If You Think The Price Of Oil Is Skyrocketing Now, Just Wait Until The War Starts…

If You Think The Price Of Oil Is Skyrocketing Now, Just Wait Until The War Starts…

Authored by Michael Snyder via The Economic Collapse blog,

In the aftermath of the most dramatic attack on Saudi oil facilities that we have ever seen, the price of oil has exploded higher.  The Wall Street Journal is calling this attack “the Big One”, and President Trump appears to be indicating that some sort of military retaliation is coming.  Needless to say, a direct military strike on Iran could spark a major war in the Middle East, and that would be absolutely devastating for the entire global economy.  Just about everything that we buy has to be moved, and moving stuff takes energy. 

When the price of oil gets really high, that tends to create inflation because the price of oil is a factor in virtually everything that we buy.  In addition, a really high price for oil also tends to slow down economic activity, and this is something that we witnessed just prior to the financial crisis of 2008.  And if this crisis in the Middle East stretches over an extended period of time, it could ultimately result in a phenomenon known as “stagflation” where we have rapidly rising prices and weaker economic activity simultaneously. 

The last time we experienced such a thing was in the 1970s, and nobody really remembers the U.S. economy of the 1970s favorably.

The damage caused by the “drone attacks” in Saudi Arabia was immense.  According to the Daily Mail, “huge plumes of black smoke” could be seen pouring out of a key Saudi oil facility…

Infernos raged at the plant in Abqaiq, Bugayg, and the country’s second largest oilfield in Khurais yesterday morning after Tehran-backed Houthi rebels in Yemen fired a flurry of rockets.

Huge plumes of black smoke could be seen coming from the oil facility.

Houthi rebels in Yemen have publicly taken responsibility for the attacks, but they may or may not be telling the truth.

At this point, U.S. Secretary of State Mike Pompeo is completely rejecting that explanation, and he is claiming that there is “no evidence the strikes had come from Yemen”

Secretary of State Mike Pompeo blamed Iran for coordinated strikes on the heart of Saudi Arabia’s oil industry, saying they marked an unprecedented attack on the world’s energy supply.

The strikes shut down half of the kingdom’s crude production on Saturday, potentially roiling petroleum prices and demonstrating the power of Iran’s proxies.

Iran-allied Houthi rebels in neighboring Yemen claimed credit for the attack, saying they sent 10 drones to strike at important facilities in Saudi Arabia’s oil-rich Eastern Province. But Mr. Pompeo said there was no evidence the strikes had come from Yemen.

And according to Reuters, another unnamed “U.S. official” told them that the attacks came from “west-northwest of the targets”…

The U.S. official, who asked not to be named, said there were 19 points of impact in the attack on Saudi facilities and that evidence showed the launch area was west-northwest of the targets – the direction of Iran – not south from Yemen.

The official added that Saudi officials had indicated they had seen signs that cruise missiles were used in the attack, which is inconsistent with the Iran-aligned Houthi group’s claim that it conducted the attack with 10 drones.

Of course drones don’t have to travel in a straight line, and cruise missiles don’t either, and so we may never know for sure where the attacks originated.

But we do know that the Houthi rebels in Yemen are being backed by Iran, and we also know that the Shia militias in Iraq are also being backed by Iran.

So whether the attacks originated in Yemen, southern Iraq or Iran itself, it is not going to be too difficult for U.S. officials to place the blame on the Iranians, and we should expect some sort of military response.

In fact, President Trump posted the following message to Twitter just a little while ago

Saudi Arabia oil supply was attacked. There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!

Of course U.S. airstrikes against Iran itself could ultimately spark World War 3, and most Americans are completely clueless that we could literally be on the precipice of a major war.

According to the Saudis, the equivalent of 5.7 million barrels a day of oil production were affected by the attacks.  Saudi Arabia typically produces about 9.8 million barrels a day, and so that is a really big deal.

When the markets reopened on Sunday night, oil futures exploded higher.  In fact, according to Zero Hedge this was the biggest jump ever…

With traders in a state of near-frenzy, with a subset of fintwit scrambling (and failing) to calculate what the limit move in oil would be (hint: there is none for Brent), moments ago brent reopened for trading in the aftermath of Saturday’s attack on the “world’s most important oil processing plant“, and exploded some 20% higher, to a high of $71.95 from the Friday $60.22 close, its biggest jump since futures started trading in 1988.

