage directed at MbS, whose authoritarian crackdown on political rivals within Saudi Arabia, as well as his escalation of the conflict in Yemen (which Saudi Arabia has blithely supported with arms and financing) and the kidnapping last year of the Prime Minister of Lebanon have undermined his reputation as a reformer (a reputation that, ironically, the NYT first helped to burnish).

Saudi

A still of the flight that Turkish authorities say carried members of the Saudi hit squad.

Turkish authorities have said that the 15-man team flew into Istanbul on two chartered jets on Oct. 2, the day Khashoggi walked into the embassy only to never be seen or heard from again. Flight records indicate that some or all of the men left later that day, and that their planes stopped in Dubai on the way back to Saudi Arabia. Turkish officials told the Times that all 15 suspects are Saudi security officers, intelligence agents or government employees. At least 9 of them worked for the Saudi security services, military or other government ministries.

The NYT independently corroborated claims about the suspects’ links to MbS.

The New York Times has confirmed independently that at least 9 of the 15 worked for the Saudi security services, military or other government ministries.

The New York Times has gathered more information about the suspects using facial recognition software, publicly available records, social media profiles, a database of Saudi cellphone numbers, Saudi news reports, leaked Saudi government documents and in some cases the accounts of witnesses in Saudi Arabia and countries the crown prince has visited.

One of the men was identified as Maher Abdulaziz Mutreb, a diplomat who is one of the Crown Prince’s closest associates.

One suspect, Maher Abdulaziz Mutreb, was a diplomat assigned to the Saudi embassy in London in 2007, according to a British diplomatic roster. He has also traveled extensively with the crown prince, perhaps as a bodyguard.

Mr. Mutreb has been photographed emerging from airplanes with Crown Prince Mohammed on recent trips to Madrid and Paris. He was also photographed in Houston, Boston and the United Nations during the prince’s visits there, often glowering as he surveyed a crowd.

Another man was identified as Abdulaziz Mohammed al-Hawsawi a French national and member of the Saudi’s security team. A third suspect, Thaar Ghaleb al-Harbi, became a lieutenant in the Saudi royal guard last year after demonstrating “bravery” in the defense of Crown Prince Mohammed’s palace in Jeddah (which has been targeted by missiles fired by Houthi rebels in Yemen). 

Saudis

Saudi investigators enter the country’s consulate in Istanbul.

A fourth, Muhammed Saad Alzahrani, is a member of the royal guard who has reportedly been photographed standing next to MbS.

A fourth suspect traveled with a passport bearing the name of another member of the royal guard, Muhammed Saad Alzahrani. A search of the name in Menom3ay, an app popular in Saudi Arabia that allows users to see the names other users have associated with certain phone numbers, identified him as a member of the royal guard. A guard wearing a name tag with that name appears in a video from 2017 standing next to Crown Prince Mohammed.

But the presence of Dr. Salah al-Tubaigy could prove to be the most problematic aspect of the reports. Because his presence suggests that the team was sent on a mission to kill Khashoggi, who had first visited the consulate two days earlier, and was told to return on Oct. 2 to obtain his paperwork.

Dr. Tubaigy, who maintained a presence on several social media platforms, identified himself on his Twitter account as the head of the Saudi Scientific Council of Forensics and held lofty positions in the kingdom’s premier medical school as well as in its Interior Ministry. He had studied at the University of Glasgow and in 2015 he spent three months in Australia as a visiting forensic pathologist at the Victorian Institute of Forensic Medicine. His published writings include works on dissection and mobile autopsies.

Although there is no public record of a relationship between him and the royal court, such a senior figure in the Saudi medical establishment was unlikely to join a rogue expedition organized by an underling.

Dr. Tubaigy, whose name first appeared among reports of the suspects several days ago, has not publicly addressed the allegations. None of the suspects could be reached for comment.

Any links to the Saudi royal family will undoubtedly undermine the regime’s official story (which has only been leaked to the media as a trial balloon, not formally offered as an official statement on Khashoggi’s disappearance).

 

 

 

 

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The “Red Scare” Redux: Understanding Brazil’s Bolsonaro

Authored by Alice Salles via The Mises Institute,

The Wall Street Journal editorial board started its defense of Brazil’s conservative presidential candidate Jair Messias Bolsonaro by mentioning how global progressives were having “an anxiety attack” over his popularity.

