Tag: news

Authored by Nick Corbishley via Wolf Street,

Crown Estates, which manages the Queen of England’s portfolio, recently wrote down the value of 17 shopping and leisure centers by 17%, cutting Her Majesty’s net worth by £552 million. As The Economist points out, this is “fairly small beer” set against the £13.4 billion valuation of the Queen’s property portfolio, which includes some of London’s toniest real estate.

But the Queen will not be left out of pocket, since her income — set at 25% of the profits generated by the Crown Estate — will be topped up with a taxpayer bailout. In fact, thanks to the Sovereign Grant Act of 2011, the overall amount given to the Queen each year in order to fund her official duties is never allowed to fall, regardless of what is happening in the broader economy.

“In the event of a reduction in the Crown Estate’s profits, the sovereign grant is set at the same level as the previous year,” a spokesperson told The Independent.

“The revenue from the Crown Estate helps pay for our vital public services – over the last 10 years it has returned a total of £2.8 billion to the Exchequer.”

Any profits made by the Crown Estate are passed to the Treasury which, in turn, hands 25% of the profits back to the Queen through the sovereign grant. This year, things will be a little different. To cover the fall in value of the Crown’s Estate, the estate has struck an agreement with the Treasury that allows it to begin making “staggered” revenue payments to the government, thus keeping a larger share of the profits to itself.

It’s a nice deal if you can get it. Most other UK commercial landlords can’t, though many larger property owners have certainly been lobbying the government for support, which for the moment is not forthcoming.

Meanwhile, conditions in both the retail and office markets continue to deteriorate. The U.K.’s ongoing retail crisis and work-from-home (WFH) revolution have between them wiped out roughly half of the market cap of large REITs such as Land Securities Group Plc, British Land Company, and Shaftesbury so far this year.

Last week, the government extended its ban on evictions of commercial property tenants from September 30 to December 31, which angered some landlords who have seen the yields on their investments slide as businesses struggle to pay rent. First passed on March 26, the moratorium on evictions was an essential lifeline for many retail businesses or offices whose incomes had dropped dramatically during the lockdown.

But it also shifted financial stress from tenants to property owners and their lenders. And the longer it drags on — it has now been extended twice in six months — the more the stress grows.

U.K. commercial property firms have so far collected just 68% of the rent they were due in June, according to data issued on Wednesday by Re-Leased, after having collected only 18.2% on the due date. Unsurprisingly, retail landlords have been hit the hardest, having so far received just 60% of rents due for the June quarter, compared to 75% and 76% respectively for the industrial and office sectors.

Despite the recent frenetic efforts of the British government to undo the WFH revolution it set in motion, the UK has significantly lagged behind mainland Europe in getting workers back behind their desks. This week, the government reversed policy once again, as covid cases began surging, urging all “office workers who can work effectively from home” to do so “over the winter,” .

This is going to have a dire impact not only on the owners of office buildings but also on the shops, restaurants, bars, cafes and other struggling city-center retail and leisure businesses that depend on the custom of office workers. Many leisure and hospitality businesses are already reeling from the government’s imposition this week of a 10 o’clock curfew for bars and restaurants. The owners of these properties are also feeling the pinch.

Shaftesbury, a real estate investment trust (REIT) that mainly rents to independent retailers in London’s West End, reported on Friday that for the six months to September so far, it had collected just 41% of rent due. Ten percent of rents are expected to be subject to deferred collection arrangements; 23% are being waived and 26% remain outstanding. By the end of August, its vacancy rate had risen to 9.7% of estimated rental value, compared to 4.8% at the end of March.

As retail vacancy rates have risen, the balance of power has gradually shifted, from landlord to tenant. Even if evictions were allowed, in this crisis it will be very tough for landlords to find a replacement for an evicted tenant — which makes landlords somewhat more flexible in dealing with their tenants.

And many tenants aren’t paying their rents, either because they can’t or are choosing not to, in the hope of renegotiating the terms of their lease contract. Shaftesbury is letting tenants defer quarterly rent for a third consecutive quarter, while British Land, part-owner of the sprawling Broadgate office and retail complex in the City of London, is considering extending support to its smaller hospitality and shop tenants for the next quarter, reports Bloomberg.

