Does Hope Trump Reality?

Authored by Jim Quinn via The Burning Platform blog,

The real hopeless victims of mental illness are to be found among those who appear to be most normal.

 

“Many of them are normal because they are so well adjusted to our mode of existence, because their human voice has been silenced so early in their lives, that they do not even struggle or suffer or develop symptoms as the neurotic does.

 

"They are normal not in what may be called the absolute sense of the word; they are normal only in relation to a profoundly abnormal society. Their perfect adjustment to that abnormal society is a measure of their mental sickness. These millions of abnormally normal people, living without fuss in a society to which, if they were fully human beings, they ought not to be adjusted.”

 

-Aldous Huxley, Brave New World Revisited

The Fed’s balance sheet will not be growing unless we have another market crash.

  • GDP barely grew in the 1st quarter.
  • Stock valuations are at all-time highs.
  • The auto industry has begun to implode.
  • Corporate profits are falling.
  • Retailers are declaring bankruptcies and closing stores like we’re in the midst of a depression.
  • Wages for the average person are stagnant. Real household income is declining when using real inflation numbers.

Hope can work for awhile but it eventually runs head on into reality.

We are living in a hope driven, profoundly abnormal society. 

“Let me tell you something my friend. Hope is a dangerous thing. Hope can drive a man insane.

-Red – The Shawshank Redemption

 

“Hope. It is the only thing stronger than fear. A little hope is effective. A lot of hope is dangerous. A spark is fine, as long as it’s contained.”

President Snow – Hunger Games

People don’t realize it, but danger is lurking just over the horizon.

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Delta Will Offer Up To $9,950 To Passengers On Overbooked Flights

In the aftermath of the United scandal, Delta Airlines will allow airline employees to offer up to $9,950 to encourage passengers to give up their seats on overbooked flights, the Associated Press reported on Friday. The change comes as rival United Airlines faces not only broad public backlash, but also a lawsuit stemming from a passenger’s forced removal from a sold-out flight last weekend.

Specifically, the AP said that it had obtained an internal Delta memo authorizing the airline’s gate agents to offer as much as $2,000 in compensation for overbooked flights, up from a previous high of $800, while Delta supervisors can now offer up to $9,950, up from a $1,350 maximum.

United has faced a week of mounting outrage over its treatment of a passenger who refused to give up his seat to airline personnel last weekend. A video showing the passenger, David Dao, being forced from of his seat and dragged off the plane by security officials went viral.

On Thursday, Dao’s attorney claimed his client, a 69-year-old doctor, suffered a concussion, broken nose and lost two teeth during the April 9 violence. Dao plans on suing United, with a hearing scheduled for Monday in Illinois. United is compensating all passengers on the flight for the price of their tickets.

While United CEO Oscar Munoz has twice apologized for the company’s handling of the confrontation, many have claimed that the unpleasant situation could have been avoided had United simply kept ratching the offer to passengers to give up their seat on the overbooked flight until a clearing price was eventually discovered. Or simply said: an efficient market. 

It appears that Delta has learned from United’s mistake, although now that the pricing threshold has been set, Delta may find it more complicated to find willing takers at what used to be the prevailing, far lower incentive prices.

* * *

Meanwhile, moments ago CNBC reported that United itself has also issued an updated policy to make sure crews traveling on their airplanes receive their seat assignments at least 60 minutes prior to departure. “This ensures situations like Flight 3411 never happen again,” United said and added that the updated policy is one of its initial steps in a review of its policies.

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Treasury Releases FX Manipulation Report: Says China Must Allow Yuan To “Rise With Market Forces”

While Donald Trump already spoiled the surprise of the contents of the latest semiannual report from the Treasury on currency manipulation, when on Wednesday he told the WSJ that China would not be named a currency manipulator, moments ago the US Treasury confirmed just that when it published the long awaited report on “Foreign Exchange Policies of Major Trading Partners of the United States” which while keeping the same six countries – China, Japan, Korea, Taiwan, Germany, and Switzerland – on its manipulation monitoring watch list, it said no major trading partner met the criteria to be designated an FX manipulator:

Pursuant to the 2015 Act, Treasury has found in this Report that no major trading partner met all three criteria for the current reporting period. Similarly, based on the analysis in this Report, Treasury also concludes that no major trading partner of the United States met the standards identified in Section 3004 of the Omnibus Trade and Competitiveness Act of 1988 (the “1988 Act”) for currency manipulation in the second half of 2016.

This confirms what Trump said previously, when he reverse on his campaign promise, and said China hasn’t manipulated the yuan for months, while accusing unidentified nations of devaluing their currencies and saying the dollar is getting too strong.

That said, while the US declined to label China a currency manipulator, the report appeared to toughen the language involving the world’s second-largest economy , urging Beijing to buy more American goods and services and reduce its trade imbalance, while allowing the Yuan to “rise with market forces.”

According to the report, “China currently has an extremely large and persistent bilateral trade surplus with the United States, which underscores the need for further opening of the Chinese economy to American goods and services, as well as faster reform to rebalance the Chinese economy toward greater household consumption.”

The report also said that China “has a long track record of engaging in persistent, large-scale, one-way foreign exchange intervention, doing so for roughly a decade to resist renminbi (RMB) appreciation even as its trade and current account surpluses soared. China allowed the RMB to strengthen only gradually, so that the RMB’s initial deep undervaluation took an extended period to correct.”