After a near-victory on the first round of the country’s presidential election, Bolsonaro is set to face the second most popular candidate, Workers Party’s Fernando Haddad, on Oct. 28. Winning 46 percent of the popular vote, Bolsonaro is the favorite to beat Haddad, a one-term São Paulo mayor who got 29 percent of the vote during the first round.

Haddad’s popularity grew on social media recently because of the #NotHim campaign against the conservative leader, perhaps inspired by #NeverTrump, which also backfired in the United States. But because of Haddad’s proximity to former president Luiz “Lula” Inácio da Silva, who’s currently in jail for his role in a corruption scheme considered one of the biggest scandals in the country’s history, many believe Bolsonaro is set to be Brazil’s next president.

But Bolsonaro didn’t make it to where he is now because he was the media’s darling.

As a member of the armed forces during the country’s military dictatorship days and then later as a congressman for 27 years representing Rio de Janeiro, Bolsonaro was often featured in the news for his nasty and sometimes borderline comical opposition to all things left-wing.

Considering the Workers Party’s past and open support of communist ideals, Bolsonaro’s opposition to the country’s past Democratic Socialist administrations quickly made him stand out as a loud and oftentimes antagonistic figure, supporting gun ownership, standing against recognizing members of the LGBT community as a protected group, and bemoaning the pro-drug legalization movement.

Despite his support for an even more aggressive war on drugs, which is undoubtedly misguided, many of his proposed policies involve the dismantling of the state apparatus, as they would limit Brazil’s tax-based revenue, give common Brazilians the ability to purchase firearms legally for self-protection, and even boost the economy by facilitating the process to open a business in the country.

Unfortunately, the so-called Democratic Socialist rhetoric that shaped Brazilian politics in the past two decades remains alive and well among many. So when an anti-communism, pro-business candidate soared as the favorite to win after the impeachment of Workers Party’s Dilma Rousseff, activists wasted no time .

But most of of the fear Bolsonaro inspires in others comes from his alleged comments regarding Brazil’s military dictatorship.

In 1993, Bolsonaro publicly defended the dictatorship, saying the military regime “led to a more sustainable and prosperous Brazil.” In 2015, he reinforced his admiration for the regime by saying that it was a Democratic and “people-led” political movement that grew as Brazil’s then-president became overly close to Chairman Mao’s China and Fidel Castro’s Cuba. Finally in 2016, after mocking then-president Rousseff’s intelligence, Bolsonaro said the military regime went too easy on the communists of the time.

“The regime’s mistake was that it didn’t kill more of them,” he said while being pressed on his former pro-dictatorship comments.

Clearly, his crass verbiage made him an instant hit both among conservatives and socialists, who took on that one single line as proof Bolsonaro was a “fascist.”

But while the military regime did end due process, torturing hundreds of young men and women who either sympathized or who were directly involved in terrorist activities with the goal of weakening the regime to implement their policies, the events that led to military coup were, indeed, people-led as Bolsonaro explained. Unfortunately, many today, perhaps because of Brazilian schools’ long history of left-leaning indoctrination , completely ignore the history behind the era that gave rise to the military regime.

Before The Coup, A Real Red Scare

João “Jango” Goulart of the Brazilian Labor Party (PTB) was the protegé of former National Socialist dictator and president Getúlio Vargas. In 1955, he was elected vice-president with Juscelino Kubitschek winning the presidency. In 1960, Goulart was once again elected to the same position with Jânio Quadros winning the presidency. In 1961, as Goulart visited China, then under the rule of Communist dictator Mao Zedong, Quadros resigned. Goulart, who headed back to Brazil, was to take over as the president but members of Congress and military leaders expressed concern regarding his radical policies.

Because of his nationalist and socialist policies, which included banning private school institutions, a 15 percent increase in the income tax, forcing companies with headquarters abroad to invest their profits in the country, the legalization of the Brazilian Communist Party, and the expropriation of “non-productive” properties larger than 600 hectares, forcing farm and land owners to let go of their property so they could be redistributed by the government, political leaders doubted Goulart wasn’t working behind the scenes to turn Brazil into the next Cuba.

While Congress initially allowed Goulart to take over on the condition his powers were constrained by a parliamentary system in 1961, the population voted to reject the constitutional changes in a 1963 referendum, and Goulart took over with full powers. But as the president aligned his administration with center-left groups, standing against groups such as the National Democratic Union , a strong conservative party whose motto was “The price of freedom is eternal vigilance,” military leaders became concerned with Goulart’s inner circle and their open support for Cuba.