It’s the main reason why fashion retailer New Look was able to secure such attractive terms from its landlords — including Landsec and British Land — in its latest voluntary insolvency procedure. By placing its store leases at the heart of its negotiations, the firm was able to ensure that 402 of its 470 stores would move to a turnover-linked model, whereby rent will be charged at between 2% and 12% of revenues. For the remaining 68 stores the firm will not have to pay rent for the next three years.

The property owners may not have liked the terms, but given New Look’s size and the huge holes its demise would have left in an already decimated brick-and-mortar retail landscape, they had little choice but to grudgingly accept them. By setting a precedent for turnover-based rents, it’s only a matter of time before other large stores begin asking for the same treatment. 

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It has been years since European banks’ dominated traditional investment-banking business lines like trading and M&A. But things weren’t always this way. Before the financial crisis, and before regulators around the world started scrutinizing banks’ derivatives businesses to try and curb risk.

But while Deutsche Bank has become the poster-child for post-GFC decline – as its ambitions to become a global rival to JP Morgan crumbled to dust – Societe Generale, the French banking giant that reaped massive profits during the late 1990s and 2000s via its pioneering ‘structured products’ business, is also presiding over the twilight of a business line that was once the bank’s profit center, but has been blamed for massive losses during the coronavirus downturn this spring.

Oudea

As the FT reminds us, the French bank fell to a shocking loss of €326 millions ($380 million) in the first quarter after revenue in its equity trading unit (long hailed as a key strength) collapsed almost 99% to just €9 million ($10.5 million) after the bank saw “the worst environment you can imagine” for its structured products business, CEO Frédéric Oudéa explained.

Another major loss was reported in August, after Q2 earnings were reported.

A loss that was attributed almost entirely to the group’s

With shareholders revolting, Oudéa promised to cut back on the bank’s structured products business, foregoing €250 million in revenue while targeting “cost savings” of €450 million ($523 million). The cuts are the biggest threat to a business line that set SocGen apart from its European peers, and helped establish the bank as a powerhouse in equity derivatives thanks to its ‘structured products’ business. These products, purchased by retail and institutional investors, charge relatively high fees, but purport to lock in moderate profits while smoothing out volatility.

30 years ago, however, the business was just the twinkle in the eye of a legendary French banker named Antoine Paille. 30 years ago, Paille was a 31-year-old software engineer with a big dream. He and a small team of engineers from a venerable French academy were bequeathed a basement office in downtown Paris, where they birthed the bank’s structured products business. Here’s the FT with more.

Thirty years ago, a group of maths and engineering graduates from Paris’s elite grandes écoles changed the direction of one of France’s oldest and most important banks.

Under Antoine Paille, a 31-year-old software engineer, the small team was given a basement office a few streets from the Palais Garnier opera house in Paris with instructions to build a new business for Société Générale, the lender founded in the 19th century.

Mr Paille believed that SocGen’s dive into options and equity derivatives, which would eventually be packaged up for professional and retail investors into so-called structured products, could provide the bank with an advantage over its larger global competitors. He proved to be right.

French banks, including SocGen, Natixis and BNP Paribas, eventually all became global leaders in these types of products, which encapsulated derivatives which promised to minimize volatility while maximizing the upside for clients. But in a world of low interest rates, and increasingly strenuous global competition, bankers were forced to make the products increasingly complex – and increasingly risky – just to keep up with the competition. “Correlation” offerings and “autocalls” soon dominated the landscape.

But the original products have changed, becoming increasingly complicated structures that tried to maintain returns in a world of low interest rates and copycat products. “Normally when we created a product, we’d have it to ourselves for about a year and a half, then others would start to copy it,” said one former member of the structured products team. Simple “plain vanilla” guaranteed return products morphed into correlation offerings based on baskets of stocks, and on to autocalls, which pay out a coupon similar to a bond as long as losses or gains are within a certain threshold.

One banker reminisced to the FT about SocGen’s first slam-dunk structured product, called “Everest”, which the banker described as “beautiful”.

“Everest was beautiful,” another banker reminisced, remembering a correlation product that was sold to retail investors and named by Christophe Mianné, one of the leading lights in equity derivatives in the 1980s, after he saw a film about the mountain projected near SocGen’s Paris headquarters in La Défense.

Here’s how it worked…

Everest had a duration of 10 years and guaranteed that clients’ capital would be returned. Additional returns were based on the performance of 10 or more stocks, with redemption based on the performance of the weakest member of that chosen basket.

