After Amazon decided not to open a New York City headquarters in February, CEO Jeff Bezos made a phone call to the city’s former mayor.
during the Statue Of Liberty Museum Opening Celebration on May 15, 2019. (Photo by Kevin Mazur/Getty Images for Statue Of Liberty-Ellis Island Foundation)
Bezos wanted to know if Bloomberg would consider running for president in 2020 – which the New York billionaire said ‘no’ to at the time.
Bloomberg, meanwhile, asked Bezos if he would reconsider putting their HQ2 in New York, to which Bezos similarly said ‘no,’ according to Recode.
Now, months later, Bloomberg is in fact on the cusp of entering the race for the Democratic nomination as he’s watched the party’s leading moderate, former Vice President Joe Biden, struggle. On Friday, Bloomberg filed paperwork to qualify for the presidential primary in Alabama, which has the earliest deadline of any state. He has still not announced his candidacy.
As Recode notes, it’s understandable that Bezos would endorse an alternative to Elizabeth Warren and Bernie Sanders – both of whom want to separate him from billions of dollars with their new wealth tax proposals.
Both Democratic Senators have also been vocal critics of Amazon – ranging from knocking the company’s notoriously poor working conditions in its warehouses, to its growing power over various industries. Warren has notably proposed a plan to break up Amazon and other tech giants.
According to the report, some believe a Bloomberg run would actually help Warren’s chances by weakening moderate democrat Joe Biden.
Edward Griffin, author of the wildly popular book about the Federal Reserve “The Creature from Jekyll Island,” is holding a conference this weekend called “Red Pill Expo.”
It is all about waking people up from the illusions they are being told. Griffin explains, “The illusions are in health, in politics and in education. The illusions are in the media, in money and in banking, which is my specialty. So, people are coming, some of whom are informed, but most respond to the slogan we are using for the “Red Pill Expo,” and the slogan is ‘Because you know something is wrong.’ That sort of spells it out for most people, not just in America, but for people all over the world. People everywhere are being fed propaganda, lies and false stimuli of all kinds, but deep in their hearts, deep in their instincts, they know something is wrong.”
What’s wrong in the financial world with the longest expansion in history and the Fed starting QE (money printing) again? Griffin says:
“We are living in a system of the banks, by the banks and for the banks, and that is the reality…
They see that the wheels are coming off… The system of inflation in which we live cannot go on forever…
All systems of exponential growth always collapse. They come to an end at some point, and it’s hard to tell exactly at what point, but you do know there is a breaking point where it just moves beyond reality. The banks know this better than anybody. So, I am assuming that they feel they are at the end. You can smell it. You can see it. You can touch it almost. So, what do you do? …
I think their thinking is, hey, we are at the end and let’s just grab all we can so when the system collapses, we will be okay. That is kind of a crude way of putting it, but I think they are going for broke because they know it is broke, and there is not much they can do about it.”
So, what’s the plan by the bankers? Griffin says, “I think I know…”
“They are waiting for the big collapse to come. They will personally be okay because they will have amassed hard assets. They are trying to hold all the gold, all the silver, all the real estate and all the stuff that has value. They want all the tools, factories and food supplies, but everything else, based on numbers, paper and debt, that will collapse. So, they will be able to pick up everything for pennies on the dollar.”
What does the little guy do? G. Edward Griffin says simply, “Hold hard assets.” Griffin also says,
“This question usually comes in the form of what does the average guy do? …The answer is if you want to do something, stop being average. You’ve got to climb up out of that level. You have to become un-average. You have to start asking questions, and stand up and take it on the chin now and again. You’ve got to get into the fray. Join the battle. Speak up and join with others with like minds, and start becoming active in the political arena.”
Join Greg Hunter as he goes One-on-One with G. Edward Griffin, author of “The Creature from Jekyll Island” and founder of the upcoming “Red Pill Expo.”
Leaked US Memo Confirms NATO Ally Turkey Pursuing “Intentioned Ethnic Cleansing” In Syria
Though Erdogan has never made a secret of his desire to redraw Syria’s map of Kurds and Arabs via his Turkish military incursion in northern Syria, and in the months prior to his ordering the operation even made statements tantamount to an open policy of ethnic cleansing, it was surprising how easily the White House gave the green light a month ago despite Ankara’s stated aims.
But now a leaked internal US government memo published by The New York Timesspells it out clearly, and underscores the fact that everyone in Washington knows NATO’s second largest military is now engaged in ongoing ethnic cleansing. The internal State Department memo states bluntly the Turks are conducting “an intentioned-laced effort at ethnic cleansing”.
Turkish-backed Islamist fighters in Manbij, via the AP.
It was authored by William Roebuck, Americas top diplomat in northern Syria, who for years previously served as the Deputy Chief of Mission in Syria. He was also recently the US Ambassador to Bahrain.