The Treasury then said that the “distortion in the global trading system resulting from China’s currency policy over this period imposed significant and long-lasting hardship on American workers and companies” and came rather close to accusing China of FX manipulation by way of limiting market access in setting the fair value of the currency:

“China continues to pursue a wide array of policies that limit market access for imported goods and services, and maintains a restrictive investment regime which adversely affects foreign investors.” The Treasury also urged “further opening of the Chinese economy to U.S. goods and services as well as faster implementation of reforms to rebalance the Chinese economy toward greater household consumption would aid in reducing the bilateral imbalance.”

In a notable departure from previous reports, the latest version said that to remain on the Treasury’s good side, China has to “demonstrate that its lack of intervention to resist appreciation over the last three years represents a durable policy shift by letting the RMB rise with market forces once appreciation pressures resume.”  That, of course, is the key highlight because as Beijing is all too aware, over the past three years China has burned nearly $1 trillion in reserves to prevent the Yuan from depreciating too rapidly, and to keep the pace of capital outflows from rising too high.

As Bloomberg further notes, like the last report by the Obama administration in October, China met only one of the three criteria – for having a large trade deficit – that’s used by the Treasury as a threshold for manipulation. China’s $347 billion goods trade surplus with the U.S. in 2016 was the largest of major trading partners last year, according to the report, which also observed that the surplus “has also declined by only 5 percent in 2016 from its peak in 2015.”

Going back to previous boilerplate language, the report also said that the “Treasury will be scrutinizing China’s trade and currency practices very closely, especially in light of the extremely sizable bilateral trade surplus that China has with the United States” and that it “places significant importance on China adhering to its G-20 commitments to refrain from engaging in competitive devaluation and not to target China’s exchange rate for competitive purposes.”

It concludes by stating that “Treasury also places high importance on greater transparency of China’s exchange rate and reserve management operations and goals.”

Aside from China, Taiwan also met one manipulation condition, while the other four met two. Some of the additional highlights via Bloomberg:

  • The U.S. will watch South Korea FX closely, with the Treasury urging more flexibility; The US estimates S. Korea was a net FX seller in 2016 of $6.6 billion, or 0.5% of GDP
  • Taiwan was urged to limit intervention to disorderly markets
  • Stronger German domestic demand would underpin euro
  • Regarding Switzerland, the TSY said Swiss interventions should be more transparent

Finally, the report said that “the United States cannot and will not bear the burden of an international trading system that unfairly disadvantages our exports and unfairly advantages the exports of our trading partners through artificially distorted exchange rates.”

And while the Treasury said it was “committed to aggressively and vigilantly monitoring and combating unfair currency practices” it has yet to demonstrate the latter.

* * *

Full Treasury report below (link)

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Donald Trump’s Foreign Policy Switcheroos: The New Fifth Column, With Michael Weiss

Moynihan is such trash. ||| Matt WelchMichael Weiss, editor in chief of the Russia-watching Interpreter magazine, and author of ISIS: Inside the Army of Terror, has long been one of the most knowledgeable observers of Great Game international politics. Last night, after one of the most eventful weeks in modern foreign policy history, what with President Donald Trump’s showy switcheroos on Syria, Russia, China, and NATO, and his noisy belligerence toward North Korea, Weiss joined for 45 minutes of a 133-minute (!) version of The Fifth Column, the weekly podcast of Kmele Foster, Michael C. Moynihan, and myself. You can listen right here:

Also earning mentions: Masshole marathoners, “Black Ron Paul,” the Maple Syrup Mafia, and much more. You can further service your Fifth Column needs at iTunes, Stitcher, Google Play, wethefifth.com, @wethefifth, and Facebook.

BONUS ANNOUNCEMENT: I am scheduled to appear on tonight’s All in With Chris Hayes on MSNBC with guest-host Joy-Ann Reid at 8 pm ET, to talk about our coming conflict with North Korea.

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Trump’s Base Turns On “Flipper-In-Chief”

Blink, and you missed Trump’s blistering, seamless transformation into a mainstream politician earlier this week.  In the span of just a few hours, President Trump flipped to new positions on several core policy issues, backing off on no less than five repeated campaign promises.

Unfortunately, at least for his re-election hopes, Trump’s support base, you know…the folks that delivered his stunning victories in Wisconsin, Michigan, Ohio and Pennsylvania, is rapidly turning on the “flipper-in-chief.”  Here are just a few comments from some disaffected supporters via Politico:

“Donald Trump dropped an emotional anchor. He captured how Americans feel,” said Tania Vojvodic, a fervent Trump supporter who founded one of his first campaign volunteer networks. “We expect him to keep his word, and right now he’s not keeping his word.”

 

“I’m not so infatuated with Trump that I can’t see the facts,” she said. “People’s belief, their trust in him, it’s declining.”

 

“It was like, here’s the chance to do something different. And that’s why people’s hopes are dashed,” said Lee Stranahan, who, as a former writer at Breitbart News, once worked with Bannon. “There was always the question of, ‘Did he really believe this stuff?’ Apparently, the answer is, ‘Not as much as you’d like.’”

 

Trump voters “felt like they were voting for an anti-establishment candidate — and they’re terrified, they’re losing faith,” Cardillo said. “They’re saying, ‘Why does he have these people around him?’”

Earlier this week, Tania Vojvodic even went so far as to launch a Facebook group called, “The concerned support base of President Trump,” which quickly drew several dozen sign-ups. She also changed the banner on her Facebook page to a picture of Bannon accompanied by the declaration: “Mr. President: I stand with Steve Bannon.”

Trump

 

Just yesterday we highlighted some of Trump’s key policy flip flops…here is an abridged version of our full post entitled “Trump Flips On Five Core Campaign Promises In Under 24 Hours.”