…and – more importantly – here is the pitch:

“We told investors that if you invest 100 then after ten years we would give you 200, minus the performance of the worst stock you chose,” said someone who used to sell the products. If the worst performing stock went to zero, then clients received only their capital back and if all the stocks performed well they got the upside. The risk that all the stocks would move in the same direction at the same time was the bank’s to wear.

Among the original group of bankers brought in to package and sell these products was Jean Pierre Mustier, who eventually rose to lead SocGen’s investment bank, before being unceremoniously fired after the financial crisis, when regulators came down hard on SocGen’s structured products business (he’s now the CEO of UniCredit). Mustier’s rise was almost as meteoric as the structured products business.

A steady stream of talented maths graduates churned out by French universities, along with a plan to build centralised teams and sell the products at scale, allowed SocGen to steal a march on rivals. Insiders say a “start-up culture” allowed them to beat US banks which were selling bespoke products to institutional clients. One ex-SocGen banker said the US banks were not as interested in structured products because they were making enough money elsewhere. By the early 2000s, SocGen’s equity derivatives unit employed close to 2,000 people and had grown into the bank’s profits engine, accounting for 95 per cent of its investment bank earnings.

Despite the business’s tremendous success, the regulatory backlash was swift, and the bank was forced to retreat from riskier practices that were also – as it turns out – extremely lucrative.

Though the bank continued to invest in its structured products business, Mustier was eventually forced out of the investment bank as Oudéa ascended to the CEO role. This precipitated a shift away from investment-banking and market making as the bank’s central focus, and led to a steep decline in the structured products business.

SocGen is not giving up on structured products, despite the hit from Covid-19 forcing it to pull back. Instead it is trying to walk a tightrope between reducing risk and remaining true to its core identity. It will do that, said Jean-François Grégoire, head of global markets at the bank, by trying to push new ranges of products that reduce the potentially large losses the bank faces in market turmoil, leaning once again on its ability to engineer. “The innovation that we’ve been pushing [this time] is completely different. It’s innovation that goes towards creating products that are easier to manage for us and that are still very profitable for the customers,” Mr Grégoire said.

Of course, any product that can’t withstand intense market “ructions” – the FT’s favorite word to describe the chaotic limit-up/limit-down swings seen in March – is bound to run into problems in a market universe where payment for order flow, algorithmic trading and uneven liquidity exacerbates volatility, creating new challenges for risk managers across Wall Street.

So far, the market reaction has placed SocGen behind the curve for 2020, as its shares lag French banks.

Authored by Brandon Turbeville via The Organic Prepper blog,

The majority of people tend to think of the concept of history as if it is something relegated only to the past. As if they are not living through what will become history in the future. Doing so allows them to maintain a thought process that convinces them that world wars and European wars, in general, are over. 

After all, Europe learned its lesson in the Big One – and the Big One after that.  Of course, with any such incident, there’s history, and there’s what actually happened.

If things between Greece and Turkey don’t cool down, a European/Mediterranean war will ensue.

Such a war would not be merely European but Euro-Asian and, at its furthest reach, global.

With Recep Tayyip Erdogan’s neo-Ottoman desires at the forefront, Turkey is expanding its national borders, with what Erdogan seems to believe will resurrect the Ottoman Empire. From Iraq to Syria and Libya, Turkey has attempted to either gain territory or forcefully make a seat at the international table through military action. Now, however, Turkey is threatening Greece as well and, as a result, Europe.

Turkey’s actions may well result in a global confrontation if cooler heads do not prevail. Political motives and deep state intrigue are not allowed to repeat themselves as they did in the first World War. Anyone who offers a so-called “perfect solution” is often using difficult times to take more control.

A brief history of the current conflict

Greek and Turkish relations have, for the most part, always been tense. Some brief historical context helps to understand the historical antipathy held toward one another by Greece and Turkey, at least at the national level.

As Victor Davis Hanson wrote for FOX News in his article “Turkey vs. Greece – here’s why this centuries-old rivalry matters now,”

Turkey is a Muslim country and was once the Ottoman Empire that ruled much of the Islamic world. Greece is still surrounded by Muslim countries.

Turks are quick to remind everyone that from the late 15th Century to the early 19th Century, most of Greece and the Aegean Islands belonged to the Ottoman Empire.

In modern times, after the bitterness over the Cyprus crisis of 1974 and years of socialist governments, Greece was vehemently anti-American despite shared Western traditions.