The most shocking line among its 3200 total words are as follows:
“Turkey’s military operation in northern Syria, spearheaded by armed Islamist groups on its payroll, represents an intentioned-laced effort at ethnic cleansing.”
The memo further describes Turkey’s Islamist ground proxies in the so-called ‘Syrian National Army’ (or formerly FSA) as carrying out horrific human rights violations and summary executions of Kurdish fighters and civilians, calling the abuses “what can only be described as war crimes and ethnic cleansing.”
Roebuck’s internally circulated memo, later leaked to the press, is considered the first broad dissent memo decrying President Trump’s policy to dump the Kurds by withdrawing from the border areas.
The memo urged greater US action in pushing back against invading Turkish forces: “we have a chance to minimize the damage for us and hopefully correct some of the impact of Turkey’s current policies, as we seek to implement the president’s guidance for our presence in northeastern Syria,” it said. Roebuck also called America’s current policy in Syria “a catastrophic sideshow”.
Via AP/Axios
“One day when the diplomatic history is written,” he said, “people will wonder what happened here and why officials didn’t do more to stop it or at least speak out more forcefully to blame Turkey for its behavior…” in reference to Ankara’s ethnic cleansing campaign which has brought Syrian Kurds and Christians in its cross hairs.
“President Trump has been clear and consistent about wanting to get our forces out of Syria,” Roebuck concluded. “The residual presence to protect the oil and fight ISIS buys us some time,” he noted.
Meanwhile, despite intense strain in US-Turkey ties over the past months, also related to Ankara’s S-400 purchase from Russia and the stalled F-35 program, both the Trump administration and Erdogan’s office have confirmed the Turkish president’s Nov. 13 visit to the White House will happen as scheduled.
Just recently, we released a study for our RIAPro Subscribers (30-Day Free Trial)on historical QE programs and what sectors, markets, and commodities perform best. (If you subscribe for a 30-day Free Trail you can read the entire report “An Investor’s Guide To QE-4.”)
“On October 9, 2019, the Federal Reserve announced a resumption of quantitative easing (QE). Fed Chairman Jerome Powell went to great lengths to make sure he characterized the new operation as something different than QE. Like QE 1, 2, and 3, this new action involves a series of large asset purchases of Treasury securities conducted by the Fed. The action is designed to pump liquidity and reserves into the banking system.
Regardless of the nomenclature, what matters to investors is whether this new action will have an effect on asset prices similar to prior rounds of QE. For the remainder of this article, we refer to the latest action as QE 4.
To quantify what a similar effect may mean, we start by examining the performance of various equity indexes, equity sectors, commodities, and yields during the three prior QE operations. We then normalize the data for the duration and amount of QE to project what QE 4 might hold in store for the assets.”
The following is one of the tables from article.
As you will notice, all major markets increased in value during QE-1, 2, and 3.
Since the market increased each time the Fed engaged in monetary programs, it should not besurprising investors now have a “Pavlovian” response to the Fed “ringing the bell.”
Over the last month, we have been discussing the end of the year rally which would be supported by both the Fed, and a “trade deal.”
This past week, as expected, headlines were floated which suggested that tariffs would be reduced in exchange for essentially nothing, This is precisely the case we laid out in September:
“Trump can set aside the last 20%, drop tariffs, and keep market access open, in exchange for China signing off on the 80% of the deal they already agreed to.
For Trump, he can spin a limited deal as a ‘win’ saying ‘China is caving to his tariffs’ and that he ‘will continue working to get the rest of the deal done.’ He will then quietly move on to another fight, which is the upcoming election, and never mention China again. His base will quickly forget the ‘trade war’ ever existed.
Kind of like that ‘Denuclearization deal’ with North Korea.”
We followed that in early October by laying out the case for the “trade deal” to push the markets to 3300:
“Assuming we are correct, and Trump does indeed ‘cave’ into China in mid-October to get a ‘small deal’ done, what does this mean for the market.
The most obvious impact, assuming all ‘tariffs’ are removed, would be a psychological ‘pop’ to the markets which, given that markets are already hovering near all-time highs, would suggest a rally into the end of the year.”
“Clearly, the Fed is concerned about something other than the impact of ‘Trump’s Trade War’ on the economy. In the meantime, the injection of liquidity continues to support asset prices as the litany of ‘algo’s’ which drive -80% of the trading on Wall Street, respond to more liquidity.”
That is where we are today.
The questions now are:
How do you play it; and,
What happens next?
How To Play It
As we have been noting over the last month, with the Fed’s more accommodative positioning, we continue to maintain a long-equity bias in our portfolios currently. We have reduced our hedges, along with some of our more defensive positioning. We are also adding opportunistically, to our equity allocations, even as we carry a slightly higher than normal level of cash along with our fixed income positioning.
Currently, it will likely pay to remain patient as we head into the end of the year. With a big chunk of earnings season now behind us, and economic data looking weak heading into Q4, the market has gotten a bit ahead of itself over the last two weeks.
