Europe’s Economic Demise Is A Global Warning: “Tightening Conditions Are Already Causing Disruptions”

Authored by Jeffrey Snider via Alhambra Investment Partners,

Harmful Modern Myths & Legends

Loreley Rock near Sankt Goarshausen sits at a narrow curve on the Rhine River in Germany. The shape of the bluff produces a faint echo in the wind, supposedly the last whispers of a beautiful maiden who threw herself from it in despair once spurned by her paramour. She was transformed into a siren, legend says, a tantalizing wail which cries out and lures fishermen and tradesmen on the great river to their death.

While it makes a great story for local conversation, this part of the Rhine is now treacherous for far different reasons. Drought in middle Europe has caused water levels to drop, in places like near Loreley Rock making the river unnavigable. Nearly all freight coming from the lowlands passes through here on its way to Germany’s industrial heartland.

In more ancient times, it would have been a catastrophe. In modern times, it is an inconvenience, an economic inefficiency of the kind that strikes anywhere in the world with regularity. Rather than by boat, material and goods are being diverted to railroads and highways.

Still, there are going to be costs. According to the Kiel Institute for the World Economy this will mean German GDP in Q3 2018 contracted by 0.3%. Together with disruption in Germany’s automobile industry because of its slow reaction to the worldwide harmonized light-duty vehicles test procedure, the engine of Europe is experiencing a transitory blip.

Eurostat has already put together a flash estimate for the Euro Area’s GDP in Q3. Presumably these include something for Germany, even though that specific country’s statistics bureau, Destatis, won’t release its figures until midmonth. The Continental numbers are already alarming.

No matter, claims Keil. There are excuses already handy for anyone thinking Europe’s economic boom is fizzling (or has fizzled). We are back to Economists’ infatuation with weather and climate. It was a common enough thing several years ago, particularly 2015, when sudden snowstorms, or wet weather, were blamed for “unexpected” weakness. In this case, apparently, drought works just as well in that role.

While we don’t know exactly what Germany’s GDP will come in at, Italian officials have provided theirs. Germany and Italy together accounted for 44% of Europe’s total output in Q2 2018, the group’s first and third largest individual economies. In Q3, Italian real GDP growth was basically zero (+0.021%, Q/Q).

This, too, isn’t supposed to be concerning. Italian GDP has grown for 15 straight quarters including the near miss in that last one. This is what matters, they say, along with the withered Rhine. In other words, the economy must be doing just fine despite all these things.

Mario Draghi indicated last month that he saw “transitory” factors in these places, too. Among them:

But [Draghi] attributed some of the weakness to one-time factors, such as the introduction of new European Union emissions standards that proved tougher than expected for auto manufacturers to meet. Deliveries slumped because the carmakers had trouble getting regulators to approve new models for sale.

Sure, but none of that would explain Italy nor Europe’s sudden deceleration in 2018 where acceleration was supposed to be. And it doesn’t in any way account for the either Italy or Germany the past ten years.

Germany has fared far better than Italy in the post-crisis era but if that’s the best Europe’s economy can do then the whole place is in deep trouble.

This, ultimately, is what matters more about 2018 and more so 2019. The European economy Germany included has never recovered from 2008. It is this one fact that explains everything. While it’s easy to blame drought, emissions, or even the poor woman of Loreley Rock, those are all just legends being told so people can feel better about very real dangers.

These are growing, not one-off. I wrote a few weeks ago:

The one thing the globally synchronized growth narrative had going for it was sentiment. It often had that in surplus. But therein lies a major drawback; are people happy because things are getting better, or do they believe things are getting better because “everyone” says so? There’s a difference and it’s a big one.

IHS Markit reported yesterday that its Composite PMI for the Eurozone in October fell to the lowest level in two years.

Both the manufacturing and service sectors recorded slower rates of growth during October. Following on from September, manufacturing registered the weaker increase in output, posting its lowest growth in nearly four years…The downturn in overall activity growth was linked to a weaker gain in incoming new business. October’s survey data showed new work rising at a modest pace that was the slowest since September 2016.

Markit’s Chief Economist Chris Williamson didn’t mention the Rhine, emissions, nor mythical stories, but I bet he wished he could have. Instead, Williamson to his credit zeroes in on the real issues:

An export-led slowdown, linked to growing trade tensions and tariffs, has been exacerbated by rising political uncertainty, growing risk aversion and tightening financial conditions.

In fact, those prior factors (trade tensions, rising political uncertainty, growing risk aversion) all trace back to the last one (tightening financial conditions). It sure does in Italy where the Italian economy is not just at risk of shrinking, but shrinking some more. The political situation for the boot is a product of the economy being decimated by 2008 and afterward, the lack of upside for all the continuous downside.

Now that it may be back again, at best it portends uncertainty as Williamson acknowledges. Uncertainty is a killer for an economy in a precarious state.

And that’s the one thing Mario Draghi cannot concede; ever. He has, like his counterparts elsewhere around the world, thrown everything on this one. This globally synchronized growth was supposed to be the happy ending that fixes most if not all these lingering, festering economic, political, and social sore spots. A real recovery would do that, not be uniformly bothered by emissions regulations.

Unfortunately, the direction toward which Europe is now heading suggests this, like the others, just isn’t going to be a real recovery. The European economy is a global warning that “tightening financial conditions” are already causing very real economic disruption. It has been quite expected.

We’ve seen the upside and it is minimal, way less than what is required. Denial won’t help; in fact, it will continue to sow mistrust and incivility. Mario Draghi, as Jay Powell, they are our modern sirens.

