RussiaGate: “Why Did This Ever Start In The First Place?”

Authored by Peter van Buren via WeMeantWell.com,

Trump and the Russians has created an army of “Mueller Truthers,” demanding additional investigations. But Republicans are also demanding to know more, specifically how the FBI came to look into collusion, and what that tells us about the tension between America’s political and intelligence worlds. In Rudy Giuliani’s words “Why did this ever start in the first place?”

The primordial ooze for all things Russia began in spring 2016 when the Clinton campaign and Democratic National Committee, through a company called Fusion GPS, hired former MI6 intelligence agent Christopher Steele to compile a report (“the dossier”) on whatever ties to Russia he could find for Donald Trump.

Steele’s assignment was not to investigate impartially, but to gather dirt aggressively – opposition research, or oppo. He assembled second and third hand stories, then used anonymous sources and Internet chum to purported reveal Trump people roaming about Europe asking various Russians for help, promising sanctions relief, and trading influence for financial deals. Steele also claimed the existence of a “pee tape,” kompromat Putin used to control Trump.

Creating the dossier was only half of Steele’s assignment. The real work was to insert the dossier into American media and intelligence organizations to prevent Trump from winning the election. While only a so-so fiction writer, Steele proved to be a master at running his information op against America.

In July 2016 Steele met with over a dozen reporters to promote his dossier, with little success. It could not be corroborated. Steele succeeded mightily, however, in pushing his information deep into the FBI via three simultaneous channels, including the State Department, and via Senator John McCain, who was pitched by a former British ambassador retired to work now for Christopher Steele’s own firm.

But the most productive channel into the FBI was Department of Justice official Bruce Ohr. Ohr’s wife Nellie worked for Fusion GPS, the front company for Steele, having previously done contract work for the CIA. Nellie passed the dossier to her husband, along with her own paid oppo research, so that he could use his credibility at DOJ to hand-carry the work into the FBI. Bruce Ohr, despite acknowledging it broke all rules of protocol and evidence handling, did just that on July 30, 2016. He stressed to then-FBI Deputy Director Andrew McCabe the material was uncorroborated and had been compiled by Christopher Steele, who wanted it used to stop Trump.

The dossier landed in welcoming hands. The FBI immediately opened an unprecedented investigation called Crossfire Hurricane into the Trump campaign. It sent agents to London to meet Australian ambassador Alexander Downer, who claimed to have evidence George Papadopoulos, one of Trump’s junior-level advisers, was talking to Russians about Hillary’s emails. The FBI’s timing of the new investigation into Trump – only days after they closed their investigation into Clinton’s email server – can be considered a coincidence by those of good heart.

Peter Strzok, the senior FBI agent managing the Crossfire Hurricane investigation, and Lisa Page, a lawyer on his team (the two were also lovers), purposefully kept investigation details from political appointees at DOJ to the extent that only five people actually knew the full measure of what was going on, ostensibly to prevent leaks.

In fact, the point seems to have been to avoid oversight, given how weak the evidence was supporting something as grave as the Republican nominee committing treason. If you are looking behind the headlines for why Trump fired Andrew McCabe, besides his personal sympathies for Hillary, look there. Strzok and Page appear to have had an agenda of their own. In a text they wrote “Page: ‘[Trump’s] not ever going to become president, right? Strzok: ‘No. No he’s not. We’ll stop it.’”

With a wave of a hand the dossier the FBI was warned was partisan bunk was transformed into evidence. Steele himself morphed from paid opposition researcher to paid clandestine source for the FBI, with the fact that he had recently retired from a foreign intelligence service, British or not, ignored. It was all just an excuse anyway to unleash the vast intelligence machine against Trump, the imagined Manchurian Candidate.

Papadopoulos, the man in London, as a linchpin was also preposterous. He was a kid on the edges of the campaign, who “bumped into” a shady Russian professor who just happened to dangle the most explosive thing ever, Hillary’s emails. Papadopoulos then met the Aussie ambassador to Britain, Alex Downer. Papadopoulos gets drunk, tells the tale, which then falls whole into the FBI’s lap. Ambassador Downer, by the way, had previously arranged a $25 million donation to the Clinton Foundation. Papadopoulos was introduced to Downer by an Australian intelligence agent who knew him through her boyfriend, stationed at the Israeli embassy as a “political officer.”

Carter Page’s case was more of the same. Page, as a key actor in the Steele dossier, wold serve as an early excuse to get FISA surveillance eyes and ears on the Trump campaign. The FBI had a paid CIA asset, University of Cambridge professor and American citizen Stefan A. Halper, contact Page and dangle questions about access to Clinton emails.

Halper had earlier been trying separately to entrap Papadopoulos (the professor offered the inexperienced campaign aide $3,000 and an all-expenses-paid trip to London to write a white paper about energy), and also met with Trump campaign co-chair Sam Clovis in late August, offering his services as an adviser. Clovis declined. Ultimately both Papadopoulos and Page also rebuffed Halper, though both would later encounter a young woman in London claiming to be Halper’s assistant who tried to reinterest the boys.