In contrast, Turkey once prided itself on its secular customs institutionalized by its first modern, pro-Western president, Mustafa Kemal Atatürk. His successors until recently were pro-American autocrats.

Now, geostrategic relations have flipped. Both nations remain NATO members, but Greece, not Turkey, is also a member of the European Union. Turkish northern Cyprus is largely considered a rogue territory, while democratic Greek Cyprus is an EU member.

Moreover, Turkey, under President Recep Tayyip Erdogan has become an increasingly Islamic state, often hostile to the U.S. It likes to leverage its NATO membership to advance its new Middle East agendas.

It is Turkey, not Greece, that has been acting provocatively on the world stage. It recently refashioned the iconic Hagia Sophia cathedral, built by the Byzantine emperor Justinian in the sixth century-long one of the most iconic churches of the Christian world – from a museum into a mosque.

The tensions between Greece and Turkey are primarily over energy and territorial rights

However, those tensions carry with them quite a bit of baggage. This baggage is not only historical but also relatively recent. That is what makes the issue so dangerous.

Turkey and Greece both have overlapping claims to areas in the Eastern Mediterranean that are rich with gas. Greece argues that each of its thousands of islands is entitled to its own continental shelf and their own exclusive Greek drilling rights.

But Turkey disagrees

Turkey argues that Greece’s claims are an unrealistic interpretation of international law and encroach upon Turkey’s exclusive economic zone.

This disagreement came to a head when Turkey began seismic tests in the Mediterranean Sea in areas Greece claims as it’s territorial waters. Greece was angered and dispatched its armed forces to the area, but Turkey still went ahead with the tests.

On August 14, Greek and Turkish warships were involved in a “minor collision” due to the standoff that Greece described as an accident, but Turkey predictably labeled a “provocation.”

Both sides continue to warn that they are not afraid of outright war

The EU supports Greece and has gone so far as to sanction Turkey for the seismic surveys off the Northern Cypriot coast, warning Turkey against any further provocations. There are also several other factors contributing to the Greek/Turkish friction. First, there is the question of the massive number of immigrants Turkey has held and used as a battering ram and bargaining chip with the rest of Europe.

In previous articles, I wrote at the height of the migrant push into Europe how Turkey was directing migrants’ flow and intentionally selecting specific types of migrants (those of a more fundamentalist variety) to send abroad. Greece was, of course, one of the heaviest hit when Erdogan “opened the gates.”

In July of this year, Turkey announced the re-conversion of Istanbul’s Hagia Sophia into a mosque. This re-conversion enraged a sizeable amount of the Greek population. Religious tensions and a centuries-old debate reignited.

Despite Turkey’s clear aggression in the Mediterranean, Joseph Hincks of TIME writes,

Turkey’s muscular approach to the contested waters enjoys bipartisan support. Turkey’s main opposition Republican People’s Party (CHP), voiced support for the Mediterranean drilling program. Securing lucrative energy resources in a region where Turkey finds itself increasingly isolated also enjoys popular social backing, experts say. “Erdogan’s adventure in the Eastern Mediterranean probably has more support than any of his other regional adventures,” says Emile Hokayem, a Middle East security expert at the International Institute for Strategic Studies.

The other players

The friction between Greece and Turkey affects many more countries than just the leading two players. For instance, the European Union as a whole is at risk of being drawn into a confrontation not only between an EU member and a powerful Asian nation but between two members of NATO.

While that might sound like bad news for Turkey, this puts the EU itself at risk of confrontation between member states in a coalition centered around whose interests lie with Turkey, Greece, or some other effected third-party nation.

You don’t need to look far to see how this could happen either

French President Emmanuel Macron has publicly stated that France will play a larger role in international affairs. Most likely due to his incredibly weakened and failing status at home (another article, another time).

Now, France is becoming involved in the Greek-Turkey row, publicly criticizing Turkey, demanding that it remove its ships and even placing French fighter jets in Cyprus as a deterrent. France indicates that it will sell several French jets to Greece, all moves that anger Turkey.

Even Jacques Attali is getting in on the action. “We have to hear what Turkey says,” he writes, “take it very seriously and be prepared to act by all means. If our predecessors had taken the Führer’s speeches seriously from 1933 to 1936, they could have prevented this monster from the accumulating the means to do what he did.”