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Under Pressure From Trump, Germany Boosts Military Spending 

Germany has given its military a 5.7 billion Euro ($6.5 billion USD) boost after Defense Minister Ursula von der Leyen refused to sign off on the previous draft, reports Reuters

Finance Minister Olaf Scholz on Monday proposed adding 5.7 billion euros (£5 billion) to the planned military budget from 2020, to buy more ships, fighter jets and other weaponry over several years, on top of a more modest 323 million euro boost in 2019. –Reuters

Eurofighter Typhoon​​​​​

The boost in spending comes amid pressure from US President Donald Trump, who has encouraged Germany to increase its military budget to 2% of its 3.67 trillion (USD) GDP from its current 1.2% – a proposal which has sparked great debate within the country’s ruling coalition. The United States spends approximately 3.1% of its much larger 19.39 trillion GDP on the military. 

Experts say the military budget – now slated to reach around 43 billion euros in 2019 – would have to increase by 2 billion euros a year through 2021 and 3 billion euros a year after that even to meet Chancellor Angela Merkel’s promise to hit 1.5 percent of GDP by 2024.

It was not immediately clear how the extra funding, set out in a 290-page list of proposed budget revisions seen by Reuters, would affect the military budget’s share of GDP. –Reuters

Coalition split

Von der Leyen of Chancellor Angela Merkel’s conservative CDU party would like to satisfy long-standing shortfalls in the German military’s personnel and equipment. 

Scholz’s center-left Social Democrats, however, have been hesitant to increase military spending out of fear of alienating German voters as their polling numbers “are collapsing,” according to Reuters

The new revisions first reported in part by the Handelsblatt newspaper will be a topic of debate during this week’s parliament meeting, and is subject to changes by the budget committee. 

The document called for 5.6 billion euros to be spent on a new heavy-lift helicopter whose funding had been called into question, a sign that a formal competition will likely proceed next year between Boeing and Lockheed Martin. –Reuters

The budget also envisions additional spending on the new MKS180 multi-role warship, along with brand new Eurofighter Typhoon jets and the TLVS missile defense program which will be built by European munitions maker MBDA in conjunction with Lockheed. 

MKS-180 warship illustration

 

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UK Government Bans The “Fake News” Label To Facilitate Further Censorship

Authored by Andrew Korybko via Oriental Review,

The UK is banning the term “fake news” in official documents.

The motivation behind this move is that the government thinks that the word is too broad and is urging people to employ more specific phrases such as “disinformation” and “misinformation” instead.

This isn’t just due to some bureaucrats’ personal preferences, however, but because the state plans to more effectively wage information warfare and defend itself from the same, which is why it needs to be as precise as possible when it comes to tackling these tasks. The two suggested replacement terms practically mean the same thing though with the important difference being that disinformation is deliberately false while misinformation is unintentionally so, but both work to sow discord and division in societies and are much more easily weaponizable in today’s interconnected age.

One of the most important functions of any intelligence agency is to determine the intent of their targets or whoever pops up on their radar, whether they’re an internal actor or an external one. In the context of fighting “fake news”, the UK is trying to improve the operational efficiency of its analysts by forcing them to discern between disinformation and misinformation instead of just lumping together whatever politically relevant narratives that they come across as “fake news” for convenience’s sake.

There’s a big difference between a fabricated news story, an analysis that deceives its intended audience through the omission of key facts, and a poorly written op-ed that inadvertently confuses people more than it conveys whatever it is that the author wants to opine about.

The most troubling aspect about all of this, however, is that the British government could abuse this new stance to censor free speech on social media. The Telegraph reported that the Digital, Culture, Media, and Sports (DCMS) Committee, whose inquiry prompted this policy, wrote in its interim report earlier this summer that “With such a shared definition, and clear guidelines for companies, organisations, and the Government to follow, there will be a shared consistency of meaning across the platforms, which can be used as the basis of regulation and enforcement.”

This makes it obvious that the government is indeed preparing to crack down and “regulate” disinformation and misinformation, which might even lead to shutting down accounts that criticize Prime Minister May’s Brexit strategy if they’re determined to have met that subjective criterion.

After all, the difference between disinformation and misinformation is largely intent, and determining that in the highly charged political context of Brexit will probably come down to the overseer’s opinion.

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In Huge Shift, UAE To Reopen Embassy In Damascus As Gulf Rapprochement With Assad Likely

Regional Middle East media have been circulating early reports that the United Arab Emirates is preparing to re-open its embassy in Damascus after six years of closure, which is to kickstart a new regional shift. This comes as Gulf Cooperation Council (GCC) countries are reportedly strongly considering the restoration of diplomatic ties with the Assad government after all GCC states had closed their Syrian embassies in 2012.

The significance of this is huge, coming after seven years of war driven by an official policy of Syrian regime change by these very GCC governments, foremost among them Saudi Arabia, the UAE, and Qatar. Restoration of ties also means countries like the UAE could be major sources of financing reconstruction projects at a key moment when the United States is attempting to block all aid that could benefit the Syrian government

Damascus, Syria. via Reuters

According to Al Masdar News Abu Dhabi has “ordered full maintenance works to its Syrian embassy to be ready for opening within the next two weeks.” 

Such a speedy turn around signals the UAE is ready to acknowledge Assad as the legitimate leader of Syria after emerging victorious as the international proxy war continues to wind down, and likely with other Gulf states to follow.

Prominent Syria analyst Joshua Landis noted this week there’s currently a monumental realignment underway as regional powers hasten to restore ties with Damascus

Bahrain, Kuwait, Egypt and Jordan are reopening relations with the Syrian government. This suggests that they are not fighting “Sunnis,” but extremists that they seem to consider common enemies. No longer Sunni vs Shia – but Conservative vs Radical. Or Governments vs insurgents.

The rationale for this is also tied up in regional rivalries and the continuing fallout of the internal GCC schism, which has pitted Saudi Arabia and the UAE against Qatar. 