Though to obtain multiple FISA warrants the FBI characterized him as an “agent of a foreign power,” Carter Page was never charged with anything. Halper dropped off the media’s radar, but is almost certainly a US intelligence asset. He had earlier worked with British intelligence to pay for Michael Flynn to visit the UK. Halper’s main US-based funding source is an internal Pentagon think tank. The Washington Post reported Halper had in the past worked for CIA directly. Halper was implicated in a 1980s spying scandal in which CIA officials gave inside information on the Carter administration to the GOP. Halper also married into a senior CIA official’s family.

It is clear the FBI was desperately trying to infiltrate Halper into the Trump campaign as part of a full-blown intel op, recruiting against Trump’s vulnerable junior staff. Even though the recruitment failed, the bits and pieces learned in the process were good enough for government work. At issue was that Steele’s dossier formed a key argument in favor of a FISA warrant to spy on Trump personnel. The dossier was corroborated in part in the warrant application by citing news reports that later turned out to be themselves based on the Steele dossier. In intelligence work, this is known as cross-contamination, a risky amateur error the FBI seems to have taken a chance on hoping the FISA judge would not know enough to question it. The gamble worked.

The FBI needed something as backup, so their investigation into Trump, now focused on the FISA surveillance, could be said not to have rested entirely on the dubious Steele dossier. Surveillance, intended and incidental, would eventually include Jeff SessionsSteve BannonCarter PagePaul ManafortRichard GatesMichael Cohen, and likely Trump himself.

Had Hillary won the story would have ended there, in fact, likely would never have come to light. But with Trump’s victory, the dossier had one more job to do: prep the public for all to come.

There has been no discussion as to why, in possession of information the FBI seemed to believe showed the Russians were running a global full-court press to themselves recruit inside Trump’s inner circle, Trump was never offered a defensive briefing. Such a warning – hey, you are in danger – is common inside government. But in Trump’s case it never happened. Instead, in echo of the dark Hoover years, the FBI used its information to try and take down Trump, not protect him.

Though the dossier had already been widely shared inside the media, the State Department, and the intelligence community, it was only on January 6, 2017 Comey briefed it to president-elect Trump. No one really knows what was said in that meeting, but we do know after holding the dossier since summer 2016, only four days after the Trump-Comey meeting Buzzfeed published the document and the world learned about the pee tape. Many believe someone in the intel community gave “permission” to the media, signaling Brennan, Clapper, Hayden, et al, would begin making publicstatements the dossier “could be true.”

John Brennan was a regular on television and other media claiming over two years there was evidence of contacts between the Russian government and the Trump campaign, pimping off his time as CIA director to suggest he had inside information. He went as far as testifying before Congress in May 2017 that there was evidence of contacts between Russian officials and Trump campaign figures, though now says he might have been given “bad information.”

After that, no item that could link the words Trump and Russia was too small to add to the pile of pseudo-evidence.

It would be easy to dismiss all this as a wacky conspiracy theory if it wasn’t in fact the counter-explanation to the even wackier, disproved theory Donald Trump was a Russian asset. It is possible to see Russiagate as a political assassination attempt, using law enforcement as the weapon. Someone might do well to double-check if Christopher Steele was in Dealey Plaza during the Kennedy assassination.

via ZeroHedge News https://ift.tt/2FKfYt7 Tyler Durden

Beijing Again Promises Fentanyl Crackdown In Latest Trade “Concession”

As Beijing tries to convince Washington to lift all of the trade war-inspired tariffs on Chinese goods as part of a sweeping trade accord, it has offered two concessions on Monday as trade czar Liu He heads to the US for another round of talks. China is reportedly planning to extend a suspension of retaliatory auto tariffs imposed last year during the trade debacle, and reiterating a promise made by President Xi’s during his meeting with Trump in Buenos Aires late last year to tighten controls of the deadly synthetic opioid fentanyl.

Though neither of the purported concessions are anything new, Beijing is hoping they will help foster a “positive atmosphere” for talks this week. Beijing initially scrapped the 25% tariff on vehicles as a tit-for-tat measure on Jan. 1, after the White House delayed a planned tariff increase from 10% to 25% on $200 billion of Chinese goods, per BBG.

Fent

Beginning on May 1, Beijing said it will change the categorization of fentanyl to make it more difficult to export, as both sides try to keep the momentum going as trade talks enter their final stretch.

Chinese officials also pledged to tighten regulation on fentanyl from next month, a promise President Xi Jinping already made to President Donald Trump at a December meeting in Argentina. The inclusion of the drug as a controlled substance in a category of non-medicinal narcotic drugs and psychotropic substances will start May 1, according to the China National Narcotics Control Commission.

The moves signal China is trying to keep momentum in trade talks going as they enter what could be the final stretch before Trump and Xi are presented with a text to finalize or sign. Beijing is determined to prevent an escalation of the frictions that have hurt its economy and roiled markets, even as enforcement measures remain a sticking point in negotiations.

China also promised to crack down on criminal networks responsible for trafficking fentanyl. American law enforcement agencies have blamed these networks for causing the surge in opioid overdose deaths in recent years, as fentanyl is increasingly used to lace heroin sold on the street.

China

However, Chinese officials refused to accept responsibility for the crisis, saying it was largely “self-created” and can’t be blamed on China.