On a short-term basis, the market is now more than 6% above its 200-dma. These more extreme price extensions tend to denote short-term tops to the market, and waiting for a pull-back to add exposures has been prudent.
Also, the majority of our indicators are back to more extreme overbought readings, which have typically denoted short-term tops at a minimum.
As I noted last week:
“Given the markets tend to pullback just before Thanksgiving, and during the second week of December, we will have a better opportunity increase allocations if we are patient.“
Once we see that pullback, or even a slight consolidation of the recent advance, we can increase allocations in portfolios towards more equity related exposure.
This begs the question of “what to buy,” which brings us back to our recent RIAPRO.NET article:
“If we assume that assets will perform similarly under QE 4, we can easily forecast returns using the normalized data from above. The following three tables show these forecasts. Below the tables are rankings by asset class as well as in aggregate. For purposes of this exercise, we assume, based on the Fed’s guidance, that they will purchase $60 billion a month for six months ($360 billion) of U.S. Treasury Bills.
The expected top five performers during QE4 on a normalized basis from highest to lowest are: Silver, S&P 400, Discretionary stocks, S&P 600, and Crude Oil.
I would highly suggest reading the whole article.
What Happens Next?
Michael Lebowitz, CFA recently penned:
“A Honus Wagner baseball card from 1909 was recently auctioned for over $3 million. While that may seem like a lot of money, it is not necessarily expensive. A baseball card is nothing more than paper and ink with no real value. Its street value, or price, is based on the whims of collectors. “Whim” is impossible to value.
Stocks are not baseball cards. Stocks represent ownership in a corporation, and therefore, their share prices are based on a future series of expected earnings and cash flows. Further, there are many other types of investments that serve not only as alternatives, but provide a means to assess relative value.
Today, investors are trading stocks on a “whim,” with scant attention to their value. Unlike a baseball card, when a stock’s street value rises much more than its real value, an inevitable correction will occur. The only question is not if but when will investors realize what they are truly buying.”
There is an important distinction to be made here between “investing” vs. “speculating.”
Benjamin Graham, in his seminal work Security Analysis (1934) defined investing as:
“An operation in which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative.”
The problem is that today, the term “investor” is now being applied ubiquitously to anyone who participates in the stock market. As Graham noted later in “The Intelligent Investor:”
“The newspaper employed the word ‘investor’ in these instances because, in the easy language of Wall Street, everyone who buys or sells a security has become an investor, regardless of what he buys, or for what purpose, or at what price, or whether for cash or on margin.”
To understand “what happens next,” one must understand the difference between “investment” and “speculation.”
“With cash levels at the lowest level since 1997, and equity allocations near the highest levels since 1999 and 2007, it suggests investors are now functionally ‘all in.’”
With investors paying exceptionally high prices for equity ownership, expected forward returns becomes much more problematic. As we addressed on Thursday:
“The detachment of the stock market from underlying profitability guarantees poor future outcomes for investors. But, as has always been the case, the markets can certainly seem to ‘remain irrational longer than logic would predict,’ but it never lasts indefinitely.
‘Profit margins are probably the most mean-reverting series in finance, and if profit margins do not mean-revert, then something has gone badly wrong with capitalism. If high profits do not attract competition, there is something wrong with the system, and it is not functioning properly.’” – Jeremy Grantham
Another way to look at the issue of profits as it relates to the market is shown below. When we measure the cumulative change in the S&P 500 index as compared to the level of profits, we find again that when investors pay more than $1 for a $1 worth of profits there is an eventual mean reversion.
With investors paying more today than at any point in history for each $1 of profit, the next mean reversion will be a humbling event.
That is just math.
However, in the meantime, individuals are “speculating” within the markets based solely on the premise that a “greater fool” will be there when the time comes to sell.
Unfortunately, that is rarely the case.
There are virtually no measures of valuation which suggest making investments today, and holding them for the next 20-30 years, will work to any great degree.
This is the difference between “investing” and “speculation.”
When you think about QE-4, as it relates to your portfolio, you have to consider the premise of valuations, margin of safety, and risk. Yes, the markets are indeed bullish by all measures, and holding risk will likely pay off in the short-term. (speculation) However, over the long-term, the “house will always win.” (investing)
Schiff explains in a letter to Rep. Devin Nunes that the whistleblower’s testimony is “redundant and unnecessary,” claiming that the impeachment inquiry has gathered evidence that “not only confirms, but far exceeds” information in the original complaint.
Schiff also made it clear that the impeachment inquiry will not be used to investigate former Vice President Joe Biden and his son, Hunter Biden, or allegations of Ukrainian meddling in the 2016 U.S. presidential elections.
Schiff’s stunningly hypocritical response to Nunes is below:
Dear Ranking Member Nunes:
The Committee is in receipt of your letter, dated today, proposing witnesses for the impeachment inquiry’s open hearings. The Committee is carefully evaluating the witness list you provided, along with the written justifications you included.