UAE Embassy in Damascus, Syria

Among the first to report the news is an expert who goes by the name Ehsani and writes for the influential analysis blog, Syria Comment — he’s obtained rare insider commentary from senior Syrian government sources concerning the historic shift and potential restoration of relations with GCC countries.

Ehsani presented his analysis based on insider sources as follows

* * *

Syria, the UAE, and Saudi Arabia are on the cusp of forming a new regional alliance to defeat the ideology and expansion of the Muslim Brotherhood long championed and supported by Qatar and Turkey. 

This important shift comes on the back of intense and comprehensive meetings that took place recently in Abu Dhabi. The common objective of the parties is to stabilize Syria and ensure the return of the secular state that existed prior to 2011.

There is no doubt that this new shift will create a challenge for Damascus when it comes to its relations with its long ally Iran. At the same time, this shift will also be a perfect opportunity for Damascus to prove its independence when it comes to foreign policy.

The thinking in Gulf capital revolves around the idea that a stronger and more stable Syria is the best way to slow and reverse the expansion of Iran in the region. After all, Tehran’s influence was seen as to have grown as the Syrian state got weaker since 2011.

Meanwhile the Trump administration has launched its most concerted effort yet to pressure the Saudis to end the conflict in Yemen. Both Mattis and Pompeo in recent days have said “the time has come to halt more than three years of conflict”.

Once the war on Yemen subsides and soon comes to a halt following US pressure, this is likely to have positive impact on the region and will add traction to this UAE/Saudi/Syrian rapprochement. The money that is now wasted on this war can be better spent stabilizing Syria.

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Trump, Gorbachev, And The Fall Of The American Empire

Authored by Raja Murthy via The Asia Times,

“The only wealth you keep is wealth you have given away,” said Marcus Aurelius (121-180 AD), last of the great Roman emperors. US President Donald Trump might know of another Italian, Mario Puzo’s Don Vito Corleone, and his memorable mumble: “I’m going to make him an offer he can’t refuse.”

Forgetting such Aurelian and godfather codes is propelling the decline and fall of the American empire.

Trump is making offers the world can refuse – by reshaping trade deals, dispensing with American sops and forcing powerful corporations to return home, the US is regaining economic wealth but relinquishing global power.

As the last leader of the Union of Soviet Socialist Republics (USSR), Mikhail Gorbachev’s perestroika (restructuring) led to the breakup of its vast territory(22 million square kilometers). Gorbachev’s failed policies led to the dissolution of the USSR into Russia and independent countries, and the end of a superpower.

Ironically, the success of Trump’s policies will hasten the demise of the American empire: the US regaining economic health but losing its insidious hold over the world.

This diminishing influence was highlighted when India and seven other countries geared up to defy Washington’s re-imposition of its unilateral, illegal sanctions against Iran, starting Monday.

The US State Department granting “permission” on the weekend to the eight countries to buy Iranian oil was akin to waving the green flag at a train that has already left the station

The US State Department granting “permission” on the weekend to the eight countries to buy Iranian oil was akin to waving the green flag at a train that has already left the station.

The law of cause and effect unavoidably delivers. The Roman Empire fell after wars of greed and orgies of consumption. A similar nemesis, the genie of Gorbachev, stalks Pennsylvania Avenue, with Trump unwittingly writing the last chapter of World War II: the epilogue of the two rival superpowers that emerged from humanity’s most terrible conflict.

The maverick 45th president of the United States may succeed at being an economic messiah to his country, which has racked up a $21.6 trillion debt, but the fallout is the death of American hegemony. These are the declining days of the last empire standing.

Emperors and mafia godfathers knew that wielding great influence means making payoffs. Trump, however, is doing away with the sops, the glue that holds the American empire together, and is making offers that he considers “fair” but instead is alienating the international community– from badgering NATO and other countries to pay more for hosting the US legions (800 military bases in 80 countries) to reducing US aid.

US aid to countries fell from $50 billion in fiscal year 2016, $37 billion in 2017 to $7.7 billion so far  in 2018. A world less tied to American largesse and generous trade tarrifs can more easily reject the “you are with us or against us” bullying doctrine of US presidents. In the carrot and stick approach that largely passes as American foreign policy, the stick loses power as the carrot vanishes.

Don Vito Corleone (Marlon Brando) in The Godfather. Big payoffs needed for big influence. A presidential lesson for Don Trump

More self-respecting leaders will have less tolerance for American hypocrisy, such as sanctioning other countries for nuclear weapons while having the biggest nuclear arsenal on the planet.

They will sneer more openly at the hysteria surrounding alleged interference in the 2016 US presidential elections, pointing to Washington’s violent record of global meddling. They will cite examples of American hypocrisy such as its sponsorship of coups against elected leaders in Latin America, the US Army’s Project Camelot in 1964 targeting 22 countries for intervention (including Iran, Turkey, Thailand, Malaysia), its support for bloodthirsty dictators, and its destabilization of the Middle East with the destruction of Iraq and Libya.

Immigrant cannon fodder

Trump’s focus on the economy reduces the likelihood of him starting wars. By ending the flood of illegal immigrants to save jobs for US citizens, he is also inadvertently reducing the manpower for illegal wars. Non-citizen immigrants comprise about 5% of the US Army. For its Iraq and Afghanistan wars, US army recruiters offered citizenship to lure illegal immigrants, mostly Latinos.

Among the first US soldiers to die in the Iraq War was 22-year old illegal immigrant Corporal Jose Antonio Gutierrez, an orphan from the streets of Guatemala City. He sneaked across the Mexican border into the US six years before enlisting in exchange for American citizenship.