Goodbye strong dollar and high interest rates

In an announcement that rocked currency markets, Trump told the WSJ that the U.S. dollar “is getting too strong” and he would prefer the Federal Reserve keep interest rates low.  “I do like a low-interest rate policy, I must be honest with you,” Mr. Trump said. “I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me. But that’s hurting—that will hurt ultimately,” he added. “Look, there’s some very good things about a strong dollar, but usually speaking the best thing about it is that it sounds good.”

 

Trump then said the one thing that every other currency manipulator realizes all too well: “It’s very, very hard to compete when you have a strong dollar and other countries are devaluing their currency.

 

During his campaign Trump had repeatedly said that a “strong dollar” policy would be beneficial for the US economy, despite our repeat warnings that he will inevitably reverse on this, especially if and when the “Goldman” circle of advisors starts providing macroconomic advice.

 

Labeling China a currency manipulator

“They’re not currency manipulators,” the president said, adding that China hasn’t been manipulating its currency for months, and that he feared derailing U.S.-China talks to crack down on North Korea. Trump routinely criticized President Obama for not labeling China a currency manipulator, and promised during the campaign to do so on day one of his administration.

 

Trump’s declaration also means that Peter Navarro may as well pack his bags, as the Goldman economic advisory team has now won its contest with the “Bannon nationalist” circle.

 

Yellen’s future

Trump also told the Journal he’d consider re-nominating Yellen to chair the Fed’s board of governors, after attacking her during his campaign.” I like her. I respect her,” Trump said, “It’s very early.”

 

Trump called Yellen “obviously political” in September and accused her of keeping interest rates low to boost the stock market and make Obama look good. “As soon as [rates] go up, your stock market is going to go way down, most likely,” Trump said. “Or possibly.”

 

Export-Import Bank

Trump also voiced support behind the Export-Import Bank, which helps subsidize some U.S. exports, after opposing it during the campaign.

 

“It turns out that, first of all, lots of small companies are really helped, the vendor companies,” Trump told the Journal. “Instinctively, you would say, ‘Isn’t that a ridiculous thing,’ but actually, it’s a very good thing. And it actually makes money, it could make a lot of money.”

 

Trump’s support will anger conservative opponents of the bank, who say it enables crony capitalism.

 

NATO

Finally, Trump said NATO is “no longer obsolete” during a Wednesday press conference with NATO Secretary General Jens Stoltenberg, backtracking on his past criticism of the alliance. During the campaign, he frequently called the organization “obsolete,” saying did little to crack down on terrorism and that its other members don’t pay their “fair share.”

 

“I said it was obsolete. It is no longer obsolete,” the president said Wednesday.

 

And while this week’s transformation of Trump into a mainstream politician has been startling for supporters, others, like former campaign economic adviser Larry Kudlow, worry more about the “flip-flops” that are yet to come…particularly as it relates to tax reform.

Still others are concerned about Trump’s lack of progress on reforming the tax code.

 

Larry Kudlow, a veteran economist who advised Trump’s campaign, expressed dismay that the president hadn’t yet released a tax plan. He said he was beginning to wonder whether the president is about to walk back his pledge to cut taxes.

 

“What is their product?” Kudlow asked. “It doesn’t make any sense to me. I’m not giving up hope. But it’s looking very shaky to me.”

 

Conservative economist Stephen Moore, who also advised the Trump campaign, said he’s reached out to the White House about the lack of a tax package.

 

“They’re all over the map,” he said. “I don’t know if they’re listening or not.”

Meanwhile, ‘angel mom’ Brenda Sparks is growing increasingly concerned over Trump’s immigration policies…or lack thereof.

Brenda Sparks, an “angel mom” whose son was killed by an illegal immigrant, appeared onstage with Trump at an August campaign event in Phoenix. She said he promised her that he would overturn the program known Deferred Action for Childhood Arrivals, or DACA, in short order.

 

While Sparks said she didn’t think it would be done immediately, “I had expected it before now.”

 

“I still support Trump, but I’m going to hold his feet to the fire,” she said. “He has not lived up to that promise.”

 

Michelle Dallacroce, an anti-immigration activist, is more pointed. Immigration is “why we voted for Donald Trump,” she said. “This could be the most elaborate reality show. I’m wondering, was this all an illusion for us, using our movement so he could get in there?”

Finally, in the clearest admission of guilt possible, Trump took to twitter, at the height of the flip-flopping allegations earlier this week, to deflect:

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“This Is A Cash-Burning Machine” – Uber Opens Up Its Books, Shows Staggering Losses

Amid a sudden and seemingly endless stream of public relations disasters (senior execs leaving, sexual harrassment scandals, uncomfortable video clips, self-driving car fiascos, secret software programs, and mishandled DUIs), Uber opened up its books to Bloomberg, prompting one analyst to exclaim "this is a cash-burniung machine."

The last couple of months have been a constant PR battle for the CEO Travis Kalanick.