As I write this article, the price of Brent crude is currently sitting at $66.89, although at least one analyst is warning that the price of oil could soon shoot up to “as high as $100 per barrel” if the Saudis are not able to quickly resume their previous level of production…

The oil market will rally by $5-10 per barrel when it opens on Monday and may spike to as high as $100 per barrel if Saudi Arabia fails to quickly resume oil supply lost after attacks over the weekend, traders and analysts said.

Saudi officials have already told us that they anticipate that a third of the lost oil output will be restored on Monday.

But because of the extensive damage that has been done, restoring the remainder of the lost output could take “weeks” or even “months”.

In the short-term, President Trump has “authorized the release of oil from the Strategic Petroleum Reserve“, and that should help stabilize prices somewhat.

However, if a full-blown war with Iran erupts, nothing is going to be able to calm the markets.  In such a scenario, the price of oil could easily explode to a level that is four or five times higher than it is today, and that would essentially be the equivalent of slamming a baseball bat into the knees of the global economy.

The times that we are living in are about to become a whole lot more serious, but most Americans are not even paying attention to these absolutely critical global events.

In fact, even the mainstream media seems to believe that the new allegations against Supreme Court Justice Brett Kavanaugh are more important.

That is because they don’t understand what is really happening.

Trust me, keep a close eye on the Middle East, because things are about to start breaking loose there in a major way.


Tyler Durden

Mon, 09/16/2019 – 19:05

via ZeroHedge News https://ift.tt/32Kf1dX Tyler Durden

Explosion Hits Russian Virus Lab Home To Anthrax, Smallpox And Other Deadly Pathogens

Explosion Hits Russian Virus Lab Home To Anthrax, Smallpox And Other Deadly Pathogens

A sudden explosion at a Siberian virus research center on Monday reportedly left the facility engulfed in flames, according to several Russian news outlets. 

Firefighters and other emergency personnel were dispatched to the “Vector Institute” located several miles from Novosibirsk – an emergency which was upgraded “from an ordinary emergency to a major incident,” according to RTdue to the research center for virology and biotechnology housed in the facility – however the mayor of Koltsovo said there were no biologically dangerous substances in the area where the explosion occurred, and that the Vector laboratory was not in use at the time. 

Of note, Vector is reportedly one of two places worldwide where smallpox is stored

The laboratory is known for having developed vaccines for Ebola and hepatitis, as well as for studying epidemics and genera issues surrounding immunology. During the Cold War, it was thought to be part of now-defunct Soviet biological weapons program, meaning that some of the most dangerous strains – including that of smallpox, Ebola, anthrax and certain plaguesare still being kept inside the Institute’s building.

With that in mind, a local branch of the Emergencies Ministry swiftly responded to the call, sending in 13 fire engines and 38 firefighters, who entered the six-story building minutes after arrival. –RT

According to Ukrinform.ua, a gas cylinder exploded on the fifth floor of the six-story building while construction crews were working at the time, after which a fire broke out in an area approximately 100 square feet. One worker suffered second and third degree burns and was taken to a local hospital. 


Tyler Durden

Mon, 09/16/2019 – 18:50

via ZeroHedge News https://ift.tt/303O5co Tyler Durden

WeWork IPO To Be Delayed Until October “At Earliest” As Roadshow Halted

WeWork IPO To Be Delayed Until October “At Earliest” As Roadshow Halted

While it will hardly come as a surprise to anyone, especially after even its notorious sponsor SoftBank urged it to fade from the public’s attention for a period of time, moments ago the WSJ reported that even as its bankers were adamant that things are proceeding according to plan, WeWork will postpone its initial public offering after investors questioned how much the company is worth (somewhere around $10 billion or lower, down from $47 billion just a few weeks ago) and had questions about its corporate governance.

What is more surprising is that according to various press reports, WeWork’s IPO roadshow was supposed to begin as soon as today ahead of a trading debut next week. It now appears that is not happening and the most likely explanation is that after some preliminary canvassing of investor interest, there was none.