On March 21, 2003, Gutierrez was killed by friendly fire near Umm Qasr, southern Iraq. The coffin of this illegal immigrant was draped in the US flag, and he received American citizenship – posthumously.

Trump policies targeting illegal immigration simultaneously reduces the availability of cannon fodder for the illegal wars needed to maintain American hegemony.

Everything comes to an end, and so too will the last empire of our era.

The imperial American eagle flying into the sunset will see the dawn of an economically healthier US that minds its own business, and increase hopes for a more equal, happier world – thanks to the unintentional Gorbachev-2 in the White House.

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Travel Trends Index: “Perfect Storm” Threatens US Domestic And Inbound Travel 

The US Travel Association warned in a new report that US domestic travel is about to “level off” after achieving 105 straight months of overall expansion.

The report indicates a “perfect storm” of factors is brewing that is currently suppressing international demand for travel to the US.

The organization noticed a strong dollar had been one of the significant factors in deterring foreigners from visiting. Another issue presented, in the report, is the global slowdown and political uncertainties in Asia, Europe, and Latin America spurred by the trade war.

“We’re seeing something of a perfect storm of factors that could suppress international demand for travel to the U.S.,” said David Huether, U.S. Travel senior vice president for research.

“The U.S. dollar has been on another very robust strengthening trend since April of this year, while the global economy has been cooling off considerably overall. That, coupled with political uncertainty in Europe and rising trade tensions, is a bad-news recipe for inbound travel.”

Furthermore, the international Leading Travel Index (LTI) forecasts that the market will not expand any further at all in the next six months, which coincides with our thoughts of a significant economic slowdown that is currently festering in Asia and Europe and could soon rear its ugly head in US macro data in the next several quarters.

The monthly Travel Trends Index (TTI) is prepared for US Travel by the research firm Oxford Economics. The TTI is based on public and private sector source data which are subject to revision by the source agency.

TTI draws from advanced search and bookings data from ADARA and nSight; airline bookings data from the Airlines Reporting Corporation (ARC); IATA, OAG and other tabulations of international inbound travel to the U.S.; and hotel room demand data from STR.

TTI shows that overall travel to and within the US grew 1.6% y/y in September, but warns of declining domestic travel rates, with business travel appearing to have plateaued and leisure travel accounting for the small growth. International travel was up 4.4% in September y/y, but US Travel said that since inbound had dropped 2.2% in September 2017, the y/y improvement “is liable to appear over-inflated.”

US Travel Association Chartpack– 

Overall Current Travel Index 

International Current Travel Index

Domestic Current Travel Index 

Domestic Business Current Travel Index

Domestic Leisure Current Travel Index 

Dow Jones Travel & Leisure Index, an index that provides coverage on 95% of market capitalization of travel and leisure stocks, shows the industry has fallen under hard times in 2018. The index is down .14% YTD.

Yet, this more data informing us that yes, in fact, an economic slowdown is headed for the “greatest economy ever” in 2019.

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US Declares War On “Troika Of Tyranny”, Pushing Them Closer To Russia

Authored by Alex Gorka via The Strategic Culture Foundation,

The US is going to extend its “combat operations” – the sanctions war aimed at reshaping the world – to Latin America.

Tough new penalties are planned against the “troika of tyranny,” consisting of Venezuela, Cuba, and Nicaragua “in the very near future.” This announcement was made by National Security Adviser (NSA) John Bolton on Nov.1 — a few days before the US mid-term elections — in an attempt to draw more support from Hispanic voters, especially in Florida. An executive order on sanctions against Venezuela has already been signed by President Trump, but that’s just the beginning.

It was rather symbolic that on the same day the NSA delivered his bellicose speech, the UN General Assembly (UNGA) voted overwhelmingly in support of a resolution calling for an end to the US economic embargo against Cuba. The document did not include amendments proposed by the US that would put pressure on Havana to improve its human-rights record.

This is a prelude to a massive escalation in US foreign policy, which will include the formation of alliances, in addition to the active confrontation of those who dare to pursue policies believed to be anti-US.

 “Under this administration, we will no longer appease dictators and despots near our shores,” Bolton stated, adding,

 “The troika of tyranny in this hemisphere — Cuba, Venezuela and Nicaragua – has finally met its match.” 

Sounds like a declaration of war. Brazil, Colombia, Argentina, Chile, and Peru are probably some of the nations the US is eyeing for a potential alliance.

Bolton’s “troika” includes only countries ruled by governments that are openly “red” or Communist.  The list of nations unfriendly to the US is much longer and includes Bolivia, Ecuador, Dominica, Grenada, Uruguay, and some other states ruled by leftist governments. Andrés Obrador, the president-elect of Mexico, takes office on Dec. 1. The Mexican leader represents the country’s left wing and looks like a tough nut to crack. Outright pressure may not be helpful in this particular case.  

Now that this new US policy is in place, Moscow and Washington appear to have another divisive issue clouding their relationship. The “troika of tyranny” against which Washington has declared war enjoys friendly relations with Russia.

With Cuba facing tougher restrictions, new opportunities are opening up that will encourage the Russian-Cuban relationship to thrive.   The chairman of the Cuban State Council and Council of Ministers, Miguel Diaz-Canel Bermudez, held talks with Russian President Vladimir Putin during his official visit to Moscow Nov. 1-3.  Their joint statement reaffirmed the strategic and allied relations between the two counties. Their long list of joint projects includes the deployment of a Russian GLONASS ground station in Cuba, which will give it access to a broad array of technical capabilities for satellite and telecommunications services and for taking remote readings of Earth. Russia will modernize Cuba’s railways. Sixty contracts are scheduled to be signed during President Putin’s visit to Cuba next year. Rosneft, the Russian state oil giant, has recently resumed fuel shipments to Cuba and is negotiating a major energy agreement. 