  1. Another tale of sexism and unacceptable workplace behavior in Silicon Valley company has emerged. This time it's at Uber, according to an explosive blog post published on Sunday by a former company engineer named Susan Fowler Riggetti.
  2. Uber's newly-hired VP of engineering Amit Singhal was asked to, and did, resign on Monday after the company learned from Recode that he was accused of sexual harassment shortly before leaving Google a year ago. Here's more on the difficult position of former employers in this case.
  3. A video showing Uber CEO Travis Kalanick rudely arguing with a long-time driver at the end of his ride was published by Bloomberg. "I need leadership help," Kalanick said in an apology he issued shortly after.
  4. Susan Fowler Rigetti, the former Uber engineer who wrote of discrimination, said she's hired attorneys after a new law firm began to investigate her claims. Uber confirmed it has hired Perkins Coie, which reports to former A.G. Eric Holder, who's leading the investigation.
  5. Uber said on Thursday that it will finally apply for a DMV permit to test self-driving cars in California after its cars' registrations were revoked in December because it refused to get the permit.
  6. Charlie Miller, one of the two famous car hackers who joined Uber's Advanced Technology Center in August 2015, announced he's leaving the company.
  7. The New York Times uncovered a secret Uber program called Greyball, through which the company uses software and data to evade law enforcement in cities.
  8. Keala Lusk, a former Uber engineer, published a blog post detailing how her female manager mistreated her, signaling that the company's problematic culture isn't limited to the men who work there.
  9. Ed Baker, Uber's head of product and growth, resigned. Though the reason is unclear, he was allegedly seen kissing another employee three years ago, which was anonymously communicated to board member Arianna Huffington, according to Recode.
  10. A report outlines a trip by a group of Uber employees to a Seoul karaoke-escort bar in 2014, which included company CEO Travis Kalanick and his girlfriend, Gabi Holzwarth. After arriving, several male employees picked escorts to sit with, and went to sing karaoke. Uncomfortable, a female marketing manager, who was part of the group, left after a couple of minutes, while Holzwarth and Kalanick left after an hour.
  11. California regulators have recommended that Uber be fined $1.13 million for failing to investigate and/or suspend drivers who are reported by a passenger to be intoxicated. The state requires ride-hailing companies to have a zero-tolerance policy for driving under the influence of alcohol or drugs.
  12. A new report says Uber used a secret program dubbed "Hell' to track Lyft drivers to see if they were driving for both ride-hailing services and otherwise stifle competition. Only a small group of Uber employees, including CEO Travis Kalanick, knew about the program, according to a story in The Information, which was based on an anonymous source who was not authorized to speak publicly.

But, Uber, according to The Wall Street Journal's Unicorn tracking database, remains the most valuable private company in the world.

 

In December we warned of the potential for massive losses at the ride-sharing company, and as Bloomberg's Eric Necomer reports, we were not wrong. Uber isn't required to report its finances publicly, but the privately held company has decided to forgo that luxury for the first time. Uber said its revenue growth is outpacing losses, hoping to show the business is on a strong trajectory as it attempts to address a recent cascade of scandals.

The good news is that the ride-hailing giant more than doubled gross bookings in 2016 to $20 billion, according to financial information Uber shared with Bloomberg, and net revenue was $6.5 billion. Uber’s business is indeed massive and getting bigger. In the last three months of 2016, gross bookings increased 28 percent from the previous quarter to $6.9 billion. The company generated $2.9 billion in revenue, a 74 percent increase from the third quarter.

 

However, adjusted net losses were $2.8 billion, excluding the China business, which it sold last summer. Losses in the last three months of 2016 rose 5 percent over the same period to $991 million.

Uber declined to report first-quarter numbers, saying they were in line with expectations but that the company hasn’t yet presented them to investors.

While the rate of sales growth compared with losses is encouraging, Uber is still losing a significant sum, said Evan Rawley, a business professor at Columbia University. “That’s a lot of cash to burn in a quarter,” he said. Jeff Jones, the company’s president of ridesharing who resigned last month, previously joked to staff that he joined Uber expecting P&L, meaning a profit and loss statement, but only found an L.

Bloomberg notes that Uber has burned through at least $8 billion in its lifetime. The company said it has $7 billion of cash on hand, along with an untapped $2.3 billion credit facility.

We leave it to none other than Aswath Damodaran, infamous valuation guru and finance professor at New York University – who nailed Theranos by warning in 2015 of numerous red flags about the unicorn

"Uber is a one-of-a-kind company, in good ways and bad ways. It’s going to be a case study… This is a cash-burning machine."

And that Mr. Damodaran is what makes it worth $68 billion!!!???

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Krunch Time for Korean Krackpot Despot, Kim Jong-Un: Missile Crisis Countdown Has Begun

The following article by David Haggith was first published on The Great Recession Blog:

Kim Jong-un watches nuclear test

The Korean missile crisis has never been hotter. Trump is turning the screws on everyone to force action. China, Japan, and South Korea join in threatening Kim Jong-un with imminent war, but North Korea’s crackpot despot isn’t backing down.

Trump has dispatched war ships, including the USS Carl Vinson, to North Korea as North Korea continues to show signs that it is preparing to do another nuclear test on Saturday (known as ‘Day of the Sun,’ which celebrates the birth of the present dictator’s grandfather, who was North Korea’s founding president). Voice of America has reported that North Korea “has apparently placed a nuclear device in a tunnel, and it could be detonated Saturday AM Korea time.”

By that time (Friday in the US), I suppose, those American ships will all be in place to do whatever it is they’re going there to do — maybe blow up the facilities around the test site. A US aircraft (Air Force WC-135 Constant Phoenix ) commonly called a nuclear sniffer, used to monitor radiation after a nuclear blast, has been moved up to Japan. The US has two destroyers capable of launching Tomahawk cruise missiles positioned near North Korea’s nuclear test set, and it has heavy bombers in Guam, capable of attacking North Korea.

 

US pre-emptive strike against North Korea on the table

 

North Korean Missile TestsUS intelligence officials told NBC that the US may launch a pre-emptive strike against North Korea if they test another nuclear device. When asked about the NBC story, the Pentagon responded, “No comment.” North Korea, in response, has warned of a “merciless retaliatory attack” if the US takes such action and has said it will hit the US with a nuclear weapon if there are even signs of aggressive reaction from the US armada.  (It is not believed that North Korea has such a weapon … yet.)