Consistent with H. Res. 660 and as noted in my November 6, 2019 letter, the Committee will give due consideration to witnesses within the scope of the impeachment inquiry.
In doing so, the Committee is mindful that this inquiry is a solemn undertaking, enshrined by the Founders in the Constitution, to determine whether the President of the United States warrants impeachment by the House of Representatives.
As we move to open hearings, it is important to underscore that the impeachment inquiry, and the Committee, will not serve as vehicles for any Member to carry out the same sham investigations into the Bidens or debunked conspiracies about 2016 U.S. election interference that President Trump pressed Ukraine to conduct for his personal political benefit.
The Committee also will not facilitate efforts by President Trump and his allies in Congress to threaten, intimidate, and retaliate against the whistleblower who courageously raised the initial alarm. It remains the duty of the Intelligence Committee to protect whistleblowers, and until recently, this was a bipartisan priority. The whistleblower has a right under laws championed by this Committee to remain anonymous and to be protected from harm.
The impeachment inquiry, moreover, has gathered an ever-growing body of evidence – from witnesses and documents, including the President’s own words in his July 25 call record – that not only confirms, but far exceeds, the initial information in the whistleblower’s complaint.
The whistleblower’s testimony is therefore redundant and unnecessary.
In light of the President’s threats, the individual’s appearance before us would only place their personal safety at grave risk.
As a reminder, Schiff initially said the whistleblower would testify to Congress but backed away after the contact between the person and his team was revealed.
This latest decision comes after Nunes complained that Democrats had yet to treat President Trump with “fairness” in the impeachment process, directing witnesses not to answer questions from GOP committee members and withholding transcripts.
Hunter Biden: The son of former Vice President Joe Biden, and a former board member for Burisma Holdings, a Ukrainian gas company that has been plagued for years by corruption concerns. President Donald Trump asked Ukraine’s president in a July 25 phone call to consider investigating whether Joe Biden pressured the Ukrainian government in 2016 to shut down an investigation of Burisma.
Alexandra Chalupa: A former DNC consultant who met with Ukrainian embassy officials during the 2016 presidential campaign. Chalupa, who is Ukrainian-American, dug up dirt on Trump campaign chairman Paul Manafort.
David Hale: The undersecretary of state for political affairs. Hale testified in a closed-door deposition Wednesday.
Tim Morrison: The former senior director for European and Eurasian affairs on the National Security Council. Morrison is one of only two individuals, including National Security Council’s Ukraine director, Lt. Col. Alexander Vindman, to have listened to the July 25 phone call between Trump and Zelensky. Morrison testified that he did not hear anything illegal on the call, while Zelensky, who will be called to testify by Democrats, said that he had serious concerns with what Trump said in the call.
Nellie Ohr: The wife of Justice Department official Bruce Ohr, and a former contractor for Fusion GPS. Ohr told Congress in an Oct. 19, 2018, interview that Serhiy Leshchenko, a former Ukrainian lawmaker and investigative journalist, was a source of information for Fusion GPS, which peddled the infamous Steele dossier. Leshchenko, who has acknowledged having contact with Chalupa, helped publish information in August 2016 that led to Manafort’s firing as Trump campaign chairman.
Kurt Volker: The former special envoy to Ukraine. Volker was a liaison between Rudy Giuliani and the Zelensky administration. He testified Oct. 3 that he did not witness a Trump quid pro quo to Ukraine.
What are the odds that any of these people will be allowed by Schiff?
Today, YouGov released polls for every region. Let’s go over them all.
Regional Voting Intention Wales
Wales is divided into forty Parliamentary constituencies. After the General Election of June 2017 and a by-election in August 2019, 28 are represented by Labour MPs, 7 by Conservative MPs, 4 by Plaid Cymru MPs, and one by a Liberal Democrat MP.
On a 49-34 percentage lead in votes, Labour held a 28-7 seat advantage over the Tories.
Expect a Tory pickup of 8 seats.
North East – You Gov
Westminster voting intention in the NORTH EAST (17-28 Oct)
The region of North East England is divided into 29 parliamentary constituencies which is made up of 19 Borough Constituencies and 10 County Constituencies. Since the General Election of June 2017, 26 are represented by Labour MPs and 3 by Conservative MPs.
The Brexit Party could be a killer here. If they stood aside, I would expect the Tories to win about 16 seats. That’s a pickup of 13.
The latest poll suggests a pickup of about 6-9 seats for the Tory Party. Call it 6.
North West – You Gov
Look at these Tory poll ratings in Brexit heartlands from @YouGov – leading in North West and Yorkshire, after decades lagging behind Labour. And neck and neck in Wales. I’m treating all polling with a pinch of salt, but this is a pretty clear vindication of Tory tactics. #GE2019pic.twitter.com/bPlwi052Ey
The region of North West England is divided into 75 parliamentary constituencies which is made up of 39 Borough Constituencies and 36 County Constituencies. Since the General Election of June 2017, 20 are represented by Conservative MPs, 54 by Labour MPs, and 1 by Liberal Democrat MPs.