Military cooperation is also to get a boost. The military chiefs are to meet this month to discuss the details. Moscow is considering granting Havana €38 million for Russian arms purchases.

The US-imposed restrictions are a factor spurring Russian exports to Cuba and other regional countries. When the US cut aid to Nicaragua in 2012, Russia increased its economic and military cooperation with that country. The memorandum signed between the Russian and Nicaraguan governments on May 8, 2018 states that the parties are to“mark a new step to boost political dialog” in such areas as “international security and cooperation through various international political platforms.”  Russia accounts for about 90% of Nicaraguan arms and munitions imports. It has far-reaching interests in building the Nicaraguan Canal in its role as a stakeholder and partner responsible for security-related missions. 

President Vladimir Putin offered support for his Venezuelan counterpart Nicolas Maduro after the United States rejected his reelection in May.  Russian energy giant Rosneft plays an important role in that country’s energy sector. It was Russia that came to Venezuela’s rescue in 2017 with a debt-restructuring deal that prevented the default that was looming after the US sanctions were imposed. This was just another example of Moscow lending a helping hand to a Latin American nation that was facing difficult times.

Russia is currently pursuing a number of commercial projects in the region, in oil, mining, nuclear energy, construction, and space services. It enjoys a special relationship with the Bolivarian Alliance for the Peoples of Our America (ALBA), which was founded by Cuba and Venezuela and includes Bolivia, Ecuador, and Nicaragua, among other countries. This grouping is looking to create economic alternatives to Western-dominated financial institutions. This cooperation with Latin American nations goes far beyond ALBA. For instance, the Peruvian air force is in the process of contracting for 24 additional Mi-171s, as well as establishing a maintenance facility for their helicopters near the La Joya base in Arequipa. A contract to upgrade its aging Mig-29 fighters is under consideration. In January 2018, Russia signed a number of economic agreements with Argentina during President Macri’s visit to Moscow.  All in all, trade between Russia and Latin American countries reached $14.5 bln in 2017 and is growing.

RT Spanish was launched in 2009, featuring its own news presenters and programming in addition to translated content, with bureaus operating in Buenos Aires, CaracasHavanaLos AngelesMadridManagua, and Miami.  Russia’s Sputnik media outlet has been broadcasting in Spanish since 2014, offering radio- and web-based news and entertainment to audiences across Latin America.

Some countries may back down under the US sanctions and threats, but many will not. There’s a flip side to everything. The policy could backfire. The harder the pressure, the stronger the desire of the affected nations to diversify their international relations and resist the implementation of the Monroe doctrine that relegates them to the role of America’s backyard. 

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Meet The Ultra-Elite Tenants Of Manhattan’s Most Secretive New Skyscraper

Step aside 15CPW, 432 Park and One57th: New York City’s 220 Central Park South is now considered the city’s most exclusive and expensive new residential development.

Sitting on the south end of Central Park, it is also starting to garner a reputation as one of the most secretive places to live: its developer has not released images of the unit interiors and the chief executive of the tower refuses to take interviews about it, according to a new Wall Street Journal article.

However, an offering plan that was filed with the attorney general’s office reveals that sale prices for the property’s units are going to range from about $12 million to $250 million and the list of some of the buyers – no longer hidden behind anonymous LLCs – is also starting to leak out; it includes Daniel Och, who is chairman of Och-Ziff capital management. Other on the list are Andrew Zaro, chairman of Cavalry Portfolio Services and his wife, and Ofer Yardeni, CEO of Stonehenge Management, is also said to be on the list of buyers. Musician Sting and his wife are also set to be buyers.

220 Central Park South/WSJ

Hedge fund manager Ken Griffin has also contracted to spend more than $200 million on apartments in the building. If Griffin decides to combine these apartments, the resulting unit could be “the most expensive home ever sold the United States”. Still, it wasn’t immediately clear how much any of these prospective buyers actually paid for the units and whether there were any price adjustments.

Many of the contracts for these purchases date back to 2015, a time when the Manhattan real estate boom was in full swing and a money-laundering haven for offshore oligarchs. Many of these contracts are closing only now as the building is finishing completion. Prospective buyers either declined to comment or couldn’t be reached by the WSJ, and representatives from Vornado Realty Trust, the company that is responsible for building the tower, didn’t have any comment.

Since then, Manhattan’s real estate market has slowed down significantly. One real estate agent, Frances Katzen, said she hopes that the closing of these units will help bolster the real estate market in Manhattan yet again, despite the fact that many of the contracts are from three years ago.

Meanwhile, real estate agents are already predicting that the building will set the record for the highest price per square-foot ever obtained for New York City apartment. The previous record was held by 15 Central Park West, which in 2012 sold for $13,000 a foot when Sandy Weill sold his penthouse for $88 million.

Dan Och

Donna Olshan of Olshan Realty disagrees that the building could sway the barometer for the market. “This building cannot be considered a proxy for the market. It’s its own country,” she told the Wall Street Journal.

To be sure, the bad news engulfing the broader Manhattan real estate market have so far skipped this “country” – Vornado announced on a conference call that the building is already 83% sold with 26 of 27 full floor apartments under contract, and each one is said to be priced at $50 million or more. It also revealed that more than half of these deals were done within a year of sales opening in 2015 and Vornado’s chairman stated on its most recent conference call that “220 Central Park South has exceeded all expectations, and is well into a record-setting territory.”

In selling units at 220 Central Park South, secrecy was the right strategy at the time. In 2015, during the midst of the Manhattan real estate boom, keeping things secret instead of touting amenities proved to be a successful strategy in attracting the attention of the tragically hip “savvy” deep pocketed buyers. Whether or not the same strategy would work in 2018 is another story.