What this means is that as of today, WeWork is “likely to shelve the offering until at least next month, according to people familiar with the matter.” Reading between the lines, it means that the IPO is effectively over – after all what will change in the next 2 weeks? Actually there is one thing that may salvage this IPO: Adam Neumann, the company’s CEO, who is suddenly at least 3.6 roentgens radioactive, may depart. 

Then again, the window for money burning IPOs may be over: as we noted yesterday, after the WeWork debacle, and the Uber and Lyft IPO fiascoes, it is quite possible that the patience of investors who granted a post-IPO valuation of just under $200 billion…

… on companies that will burn through $12.5 billion next year…

… has finally run out.


Tyler Durden

Mon, 09/16/2019 – 18:33

via ZeroHedge News https://ift.tt/2AqQ8YF Tyler Durden

If Truckers Stopped Working, Grocery Stores Would Run Out Of Food In 3 Days

If Truckers Stopped Working, Grocery Stores Would Run Out Of Food In 3 Days

Authored by Mac Slave via SHTFplan.com,

Because of the “bloodbath” ongoing in the trucking industry right now, it’s important to realize just how much Americans are dependent on trucking.

If truckers stopped working, grocery stores across the country would run out of food in just three days.

Trucking moves about 71% of the freight in the United States, according to the New Haven Register. That means that if the truckers in this country just stopped working, grocery stores would be out of food plunging the nation into an epic food crisis. It’s more important than ever to prepare yourself and your family for a possible food crisis.  Hunger will bring out the worst in humanity and ensuring you can provide enough will keep your mind at ease while others fight over the last can of corn.

“Without trucking, we would be naked, starving, and homeless,” Mike Robbins, a longtime trucker and leader of trucker strike group Black Smoke Matters, told Business Insider. And a study by the American Trucking Associations outlined what would happen if truckers were to stop working. The effects would hit hospitals, gas stations, ATMs, grocery stores, and even your garbage can.

Basic medical supplies, like syringes and catheters, would be at risk of running out. Medication for cancer patients that use radiopharmacuticals, which only have a life span of a few hours, would expire. –New Haven Register

This should highlight the importance of taking on a preparedness mindset.  If the grocery stores run out of food, what are your options?  A great majority of Americans have no idea how to grow or hunt their own food.  Others don’t think they need to have any stored food at all in case of a minor emergency such a blizzard or storm.

If you are lagging in your prepping, consider buying bulk dried beans already in buckets. An added bonus is that these buckets are stackable and easy to store. Beans are a staple in my personal prepping supplies because of their nutritional value and price. Plus, everyone in my family will eat beans.  Several brands offer beans in a sealed bucket that’s really easy to store. Augason Farms Pinto Beans Emergency Bulk Food Storage 4 Gallon Pail 253 Servings is offered at our local grocery store.  I have several different kinds of beans in our long-term food storage from this brand because of it.  The price is reasonable too.  This will run you about $60 and it’s similar on both Amazon and in the store. 

Beans are only one option. You can also buy kits that have 30-days worth of food in them, such as the Augason Farms 5-20091 Deluxe Emergency 30-Day Food Supply (1 Person), 200 Servings, 36,600 Calories, Net Weight 20 lbs. 7 oz.  Take the size of your family into account when buying.  If you’ve already started prepping, you might need more food, however, if you’re just starting, now is the time to make sure food and water are a top priority!

A food crisis can hit at any time, and it could be in the form of a massive storm rendering travel impossible or an escalated trucking industry “bloodbath.”

*  *  *

Tess Pennington, the author of The Prepper’s Blueprint, has come up with over 300 “prepper” recipes for your emergency and long term food supply. The Prepper’s Cookbook: 300 Recipes to Turn Your Emergency Food into Nutritious, Delicious, Life-Saving Meals (Preppers) is an excellent resource and foundation that covers many topics of preparation. It is especially helpful for the seeker and the new-to-prepping, however, there are great ideas for even the seasoned prepper.


Tyler Durden

Mon, 09/16/2019 – 18:25

via ZeroHedge News https://ift.tt/2Ofb2lZ Tyler Durden

Will international trade law block IOT cybersecurity regulation?