With a 55-33 margin in favor of Labour over the Tories, the Tories managed 20 out of 75 seats.
The Tories are now leading 36-30. A pickup of 20 seats (40 Tory, 35 Other), seems reasonable.
The Brexit Party may cost additional pickups, but not as many as in the North East given the Tory majority.
Scotland Current MP Makeup
Regional Voting Intent Scotland
Labour will be wiped out in Scotland. With these numbers it is a bit unreasonable to expect a total blowout where conservatives lose every seat. Let’s assume they hold 4.
Regional Voting Intention Northshire and Humber
The region of Yorkshire and the Humber is divided into 54 parliamentary constituencies which is made up of 25 Borough Constituencies and 29 County Constituencies. As of September 2019 17 are represented by Conservative MPs, 35 by Labour MPs, 1 Liberal Democrat MP and 1 Independent MP.
That makeup was with a 49-34 advantage of Labour over the Tories.
I suggest a Tory pickup of 15 or more. Call it 15.
Regional Voting Intention East Midlands
The region of East Midlands is divided into 46 parliamentary constituencies which is made up of 12 Borough Constituencies and 34 County Constituencies. Since the General Election of June 2017, 31 are represented by Conservative MPs and 15 by Labour MPs.
With a 51-41 (10-point) lead, the Tories had a 31-15 seat advantage. The Tory lead is now 13 points.
Expect a pickup of 5-8 seats. Call it 6.
Regional Voting Intention West Midlands
The ceremonial county of West Midlands, England is divided into 28 parliamentary constituencies, each of which elect one Member of Parliament (MP) to the House of Commons.
Despite a 49-43 lead over Labour in 2017, Labour held 20 seats with the Tories 8.
With a 43-23 lead, expect a reversal. Tories +12.
Regional Voting Intention East of England
The region of East of England is divided into 58 parliamentary constituencies which is made up of 16 Borough Constituencies and 42 County Constituencies. Since the General Election of June 2017, 50 are represented by Conservative MPs, 7 by Labour MPs, and 1 by Liberal Democrat MPs.
On a 55-33 vote in 2017, the Tories held 50 MPs with Labour only 7.
Assume a modest gain of 2 but with Labour losing a handful more to the Liberal Democrats.
Regional Voting Intention South East
The region of South East is divided into 84 parliamentary constituencies which is made up of 23 Borough Constituencies and 61 County Constituencies. 60 are represented by Conservative MPs, 11 by Independent MPs, 8 by Labour MPs, 3 by Liberal Democrat MPs, 1 by Green MPs and the Speaker of the House of Commons.
On a 54-29 vote percentage the Tories held 60 of 81 seats.
They rate to pick up 5-8. Call it +5. Labour rates to get smashed to 0-2 seats.
Regional Voting Intention Greater London
The region of Greater London, including the City of London, is divided into 73 parliamentary constituencies which are sub-classified as borough constituencies, affecting the type of electoral officer and level of expenses permitted. As of September 2019, 46 are represented by Labour MPs, 19 by Conservative MPs, 4 by Liberal Democrat MPs, 2 by The Independent Group for Change, and 2 are held by independents.
On a 55-33 voting lead (22 points) over the Tories, Labour held an edge in seats of 46-19.
The lead is now down to 10 points. Expect a Tory pickup 8 seats.
Regional Voting Intention South West
The region of South West England has, since the 2010 general election, 55 parliamentary constituencies which is made up of 15 Borough Constituencies and 40 County Constituencies. In the 2017 general election, the Conservatives remained, by far, the largest party with 47 seats, though losing three to Labour, who won 7, and one to the Liberal Democrats, who won 1.
On a 51-29 lead in votes (22 points) the Tories held a seat advantage over Labour by a 47-7 margin. The lead is now down to 20 not over Labour, but over the Liberal Democrats.
This is another region in which the Brexit Party might hurt the Tories significantly.
I expect a loss of about 5 seats but also with Labour getting clobbered by the Liberal Democrats.
Expected Gains vs Starting Scenario
London: +8
Wales: +8
North East: +6
North West: +20
Scotland: +4
Yorkshire and Humber: +15
East Midlands: +6
West Midlands: +12
East of England: +2
South East: +5
South West: -5
That is a total of +81 seats.
From the starting point of 270, the Tories are up to 351. That’s a majority of 31.
Most of the polls are a bit out of date, but not radically so.
Best Case Scenario
The best case scenario could easily be above 351.
Let’s assume YouGov is way off, possibly even low.
Expected Gains Range vs Starting Scenario
London: +5 to +10.
Wales: +6 to +10.
North East: +3 to +8.
North West: +15 to +22.