“What used to work in those markets does not work now,” Donna Olshan continued.

People familiar with the building have stated that the building includes private dining rooms, an athletic club, a juice bar, a library, a basketball court, a golf simulator and a children’s play area. The building was designed by Robert A.M. Stern, who also designed 15 Central Park West; the building real estate agents most frequently compare 220 Central Park South to. 15 Central Park West has itself has attracted numerous billionaire and celebrity buyers since it was erected in the mid 2000’s. Daniel Och also owns a unit in that building and Sting recently sold his unit there for $50 million.

Meanwhile, away from this bastion of extravagant opulence things are slowing: one month ago we reproted that the Manhattan luxury market was experiencing a rout. When the first signs of stress in Manhattan’s luxury real-estate market started to appear roughly one year ago, we anticipated that the weakness in the high-end would soon spread to the broader market.

In early October, Bloomberg reported that during the three months through September, the number of homes purchased in Manhattan declined for the fourth straight quarter, dropping 11% from a year earlier to 2,987, according to a report Tuesday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Meanwhile, the number of listings climbed 13% to 6,925 homes, the most since 2011.

So in retrospect, those looking for the “top tick” in the Manhattan real estate market, perhaps the days when the ultra-wealthy new buyers at 220 Central Park South were putting pen to paper in 2015 should be a great place to start.

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A Badge Of Shame: The Government’s War On America’s Military Veterans

Authored by John Whitehead via The Rutherford Institute,

For soldiers serving in Afghanistan and Iraq, coming home is more lethal than being in combat.” 

– Brené Brown, research professor at the University of Houston

Not all heroes wear the uniform of war.

In the United States, however, we take particular pride in recognizing as heroes those who have served in the military.

Yet while we honor our veterans with holidays, parades, discounts at retail stores and restaurants, and endless political rhetoric about their sacrifice and bravery, we do a pitiful job of respecting their freedoms and caring for their needs once out of uniform.

Despite the fact that the U.S. boasts more than 20 million veterans who have served in World War II through the present day, the plight of veterans today is America’s badge of shame, with large numbers of veterans impoverished, unemployed, traumatized mentally and physically, struggling with depression, suicide, and marital stress, homeless, subjected to sub-par treatment at clinics and hospitals, and left to molder while their paperwork piles up within Veterans Administration offices.

Still, the government’s efforts to wage war on veterans, especially those who speak out against government wrongdoing, is downright appalling.

Consider: we raise our young people on a steady diet of militarism and war, sell them on the idea that defending freedom abroad by serving in the military is their patriotic duty, then when they return home, bruised and battle-scarred and committed to defending their freedoms at home, we often treat them like criminals merely for having served in the military.

The government even has a name for its war on America’s veterans: Operation Vigilant Eagle.

As first reported by the Wall Street Journal, this Department of Homeland Security (DHS) program tracks military veterans returning from Iraq and Afghanistan and characterizes them as extremists and potential domestic terrorist threats because they may be “disgruntled, disillusioned or suffering from the psychological effects of war.”

Coupled with the DHS’ dual reports on Rightwing and Leftwing “Extremism,” which broadly define extremists as individuals, military veterans and groups “that are mainly antigovernment, rejecting federal authority in favor of state or local authority, or rejecting government authority entirely,” these tactics bode ill for anyone seen as opposing the government.

Yet the government is not merely targeting individuals who are voicing their discontent so much as it is taking aim at individuals trained in military warfare.

Don’t be fooled by the fact that the DHS has gone extremely quiet about Operation Vigilant Eagle.

Where there’s smoke, there’s bound to be fire.

And the government’s efforts to target military veterans whose views may be perceived as “anti-government” make clear that something is afoot.

In recent years, military servicemen and women have found themselves increasingly targeted for surveillance, censorship, threatened with incarceration or involuntary commitment, labeled as extremistsand/or mentally ill, and stripped of their Second Amendment rights.

An important point to consider, however, is that under the guise of mental health treatment and with the complicity of government psychiatrists and law enforcement officials, these veterans are increasingly being portrayed as threats to national security.

This is not the first time that psychiatry has been used to exile political prisoners.

Many times throughout history in totalitarian regimes, such governments have declared dissidents mentally ill and unfit for society as a means of rendering them disempowering them.

As Pulitzer Prize-winning author Anne Applebaum observes in Gulag: A History: “The exile of prisoners to a distant place, where they can ‘pay their debt to society,’ make themselves useful, and not contaminate others with their ideas or their criminal acts, is a practice as old as civilization itself. The rulers of ancient Rome and Greece sent their dissidents off to distant colonies. Socrates chose death over the torment of exile from Athens. The poet Ovid was exiled to a fetid port on the Black Sea.”

For example, government officials in the Cold War-era Soviet Union often used psychiatric hospitals as prisons in order to isolate political prisoners from the rest of society, discredit their ideas, and break them physically and mentally through the use of electric shocks, drugs and various medical procedures.

Insisting that “ideas about a struggle for truth and justice are formed by personalities with a paranoid structure,” the psychiatric community actually went so far as to provide the government with a diagnosis suitable for locking up such freedom-oriented activists.

In addition to declaring political dissidents mentally unsound, Russian officials also made use of an administrative process for dealing with individuals who were considered a bad influence on others or troublemakers.

Author George Kennan describes a process in which:

The obnoxious person may not be guilty of any crime . . . but if, in the opinion of the local authorities, his presence in a particular place is “prejudicial to public order” or “incompatible with public tranquility,” he may be arrested without warrant, may be held from two weeks to two years in prison, and may then be removed by force to any other place within the limits of the empire and there be put under police surveillance for a period of from one to ten years. Administrative exile–which required no trial and no sentencing procedure–was an ideal punishment not only for troublemakers as such, but also for political opponents of the regime.