Joel Trachtman thinks it’s a near certainty that the WTO agreements will complicate US efforts to head off an Internet of Things cybersecurity meltdown, and there’s a real possibility that a US cybersecurity regime could be held to violate our international trade obligations. Claire Schachter and I dig into the details of the looming disaster and how to avoid it.

In the news, Paul Rosenzweig analyzes the Ninth Circuit holding that scraping publicly available information doesn’t violate the CFAA.

The California legislature has adjourned, leaving behind a smoking ruin where Silicon Valley’s business models used to be. Mark MacCarthy elaborates: One new law would force companies like Uber and Lyft (and a boatload of others) to treat gig economy workers as employees, not contractors. Another set of votes in the legislature has left the demanding California Consumer Privacy Act more or less unscathed as its 2020 effective date looms. Really, it’s beginning to look as though even California hates Silicon Valley.

Klon Kitchen and I discuss the latest round of Treasury sanctions on North Korean hacking groups. The sanctions won’t affect anyone in North Korea, but they might affect a few of their enablers on the Internet. What I wonder, though, is this: Since sanctions violations are punishable even when they aren’t intentional, will US companies whose money is stolen by the Lazarus Group be penalized for having engaged in a prohibited transaction with a sanctioned party? Maybe the Lazarus Group should steal a Treasury license too, just to be sure.

Klon also lays out in chilling detail what the Russians were really trying to do to Ukraine’s grid – and the growing risk that someone is going to launch a destructive cyberattack that leads to a cycle of serious real-world violence. The drone attack on Saudi oil facilities shows how big that risk can be.

Paul examines reports that Israel planted spy devices near the White House. He thinks it says more about the White House than about Israel.

Paul also reports on one of the unlikelier escapades of students from his alma mater: Trading 15 minutes at the keyboard for months in jail and a lifetime of trouble on their permanent records.

I walk back the deepfake voice scam story we discussed recently, but Klon points out that it reflects a future that is coming for us soon, if not today.

Proving the old adage about a fool for a lawyer, the Mar-a-Lago trespasser has been found guilty after an ineffective pro se defense. We may never know what she was up to.

Klon digs into a long and thoughtful op-ed by NSA’s Glenn Gerstell about the effects of the “digital revolution” on national security. And I note the recent Carnegie report trying to move the encryption debate forward. I also plug my upcoming speech in Israel on the same topic.

Download the 278th Episode (mp3).

You can subscribe to The Cyberlaw Podcast using iTunes, Google Play, Spotify, Pocket Casts, or our RSS feed!

As always, The Cyberlaw Podcast is open to feedback. Be sure to engage with @stewartbaker on Twitter. Send your questions, comments, and suggestions for topics or interviewees to CyberlawPodcast@steptoe.com. Remember: If your suggested guest appears on the show, we will send you a highly coveted Cyberlaw Podcast mug!

The views expressed in this podcast are those of the speakers and do not reflect the opinions of the firm.

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Blackface Incident Has Peaked Gucci, It’s All Downhill From Here

Blackface Incident Has Peaked Gucci, It’s All Downhill From Here

The Wall Street Journal is reporting that the Gucci blackface sweater incident in February has likely peaked the luxury brand’s sales and social media influence.

Data from Tribe Dynamics shows Gucci has been displaced as the top luxury company for social-media engagement in March, and by mid-summer, its quarterly sales plunged in North America.

In response, Gucci decreased its U.S. marketing last quarter to asses the fallout after the blackface incident that led to a social media backlash.

“We wanted to assess the evolution of the U.S. market, the reaction of the consumers after the issue we had in the U.S.,” said Jean-Marc Duplaix, the chief financial officer at Kering/Gucci.

Gucci contributes 60% of Kering’s revenue and 80% of the profit.

Investors started dumping Kering’s shares in April after the fallout. By late July, the company reported a 2% decline in North American sales, which extended the selloff into a bear market by late August.

Gucci was quick to pull the sweater from shelves and online stores earlier in the year, led to the company hiring a chief diversity officer. The brand has taken a massive beating on social media, and celebrities posted videos of themselves burning Gucci clothing. Rapper T.I. even told his followers on social media to boycott the luxury brand.

Some in the fashion world are questioning whether Gucci and its star designer Alessandro Michele have peaked.