In 1961, Congressman Francisco Julião visited Castro in Cuba and when he went back to Brazil, he pressed the administration to hurry up with its expropriation policy, repeating the slogan “land reform through law or by force.”

After a Brazilian plane carrying letters from Cuba crashed in Peru, documents showing that a Cuban agent was having a hard time organizing guerilla fighters in Brazil were uncovered. As news outlets reported on the discovery as well as the fact Castro supported a Brazilian group known as the Revolutionary Tiradentes Movement, Leonel Brizola, a congressman and Goulart’s top counselor, went on the radio to make inflammatory speeches calling Brazilians to arm themselves and join guerilla groups. Claiming the action was necessary to fight for Goulart if critics tried to take over, the plan was meant to instigate a revolution “much like the Socialist Revolution of 1917 in the Soviet Union,” Brizola said.

He even defended the use of women and children as human shields and the execution of captured enemies.

By mid-March 1964, Brazilians took to the street to protest Goulart in a series of marches organized by opposition groups, the Catholic Church, and members of the business community. Over one million peopleprotested the socialist reforms proposed by Goulart and on March 31, 1964, General Olímpio Mourão Filho, who was in charge of the 4th Military Region and headquartered in Minas Gerais, ordered his troops to start moving toward Rio de Janeiro to depose the president. Learning of his imminent fate if he remained in Rio, Goulart left on April 1 for Brasília. As he arrived, he noticed he had no support from Congress as Senate President Auro Moura Andrade had already started a campaign to get his colleagues to support the coup.

Goulart eventually fled to the south where he also lacked meaningful support, allowing Andrade to declare the country had no president .

By April 2nd, Pascoal Ranieri Mazzilli, then-House speaker, was sworn in as president.

While U.S. President Lyndon B. Johnson offered support to the Brazilian military regime if necessary, the offer was never put to use as Brazilians supported the coup en masse , afraid Brazil could end up under the rule of the Soviet Union.

Between 1964 and 1968, the regime followed the civil law, promising elections were going to be carried out in the near future, but in Dec. 1968, Congress was shut down and the Executive started ruling by decree. In the previous year, Brazil saw an uptick of violent terrorist attacks , with guerilla fighters executing people in public, attacking military headquarters, robbing banks, and using bombs in attacks that killed nine people and left others injured.

Many of the victims were bystanders, not government or military officials.

One of the victims was Edward Ernest von Westernhagen, a German Major who was killed by mistake by the National Liberation Command (Colina), a group whose participants included former Brazilian president Rousseff .

The group had tried to assassinate Bolivian Major Gary Prado, who had killed Ernesto “Che” Guevara, but von Westernhagen, his colleague, was the one who died.

As the regime installed a nightmarish police state, using the terrorist attacks as a justification, students accused of being communists, politicians, and artists were often tortured, arrested, and sent into exile, as the country suspended due process.

Bolsonaro: Today’s Answer To The ‘Red Scare’?

Bolsonaro, who served in the Brazilian Army’s field artillery and parachutist groups through the late 1970s and 1980s, was a product of the regime, which relied on public support thanks to its anti-communist rhetoric, but that in the end, installed a dictatorship very similar to what we see in socialist countries , where inflation and the nationalization of businesses are all too common.

In the minds of many of those who lived through that period, however, what they left with was the realization that they had escaped from a red future — one that would have isolated Brazil, turning it into another Cuba. Bolsonaro appears to feel the same, seeing the coup as the only alternative then to a communist takeover. And to many of his supporters now, Brazil has gone through something similar, as the government led by the Workers Party was largely to blame for the country’s disastrous economy in the past years.

To understand Bolsonaro, therefore, one must understand Brazil’s long-time war between classical liberal and socialist ideals, and how political factions seize on these ideologies whenever possible.

As the WSJ explains, Haddad is trying to rewrite the Brazilian constitution to mirror what Hugo Chávez did in Venezuela, giving the president the power to rule over military promotions. In light of what Brazilians see happening in the neighboring country , Bolsonaro’s platform, which includes privatization promises, the restraining of government spending, and the deregulation of much of the economy, sounds much more realistic and plausible, even if the candidate is, indeed, a hot-headed loudmouth.

Much like what happened in the United States during the 2016 presidential campaign, the media categorizes Bolsonaro as a “hateful” candidate, without ever analyzing or even taking into consideration how Brazilians have suffered.

It’s clear that virtue signaling pales in comparison to putting food on the table, and to the common Brazilian, the “red scare” is once again very real, as powerful politicians in the country would turn Brazil into another Venezuela in the blink of an eye.