Sound familiar?

This age-old practice by which despotic regimes eliminate their critics or potential adversaries by declaring them mentally ill and locking them up in psychiatric wards for extended periods of time is a common practice in present-day China.

What is particularly unnerving, however, is how this practice of eliminating or undermining potential critics, including military veterans, is happening with increasing frequency in the United States.

Remember, the National Defense Authorization Act (NDAA) opened the door for the government to detain as a threat to national security anyone viewed as a troublemaker. According to government guidelines for identifying domestic extremists—a word used interchangeably with terrorists—technically, anyone exercising their First Amendment rights in order to criticize the government qualifies.

It doesn’t take much anymore to be flagged as potentially anti-government in a government database somewhere—Main Core, for example—that identifies and tracks individuals who aren’t inclined to march in lockstep to the government’s dictates.

In fact, as the Washington Post reports, communities are being mapped and residents assigned a color-coded threat score—green, yellow or red—so police are forewarned about a person’s potential inclination to be a troublemaker depending on whether they’ve had a career in the military, posted a comment perceived as threatening on Facebook, suffer from a particular medical condition, or know someone who knows someone who might have committed a crime.

The case of Brandon Raub is a prime example of Operation Vigilant Eagle in action.

Raub, a 26-year-old decorated Marine, actually found himself interrogated by government agents about his views on government corruption, arrested with no warning, labeled mentally ill for subscribing to so-called “conspiratorial” views about the government, detained against his will in a psych ward for standing by his views, and isolated from his family, friends and attorneys.

On August 16, 2012, a swarm of local police, Secret Service and FBI agents arrived at Raub’s Virginia home, asking to speak with him about posts he had made on his Facebook page made up of song lyrics, political opinions and dialogue used in a political thriller virtual card game.

Among the posts cited as troublesome were lyrics to a song by a rap group and Raub’s views, shared increasingly by a number of Americans, that the 9/11 terrorist attacks were an inside job.

After a brief conversation and without providing any explanation, levying any charges against Raub or reading him his rights, Raub was then handcuffed and transported to police headquarters, then to a medical center, where he was held against his will due to alleged concerns that his Facebook posts were “terrorist in nature.”

Outraged onlookers filmed the arrest and posted the footage to YouTube, where it quickly went viral. Meanwhile, in a kangaroo court hearing that turned a deaf ear to Raub’s explanations about the fact that his Facebook posts were being read out of context, Raub was sentenced to up to 30 days’ further confinement in a psychiatric ward.

Thankfully, The Rutherford Institute came to Raub’s assistance, which combined with heightened media attention, brought about his release and may have helped prevent Raub from being successfully “disappeared” by the government.

Even so, within days of Raub being seized and forcibly held in a VA psych ward, news reports started surfacing of other veterans having similar experiences.

“Oppositional defiance disorder” (ODD) is another diagnosis being used against veterans who challenge the status quo. As journalist Anthony Martin explains, an ODD diagnosis

“denotes that the person exhibits ‘symptoms’ such as the questioning of authority, the refusal to follow directions, stubbornness, the unwillingness to go along with the crowd, and the practice of disobeying or ignoring orders. Persons may also receive such a label if they are considered free thinkers, nonconformists, or individuals who are suspicious of large, centralized government… At one time the accepted protocol among mental health professionals was to reserve the diagnosis of oppositional defiance disorder for children or adolescents who exhibited uncontrollable defiance toward their parents and teachers.”

Frankly, based on how well my personality and my military service in the U.S. Armed Forces fit with this description of “oppositional defiance disorder,” I’m sure there’s a file somewhere with my name on it.

That the government is using the charge of mental illness as the means by which to immobilize (and disarm) these veterans is diabolical. With one stroke of a magistrate’s pen, these veterans are being declared mentally ill, locked away against their will, and stripped of their constitutional rights.

If it were just being classified as “anti-government,” that would be one thing.

Unfortunately, anyone with a military background and training is also now being viewed as a heightened security threat by police who are trained to shoot first and ask questions later.

Feeding this perception of veterans as ticking time bombs in need of intervention, the Justice Department launched a pilot program in 2012 aimed at training SWAT teams to deal with confrontations involving highly trained and often heavily armed combat veterans.

The result?

Police encounters with military veterans often escalate very quickly into an explosive and deadly situation, especially when SWAT teams are involved.

For example, Jose Guerena, a Marine who served in two tours in Iraq, was killed after an Arizona SWAT team kicked open the door of his home during a mistaken drug raid and opened fire. Thinking his home was being invaded by criminals, Guerena told his wife and child to hide in a closet, grabbed a gun and waited in the hallway to confront the intruders. He never fired his weapon. In fact, the safety was still on his gun when he was killed. The SWAT officers, however, not as restrained, fired 70 rounds of ammunition at Guerena—23 of those bullets made contact. Apart from his military background, Guerena had had no prior criminal record, and the police found nothing illegal in his home.

John Edward Chesney, a 62-year-old Vietnam veteran, was killed by a SWAT team allegedly responding to a call that the Army veteran was standing in his San Diego apartment window waving what looked like a semi-automatic rifle. SWAT officers locked down Chesney’s street, took up positions around his home, and fired 12 rounds into Chesney’s apartment window. It turned out that the gun Chesney reportedly pointed at police from three stories up was a “realistic-looking mock assault rifle.”