In addition to putting fentanyl on the controlled substance list, China said it will crack down on underground networks who sell the drug online and ship them to the U.S by disrupting their cyber communication channels and stepping up checks on private packages at its customs borders. The synthetic opioid is sold by online distributors across China and is blamed for thousands of overdose deaths in the U.S.

Chinese officials also emphasized that the U.S. opioid crisis is largely self-created and cannot be blamed on supply from China.

China “exercised great restraint and did its very best” with the recent moves, compared with the U.S. only mulling to suspend some of its tariffs, said Li Yong, a senior fellow at the China Association of International Trade in Beijing. “Blame does not help to solve the problem. The right attitude should be to enhance cooperation and have construction communication.

One analyst said the concessions would help enhance mutual trust between the world’s two largest economies.

“What matters is not whether these are big concessions or not, but that they are a quick response to the U.S. concerns,” said Gai Xinzhe, a senior analyst at Sino Ocean Capital in Beijing. “It’s not like in the past when issues raised in bilateral dialogues dragged on without solution. This is good for enhancing mutual trust in the negotiations.”

Of course, as we’ve pointed out before, the authorities in Beijing have the unilateral ability to turn off the fentanyl tap any time they want, and the notion that they have been helpless to stop fentanyl trafficking is simply misguided. Local governments have allowed fentanyl production because it brings in badly needed tax revenue – and they are also thoroughly corrupt.

That Beijing touted these as new concessions, even though they merely represent a doubling-down of Beijing’s previous promises, suggests that reports on Friday that China is unwilling to cede any more ground to the US, and that Xi remains “wary” of a summit with Trump, should be taken seriously.

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

Child Protective Services Has Created A Gestapo Police State: PCR

Authored by Paul Craig Roberts,

My generation and that of our children grew up without Child Protective Service (CPS).  We stand up very well compared to subsequent generations.  

Child Protective Services is an extremely intrusive government agency that would not have been tolerated.  The power of this police agency trumps parental rights and responsibilities.  The agency is an important part of the destruction of liberty that I have witnessed over my lifetime. 

The Gestapo power that the state now wields over parents is a creation of “child advocates” who believe that it is the function of government to protect children from parents.  One consequence has been to erode parental control and to effectively end it in the case of rebellious children who respond to punishment by calling CPS and reporting their parents.   CPS has powerful incentives to seize children as it justifies the agency’s existance and brings a federal payment for each child seized. 

There are reports that many of the seized children end up in the hands of pedophiles, but governments seldom want to hear that they are doing harm rather than good.

Why has child safety changed so much over my lifetime that children need a police agency to protect them?  Why could I and my 5 year old classmates walk alone to our neighborhood schools, for example, but such a thing is unthinkable today.  Could the destruction of homogenuous neighborhoods by “diversity” have anything to do with it? Could the redefinition of the parental control of my day as child abuse have anything to do with it?  Could all the forces that have broken up the family have anything to do with it?  

When I grew up children had parents, two sets of grandparents, aunts, uncles, cousins all in the same geographical area.  There was tremendous support for marriages and children.  Divorce was rare compared to today.  Families went to church, an important mission of which was to inculcate and reinforce moral and ethical standards of behavior.  The father’s income was enough to support the family, so mothers were at home to provide child and household services.  Today both parents have to work.

The support systems have been swept away.  Corporations have transferred employees to relative-free geographical locations, thus increasing the stress on marriages.  Divorce has broken up families, creating animosity where once there was support.  Mass immigration has brought “multiculturalism” where once were shared standards.  Identity Politics has produced a disunited population.  

Over the course of my lifetime I have watched the destruction of America’s social capital – the shared norms, understandings, values, cooperation, and trust that make a society functional.  In the dysfunctional society in which Americans live today, government tries to glue things back together by exercising more power, regulating speech, controlling explanations, and imposing more constraints on human action.  

The consequence is the death of liberty and individual responsibility and the erasure of a nation.

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

A $450 Million Da Vinci Painting Vanishes Into Thin Air

Back in November 2017, “Salvator Mundi,” a painting of Jesus that was controversially attributed to Leonardo da Vinci, was driving the art world crazy. Aside from its sky high price of $450 million and its sale to a bidder that many thought represented Saudi Arabia’s Crown Prince Mohammed bin Salman, the painting’s authenticity was also called into question.

Which is why when the Louvre Abu Dhabi cancelled a planned showing of the work this week, it caught the eye of art world yet again. Not only that, but the museum’s culture department has deflected questions about the work and other museum workers have said that they “do not know where the painting is,” according to Inquisitr.

The bottom line: the painting appears to have vanished into thin air.

French officials at the Louvre in Paris expected to get the painting for an exhibition later this year that will mark the 500th anniversary of Da Vinci’s death. They hoped that the painting would surface prior to then, but so far, it hasn’t. 

Dianne Modestini, an art professor at New York University’s Institute of Fine Arts said: “It is tragic. To deprive the art lovers and many others who were moved by this picture — a masterpiece of such rarity — is deeply unfair.”

The Abu Dhabi arrangement to show the painting is also cloaked in mystery: nobody knows how the agreement was arranged, leading many to believe that it was indeed Crown Prince Mohammed that bought it. Some believe he may have changed his mind and may be simply keeping the painting to himself now. Others have speculated that the painting purchase may have simply been a relatively easy way to launder half a billion dollars.