A defiant North Korea has said it will do more tests, regardless of US threats, and that it “will not back down.” America’s UN ambassador under Obama already called the threat “extremely grave,” saying last fall that North Korea was more dangerous than ever and a threat to the entire world.

Now the US and South Korea have deployed thousands of troops in the area, and US troops have been practicing the assassination of North Korea’s crackpot tinpot dictator. North Korea confirms that it has no doubt that the US is threatening the life of its leader, and that US, since the Obama days, has used its own nuclear bombers to push North Korea to further development of its own nuclear arsenal.

After a recent missile test off of North Korea’s coast, Japan began conducting mass nuclear evacuation drills. In the last couple of weeks, Japan also installed anti-missile batteries around the country, and a report has been circulating that President Trump last week made the extraordinary post-WWII policy change of granting Japan permission to attack North Korea on its own so long as China is not already engaged in conflict with North Korea. Japan denies this report. So, this might have been talk to get China more engaged as China would prefer to keep Japan out of North Korea.

It has also been reported on several news sites this week that China has moved 150,000 troops into location along North Korea’s border and has even stated to North Korea it will go to war against it if North Korea attempts another nuclear test. Trump tweeted his confidence in China’s response, saying they would “properly deal with North Korea,” but adding that, “if they are unable to do so, the US, with its allies, will!” Trump also said that, when he met with China’s president, he told President Xi Jinping to remind North Korea that the United States has nuclear submarines.

China issued its own uncharacteristically blunt caution to all parties this week:

 

The United States and South Korea and North Korea are engaging in tit for tat, with swords drawn and bows bent, and there have been storm clouds gathering,”  China’s foreign minister, Wang Yi, said in Beijing…. “No matter who it is, if they let war break out on the peninsula, they must shoulder that historical culpability and pay the corresponding price for this.”  (The New York Times)

 

Even the normally reticent South Korea has warned the north that it can expect significant punishment that it will find hard to recover from if it attempts another nuclear test or intercontinental ballistic missile test. So, North Korea’s days of getting away with nuclear tests that defy world conventions are clearly over, and I think the days of negotiation are also past. There will be no more tests without action.

 

North Korea gears up for war

 

 

Kim Jong-un watching submarine's test missile launch.

Kim Jong-un watching submarine’s test missile launch.

 

Suspecting trouble, North Korea partially evacuated its capital, Pyongyang, this week in order to reduce the population present to the number that can be accommodated in bomb shelters, and its Supreme Despot, Kim Jong-un (whose plopped-on hairstyle is only trumped by the Donald’s orange swirl), has told journalists to get ready for a big event. This event may have been the ribbon-citing ceremony Kim participated in this week with journalists present, as he showed off Pyongyang’s latest development, but the press is gathered for the upcoming Day of the Sun celebrations, and anticipates something much bigger at this event at which North Korea has in the past displayed missile tests or other evidence of military prowess. As he preps for whatever he’s prepping for and makes his various threats, Kim Jong-un is all smiles like a lunatic with something up his sleeve.

 

 

Kim Jong-un dances with soldiers as he celebrates a North Korean missile test. Everybody is happy.

Kim Jong-un dances with soldiers as he celebrates a North Korean missile test. Everybody is happy.

 

 

All nations are on edge

 

Vice President Pence is scheduled to visit Seoul on Sunday, during his first Asian trip. The timing of his visit, after the Day of the Sun might indicate the US does not plan any pre-emptive strike against North Korea on that day. However, while Pence is ostensibly going to South Korea to talk with the government there about North Koreas nuclear development, the White House has also said it has contingency plans for the VP’s visit, should North Korea carry out another nuclear test, indicating the possibility of a sudden shift to a war footing if Kim goes ahead with his apparent plans. Said a White House foreign policy adviser of Kim Jong-un,

 

He continues to develop this program, he continues to launch missiles into the Sea of Japan. With the regime it’s not a matter of if – it’s when. We are well prepared to counter that.

 

The Kremlin has reported that it is watching the developments around North Korea with great concern. According to the head of Russia’s Foreign Affairs Committee, Konstantin Kosachev,

 

The most alarming thing about the current U.S. administration is that you can’t be sure if it is bluffing or really going to implement its threats…. America objectively poses a greater threat to peace than North Korea…. The entire world is scared and left guessing if it strikes or not. (Associated Press)

 

North Korea’s vice foreign minister says President Donald Trump is more “vicious and aggressive” than President Barack Obama was. You got that right.

 

We are comparing Trump’s policy toward the DPRK with the former administration’s and we have concluded that it’s becoming more vicious and more aggressive.

 

It takes one to know one? North Korea denounced Trump’s “maniacal military provocations.” But maybe that is exactly Trump’s strategy: convince North Korea that he is just as crazy as Kim Jong-un and just as likely to have a hair trigger in order to get the Korean crackpot to back off a little. Convince the world with his recent attacks in other countries that he will act strongly and unpredictably in order to intentionally set everyone edge.

 

Is the Trump edge shrewd and necessary strategy or a game of tit for tat?

 

Trump is turning the screws hard because, while China and the Kremlin are counseling the US toward further negotiation, decades of negotiation with North Korea, from Clinton on, have already gone nowhere. So, Trump’s recent military moves, including the advancement of this armada, may be intended to rapidly ramp up pressure on China and Russia to do more than talk endlessly about negotiation. That doesn’t mean he is bluffing, any more than his actions with Syria and Afghanistan were some kind of bluff. This is a rapid ramp up of real pressure, meaning real action will be taken if North Korea takes one more step toward nuclear armament.