Scotland: +0 to +6.
Yorkshire and Humber: +10 to +20.
East Midlands: +3 to +9.
West Midlands: +9 to +16.
East of England: +0 to +4.
South East: +3 to +7.
South West: -7 to +0.
Expected Range
37 + 270 = 307.
112 +270 = 382.
The first is a hung parliament.
The second is the mother of all blowouts.
And it is not all that unlikely.
Note that Electoral Calculus expects 373 seats.
Probabilities Based on Current Polls
Outright Labour Win: 2%
Hung Parliament: 23%
Small Majority (by 1-6 seats): 15%
Medium Majority (by 7-20 seats): 25%
Big Majority (by 21-40 seats): 20%
Blowout (over 40 seats): 15%
Divide and Concur
If these polls are remotely close, and I believe they are, Johnson’s strategy of splitting Labour and the Liberal democrats is working precisely as planned.
Broke Bond Markets Mounting: Italy Surpasses Greece As Europe’s Riskiest Sovereign
As yields soar optimistically around the world, pushing negative-yielding debt below $12 trillion – the lowest since June, but hey, it’s still $12,000,000,000,000 of insanity, central-planners’ incessant meddling with global markets has sparked another WTF-moment in capital market history.
A mere twelve trillion dollars worth of nonsense debt remains…
Source: Bloomberg
And, as The FT reports,for the first time since 2008, Greece has lost the dubious distinction of being the riskiest government borrower in the eurozone after its bond yields dipped below Italy’s…
Source: Bloomberg
Greek bonds have soared this year as investors hungry for yields have snapped up debt from former euro area crisis spots — a trend that gained further momentum after S&P’s upgraded Athens’ credit rating to BB- late last month.
As FT notes, the small size of Greece’s bond market – much of its enormous debt load is in the form of low interest loans to the EU and IMF following a series of bailouts – means there is less immediate pressure on government finances compared with Italy, which relies solely on markets to refinance its own huge debt pile.
“We still hold some Greek bonds based on our view that the economy has bottomed,” said Chris Jeffery, a fixed-income strategist at Legal & General Investment Management.
“But much more important is the debt structure. There are very few cash flow requirements for the next five years. With Italy, you always have the rollover risk.”
5Y Greek bond yields topped 60% in early 2012, they are now below 0.50%!!
Source: Bloomberg
Finally, as the chart above shows, Italian debt has also performed strongly during the summer’s global bond rally, but some investors remain wary due to the effects of last year’s political tensions.
However, the real fear – that of Euro redenomination – has now switched from Italy to Spain…
Source: Bloomberg
Although S&P rates its debt several notches higher than Greece’s, Italy has a negative outlook on the rating (but is still investment grade), but given the chart above, we suggest all eyes should be focused on Spain for now for the next round of EU fireworks.
Of course, with Lagarde sure that negative-rates are a good thing, who knows where the next bank-bomb lies.
Where did all the time go? Thirty years ago this week the Berlin Wall fell. Then Soviet chairman Mikhail Gorbachev freed the Baltic states and allowed divided Germany to reunite. It was a geopolitical earthquake of historic proportions – and a major miracle of our times.
The once mighty Soviet Union had become exhausted by its long military/economic/political struggle to keep up with the much wealthier United States and its rich allies. Moscow had 40,000 tanks, but its economic infrastructure, crippled by Marxist ideology, was an empty shell.
A senior KGB general in Moscow told me that, a decade earlier, the renowned Soviet physicist Andrei Sakharov had warned the Politburo that failure by Soviet industry to account for deprecation to modernize and replace outdated equipment would provoke a major crisis by 1990. This is exactly what happened.
By 1990, Soviet industry was broken down, outdated or rusted away. The Kremlin could no longer maintain the Soviet welfare state with its free medicine and education, long holidays, vacation spas, early pensions and unaffordable military spending. Arms alone may have accounted for over 40% of Moscow’s budget.
The Soviet Empire came crashing down after a revolt by East Germans, followed by Baltic peoples and central Europeans. Secretary Gorbachev, an idealistic leader of high ethics, refused to use the Red Army to crush the rebellion.
KGB, fed up with decrepit Communist misrule, abandoned the Party and moved to take control. East Germany broke free of Moscow and joyously reunited with West Germany, altering Europe’s balance of power to the displeasure of Britain and France, Germany’s historic rivals.
According to the Russians, Moscow made oral agreements with Washington, London and Paris that, in exchange for allowing Germany to reunite and then join NATO, the Western powers vowed NOT to extend the alliance into the former Communist states. They agreed to a neutral buffer zone across Eastern Europe and the Baltics.
The West lied. Precisely the opposite occurred. NATO, led by its sponsor, the US, moved relentlessly east, using its economic and political clout to dominate Hungary, Czechoslovakia, Poland (they were delighted), the Baltic states, Bulgaria, Romania and the wreckage of former Yugoslavia. New NATO bases in Romania and Bulgaria gave the US-run alliance much greater access to the Mideast.