The last known stop for the painting was Zurich, when it was inspected by an insurance company before being shipped to “an unknown location”. After Switzerland, “the trail goes completely cold” Modestini said.

Martin Kemp, an Oxford art historian told the NY Times that the painting was “a kind of religious version of the ‘Mona Lisa’ and Leonardo’s strongest statement of the elusiveness of the divine.”

“I don’t know where it is, either,” he said. Hopefully at least the Saudi Crown Prince does.

via ZeroHedge News https://ift.tt/2Vja74g Tyler Durden

Is The World Already Multi-Polar?

Authored by Mike Krieger via Liberty Blitzkrieg blog,

A hefty case can be made that the Empire of Chaos currently has no allies; it’s essentially surrounded by an assortment of vassals, puppets and comprador 5th columnist elites professing varied degrees of – sometimes reluctant – obedience.

The Trump administration’s foreign policy may be easily deconstructed as a crossover between The Sopranos and late-night comedy.

– Pepe Escobar, in his recent Consortium News piece: Empire of Chaos in Hybrid War Overdrive

While the U.S. empire’s existed in various states of decline for much of the 21st century, I’ve been opining on the topic with far more frequency and urgency since the election of Donald Trump. This isn’t because he’s fundamentally much different from the imperial managers (aka presidents) that came before him on foreign policy, but because his personality, style and overall boorishness serve to accelerate the pace of decline.

As many astute observers have noted, what really bothers establishment types on the “NeverTrump” right and the “Russiagate conspiracy theory” left is not so much what Trump does, but how he does it. These political cliques may disagree on many issues, but what they have in common — aside from Trump derangement syndrome — is a love affair with U.S. empire and an unwavering dedication to the maintenance of American geopolitical dominance at all costs.

Both the NeverTrump right and the Russiagate conspiracy theory left are concerned that Trump, unlike Obama, is a poor global salesman for empire. Obama had the rare quality of being able to bailout bankers and keep them out of prison, pass healthcare “reform” only an insurance company could love, and expand American wars across the globe and still be revered around much of the world and celebrated as a liberal at home. That’s the sort of person you need in charge to keep a corrupt and violent empire running smoothly.

It keeps the mask on a while longer and allows everyone to pretend the status quo still works. In contrast, there’s no lipstick on the imperial pig under Trump and his band of creepy recycled neocons. It’s just an endless stream of threats and sanctions, and most importantly, an increased willingness to use the U.S. dollar and the global financial system as a weapon, even against allies.

What’s most interesting is that as the U.S. runs around sanctioning and trying to regime-change any sovereign state that dares to be anything less than an obsequious poodle, many traditional allies have begun to bristle. We saw it with the opening of a new trade channel earlier this year by France, Germany and Britain to avoid U.S. sanctions on Iran following Trump’s unilateral withdrawal from the JCPOA last May. We saw it again recently with the European Commission decision to allow individual countries to decide for themselves on Huawei’s participation in the 5G buildout, despite the Trump administration calling for a ban. We also saw it with Italy recently signing up for China’s belt and road initiative despite U.S. objections, as well as Xi Jinping signing a variety of deals with France last week while the U.S. remained in the midst of a trade war.

The mere fact that America’s European allies have been so glaringly dismissive of U.S. demands on a variety of fronts recently makes me consider that perhaps a multi-polar world isn’t coming at some point in the distant future, but is in fact already here. In other words, it seems the world as it stands today is already being shaped and influenced by a variety of geopolitically significant powers as opposed to just one. The only faction that doesn’t seem to understand this yet is the U.S. government itself, which is of course a very dangerous situation. The rest of the world doesn’t know how to break reality to those in charge of the levers of power in America. No one wants to tell them bluntly, because it’s become pretty clear that many diehard imperialists are still willing to double down on some very evil and stupid things in order to maintain an illusion of world dominance.

With the failed regime change attempt in Syria and now the flailing coup in Venezuela, it’s become clear the U.S. can’t easily get whatever it wants anymore despite its gigantic defense budget and 800 formal military bases in 80 countries. The most effective weapon the U.S. empire still currently has at its disposal is a dominance of the global financial system and the core role of the USD in it. This is why the Trump administration’s been flexing these financial tools so aggressively, but of course, this abuse of America’s exorbitant privilege is precisely what will ultimately lead to a serious decline in the global position of USD down the road (I expect it to play out by 2025).

If you’re an American reading this and find it depressing, don’t despair. The U.S. empire as it stands today is exceedingly corrupt, violent and works against the interests of the average American citizen, both economically and from a civil liberties perspective. Although the transition from being the unipolar power to just one of several major powers will be challenging, we should see it as an opportunity. Our government and our culture spends far too much of its energy and wealth trying to dominate the world that we’ve collectively lost sight of caring about the country we actually live in.

Our media’s a joke and bridges are crumbling as I write this, and that’s just the tip of the iceberg.

Trump pledged to change this, but his campaign promises are being brushed aside as he fills foreign policy positions with wild-eyed neocons focused on making imperial dominance great again. Nothing will get better until we stop spending all our time playing Game of Thrones with the world, and transition our domestic affairs away from the corrupt and unaccountable oligarchy we have today, into a robust, creative, entrepreneurial, and freedom-loving society.