But the EU is not necessarily unified in its view of the conflict

Germany has tried to sound neutral but has long ties with Turkey if for no other reason than the massive number of Turkish immigrants in Germany and the large Turkish community. Germany is now attempting to act as a mediator between the two parties by offering Turkey an “enhanced customs union” with the EU. Spain and Italy seem to be following Germany’s lead in that direction also.

Patrick Wintour has written an interesting for The Guardian about this standoff entitled, “How A Rush For Mediterranean Gas Threatens To Push Greece And Turkey Into A War,” where he says the following:

An increasingly fractious standoff over access to gas reserves has transformed a dispute between Turkey and Greece that was once primarily over Cyprus into one that now ensnares Libya, Israel, Egypt and the United Arab Emirates, and feeds into other political issues in the Mediterranean and has raised fears of a naval conflict between the two Nato allies in the Aegean Sea.

The crisis has been deepening in recent months with the French president, Emmanuel Macron, leading those inside the EU opposing Turkey’s increasingly military foreign policy and saying Turkey can no longer be seen as partner in the Mediterranean. He has offered French military support to the Greek prime minister, Kyriakos Mitsotakis, including the possible sale of 18 Rafale jets.

The issue was on the agenda of a meeting of the Med7 group of southern Mediterranean leaders on the French island of Corsica on Thursday and again at an EU council meeting on September 23 that will discuss imposing severe sanctions on the already struggling Turkish banking sector over its demand for access to large swaths of the eastern Mediterranean.

Germany, the lead mediator between Turkey and Greece, is exploring an enhanced customs union between Turkey and the EU to calm the dispute, which has been exacerbated by vast hydrocarbon discoveries over the past decade in the eastern Mediterranean.

Turkey has long sought a broader customs union with the EU, and although Greece might see any such offer as a reward for bullying, Germany believes both carrots and sticks are needed to persuade Turkey to change its strategy.

But Germany is also warning Turkey’s president, Recep Tayyip Erdoğan, that his current unilateral strategy is a commercial dead end, since no private gas company is going to touch cooperation with Turkey if it is trying to exploit illegal claims on gas reserves.

Macron has already increased the French naval presence in the sea and called for the withdrawal of the Turkish reconnaissance ship Oruç Reis, accompanied by Turkish naval ships. The ship is undertaking seismic surveys in Greek waters south of Cyprus.

The fear that the conflict could spiral out of control has led to an urgent search for a neutral arbitrator and an agreed agenda for talks. An effort by Nato to start technical naval deconfliction talks was delayed after Greece objected to Nato’s involvement. The Greek foreign minister, Nikos Dendias, insisted that the talks would start only when the threats stopped. He then flew to New York to enlist the help of the UN secretary-general, António Guterres.

There are more players for no other reason than energy exploration.

The size of the reserves for which Turkey is attempting to lay claim inspired Israel, Egypt, Greece, Cyprus, Italy, Jordan, and Palestine form an East Med Gas forum to develop a plan to extract and export gas from the same region.

France wants to join that forum, and the UAE is a supporter as well. This forum has effectively created an anti-Turkish coalition (though Italy’s position is less clear) regarding this conflict.

There is even more to the story, particularly regarding the Libyan question.

Initially, many thought that the Turkish intervention in the Libyan civil war (following America and NATO’s tragic war there) was merely Erdogan acting out. Erdogan had other ideas, most notably a maritime treaty that he was rewarded with for his support by the UN-backed Government of National Accord (GNA).

Of course, Turkey supports the GNA and has become involved military and by proxy in support of that government while Russia, UAE, Egypt, and France are supporting Khalifa Haftars’ Libyan National Army (LNA).

Pro-LNA members have some concerns.

Turkey’s newfound maritime treaty with the GNA gives Turkey drilling rights and essentially ignores Crete’s existence, contradicting all previously understood Greek and Cypriot drilling rights.

Thus, Egypt and Greece have now signed a maritime agreement that Turkey has labeled null and void. Egypt’s al-Sisi has even gone so far as to threaten to intervene militarily against Turkey in Libya, now putting those two countries in a place where the possibility of a direct military confrontation is a very real one, not to mention a conflict between each of their allies.

The UAE has already sent a number of US-manufactured jets to Libya and has taken part in military drills with Greece off Crete’s island.

And Russia’s role?