 

“It’s high stakes,” a senior intelligence official directly involved in the planning told NBC News. “We are trying to communicate our level of concern and the existence of many military options to dissuade the North first. It’s a feat that we’ve never achieved before but there is a new sense of resolve here,” the official said, referring to the White House. (NBC News)

 

Trump’s sudden actions in Syria and Afghanistan this week were probably designed to make it clear to the North Korea, China and Russia that they cannot count on him to telegraph his plans to China and Russia. They cannot assume he will wait any longer for action on North Korea. Trump is making it abundantly clear everywhere that China and Russia have little time left to be of any further influence on the so-called Democratic People’s Republic of Korea. He is deliberately keeping all parties guessing about what he will actually do because a ticking time bomb is strong incentive for all parties to do everything they can to avert a conflict that will put them at risk.

While they urge negotiation and sanctions, China is also reluctant to go with sanctions and clearly needs a major push to get there even in the present pressured environment:

 

The Chinese Foreign Ministry said this week that the Trump administration should not expect China to risk instability in North Korea by going along with choking sanctions. China and North Korea are “neighbors with traditional friendly ties, including normal trade activities,” a spokesman for the Foreign Ministry, Lu Kang, told reporters on Thursday. (The New York Times)

 

While Trump has been assessing tougher economic sanctions and pushing for them, I suspect his policy looks something like this: “We’ll apply sanction as soon as we can work them out with others, and we’ll engage in talks if North Korea shows signs of stopping its nuclear advancement, BUT we’ll never even get there if North Korea sends up another missile. We’ll simply shoot it out of the sky, and the second the DPRK detonates another nuclear bomb, we’re going in to destroy those parts of the nuclear test site and of Korea’s nuclear development facilities to whatever extent they can be safely destroyed.”

(Obviously, we have to be very careful that we don’t send a reactor into meltdown mode that could contaminate and kill friends in the region or harm the earth generally. You cannot just knock out its control room without creating your own bomb right beside South Korea, which could also drift contamination over Japan, Russia or China. Those countries may be more concerned about that kind of literal fallout than they are about Kim Jong-un’s retaliation. Japan has also expressed concern that Jong-un might respond with chemical-tipped missiles, aimed at Japan.)

 

Kim Jong-un sits alone

Kim Jong-un sits alone

 

Personally, I think getting North Korea’s insane leader out of the way could be a big win for Trump. It’s the only situation I see where regime change actually does make sense because Kim is clearly both evil and insane enough to use whatever he has at his disposal. Unlike Assad or Qadaffi or Hussein, Kim directly threatens the US as often and as directly as he can. So, why would we wait until he has whatever he needs at his disposal? If someone is holding a gun to your head while you’ve got one aimed at theirs, do you wait until they start to pull the trigger before you pull yours?

 

CNN, however, can only wring its hands

 

After stating that “four-year-old” Trump doesn’t have the attention span it takes to fulfill his campaign statement that he might be able to “talk ’em out of those damn nukes,” CNN can only wring its hands and say,

 

The price of war is too high to bear, and the time for pre-emption passed on October 9, 2006, when Pyongyang said it conducted its first nuclear test. Doing nothing has only resulted in continued military development and aggression from North Korea. (CNN)

 

That’s a silly statement. The price of waiting for North Korea to get a nuclear missile is even higher, and pre-emption hasn’t passed if the US can take out North Korea’s nuclear arms before North Korea is capable of moving them to the US. If doing nothing has resulted in further military development by North Korea, and attempts at negotiation by Bill Clinton (before he gave up on that path) and talk by Obama did nothing to slow North Korea down, what options is left, other than an attack aimed at disarming them?

If you want real action here, you’re going to have to apply real pressure, which means real risks because no one in North Korea is listening to all the threats. So, Trump may be doing this to push things into action, but it clearly won’t work (because it hasn’t) if the threat isn’t completely real. Trump is saying, “We are past threats. It’s crunch time. Cease and desist immediately, or immediate action will be taken.”

If cease and desist works this weekend, talks will have a little time to proceed along with sanctions. If it doesn’t, there won’t be any further need for talks.

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Latest “Shadow Brokers” Leak Reveals NSA Hacked Most Windows Platforms; SWIFT Banks

One week after the “Shadow Broker” hacker group re-emerged when in a Medium blog post it slammed Donald Trump’s betrayal of his core “base” and the recent attack on Syria, urging Trump to revert to his original promises and not be swept away by globalist and MIC interests, it also released the password which grants access to what Edward Snowden dubbed the NSA’s “Top Secret arsenal of digital weapons”, it has made fresh headlines by releasing data which reportedly reveals that the NSA had hacked the SWIFT banking system of several banks around the globe including in the EU and middle east.

As a reminder, last year the Shadow Brokers claimed to have stolen files from the NSA’s cyber-espionage group known as the Equation Group. After initially putting up the tools up for auction (ultimately nobody was interested in paying the price of 1 million Bitcoin, or around $570 million at the time), Last week, the Shadow Brokers dumped the password for the files they had put up for auction last summer. Missing from last week’s dump were the Windows files they put up for individual auctions over the winter.

Fast forward one week, when on Good Friday the Shadow Brokers dumped a new collection of files, containing what appears to be exploits and hacking tools targeting Microsoft’s Windows OS and evidence the Equation Group had gained access to servers and targeted banks connected to the ubiquitous SWIFT banking system.