It’s very possible, we just have to get out of our own way.

*  *  *

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via ZeroHedge News https://ift.tt/2WK6YLv Tyler Durden

China Using AI Surveillance In VIP Jail To ‘Make Prison Breaks Impossible’

A high-security VIP prison in China is deploying an AI monitoring system to surveil convicts – tracking their every move to ‘learn’ their behavioral patterns and flag abnormal activity, according to SCMP

A 2016 photo shows prisoners engaged in sporting activity at the jail. Photo: SCMP

State-run Yancheng prison has installed a network of cameras in every cell and every corner of the building, which some experts believe will make escape impossible even if inmates are able to bribe the guards (who we expect the system to be used to monitor as well). 

After months of intensive construction, the upgrade of surveillance system at the 40-hectare facility in Yanjiao, Hebei is nearly finished, several sources involved in the project confirmed to the South China Morning Post this month.

The new “smart jail” system involves a network of surveillance cameras and hidden sensors that reach out like “neuron fibres”, as one of the sources put it, through the compound with a blanket coverage extending into every cell

The network collects and streams data to the “brain”, a fast, AI-powered computer that is able to recognise, track and monitor every inmate around the clock, without blinking. –SCMP

The system will produce a comprehensive report at the end of each day, which will include behavioral analysis on each prisoner, using various AI functions such as facial recognition and movement analysis. The reports will be archived, while any abnormalities will be flagged. 

“For instance,” said project representative Meng Qingbiao, “if an inmate has been spotted pacing up and down in a room for some time, the machine may regard the phenomenon as suspicious and suggest close-up checks with a human guard.”

The AI system was developed through a joint collaboration between numerous public research institutions, including surveillance technology company Tiandy and Tianjin University. 

Meng, a Tiandy employee, claimed the system would knows where a each particular person was and what he or she was doing, no matter how large the inmate population – and there would be no need for a human guard to watch the monitors.

This is in part thanks to advanced facial recognition technology which is capable of handling a huge amount of surveillance targets at the same time. –SCMP

“The cutting edge technology allows each camera to track up to 200 faces at the same time,” said Meng, who added: “Prison breaks will be history.” 

VIP treatment

Aside from the whole AI tracking thing, Yancheng has been described as a “luxury prison” due to its host of VIP inmates and relatively comfortable conditions. 

Some of the high-profile residents include Gu Kailai, the wife of disgraced former Chongqing party chief Bo Xilai, who is serving life for murdering a British businessman; Rui Chenggang, a former China Central Television anchor who was detained in 2014 for reasons that remain unclear; and a number of high-profile figures who were snared for corruption, such as Zhang Shuguang, the former high-speed rail network’s chief engineer and Nan Yong, former deputy chairman of the national soccer association. –SCMP

Gu Kailai is one of the prison’s most high-profile inmates. Photo: Reuters

Aside from high-profile Chinese citizens, the prison also houses an unspecified number of foreigners, which has been visited by diplomats from many countries who have checked up on inmates. 

That said, a team of Chinese government inspectors warned in December that the jail did not fully understand “its political nature in the new era,” and noted that some guards had been engaging in “frequent violations of the rules.” 

As a result – the new AI network will now keep a close eye on what’s going on. 

Yancheng prison held more than 1,600 prisoners last year, according to a report by Shanghai-based news website Thepaper.cn.

That number has been increasing rapidly in recent years due to the massive anti-corruption campaign launched by President Xi Jinping and many fallen senior officials have ended up inside the jail. –SCMP 

​​​​​A study area in the jail. Photo: SCMP

Tiandy, meanwhile, has been in discussions with some South American countries to introduce similar technology into prisons which have a history of violence and security breaches. 

Ethical questions

The 24-hour surveillance has raised ethical questions among some. 

Rules from the UN high commissioner for human rights state that prisoners “shall be treated with the respect due to their inherent dignity and value as human beings”.

Zhang Xuemin, a professor of physiology who has studied human behaviour in extreme environments at Beijing Normal University, said the cameras and AI would “definitely affect” the prisoners’ lives and their mental state.

He also argued that the authorities must consider that supervising humans with machines may backfire in unexpected ways. –SCMP 

It’s also possible that some prisoners may find ways to cheat the AI and exploit its weaknesses – though escape through traditional means such as cutting through walls, digging tunnels or squeezing through tiny holes – should be impossible with the AI. 

Ding Zhenyang, assistant professor of electric engineering with Tianjin University who had took part in the project, said the prisoners could not beat the AI.

Even if they someone managed to convince the camera that they were not doing anything untoward, they would not be able to leave the prison.

The system was linked not only to cameras but sensors such as optical fibres capable of detecting and locating many types of ground movements. –SCMP 

You may cheat the camera. You may cheat the sensor. But you will not cheat both,” said Zhenyang. 

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

Why “A Spike In Defaults Is On The Way, Sooner Or Later”

Submitted by Almost Daily Grant’s

Motley Crew

Asset prices are off to the races, as the S&P 500 logged a 13% gain through March 31, the best quarterly showing since the summer of 2009. Credit has likewise marched higher, with the Bloomberg Barclays High Yield Index jumping 7.3%, the steepest quarterly rise since 2003, while the Markit iBoxx Leveraged Loan Total Return Index rose by 4.8% for its best quarter since 2010.