Joseph Hincks writes,

Russia has yet to make a public statement on the Greece–Turkey tensions but it is deeply entrenched in both the Eastern Mediterranean and the Black Sea, where Erdogan recently announced Turkey’s biggest ever gas find. The U.S. Navy’s top admiral in Europe warned last year that Moscow is in the process of turning the eastern Mediterranean into one of the world’s most militarized zones, in part as a result of building up a naval hub at the Syrian port of Tartus. Greek media reported this week that the Russian Navy has gathered nine military vessels between Cyprus and Syria, including three submarines.

If any of this sounds familiar, it should.

If any of this sounds familiar, it should. Just before World War 1, a tangled mess of alliances had been created by a perfect mix of cunning by some nations and a dose of folly by others to result in one of the greatest tragedies of the 20th Century.[1]

World War 1 led to the Russian Revolution’s tragedies, the rise of Adolph Hitler, and World War 2, where the order was re-invented yet again. Now, that order is being challenged but not in a way that will result in greater freedom and prosperity for the world’s people. Indeed, it will result in quite the opposite.

There is no way to predict whether or not the Greek-Turkish row will become a military clash or even a war, much less a global one. But the puzzle pieces are there and slowly being put together just as they were over a hundred years ago.

The odds are that it won’t happen. But then again, the odds were that it wouldn’t happen the first time.

London wasn’t the only European city where frustrated denizens took to the streets in anger to protest another round of COVID-19-inspired lockdowns. Madrid saw anti-lockdown protests blossom into full-on riots – as they were described in the Spanish press – as clashes between citizens and police grew increasingly violent.

Last week, the city council imposed new restrictions on more than 1 million inhabitants of Madrid, as they expanded the number of COVID-19 hot spots to 45. Localized restrictions on movement were similar to those imposed during the lockdown in the spring, though not as harsh.

Over the weekend, thousands of Spaniards streamed into the streets of Madrid. Dozens of residents were involved in violent clashes with the police.

Madrid hoy Caravanchel pic.twitter.com/GzCnzoF3mn

— Angela Comanchera (@AComanchera) September 27, 2020

Cargas en la Asamblea de Madrid. #vallecas pic.twitter.com/oFQWwWIuND

— Álvaro Casares (@comex25) September 24, 2020

Demonstrating that American cops don’t have a monopoly on police brutality, one Spanish cop was filmed headbutting a detained man.

Policía sin número de identificación dando un cabezazo con el casco a un detenido esposado e inmovilizado.
Es intolerable.
El delegado del Gobierno debe ser cesado inmediatamente.@conJoseMFranco
Lo llaman democracia y NO LO ES. pic.twitter.com/fhgTyr79bL

— Matsi♀️✊ (@Vicky_Taibo) September 25, 2020

Protests weren’t confined to Madrid. They were widespread over the weekend across areas such as Usera, Puente de Vallecas, Villa de Vallecas, Villaverde, Ciudad Lineal, Vicálvaro, San Blas and Carabanchel.

Over one million people are subject to the new localized lockdown restrictions and may only leave their homes for work, medical or educational purposes and only if they carry supporting documents. Poorer and migrant workers who rely on public transit to get to jobs in the construction industry say these measures discriminate against them.

¡Sánchez culpable, Gobierno culpable, Ayuso culpable! Luego vendréis al barrio a haceros foto en campaña.

¡Esto no lo hacéis en el barrio de Salamanca! pic.twitter.com/0OO3SvzaJc

— Vallekas se Defiende (@VKseDefiende) September 24, 2020

Local businesses must operate at 50% capacity and must close before 10pm. Gatherings are limited to no more than six people. The new measures will be reviewed every 2 weeks.

Madrid is presently one of the worst-hit cities in all of Europe, with an infection rate of roughly 1,000 cases per 100,000 residents.

Authored by The Saker via The Vineyard of The Saker blog,

We all know that we are living in crazy, and dangerous, times, yet I can’t help being awed at what the imperial propaganda machine (aka the legacy ziomedia) is trying to make us all swallow. The list of truly batshit crazy stuff we are being told to believe is now very long, and today I just want to pick on a few of my “favorites” (so to speak).