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American Pilot Killed During “Clear Sky 2018” Joint Exercises In Ukraine

An American pilot has died while taking part in a rare joint air exercise with Ukrainian forces as part of the Clear Sky 2018 operation in the western part of the country. 

The pilot has been identified as a US Air National Guardsman who was killed Tuesday when the Ukranian Su-27UB fighter he was co-piloting crashed in a west-central Ukraine field, according to official Ukrainian military reports. 

Ukraine’s Su-27UB jet

Military analysis site Defence-blog reports of the Ukrainian military statements:

According to the Ukrainian General Staff, the bodies of two pilots were discovered: one was a pilot of the Ukrainian Air Forces, the second – a US Air Force National Guard pilot.

“We regret to inform that according to the rescue team, the bodies of two pilots have been discovered: one is a serviceman of the Ukrainian Air Force, the other is a member of the US National Guard,” it said.

The Su-27UB jet is being described as a two-seat trainer  suggesting the US pilot was likely overseeing a less experienced Ukrainian pilot as this was an expressed part of the Clear Sky 2018 exercise. 

Meanwhile a U.S. Air Force public affairs officer has confirmed the accident, stating: “We are aware of a Ukrainian Su-27UB fighter aircraft that crashed in the Vinnytsia region at approximately 5pm local time during Clear Sky 2018 today. We understand there was an American in the backseat of the aircraft.”

“We have also seen the reports claiming a U.S. casualty and are currently investigating and working to get more information. We will provide more information as soon as it becomes available,” the US military official said. 

An official message via the Ukrainian Military Prosecutor’s Office stated the extent of known details as follows: “According to preliminary data, the aircraft of the Ukrainian Air Force took off from the Starokonstantinovo airfield in order to perform a military training exercise within the framework of the Clear Sky 2018 military drills,”.

We previously noted the controversial nature of the joint air exercise, as the United States now appears to be treating Ukraine as if it were a NATO member, and follows Washington donating to Ukraine two warships for use against Russia in September.

The Clear Sky 2018 operation kicked off over a week ago Monday and is focused on air defense operations in order to “protect the airspace” from Russia. The war games include the participation of the US military and several other NATO nations, including bordering nations Poland and Romania, as well as Britain and the Netherlands. It total it involves approximately 950 personnel from nine nations.

The U.S. Embassy in Ukraine previously described the event as a “multinational military exercise focusing on promoting peace and security” — however, it appears aimed at sending clear message to Russia saying NATO plans to provide increased support to the sovereignty of the West-backed Kiev government. 

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CJ Hopkins Offs Some Advice: “Do Not Vote. For Anyone. At All”

Authored by CJ Hopkins via The Unz Review,

So, it’s three weeks before the US midterm elections, and it looks like we have got ourselves a horse race! That’s right, folks, once again, it’s time to start playing with those forecast maps on Real Clear Politics and FiveThirtyEight, and obsessively following the fluctuating poll numbers of congressional candidates you have never heard of competing in districts you couldn’t locate if someone held a gun to your head. You need to start doing this immediately, if not sooner, as the stakes in these midterms could not be higher. Nothing less than the continued existence of “American democracy” hangs in the balance, so the ruling classes need every last one of us to get out there and vote for somebody!

The fact that it only marginally matters who that somebody that you vote for is should not dissuade you from voting for somebody. Voting for somebody is your civic duty, and is no less important than rooting for a sports team, or maintaining a personal favorite color, or celebrity, or brand of hemorrhoid creme. Remember, if you don’t vote for somebody, somebody else is going to win, and we can’t afford to let that happen!

Now, your choices this year are particularly exciting, despite the fact that they are exactly the same as in every other US election since approximately the 1970s. Yes, that’s right, once again, it’s the Transgender Panethnic Communists of Color versus the Old White Cisnormal Capitalist Nazis, and what a spectacle it promises to be! The Old White Cisnormal Capitalist Nazis (hereinafter the “OWCCN”) currently control … well, pretty much everything (i.e., the House, the Senate, and executive branch), and so the Transgender Panethnic Communists of Color (hereinafter the “TPCoC”) are hungry, and are looking for some serious payback after getting their butts kicked in 2016. Rumor has it, the TPCoC are preparing to unleash a “Blue Tsunami” on vulnerable OWCCN incumbents, take control of the House of Representatives, and then not impeach the ass clown President they’ve been telling everyone for the last two years is both a traitorous Russian intelligence asset and the resurrection of Adolf Hitler.