The Fed’s dovish swivel figures prominently in the bull move in credit, as interest rate futures now expect rate cuts instead of further tightening and the “QT” asset run-off is set to end in six months. At the same time, loan defaults reached a seven-year low in March as the post-2009 economic expansion is now three months shy of a record length.

A mismatch between new supply and demand also helps. Junk bond volumes tallied $59 billion in the first quarter, down 5.5% year-over-year and the slowest pace of issuance since 2016. On the loan side, new volume fell to $85.2 billion in the first quarter, down a hefty 68% year-over-year according to data compiled by Bloomberg.

That dearth of supply has further tilted the balance of power in favor of the borrowers. On March 22, the Financial Times reported on the “near-total control” of sellers in the leveraged loan market, a development raising “concerns that a borrower could load up on more debt, extract cash from the company or seek expensive acquisitions.” Even the sharp downdraft seen at the end of 2018 has done little to level the playing field. An unnamed fund manager told the FT that “we were hoping there would be an improvement [in terms for investors] after December’s volatility, but that doesn’t seem to be the case.”

Last Thursday a report from Moody’s Investor Services noted “unprecedented flexibility” on the part of borrowers to make investments free of obligations to maintain certain leverage levels, as well as an “aggressive use of investment capacity” that allows issuers to shift assets beyond creditors’ reach, leaving investors “in uncharted territory.” Indeed, Moody’s determines that 2018 saw the weakest credit agreement protections on record, a fact that bodes ill for recoveries when the cycle turns.

On that score, a prominent cautionary tale finds itself back in the news. On Thursday, the J. Crew Group, Inc. term-loan B fell to 66 from 92 as recently as Oct. 22, 2018, after the fashion retailer reported a full-year adjusted EBITDA decline of more than 50% with cash on hand dropping to $25.7 million at the beginning of February from $107 million a year earlier. The company, taken private in 2011 by Leonard Green & Partners, L.P. and TPG Capital, earned the ire of creditors in 2017 by transferring $250 million worth of intellectual property to a foreign subsidiary (out of the grasp of supposedly-senior bondholders) and then issuing $250 million in fresh debt backed by the same IP.  

A slightly different saga featuring private-equity owned PetSmart, Inc. continues to unfold. In April 2017, PetSmart bought online pet supply company Chewy, Inc. for $3.35 billion. Just over a year later, PetSmart transferred a chunk of Chewy’s equity to an unrestricted subsidiary, out of the reach of the company’s creditors. Those jilted bondholders sought legal recourse against PetSmart for alleged “fraudulent” behavior, claiming that PetSmart was already out of compliance with a fixed-charge coverage ratio test.  On Thursday, a federal judge ordered the company to turn over documents related to the transfer of Chewy equity. A day later, Bloomberg reported that PetSmart creditors rejected the company’s offer to add new investor protections in return for dropping their litigation. PetSmart’s term loan reached a post-2017 high of 89 cents on the dollar Friday, potentially indicating that the lawsuit is gaining traction.

More recently, the March term loan and senior note offering financing the $10 billion leveraged buyout of Johnson Controls International plc’s car-battery unit represents another measuring stick. After analyzing the senior notes documentation, credit research firm Covenant Review called those covenants “extremely aggressive and containing numerous flaws.” Features that might make creditors cringe include “wildly off-market” compliance calculations that “arbitrarily” exclude various borrowings, as well as a “phony” test that could overlook additional debt used to fund such restricted payments and the ability to “transfer unlimited IP to unrestricted subsidiaries and other entities.” What’s more, so-called add-backs to EBITDA give “the company credit for expected revenues that have not yet been (and may not be) earned.”

As issuers continue to push the envelope, the cycle continues to age. In a March 4 interview with Bloomberg, Carlyn Taylor, global co-leader of corporate finance and restructuring at FTI Consulting, predicted that a spike in defaults is on the way, sooner or later:

The expansion is pretty long in the tooth and there’s definitely a lot of buildup. The activity level of restructuring is rising, maybe not at the rate of bankruptcies, but the pipeline of companies we think are going to end up in restructuring, based on metrics that we analyze, that volume has gone up. And we’re so busy, which we don’t think is just market share, because we think our competitors are also very busy.

via ZeroHedge News https://ift.tt/2Ut0vqs Tyler Durden

Americans Would Run Out Of Avocados In 3 Weeks If Trump Closes Border

White House officials warned Sunday that President Donald Trump’s threat to close the Mexico–United States border this week “isn’t a bluff.” 

On Monday morning, a top avocado distributor told Reuters that the potential shutdown could spark a massive avocado shortage across the U.S.

The President & CEO Steve Barnard of Mission Produce, a global avocado distributor, told Reuters that Americans would face a severe shortage of avocados within one month upon the border shutdown, adding that, “We would be out of business for a while.”

“You couldn’t pick a worse time of year because Mexico supplies virtually 100% of the avocados in the U.S. right now,” Barnard told Reuters.

“California is just starting and they have a very small crop, but they’re not relevant right now and won’t be for another month or so.”

Last Friday, Trump said: “Mexico is going to have to do something, otherwise I’m closing the border. I’ll just close the border. With the deficit like we have with Mexico and have had for many years, closing the border will be a profit-making operation.”