The tools were dumped via the Shadow Brokers Twitter account and were accompanied by a new blog post. As Bleeping Computer’s Catalin Cimpanu, who first noticed the release, points out, the blog post is called “Lost in Translation,” and in addition to some premeditated ramblings in broken English…

KEK…last week theshadowbrokers be trying to help peoples. This week theshadowbrokers be thinking fuck peoples. Any other peoples be having same problem? So this week is being about money. TheShadowBrokers showing you cards theshadowbrokers wanting you to be seeing. Sometime peoples not being target audience. Follow the links for new dumps. Windows. Swift. Oddjob. Oh you thought that was it? Some of you peoples is needing reading comprehension.

… the post contained a link to a Yandex Disk file storage repo.

The password provided for these files is “Reeeeeeeeeeeeeee”, and they’ve already been unzipped and hosted on GitHub by security researchers.  A list of all the files contained in the dump is available here, and it reveals the presence of 23 new hacking tools named such as ODDJOB, JEEPFLEA, EASYBEE, EDUCATEDSCHOLAR, ENGLISHMANSDENTIST, ESKIMOROLL, ECLIPSEDWING, EMPHASISMINE, EMERALDTHREAD, ETERNALROMANCE, ETERNALSYNERGY, ETERNALBLUE , EWOKFRENZY, EXPLODINGCAN, ERRATICGOPHER, ESTEEMAUDIT, DOUBLEPULSAR, MOFCONFIG, FUZZBUNCH, and others.

As Cimpanu notes, the dump contains three folders named Windows, Swift, and OddJob. The Windows folder contains several Windows hacking tools, although these don’t look like the same tools that were put up for sale last December. The folder OddJob contains an eponymous implant that can be delivered to Windows operating systems. Details on this implant are scarce at the moment although according to some members of the hacking community, the ETERNALBLUE tool also allows access to Windows 10-based platforms, also known as “zero-day” (0-day) exploits, granting hackers adversely control over any hacked computer.

Commenting on today’s release, Edward Snowden said in a tweet that “#NSA knew their hacking methods were stolen last year, but refused to tell software makers how to lock the thieves out. Are they liable?”

Just as interesting is that the folder claiming to hold SWIFT data contains SQL scripts that search for SWIFT-specific data inside databases, and text and Excel files hinting the Equation Group had hacked and gained access to several banks across the world, including not only Middle Eastern countries such as Palestine, UAE, Kuwait, Qatar, and Yemen, but also allegedly to European Union-based banks.

As Cimpanu adds, “this folder is by far the most interesting of the three, as it alludes the Equation Group (NSA) had been infiltrating banks, and secretly keeping an eye on SWIFT transactions. The files included in the dump indicate the Equation Group had targeted and successfully infiltrated the SWIFT Service Bureau of the Middle East (EastNets), one of the SWIFT departments managing and monitoring SWIFT transactions across Middle East banks.”

In a statement posted on its website, EastNets denied it had been compromised, even if the Shadow Brokers dump included a file with all the Bureau’s compromised administrator accounts, some of which correspond to real-world employees. Furthermore, op-sec commentator Joseph Cox noted on twitter that JEEPFLEA is the “alleged op targeting SWIFT. Here’s the already public mention of JEEPFLEA from (I believe) a Snowden doc. TAO hacking op”

And while the NSA can perhaps claim that it was infiltrating Middle-eastern SWFT-member banks to search for terrorist, it will have a bigger headache on its hands if it emerges as some have alleged, that the NSA’s “Equation Group” had managed to hack the internal Belgium HQ network at SWIFT itself:

Additionally, as some commentators have pointed out, notably @emptywheel, there was no effective need for the NSA to hack into SWIFT as the US government already had “front door” access into SWIFT – with supervision – for terrorist purposes as far back as 2013.

Also of note is that the SWIFT files date to at least a month after Globo and Spiegel exposed TAO’s hacking of SWIFT in 2013.

As Wired confirms, “the new leak includes evidence that the NSA hacked into EastNets, a Dubai-based firm that oversees payments in the global SWIFT transaction system for dozens of client banks and other firms, particularly in the Middle East. The leak includes detailed lists of hacked or potentially targeted computers, including those belonging to firms in Qatar, Dubai, Abu Dhabi, Syria, Yemen, and the Palestinian territories. Also included in the data dump, as in previous Shadow Brokers releases, are a load of fresh hacking tools, this time targeting a slew of Windows versions.”

As a reminder, the transaction protocol SWIFT has been repeatedly targeted by hackers seeking to redirect millions of dollars from banks around the world, with recent efforts in India, Ecuador, and Bangladesh. Over the past year, researchers have pointed to clues that a $81 million Bangladesh bank theft via SWIFT may have been the work of the North Korean government.   But the Shadow Brokers’ latest leak offers new evidence that the NSA has also compromised SWIFT, albeit most likely for silent espionage and supervision of global fund flows, rather than wholesale larceny.

Separately, The Intercept notes that according to security researcher and hacker Matthew Hickey, co-founder of Hacker House, the significance of what’s now publicly available, including “zero day” attacks on previously undisclosed vulnerabilities, cannot be overstated: “I don’t think I have ever seen so much exploits and 0day [exploits] released at one time in my entire life,” he told The Intercept via Twitter DM, “and I have been involved in computer hacking and security for 20 years.” Affected computers will remain vulnerable until Microsoft releases patches for the zero-day vulnerabilities and, more crucially, until their owners then apply those patches.