“As innovative as Michele is, his style is becoming a little bit stagnant,” said Nicole Fischelis, who held positions as fashion director and creative director at Saks Fifth Avenue and Macy’s before starting her own consulting firm.

Gucci sells overpriced products to millennials, such as $300 wallets, $1,590 sneakers and $5,000 dresses. Millennials are susceptible to the company’s marketing thanks to social media and celebrity advertisement. Morgan Stanley estimates than nearly two-thirds of Gucci sales come from millennials.

Gucci has blamed some of its North American sales declines on a tourism slump in the U.S., where it derives at least 20% of its sales.

The Journal said Tribe Dynamics has warned that Gucci’s social media buzz and quarterly earned media value is in rapid decay:

“Gucci was overtaken in March by Chanel in the Tribe Dynamics ranking, which uses a proprietary metric, known as earned media value, to quantify the influencer content and consumer engagement a brand gets on social media. Chanel benefited from the social-media buzz surrounding the death in February of its longtime designer, Karl Lagerfeld.

Gucci’s earned media value fell by one-third in March from the previous month to $30.7 million. Chanel, which had an earned media value of $33.8 million in March, held the top spot again in April, lost it in May to Gucci and then won it back again in June with the two companies almost tied.

The drop in Gucci’s North American sales comes on the heels of four quarters of declining growth and tracks the brand’s waning social-media strength. Gucci in September 2017 hit an earned media value of $82.5 million, triple the $27 million it reached in July of this year, according to Tribe Dynamics. In the September 2017 quarter, Gucci sales rose 49% in North America.”

The demise of Gucci has been quick and swift thanks to the power of social media. The trend in quarterly sales in North America is expected to plunge even further as larger macroeconomic deterioration in the global economy gains momentum and wanes on consumer sentiment.


Tyler Durden

Mon, 09/16/2019 – 18:05

via ZeroHedge News https://ift.tt/30lSjYd Tyler Durden

Will international trade law block IOT cybersecurity regulation?

Joel Trachtman thinks it’s a near certainty that the WTO agreements will complicate US efforts to head off an Internet of Things cybersecurity meltdown, and there’s a real possibility that a US cybersecurity regime could be held to violate our international trade obligations. Claire Schachter and I dig into the details of the looming disaster and how to avoid it.

In the news, Paul Rosenzweig analyzes the Ninth Circuit holding that scraping publicly available information doesn’t violate the CFAA.

The California legislature has adjourned, leaving behind a smoking ruin where Silicon Valley’s business models used to be. Mark MacCarthy elaborates: One new law would force companies like Uber and Lyft (and a boatload of others) to treat gig economy workers as employees, not contractors. Another set of votes in the legislature has left the demanding California Consumer Privacy Act more or less unscathed as its 2020 effective date looms. Really, it’s beginning to look as though even California hates Silicon Valley.

Klon Kitchen and I discuss the latest round of Treasury sanctions on North Korean hacking groups. The sanctions won’t affect anyone in North Korea, but they might affect a few of their enablers on the Internet. What I wonder, though, is this: Since sanctions violations are punishable even when they aren’t intentional, will US companies whose money is stolen by the Lazarus Group be penalized for having engaged in a prohibited transaction with a sanctioned party? Maybe the Lazarus Group should steal a Treasury license too, just to be sure.

Klon also lays out in chilling detail what the Russians were really trying to do to Ukraine’s grid – and the growing risk that someone is going to launch a destructive cyberattack that leads to a cycle of serious real-world violence. The drone attack on Saudi oil facilities shows how big that risk can be.

Paul examines reports that Israel planted spy devices near the White House. He thinks it says more about the White House than about Israel.

Paul also reports on one of the unlikelier escapades of students from his alma mater: Trading 15 minutes at the keyboard for months in jail and a lifetime of trouble on their permanent records.

I walk back the deepfake voice scam story we discussed recently, but Klon points out that it reflects a future that is coming for us soon, if not today.

Proving the old adage about a fool for a lawyer, the Mar-a-Lago trespasser has been found guilty after an ineffective pro se defense. We may never know what she was up to.

Klon digs into a long and thoughtful op-ed by NSA’s Glenn Gerstell about the effects of the “digital revolution” on national security. And I note the recent Carnegie report trying to move the encryption debate forward. I also plug my upcoming speech in Israel on the same topic.