Ramon Hooks’ encounter with a Houston SWAT team did not end as tragically, but it very easily could have. Hooks, a 25-year-old Iraq war veteran, was using an air rifle gun for target practice outside when a Homeland Security Agent, allegedly house shopping in the area, reported him as an active shooter. It wasn’t long before the quiet neighborhood was transformed into a war zone, with dozens of cop cars, an armored vehicle and heavily armed police. Hooks was arrested, his air rifle pellets and toy gun confiscated, and charges filed against him for “criminal mischief.”

Given the government’s increasing view of veterans as potential domestic terrorists, it makes one think twice about government programs encouraging veterans to include a veterans designation on their drivers’ licenses and ID cards.

Hailed by politicians as a way to “make it easier for military veterans to access discounts from retailers, restaurants, hotels and vendors across the state,” it will also make it that much easier for the government to identify and target veterans who dare to challenge the status quo.

Remember: no one is spared in a police state.

Eventually, as I make clear in my book Battlefield America: The War on the American People, we all suffer the same fate.

It stands to reason that if the government can’t be bothered to abide by its constitutional mandate to respect the citizenry’s rights—whether it’s the right to be free from government surveillance and censorship, the right to due process and fair hearings, the right to be free from roadside strip searches and militarized police, or the right to peacefully assemble and protest and exercise our right to free speech—then why should anyone expect the government to treat our nation’s veterans with respect and dignity?

So if you really want to do something to show your respect and appreciation for the nation’s veterans, here’s a suggestion: skip the parades and the retail sales and the flag-waving and instead go exercise your rights—the freedoms that those veterans risked their lives to protect—by pushing back against the government’s tyranny.

Freedom is not free.

It’s time the rest of the nation started to pay the price for the freedoms we too often take for granted.

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“We Feel Comfortable Back-to-Back”: The Unlikely Comrades Of Trump’s Trade War

“There is no sense of threat from Russia. We feel comfortable back-to-back.” A new deep dive by Bloomberg examining the growing closeness of Russia and China as both face down increased U.S. pressures and sanctions contains some deeply revealing quotes by analysts as well as a high official in the Chinese communist government reacting to Trump’s trade war. 

Russia and China, Bloomberg begins, are currently “as close as at any time in their 400 years of shared history.”

Toasting a $400 billion energy deal in 2014, via WSJ

This is due to a perhaps “forced” and largely externally driven developing reconfiguration of the Eastern hemisphere’s superpowers — for most of their history longtime rivals — which involves, as Bloomberg summarizes:

Chinese investment and energy purchases make it easier for Russia to resist economic pressure over Ukraine; Russian sales of oil, missile defense systems, and jets are changing U.S. calculations in the Pacific by raising the potential cost of any future showdown with China.

Fu Ying, the chairwoman of the Foreign Affairs Committee of China’s National People’s Congress, said while confirming the reality that China and Russia now find themselves in the same trenches: “I just hope that if some people in the U.S. insist on dragging us down the hill into Thucydides’ trap, China will be smart enough not to follow.”

Indeed to step back and review the breadth of Russia-China cooperation over the past couple years alone reveals the full potential “cost” of a US-China conflict, given the ways Russia could easily be pulled in. Fu Ying articulated the increasingly common view from Beijing, that “There is no sense of threat from Russia” and that “We feel comfortable back-to-back.”

And participants in a recent study by the National Bureau of Asian Research, a Seattle-based think tank, actually agree. They were asked whether American policy was at fault for pushing China and Russia into closer cooperation, and alarmingly, as Bloomberg notes: “Some among the 100-plus participants called for Washington to prepare for the worst-case scenario the realignment implies: a two-front war.”

Here’s but a partial list of the way Sino-Russian relations have been transformed in recent years:

  • China is now Russia’s biggest single trade partner.
  • Since 2015 Russia has been China’s top supplier of crude oil, displacing Saudi Arabia. Early this year Russia ramped up its capacity to pipe crude oil to China, to about 600,000 barrels per day, which is about double the prior capability
  • Increased coordination at the U.N. Security Council.
  • Regional coordination in Asia, such as Russia supplying the engines for Chinese-Pakistani fighter jets, resulting in an increasingly worried India which is seeing Russia move into the Chinese orbit instead of being an arbiter in Chinese-Pakistani relations
  • The cooperative “NATO-lite” Shanghai Cooperation Organization.
  • The “bromance” at recent summits between Vladimir Putin and Xi Jinping, who meet each other with increased regularity.
  • Joint military exercises between the two are now routine.
  • This year Russia supplied China with its most advanced S-400 air defense system as well as Sukhoi SU-35 fighter aircraft
  • Increased willingness on the part of Russia to thwart Washington’s argument that China is a threat to Moscow’s aims in the East.
  • The new “Power of Siberia” natural gas pipeline set to start pumping 38 billion cubic meters (1.3 trillion cubic feet) of natural gas per year to northern China in December 2019. 
  • Increasingly discovering non-conflicting interests: Europe and China “are two independent destinations and two independent routes” for gas and oil, Russian Energy Minister Alexander Novak said in an October interview. “We do not see any need to redirect volumes.”
Power of Siberia natural gas pipeline. Gazprom

One observer of Sino-Russian relations and their increased military cooperation, Florence Cahill, recently summarized, “Both Beijing and Moscow are looking to demonstrate that trade wars and sanctions will only push them to develop new alliances.” 

Cahill explained further, “As long as their prevailing worldview is shaped by an animus towards a US-led international order, co-operation on all levels between Moscow and Beijing will likely be more pronounced than competition between them.”

This echoes precisely what President Xi affirmed to Putin  during their last major summit: “Both nations have to oppose unilateralism and trade protectionism, and build a new type of international relations and shared human destiny,” he said. 

It appears the blowback from Trump’s trade war with China will be a hastening in this “new type of relations” between the two superpowers in the East and it may soon reach a point at which the U.S. will have fewer and fewer options, but only to sit back and watch. 

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