“This is as big as it gets,” Hickey said. “Nation-state attack tools are now in the hands of anyone who cares to download them…it’s literally a cyberweapon for hacking into computers…people will be using these attacks for years to come.”

Hickey provided The Intercept with a video of FUZZBUNCH being used to compromise a virtual computer running Windows Server 2008–an industry survey from 2016 cited this operating system as the most widely used of its kind.

 

Finally, as an indication of the severity of today’s Shadow Broker leak, none other than Facebook’s Chief Security Officer, lashed out, saying that “Whatever you think of the [intel community] having 0-day, this situation pretty clearly demonstrates that the USG vulnerability equities process is broken.”

Just to put it all into perspective, it was not the Russian government that allegedly had backdoor access to virtually every Windows-based platform and had infiltrated the information network that connects every bank in the world, but the NSA… and the US government.

And then there’s the question why the NSA has kept silent throughout this entire process:

While many more questions will emerge following today’s leak, one can’t help but wonder if the entire “Russian hacking” scandal had been staged – either with the prior knowledge of the NSA or without – and just how much deeper this particular rabbit hole goes.

* * *

We conclude with the cryptic hint presented by the Shadow Brokers in their latest blog post:

Maybe if all suviving WWIII theshadowbrokers be seeing you next week. Who knows what we having next time?

Here’s to surviving WWIII…

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Gwinnett County Police Fire Two Officers a Day After They’re Caught on Video Brutalizing a Handcuffed Man

The Gwinnett County Police Department (GCPD) announced it had fired Officers Robert McDonald and Michael Bongiovanni, both of whom were involved in assaulting Demetrius Hollins in an incident caught on video. The terminations come just a day after the incident occurred, in large part because the department was not hamstrung by legal privileges of public employees that prevent such timely terminations in many other jurisdictions.

Georgia does not have a “law enforcement officers bill of rights,” which makes it extremely difficult to fire a police officer in those states that have such laws, and neither are public employees in Georgia granted collective bargaining privileges, which enable police unions to negotiate just the kinds of contracts that unduly protect bad actors.

Nevertheless, the two cops have some sort of appeals process, as a GCPD public information office explained to Reason. She said she’s requested documents pertaining to the appeals process and would share the information with us when she gets it. She did not respond by the end of the business day today, but we’ll post an update with that information if we get it.

The incident also highlights the importance of laws protecting people’s rights to record police officers in public. McDonald was caught on cellphone video by a driver stomping Hollins in the head after the man had already been handcuffed—GCPD fired him less than 24 hours later.

Subsequently, the department announced it was firing McDonald’s supervisor, Sergeant Michael Bongiovanni, after it said police discovered a second video taken from a different angle. “The video was contrary to what was reported by Michael Bongiovanni,” the department said in a statement. “The video was filmed by a witness and shows the man getting out of the car with both hands up. As he stands with his hands up, Michael Bongiovanni strikes the man in the face.”

Bongiovanni punched Hollins after Hollins got out of his car. McDonald headstomped Hollins later while he man was handcuffed.

“The revelations uncovered in this entire investigation are shocking,” the statement continued. “We are fortunate that this second video was found and we were able to move swiftly to terminate a supervisor who lied and stepped outside of his training and state law.”

The department also said they had launched a criminal investigation into McDonald’s actions and subsequently a second one on Bongiovanni’s actions. The Georgia Bureau of Investigation is not involved.

“The actions by this former officer do not represent the officers of this department who dedicate their lives to serving the community on a daily basis,” the department statement about McDonald’s termination read.

“We acknowledge that the actions of these two officers have implications that will be felt for some time,” the department said in its statement. “However, we also believe that our decisive action in terminating both officers speaks volumes about what is expected of each officer that wears a Gwinnett County Police badge.”

Bongiovanni was hired in 1998, while McDonald was hired in 2013.

Watch Bongiovanni punch Hollins than McDonald stomp the handcuffed Hollins below, via Photography Is Not a Crime:

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Facebook Scrambles to Shut Down Pro Le Pen Accounts Before Election

The first round of French elections will be held on April 23rd, prompting Facebook to shut down pro Le Pen accounts, which they deem to be ‘fake.’

In an effort to fight ‘fake news’ or misinformation, Facebook has targeted 30,000 ‘fake accounts’ in order to control the information that its users consume.

In a statement to AFP, the company said they were trying to “reduce the spread of material generated through inauthentic activity, including spam, misinformation, or other deceptive content that is often shared by creators of fake accounts.”

They are targeting accounts with the highest amount of traffic — since they pose a grave threat to the croissant eating frog lovers in France.

In addition to outright bans, the company, in conjunction with French media, are running ‘fact checking’ programs — designed to fight ‘fake news’, heightening their efforts around the elections — which spans from 4/23-5/7.

All of this hysteria happened after Hillary Clinton lost to Donald Trump’s twitter account this past November — prompting officials to pressure Facebook and Twitter to do something about the brazen belittling and subversion of the main stream media. Last week, the company launched a tool to help its users identify ‘fake news’ in 14 countries — including the U.S., France and Germany.

About a month ago, Facebook disabled our Facebook account, after we posted a picture of Chuck Schumer with Vlad Putin. This was a widely circulated news story at the time, which involved zero deception or any of the hallmarks that could be construed as being ‘fake news.’ Nevertheless, we lost access to the account and have ceased using the platform since then.

For those who publish independently and rely upon the ‘socials’ for traffic, heed the warnings given by Matt Drudge, founder of the Drudge Report, who compared them to ghettos — corporate controlled denizens of propaganda.


Content originally published at iBankCoin.com

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