Download the 278th Episode (mp3).

You can subscribe to The Cyberlaw Podcast using iTunes, Google Play, Spotify, Pocket Casts, or our RSS feed!

As always, The Cyberlaw Podcast is open to feedback. Be sure to engage with @stewartbaker on Twitter. Send your questions, comments, and suggestions for topics or interviewees to CyberlawPodcast@steptoe.com. Remember: If your suggested guest appears on the show, we will send you a highly coveted Cyberlaw Podcast mug!

The views expressed in this podcast are those of the speakers and do not reflect the opinions of the firm.

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The U.S. Shouldn’t Rush to War With Iran Over Saudi Oilfield Attack

In the wake of an apparent drone attack targeting oilfields on the Arabian Peninsula, Congress should do everything it can to avoid getting America involved in a potential conflict between Iran and Saudi Arabia.

The attack on the Abqaiq oil facility appears to have been carried out with drones operated by Houthi rebels in Yemen. They targeted a refinery owned by Saudi Aramco, the state-owned oil monopoly. The attack is likely to cut Saudi Arabian oil production in half, reducing global supply of crude oil by about 5 percent, The Wall Street Journal reported, raising the possibility of higher gasoline prices. It did not take long for Saudi and U.S. officials—including President Donald Trump—to pin blame for the Saturday night attack on Iran, which has provided support and aid to the Houthi rebels.

On Monday night, NBC News reported that the attack was launched from within Iran, citing three anonymous sources familiar with American intelligence reports.

The question, then, becomes what America should do next.

In a tweet on Sunday, Trump gave the impression that he was willing to let the Saudis decide how America would react.

That response raises obvious constitutional concerns. Even if Saudi Arabia and Iran were heading for a military confrontation, it’s not immediately clear how that conflict would jeopardize American national security. If there is a reason for the U.S. to be involved in a regional war in the Middle East, the Trump administration should make that argument to Congress and proceed only after Congress has approved military action.

“The whole situation is more complicated than the war hawks in town would have you believe,” says Chris Preble, vice president for defense and foreign policy studies at the Cato Institute, a libertarian think tank. “It’s simply not true that the Iranians call the tune and the Houthis dance. It’s more complicated than that.”

Indeed, the Houthi rebels have been fighting a Saudi-backed regime in Yemen for several years—a conflict that has turned into a brutal civil war that has killed an estimated 50,000 people; while at least 50,000 more are estimated to have died in a famine triggered by the conflict, though exact numbers of deaths are difficult to ascertain. Earlier this year, Trump vetoed a bill that would have ended American military involvement in the Yemeni civil war.

But in a follow-up tweet on Monday, Trump compared Iran’s denial of involvement in the oil facility attacks to what the president called “a very big lie” regarding the downing of a U.S. drone earlier this year. At that time, Iran claimed the drone had entered its airspace, while the U.S. claimed it had not. Shortly afterward, Trump ordered a military strike against Iran before changing his mind at the very last second.

That moment aside, the Trump administration has seemed willing—and eager, at times—to start a war with Iran. Secretary of State Mike Pompeo has pitched lawmakers on the idea that the 2001 Authorization of Military Force (AUMF)—passed in the wake of 9/11 to permit the U.S. to attack Al Qaeda—allows the U.S. to attack Iran without further congressional approval. And just last week, senior State Department advisor Brian Hook wrote an op-ed in The Wall Street Journal arguing Iran “is effectively extending its borders, enlarging its sphere of influence, and launching lethal attacks against rivals” via the Houthis.

But if Trump is going to remind the American public about the lies that Iranian leaders have told, it seems only fair to also point out that Saudi Arabian crown prince Mohammed bin Salman has told a few lies himself. Salman, known by”MBS,” apparently ordered the killing of journalist Jamal Khashoggi last year—and then lied about the murder for weeks after it took place at the Saudi consulate in Turkey. Trump sided with bin Salman during the controversy.