First, of course, comes the “Novichok Reloaded” scandal around the alleged poisoning of the so-called “dissident” Alexei Navalnyi. I already mentioned this absolutely ridiculous story once, so I won’t repeat it all here. I just want to mention a few very basic facts:

• Navalnyi is pretty much a discredited non-entity in Russia. “Putin” (because this is how the imperial propaganda machine always personalizes the evils of Russia: “Putin” did this or that, as if Putin was personally in every alleged Russian evil deed) had absolutely and exactly zero reasons to harm Navalnyi in any way. I would even add that IF Navalnyi was poisoned in Russia (which I do not believe) then the FSB screwed up by not offering him 24/7 protection, especially in the current political climate (i.e. struggle for the completion of North Stream 2).

• The Empire always likes to produce a “sacrificial lamb” to symbolize the putative evil of the nation which dares to resist. In Iran it was Neda, in Kuwait the infamous “incubator babies”, in Syria anonymous kids killed by Russian gas, and in Russia it was Nemtsov (did not really work) and now Navalnyi (I wonder who the sacrificial lamb will be in Belarus (Tikhanovskaia?). The FSB should have seen this coming, especially after Nemtsov.

• There is exactly zero evidence that the mineral water bottle which the Germans claim contained traces of, what else, “Novichok”, ever was anywhere near Navalnyi or even that it ever was in Russia. No such bottle was found by, or mentioned to the Russian investigators. This bottle was, allegedly, hidden from the FSB by Navalnyi supporters, and secretly brought to Germany. What that means in terms of “chain of custody” is self-evident.

• As I have mentioned in my past article, if what the German authorities are claiming is true, then the Russians are truly the dumbest imbeciles on the planet. Not content to use this now famous “Novichok” gas against Skripal in the UK and after failing to kill Skripal, these stupid Russians decided to try the very same gas, only “improved”, and they failed again: Navalnyi is quite alive and well, thank you!

• Then there is this: according to the imperial propaganda machine, Novichok was so horribly dangerous, that the Brits had to use full biosuits to investigate the alleged poisoning of Skripal. They also said that they would completely destroy the dangerous Skripal home (though they never did that). The self same propaganda machine says that the Novichok used on Navalnyi was a more powerful, improved version. Okay. Then try to answer this one: why did the Russians NOT put on biosuits, why did not a single passenger suffer from any side effects (inside a closed aircraft cabin!)? How is it that this super-dooper Novichok not only failed to kill Navalnyi (who, allegedly, ingested it!) but also failed to even moderately inconvenience anybody from the many people Navalnyi was surrounded by on that day?

I could continue to deconstruct all this nonsense, but that would take pages. I will mention two thing though:

First, the Russians have requested any and all evidence available to the Germans and to the Organization for the Organization for the Prohibition of Chemical Weapons – but they got absolutely nothing in return. Yet the EU is demanding an investigation (which is already under way in Russia anyway!) as if the Russians did not want the exact same!

Second, Navalnyi apparently has an immunity to otherwise deadly Russian biological

After being exposed to an improved Novichok and after weeks in coma in intensive care, here is Navalnyi trotting down stairs feeling great agents, just take a look at him on this post-Novichok photo:

[By the way, the first time around the Brits also never gave the Russians *any* information, nevermind any kind of evidence. Apparently, to hide some super-secret secrets. Yeah, right!]

Next, I absolutely have to mention the absolutely insane situation around Belarus.

To make a long story short, the EU wants to sanction Russia for intervening in Belarus while that self-same EU is intervening in every possible imaginable manner: from the Poles who treat Tikhanovskaia as a modern False Dmitri the Fifth (see here for a summary of Polish-run False Dmitris), to the promise of a special “Marshall Plan for Belarus”, to the coordination of all the protests from Poland. The EU refuses to recognize Lukashenko as the winner (in spite of the fact that there is exactly zero evidence suggesting that Lukashenko lost) and refers to Tikhanovskaia as the “Leader of Belarus” (whatever that means).

As for our US American friends, having learned exactly *nothing* from the abject failure of their Guaido coup in Venezuela, they now want to repeat exactly the same with Tikhanovskaia in Belarus. As a result, Tikhanovskaia has been re-christened “Juanita Guaido”

But the worst are still the Europeans. Not only are they prostituting themselves to the leaders of the Empire, the following countries were the first to declare that they will not recognize Lukashenko as the leader of Belarus: Poland, Latvia, Lithuania, Estonia (which is no surprise, they all compete for the title of most pro-US colony on the planet), but also putatively mentally sane countries such as Germany, Czechia, Slovakia, Denmark. The case of Germany is particularly amazing, because Germany will now be placed under immense pressure to cancel North Stream 2, something which the entire German industry opposes. Eventually, the US, Canada, the Ukraine, the UK and the entire EU joined in and also refused to recognize Lukashenko as the leader of Belarus.