President Trump has also identified the border as a national emergency over illegal border crossings. 

Recently, Customs and Border Protection Commissioner Kevin McAleenan warned that the immigration system was about to break.

A border shutdown would also trigger food and alcohol prices to soar, according to Reuters.

Monica Ganley, principal at Quarterra, a consultancy specializing in Mexican agricultural trade issues, told the news organization that consumers are “absolutely going to see higher prices. This is a very real and very relevant concern for American consumers.”

Ganley said that tomatoes, cucumbers, blackberries, and raspberries are crops that could be affected as well. 

Nearly 40% of all U.S. imported fruit derives from Mexico,  according to data from the USDA. 

If closing the border affects various forms of transportation, including trucking and rail, Mexican imports of U.S. energy products could drop, according to Reuters.

What we see here is President Trump’s America first policies at play. With tariffs not having their intended effect of shrinking the deficit. Trump is now using the immigration crisis to potentially shut down the entire border – so that trade would virtually come to a halt – thus shrink the deficit to appease his base for 2020.

However, there is a significant problem, as Reuters pointed out, closing the border would essentially cause a food shortage across the U.S. and spike prices, probably not the best thing to have as the economy falters.

via ZeroHedge News https://ift.tt/2I1l9Ym Tyler Durden

Climate Change Alarmists Routinely Ignore Chinese Flouting Of Paris Accords

Authored by Duane Norman via FMShooter.com,

Unfortunately the “Green New Deal” continues to stay in the news.  When Majority Leader Mitch McConnell forced the bill to the Senate floor for a vote, Utah Senator Mike Lee used his 13 minutes on the Senate floor to spend more time discussing Reagan on a Velociraptor and Star Wars Tauntauns than making a coherent policy argument against the bill’s outlined policy.

Afterwards, AOC got all upset and issued her own “people are dying” whining tirade, blaming everyone (but herself) for all the CO2 she claims is causing any extreme weather in America.  This all occurred, of course, right before the Senate voted on the deal, with the final tally going 57-0, with 43 Democrats (including Bernie Sanders) voting “present” instead putting themselves on record on where they stood on the GND initiative.

All the while, American politicians from both parties all but ignored far more prevalent emissions emanating from abroad – especially from the two biggest culprits, China and India:

Of course, Chinese, Indian and Southeast Asian pollution issues are hardly limited to CO2 emissions:

While Democrats have tried to pivot away from the Green New Deal, posturing with a dead-on-arrival bill to force President Trump back into the Paris climate agreement, all US politicians continue to turn a blind eye to China making a mockery of the toothless Paris accords:

The research, carried out by green campaigners CoalSwarm, suggests that 259 gigawatts of new capacity are under development in China.

The authors say this is the same capacity to produce electricity as the entire US coal fleet.

In this study, the researchers used satellite photos to examine every power plant that was subject to a suspension order. They found construction ongoing at many locations.

China has chosen to greatly expand coal power production (64.7% of Chinese electricity generation) while snubbing nuclear power (just 3.9% of Chinese electricity generation).  And even the (fake) New York Times has been forced to admit that China is openly lying about its Paris accord compliance:

China, the world’s leading emitter of greenhouse gases from coal, has been burning up to 17 percent more coal a year than the government previously disclosed, according to newly released data. The finding could complicate the already difficult efforts to limit global warming.

Even for a country of China’s size, the scale of the correction is immense. The sharp upward revision in official figures means that China has released much more carbon dioxide — almost a billion more tons a year according to initial calculations — than previously estimated.

China’s low regard for reducing fossil fuel emissions continues in spite of opposition to the nation’s excessive smog within the country – instead of curtailing polluting activity, China has instead chosen to build massive air purifiers in the heart of its cities:

An experimental tower over 100 metres (328 feet) high in northern China – dubbed the world’s biggest air purifier by its operators – has brought a noticeable improvement in air quality, according to the scientist leading the project, as authorities seek ways to tackle the nation’s chronic smog problem.

In spite of claims it “can run” on solar energy, the project’s officials wouldn’t confirm or deny whether or not the tower uses coal power to run, which would be an irony unto itself.  Amazingly enough, China is more than content to chastise US lawmakers from both parties (who are more than happy enough to take the baitin the push for carbon taxes), recently stating that the US isn’t doing enough to “pay its debts”:

China called on rich countries to “pay their debts” on climate change at global talks on Thursday, criticising developed countries for not doing enough to reduce greenhouse gas emissions and provide finance to help poor countries do the same.

And its not just within China – the Chinese are funding coal power plants across the world, outsourcing even more flouting of the Paris agreements to many of the other nations that are also signatories: 

China financed more than a quarter of all coal plants announced outside the country last year according to a new report, putting its clean energy image at risk as Chinese institutions fund coal-fired projects in emerging markets.

Chinese institutions last year provided $36bn of financing for coal plants outside the country, 26 per cent of the 399 gigawatts of such plants planned or committed last year, according to a report published by the Institute for Energy Economics and Financial Analysis (IEEFA), a US-based non-profit.