And, if that isn’t exciting enough for you already, they’ve got all kinds of other life-and-death issues to emotionally pressure you into picking a team to fanatically root for on social media, and then getting out and voting for somebody. How blatantly to humiliate illegal immigrants, how affluent you have to be to obtain an abortion, how much interest banks can charge when you pay for your chemo with an Amazon card, and which pronouns law enforcement officers are required to use to refer to people whose homes they barge into and unintentionally murder, are just a few of the many “hot-button” questions requiring your democratic input.

Other questions, like whether to invade or just strategically bomb Iran or Syria, or some other non-ball-playing Middle East country, or pour billions more in military aid into Israel, or sell billions in weapons to Saudi Arabia, or foment a coup in Venezuela, or maintain almost eight hundred military outposts in over seventy foreign countries all around the world, are questions that do not require your input. The global capitalist ruling classes, the corporations they own and operate, their friends in the government and the intelligence agencies, and the corporate media will take care of all that. Same goes for those Wall Street banks, and the next looming global financial crisis, and those mass extinctions, and this wacky weather. The grown-ups with the fancy suits and haircuts are handling all that complicated stuff. You just worry about all those other issues, and get out there and vote for somebody!

Seriously, though, for those unfamiliar with the ins and outs of U.S. politics, our election cycle, and these midterm elections, and thus do not have the slightest idea what I’m even referring to, here’s what’s going on in a nutshell …

On November 6, 2018, Americans will be returning to the polls to exercise their inalienable right to choose between two corporate-financed, ruling class-vetted political stooges competing for the chance to pretend to represent them in the House of Representatives and the Senate, and in various gubernatorial, municipal, and somewhat lesser distinguished chambers. A selection of non-ruling-class-vetted candidates will also appear on a handful of ballots. Americans will be free to vote for such candidates, as long as they realize they are just wasting their time, and possibly damaging the “serious” candidates, which the corporate media will remind them they are doing at every available opportunity.

See, unlike in backward European countries, where some semblance of a parliament still exists, and there are actual campaign finance restrictions and limits on televised campaign advertising, in the United States, where everyone is free, voting for non-ruling-class-vetted candidates, in a midterm or any other election, is about as effective as voting for a sandwich … or for, you know, some narcissistic billionaire ass clown who swears he is going to “drain the swamp,” and build “a beautiful wall,” or whatever. The system is designed to guarantee that no matter which ruling class stooge you vote for, and even if you vote for a character like Trump just to stick it to the establishment for once, it makes no difference … or, OK, very little difference.

The reason for this is not a big mystery. When a seat in the Senate goes for ten million dollars and a seat in the House for over a million, and there are no real restrictions on campaign financing, and the corporate-owned media decide in advance which candidates will be given airtime, and considered “serious” by the mainstream pundits who work for the handful of corporations that own the vast majority of newspapers, television and radio stations, and internet platforms that control the flow of information to the American public … well, it would kind of be a little odd, wouldn’t it, if authentic anti-ruling-class candidates were allowed to enter and compete in that system?

Most Americans understand this, which is why nearly half of them do not vote. It’s humiliating enough to be forced to live, and attempt to support a family, and so on, in a savage, neoliberal marketplace with virtually no social cohesion whatsoever, and in which the only real operative value is money, without also having to debase themselves by participating in the simulation of democracy that the capitalist ruling classes need to maintain in order to pretend that they are not just social parasites with a lot of goons and guns.

Which brings me to the point of this essay. See, normally, I try like hell to avoid telling people what to do in my columns, but, after my last one, a number of readers wrote in asking for advice, so I’m going to make an exception, just this once.

Here’s my advice. You’re not going to like it.

Do not vote. For anyone. At all. Tell all your friends not to vote for anyone. Join the hundreds of millions of Americans who refuse to participate in the simulation of democracy. Take time off from work to vote, and then do not vote. Go see a movie, or have lunch with someone you haven’t seen in a while, or take a nice, long walk in the woods or something. Whatever you do, do not vote. Seriously. Please stop voting for these people. They’re not your friends. They mean you ill. They will shake your hand, kiss your baby, then sell you to the first pharmaceutical lobbyist, or military industrial lobbyist, or Israeli or Saudi Arabian lobbyist, that waltzes into their office with a check, or that threatens to turn their voters against them.