It’s that sort of knee-jerk support for Saudi Arabia within American political ranks that makes a U.S. military response troublingly likely. To the extent that duplicitous Saudi behavior enters into the equation at all, it seems to be quickly pushed aside in favor of backing a long-time ally merely because it has been a long-time ally—in the way that Sen. Chris Coons (D–Conn.) did on Monday morning:

Even if members of Congress are cheering for a war with Iran, Trump should have to put the matter before them for a formal vote. And lawmakers should be measured in their approach. If you think a single attack that took 5 percent of the world’s oil supply offline temporarily is a problem, you should also consider what a full-fledged conflict among some of the world’s biggest oil-producing countries would mean.

“At a minimum, we should want to know more information before doing anything. Don’t jump to conclusions,” Preble says he would advise members of Congress. “And then, even once you’ve established the facts, you want to make sure that whatever action you’re being asked to take is likely to make the situation better.”

American involvement in a Saudi-Iran war would do little to protect the national security or economic interests of Americans. Congress should do everything in its power to avoid it.

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The U.S. Shouldn’t Rush to War With Iran Over Saudi Oilfield Attack

In the wake of an apparent drone attack targeting oilfields on the Arabian Peninsula, Congress should do everything it can to avoid getting America involved in a potential conflict between Iran and Saudi Arabia.

The attack on the Abqaiq oil facility appears to have been carried out with drones operated by Houthi rebels in Yemen. They targeted a refinery owned by Saudi Aramco, the state-owned oil monopoly. The attack is likely to cut Saudi Arabian oil production in half, reducing global supply of crude oil by about 5 percent, The Wall Street Journal reported, raising the possibility of higher gasoline prices. It did not take long for Saudi and U.S. officials—including President Donald Trump—to pin blame for the Saturday night attack on Iran, which has provided support and aid to the Houthi rebels.

On Monday night, NBC News reported that the attack was launched from within Iran, citing three anonymous sources familiar with American intelligence reports.

The question, then, becomes what America should do next.

In a tweet on Sunday, Trump gave the impression that he was willing to let the Saudis decide how America would react.

That response raises obvious constitutional concerns. Even if Saudi Arabia and Iran were heading for a military confrontation, it’s not immediately clear how that conflict would jeopardize American national security. If there is a reason for the U.S. to be involved in a regional war in the Middle East, the Trump administration should make that argument to Congress and proceed only after Congress has approved military action.

“The whole situation is more complicated than the war hawks in town would have you believe,” says Chris Preble, vice president for defense and foreign policy studies at the Cato Institute, a libertarian think tank. “It’s simply not true that the Iranians call the tune and the Houthis dance. It’s more complicated than that.”

Indeed, the Houthi rebels have been fighting a Saudi-backed regime in Yemen for several years—a conflict that has turned into a brutal civil war that has killed an estimated 50,000 people; while at least 50,000 more are estimated to have died in a famine triggered by the conflict, though exact numbers of deaths are difficult to ascertain. Earlier this year, Trump vetoed a bill that would have ended American military involvement in the Yemeni civil war.

But in a follow-up tweet on Monday, Trump compared Iran’s denial of involvement in the oil facility attacks to what the president called “a very big lie” regarding the downing of a U.S. drone earlier this year. At that time, Iran claimed the drone had entered its airspace, while the U.S. claimed it had not. Shortly afterward, Trump ordered a military strike against Iran before changing his mind at the very last second.

That moment aside, the Trump administration has seemed willing—and eager, at times—to start a war with Iran. Secretary of State Mike Pompeo has pitched lawmakers on the idea that the 2001 Authorization of Military Force (AUMF)—passed in the wake of 9/11 to permit the U.S. to attack Al Qaeda—allows the U.S. to attack Iran without further congressional approval. And just last week, senior State Department advisor Brian Hook wrote an op-ed in The Wall Street Journal arguing Iran “is effectively extending its borders, enlarging its sphere of influence, and launching lethal attacks against rivals” via the Houthis.

But if Trump is going to remind the American public about the lies that Iranian leaders have told, it seems only fair to also point out that Saudi Arabian crown prince Mohammed bin Salman has told a few lies himself. Salman, known by”MBS,” apparently ordered the killing of journalist Jamal Khashoggi last year—and then lied about the murder for weeks after it took place at the Saudi consulate in Turkey. Trump sided with bin Salman during the controversy.