The Georgian government, led by Gorbachev’s foreign minister Eduard Shevardnadze, a key player in dismantling Communism, was ousted in a CIA-led ‘color revolution.’
Protests by bankrupt Russia over NATO’s intrusion into Eastern Europe were scornfully dismissed by the West with ‘well, you don’t have anything in writing to confirm your claims of a deal.’
True enough, in the confusion of ‘fin de regime’ Moscow and its Russian diplomats failed to get signed treaties. `We trusted the Western powers,’ came their pathetic reply. Meanwhile, US intelligence agencies were looting Moscow of its military technology and bribing the corrupt government. At times, Russia felt like an occupied nation.
The US poured vast sums of money into Russia to shore up its pro-US oligarchs and robber barons, corrupting everyone in their path. A bunch of drunken former Communist Party bigwigs attempted a clownish coup, only to be blocked by the KGB and military. Another serious drunk, Boris Yeltsin, was helped into power on a route paved with US $100 bills by the West. It was Russia’s darkest hour.
KGB finally seized power by outing Yeltsin and installing one of its brightest officers, Vladimir Putin. He quickly began rebuilding Russia and cleaning Moscow’s Augean Stables. Germany achieved another miracle by its successful reunification with former East Germany.
I walked through the deserted main building of East Germany’s Stasi secret police and the abandoned HQ of the quarter million-strong Group of Soviet Forces in Germany. Files were strewn on the floors; sheets of paper marked ‘Top Secret’ blew about. It was spooky and miraculous.
I was reminded of poet Shelley’s great poem Ozymandias:
US Threatens Sanctions On Serbia, Scrambles To Thwart Possible S-400 Purchase
In a largely unreported but hugely important story that played out this week in the Balkans, Washington is putting immense pressure on Serbia to shelve future plans for acquiring Russia’s advanced S-400 air defense missile systems.
The controversy began Wednesday when Serbian President Aleksandar Vucic told a public television broadcaster in an interview that he had a desire to purchase the S-400 but lacked the funding to do so, and at one point said “Serbia was ready to accept S-400s from Russia as a gift,” according to TASS.
“You know, when you have such a weapon, no one would attack you. Neither US nor any other pilots fly where S-400s are operational: Israeli pilots do not fly either over Turkey or Syria, except for the Golan Heights. We have aviation, which the strongest than ever before. We will be strengthening the air defense with Pantsyr systems and other things, which are not on the sanctions list,” Vucic said in the interview.
Vladimir Putin and Aleksandar Vučić, via EWB
This after Serbia is still reeling from what Belgrade and much of the public considers the ‘illegal’ US-NATO bombing of Yugoslavia in 1999, and later formal recognition of breakaway Kosovo as a republic under the Bush administration.
The president explained that he had attended the Slavic Shield-2019 Russian-Serbian drills in order to personally inspect the Russian systems and view their capabilities, which included Pantsyr-S anti-aircraft missiles.
Prior to the interview at least one notable Serbian newspaper reported that Belgrade was mulling purchase of the S-400 anti-air systems on long-term credit, with rumors that Serbian officers had even already begun limited training on the systems.
But as Russia’s TASS reported, all of this was enough to trigger US diplomatic threats and intervention:
The US was quick to respond to Vucic’s statement. US Special Representative for the Western Balkans Matthew Palmer warned in an interview with the Macedonian television during his visit to Skopje that the purchase of S-400 systems from Russia would entail US sanctions against Belgrade.
The sanctions threat worked, according to some Russian sources; however, the spat appears to be ongoing, given Reuters reported Friday that a US diplomat was promptly dispatched to meet with Serbian authorities over the issue.
S-400 Triumph anti-aircraft missile system, via EPA/EFE
U.S. concerns grew last month when Russia sent its S-400 missile defense system and Pantsir launchers to Serbia for a military drill. The move underlined Moscow’s wish to keep a traditional Slavic ally on side as Belgrade pursues links with NATO and tries to join the European Union.
Matthew Palmer, a U.S. envoy for the Balkans, said last week that Serbia could risk sanctions over its arms deals with Russia. Under the sanctions, Serbia could face punishments ranging from visa bans to denial of export licenses.
However, late in the week President Aleksandar Vucic had publicly addressed the country, telling Serbs “not to fear broad sanctions would be imposed on Serbia similar to those of the 1990s during the Balkan wars,” according to Reuters.
Serbia officially has a stance of “military neutrality” with regards to NATO, but joined its Partnership for Peace program in 2015, and remains a traditional close Slavic Balkan ally of Moscow.
Washington has of late actively sought to prevent the proliferation of Russian S-400s and its next generation S-500, especially after Turkey began receiving deliveries in the past months, which has brought US-Turkey relations near breaking point.