Chinese bankers and project planners like coal-backed projects because they are cheap. While they are restricted by Chinese pollution and emissions targets at home, they are free to fund coal-backed projects abroad. “They see the long-term financial, environmental and health consequences of these projects as the responsibility of the other side,” said IEEFA’s Ms Brown.

Meanwhile, in spite of Trump’s insistence that he will save US coal power…

…coal power plants are in rapid decline in the US, as the shale revolution has given way to a rapid rise in natural gas-fired plants.  This has also come at the expense of nuclear power – by far the largest source of carbon-free energy in the US, “expensive” nuclear plants are shuttering at a rapid pace:

So even though the US withdrew from the Paris accord while China stayed in and chastised Trump’s exit, the US has still done a better job of reducing its CO2 emissions than China has.  Go figure.  

Anyone with half a functioning brain knows that the Paris agreements are completely ineffectual – crafted by hypocritical elites that patrol the planet on private jets for the purpose of effecting massive energy taxation upon everyone on earth.  It is hardly a surprise to see left-wing smooth brains jump on board, but the pathetic defense put forward by the GOP’s “best and brightest” leaves little hope that a credible defense against these policies can be put into effect by their opponents.

Unsurprisingly, MSNBC’s Chris Hayes (perhaps the most disingenuous person in mainstream media) hosted a “town hall in the Bronx” with AOC – which essentially amounted to an endorsement of her legislation.  There was no challenge on the deal’s details, and obviously no mention of global emissions – just a “call to action” from a pathetic host who behaved as more of a puppet than a journalist who would challenge any policy proposal.  And MSNBC’s audience?  They just ate the whole thing up – more than willing to push heavy taxation to no effect on global pollution.

Sadly, if the GOP’s best defense against the Paris agreements and the Green New Deal completely ignores excessive foreign flouting of “emissions targets”…

…sooner or later, we will be in for some sort of massive worthless legislation that will accomplish nothing – except higher taxes and more useless regulations. 

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

The $9 Trillion Corporate Bond Market Is Ditching Banks For Electronic Trading

Banks that for decades were tasked with brokering corporate bond trades – and paid Boiler Room-type spreads for the privilege – are now being pushed aside. As Bloomberg reports, upstart bond marketplaces like MarketAxess, Tradeweb and Liquidnet are all indicating that many bond trades occurring on their platforms are now happening between investors directly, without traditional bank-side brokering. This, needless to say, would have a deleterious effect on bank top lines as brokering institutional order flow for the $9.2 trillion market has historically been one of the main key source of revenue.

Over the last 10 years, corporate-bond traders have been one of the last groups of traders to adopt electronic transactions, even as the rest of the market evolved around them, largely due to the non-standardized nature of corporate bonds (and certainly leveraged loans). But now new rules have forced many dealers to act like machines, seeking bids and offers for bonds and linking the two, instead of just buying securities and holding onto them.

John Gutfreund, Salomon Brothers’ iconic bond trader.

As Bloomberg reports, 27% of the corporate bond trades at MarketAxess were made on its all-to-all platform, Open Trading, in the fourth quarter; this was up from 3% in 2014. On Liquidnet’s platform, more than 90% of volume is between investors. And while electronic trading still remains relatively small, its market share is growing and will likely accelerate as it presents a much more cost-beneficial option to the buyside, especially in a time when trading volumes have collapsed in a world of buy-and-hold-while-praying-the-Fed-will-stay-loose. 

One of the reasons behind the tectonic shift is that regulations after the 2008 crisis made it more expensive for dealers to hold bonds, which has resulted in inventories dwindling by more than 55% over the last 5 years. Rising corporate debt also has investors fearful of a looming credit crunch and speed matters. As the market starts to weaken, money managers look to offload bonds any way they can – through dealers or electronically – in the fastest possible way, and often that involves computers.

Richard McVey, chief executive officer of MarketAxess said: “We’ve opened the architecture so anyone can trade with
anyone else. The cost savings when they find a natural match are meaningful.”

All-to-all trading is also gaining favor because, just like stock trading, it grants traders the option of anonymously seeking a counterparty instead of having to wait on a dealer, especially one who may have a conflict of interest in transacting with you (as the Jesse Litvak scandal revealed). Investors polled by Greenwich Associates said that “all-to-all protocols would be the biggest factor helping trading over the next two years.” 

In all, electronic bond trading made up 26% of the market in the third quarter. Those transactions were generally $4 million and under – a sum that, in the bond market, isn’t usually enough to be worth a bank’s time. Most trades over $50 million are generally still done using bankers. Still, the world’s 12 largest dealers collected $2.2 billion from company bond and loan trading last year, down from $2.8 billion in 2017 and $3.9 billion the year before, according to Bloomberg.

Discussing electronic trading, Rich Repetto, an equity analyst at Sandler O’Neill said that “it is the model of tomorrow for fixed-income trading. All-to-all represents significant advancement in automation in the market.”

But the bankers aren’t dead just yet. Sometimes, in an illiquid market with tons of complex instruments and trades often exceeding tens of millions in value, it’s nice to have a person on the other end of the phone line. 

Kevin McPartland, head of market-structure research at Greenwich Associates said: “People want to talk to people, and know they are doing the right thing on transactions that are $50 million or $100 million.”

via ZeroHedge News https://ift.tt/2VcI4nk Tyler Durden