It’s that sort of knee-jerk support for Saudi Arabia within American political ranks that makes a U.S. military response troublingly likely. To the extent that duplicitous Saudi behavior enters into the equation at all, it seems to be quickly pushed aside in favor of backing a long-time ally merely because it has been a long-time ally—in the way that Sen. Chris Coons (D–Conn.) did on Monday morning:

Even if members of Congress are cheering for a war with Iran, Trump should have to put the matter before them for a formal vote. And lawmakers should be measured in their approach. If you think a single attack that took 5 percent of the world’s oil supply offline temporarily is a problem, you should also consider what a full-fledged conflict among some of the world’s biggest oil-producing countries would mean.

“At a minimum, we should want to know more information before doing anything. Don’t jump to conclusions,” Preble says he would advise members of Congress. “And then, even once you’ve established the facts, you want to make sure that whatever action you’re being asked to take is likely to make the situation better.”

American involvement in a Saudi-Iran war would do little to protect the national security or economic interests of Americans. Congress should do everything in its power to avoid it.

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The Four Dynamics Of Bubbles

The Four Dynamics Of Bubbles

Authored by Charles Hugh Smith via The Daily Reckoning,

Financial bubbles manifest three dynamics:

The one we’re most familiar with is simple human greed, the desire to exploit a windfall and catch a work-free ride to riches.

The second dynamic gets much less attention. Financial manias arise when there is no other more productive, profitable use for capital. And these periods occur when there is an abundance of credit available to inflate the bubbles.

Humans respond to the incentives the system presents: If dealing illegal drugs can net $20,000 a month compared with $2,000 a month from a regular job, a certain percentage of the workforce is going to deal drugs.

In our current economy, corporations have sunk $2.5 trillion in buying back their own stocks because this generates the highest work-free return. This reflects two realities:

  1. Corporations can’t find any other more productive, profitable use for their capital than buying back their own shares (enriching the managers via stock options and the 10% of American households who own 93% of the stocks).

  2. Thanks to the Federal Reserve and other central banks injecting trillions of dollars of nearly free credit into the financial sector, corporations can borrow billions of dollars to play with at near-zero rates that are historically unprecedented.

So borrow billions at 2.5%, pour it all into buying back your own stock and reap the gains as your stock rises 10%.

Recall the basic mechanism of stock buybacks: By reducing the number of shares outstanding, sales and profits go up on a per share basis — not because the company generated more revenues and profits, but because the number of shares has been reduced by the buybacks.

(Note to New Green Deal advocates: If corporations reckoned they could earn more by investing the $2.5 trillion in alternative energy projects rather than stock buybacks, they would have done so.)

As various sources have outlined, corporate stock buybacks have been the primary driver of higher stock prices.

This is driving the third dynamic of bubbles:

As the bubble continues inflating beyond any rational valuation, rational investors throw in the towel and join the frenzy. Once again, this willingness to abandon rationality is partly fueled by greed and also by a dearth of other more attractive investments.

A bubble economy is a sick economy, for bubbles are proof there is too much capital chasing too few productive uses for that capital.

The Fed and other central banks have created trillions of dollars, yuan, euros and yen for corporations and financiers to play with and, to a lesser degree, for homebuyers to play with via low mortgage rates and federal guarantees on mortgages.

As a result, the housing bubble is the one regular folks can play. And despite claims that it’s not a bubble because of organic demand, housing is definitely in a bubble, along with stocks and bonds, art, etc.

When you create trillions of dollars, yuan, euros and yen out of thin air, you create the incentives to inflate bubbles. When your real economy is sick and offers few productive uses for all this excess capital, that only adds fuel to the speculative fire.

Here’s the problem: All bubbles burst, regardless of other conditions. Creating more trillions won’t change this, adding more gamblers to the casino won’t change this, claiming a bubble economy is healthy won’t change this and promising a trade deal with China won’t change this.

All of America’s bubbles will pop, and sooner rather than later. The stock market moves a bit faster than the housing and bond markets, but the bubbles that are visible in every market will all burst, much to everyone’s dismay.

We can add a fourth dynamic of bubbles: Nobody believes bubbles can burst until it’s too late to get out unscathed.


Tyler Durden

Mon, 09/16/2019 – 17:03

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