A United Nations expert in torture diagnosis has in the past week issued a stark warning that Australian whistleblower Julian Assange is in danger of dying from extreme prison conditions in Britain.
It is testimony to the rank hypocrisy of British and American governments who lecture others around the world about democracy, human rights and international law.
One can only imagine the hysterical outcry among Western governments and media if somehow Assange was being detained in a Russian prison.
The 48-year-old Assange has been held in a maximum-security prison in London since April this year when he was forcibly removed from the Ecuadorean embassy. His arrest was itself a staggering breach of international law. Assange had been confined to the embassy for nearly seven years where he sought asylum to avoid being extradited to the US.
He should have been released on September 22 when his sentence for a past bail infringement had been served out. Instead, a British judge has ordered Assange to be detained until the extradition trial to the US gets underway next year. If Assange is extradited to the US he is facing 175 years in prison if convicted for espionage. Few would believe that he will receive a fair trial in Britain or the US. He has been denied due process of consulting with his defense lawyers.
Assange’s “espionage” charge stems from the fact that his whistleblower site Wikileaks published volumes of damning information exposing massive US and NATO war crimes in Iraq, Afghanistan and elsewhere. His publications of leaked data also exposed Western diplomatic malfeasance in several countries, as well as illegal global spying on citizens by US intelligence agencies in collusion with British counterparts.
Assange has provided vital information to the international public which demonstrates systematic corruption by Washington and its allies. For telling the truth, he is now being persecuted, just as his whistleblowing colleagues, Chelsea Manning and Edward Snowden are. Manning has been repeatedly imprisoned in the US, while Snowden has had to seek asylum in Russia for fear of being summarily incarcerated as a “traitor” if he returns to the US.
Nils Melzer, an internationally recognized expert on torture treatment, visited Assange back in May this year during his ongoing detention in Belmarsh Category A prison under conditions of solitary confinement. He concluded then that Assange was suffering psychological torture by the British authorities. His latest warning is based on up-to-date medical information pertaining to Assange’s health, and it makes for a grim assessment.
In comments to the AFP news agency, which this week received little Western media coverage, Melzer said:
“Mr Assange’s health has entered a downward spiral of progressively severe anxiety, stress and helplessness typical for persons exposed to prolonged isolation and constant arbitrariness.”
In a grave conclusion, he added:
“While the precise evolution is difficult to predict with certainty, this pattern of symptoms can quickly develop into a life-threatening situation involving cardiovascular breakdown or nervous collapse.”
Melzer said the measures he urged back in May to protect Assange’s health and dignity have been pointedly ignored. “However, what we have seen from the UK government is outright contempt for Mr Assange’s rights and integrity… Despite the medical urgency of my appeal, and the seriousness of the alleged violations, the UK has not undertaken any measures of investigation, prevention and redress required under international law.”
In a further damning comment, Melzer said that Julian Assange “continues to be detained under oppressive conditions of isolation and surveillance, not justified by his detention status. While the US government prosecutes Mr Assange for publishing information about serious human rights violations, including torture and murder, the officials responsible for these crimes continue to enjoy impunity.”
The appalling assessment corroborates what Assange’s father told Strategic Culture Foundation in an interview published on September 24. John Shipton warned then that he feared his son was being killed extrajudicially by the British and American authorities.
Despite Assange’s award-winning journalism and truth-telling, the Western mainstream media have shown utter disregard for his plight. Indeed, such media have tended to bolster the vilification and character assassination piled on Assange by the American and British governments.
The hypocrisy is further underscored by recent US media attempts to lionize a so-called whistleblower who has helped launch impeachment proceedings against President Trump over alleged corruption in connection with Ukraine. By contrast, the same media in their callous indifference towards Assange are condemning him to torture for acts of whistleblowing which were truly historic in their scope and importance.
However, one thing that has severely disadvantaged the cause of Assange is the smear campaign against him, accusing him of being a “Russian asset” or “cyber terrorist”. These smears have been peddled by Western media.
So, evidently, when so-called whistleblowing serves power it is deemed praiseworthy. But when whistleblowers challenge and discredit power then they are persecuted as criminals, even to the point of death.
Arguably, if President Donald Trump had any scruples he would drop the trumped-up espionage case against Assange. After all, it was Wikileaks’ exposures of corruption by Hillary Clinton and her Democratic Party chiefs which partly boosted Trump’s election in 2016. Assange obtained those leaks from a Democratic insider, not from Russian hackers, as is commonly asserted by deluded “Russiagaters”.
Julian Assange while he was free and now while in prison exposes the systematic criminality and immorality of Western governments and their lackey corporate media. That’s why he finds himself in the hellish dungeon conditions today in a British prison.
We can only hope that mounting public pressure can be brought to bear on Washington and London to restore Assange’s freedom and life. In the meantime, the cruel vindictiveness of both governments, their lawlessness and profound contempt for human rights, is surely an eye-opening spectacle.