You probably think I’m kidding. I’m not. Do not vote in these midterm elections. Or in any other American elections. Not while the system remains as it is. If you really want to vote, move to Europe, where at least there are still parliamentary structures, and a decent variety of political parties, and some restrictions on campaign financing and advertising. All you’re doing when you vote in America is reifying a simulation of democracy, and so perpetuating the system as it is.

Oh, and while you’re at it, if you happen to work for any of those pharmaceutical companies, or any of those weapons manufacturers, or their suppliers, or for an investment bank, or a hedge fund, or private equity firm, or any other company, corporation, firm, consultancy, or department of government that is central to keeping the American political and economic system going as it is, quit your job and do something else. Seriously, go into the office today (or get up from your desk right now) and quit, and go find something else to do with the gift of your sentient life on this planet. I realize that might be a scary proposition, but that’s what it’s going to take to change things, a lot of people deciding they have had it and are not going to play the game anymore.

That’s pretty much all the advice I’ve got. Sorry … I told you you weren’t going to like it.

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S&P Reveals $5.8 Trillion In “Hidden” Chinese Debt With “Titanic Credit Risks”

When it comes to estimating China’s total outstanding debt, there has long been confusion about the real number with most putting the debt/GDP at around 250%, while the IIF last year calculated China’s debt load as high as 300% of GDP.

Now, China watchers can one add another ~40% of debt/GDP to the total because according to S&P, China’s local governments have accumulated 40 trillion yuan ($5.8 trillion) – or even more – in off-balance sheet debt, suggesting the already record surge in defaults is set to accelerate further.

“The potential amount of debt is an iceberg with titanic credit risks,” S&P credit analysts wrote in a report Tuesday, Bloomberg reported, with much of the build-up related to local government financing vehicles, which don’t necessarily have the full financial backing of local governments themselves.

LGFV debt has emerged as a growing risk for China’s economy, because with the national economy slowing, and as a result of a crackdown on shadow lending and a Beijing quota for issuance of local-government bonds not enough to fund infrastructure projects to support regional growth, authorities across the country have resorted to LGFVs to raise financing, according to S&P.

That’s left LGFVs “walking a tightrope” between deleveraging and transforming their businesses into more typical state-owned enterprises, S&P warned.

Meanwhile, debt vulnerabilities continue to rise as a result of the previously reported record surge in Chinese corporate defaults this year, as Beijing seeks to roll back a decades-old practice of implicit guarantees for debt.

And while so far LGFV debt has avoided an event of default, several issues have come close, with local government bailouts taking place only in the last minute, adding to concerns about LGFVs vulnerabilities. Meanwhile, according to S&P the riskiest LGFVs include the following:

  • Those tied to weaker prefectural, city or district-level governments with lax supervision over state-owned enterprises.
  • Those focused on commercial activities – thus having diminishing importance to local governments.
  • Those with significant refinancing risks thanks to large short-term debt or reliance on borrowing from the shadow-banking sector.

As Bloomberg notes, the focus on funding to sustain growth at the local level echoes a broader shift in the central government, which last year was focused on reducing leverage in the financial system. That phase is essentially over, thanks in part to an escalating trade war with the U.S., according to Citi. The result has been a sharp slowdown in China’s debt-reliant economy.

“The markets are right, in our view, to feel more concerned about the sustainability of China’s debt and the increased financial risks,” said Citi’s chief China economist Liu Li-Gang, who also saw “renewed pressure” on the yuan as the currency continues to creep ever lower to the PBOC “redline” of 7.00.

Meanwhile, despite China’s recently renewed shift toward fiscal stimulus, S&P said that Beijing remains determined to “bring discipline to the financing practices of local governments and their LGFVs.” That may mean local authorities aren’t fully able to keep LGFVs afloat, however, and the bottom line is “the default risk of LGFVs is increasing.” That said, the first LGFV default has yet to hit; how it will impact the broader market as yet another hub of moral hazard is wiped out remains to be seen.

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The Complex, Childish Identity Politics of Elizabeth Warren’s Native Heritage: New at Reason

In her latest piece for Reason, Nancy Rommelmann writes about how Elizabeth Warren is far from the only white person to engage in a little myth-making about her own Native ancestry:

There’s a party trick my ex-husband, a member of the Creek Nation, told me about: The next time a white-looking person tells you they have Native American blood, look at them thoughtfully, maybe tilt their chin this way and that, and say, “I bet you’re part Cherokee.”

Nine times out of 10, the person will light up and say, “How did you know?”

At which point you can keep the trick going (“I see it in your profile…”), or chalk them up to being another member of the Wannabe tribe.

View this article.

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