What is especially amazing to me is that these EU imbeciles apparently don’t care that without North Stream 2 they will have to purchase US gas, at much higher prices, which will make the EU economy less effective than the US one. And I thought that prostitutes are always acutely aware of the money they can make: not the European ones, apparently.

Still, I think that the “top honor” in this category goes to Poland which, while condemning some undefined Russian intervention in Belarus, runs the NEXTA Telegram channel which runs videos like this one: (in Russian – no, not in Belarusian, they *know* that 99.9999% Belarussians speak Russian):

Oh, but it gets better.

NATO seems to be trying to frighten Russia with maneuvers in Poland and B-52 flights over the Ukraine and the Black Sea (see here for a full analysis). As for the Poles and Ukronazis, they apparently believe that the Russian bear covered himself in poop and ran away at full speed.

What I am going to say next is not a secret, every military person who looked into this issue knows and understands this: NATO, and I mean the combined power of all NATO member states, simply does not have the hardware needed to wage a war against Russia in Europe. What NATO does have is only sufficient to trigger a serious incident which might result in a shooting war. But once this war starts, the chances of victory for NATO are exactly zero. Why?

Well, for one thing, while coalitions of countries might give a thin veneer of political legitimacy to a military action (in reality, only a UNSC resolution would), in purely military terms you are much better off having a single national military. Not only that, but coalitions are nothing but the expression of an often held delusion: the delusion that the little guy can hide behind the back of the big guy. Poland’s entire history can be summarized in this simple principle: strike the weak and bootlick (or even worse!) the powerful. In contrast, real military powers don’t count on some other guy doing the heavy lifting for them. They simply fight until they win.

Yes, the Europeans, being the cowards that they are, do believe that there is safety in numbers. But each time these midgets gang up on Russia and start barking (or, to use Putin’s expression, start oinking) all together, the Russians clearly see that the Europeans are afraid. Otherwise, they would not constantly seek somebody to protect them (even against a non-existing threat).

As a direct result of this delusion, NATO simply does not have the equivalent of the First Guard Tank Army in spite of the fact that NATO has a bigger population and much bigger budgets than Russia. Such a tank Army is what it would take to fight a real war in Europe, Russia has such an Army. NATO does not.

The other thing NATO does not have is a real integrated multi-layered air defense system. Russia does.

Lastly, NATO has no hypersonic weapons. Russia does.

(According to President Trump, the USA *does* have super-dooper “hydrosonic” weapons, but nobody really knows what that is supposed to mean).

I would even argue that the comparatively smaller Belarusian military could make hamburger meat of the roughly three times larger Polish armed forces in a very short time (unlike the Poles, the Belarusian are excellent soldiers and they know that they are surrounded by hostile countries on three sides).

As for the “armed forces” of the Baltic statelets, they are just a sad joke.

One more example: the Empire is now sending ships into the Black Sea as some kind of “show of force”. Yet, every military analyst out there knows that the Black Sea is a “Russian lake” and that no matter how many ships the US or NATO sends into the Black Sea, their life expectancy in case of a conflict would be measured in minutes.

There is a popular expression in Russia which, I submit, beautifully sums up the current US/NATO doctrine: пугать ежа голой задницей, which can be translated as “trying to scare a hedgehog with your naked bottom”.

The truth is that NATO military forces currently are all in very bad shape – all of them, including the US – and that their only advantage over Russia is in numbers. But as soon as you factor in training, command and control, the ability to operate with severely degraded C3I capabilities, the average age of military hardware or morale – the Russian armed forces are far ahead of the West.

Does anybody sincerely believe that a few B-52s and a few thousand soldiers from different countries playing war in Poland will really scare the Russian generals?

But if not – why the threats?

My explanation is simple: the rulers of the Empire simply hope that the people in the West will never find out how bad their current military posture really is, and they also know that Russia will never attack first – so they simply pretend like they are still big, mighty and relevant. This is made even easier by the fact that the Russians always downplay their real capabilities (in sharp contrast to the West which always brags about “the best XYZ in the world”). That, and the fact that nobody in the Western ruling classes wants to admit that the game is over and that the Empire has collapsed.

Well, they apparently can hide these truisms from most of their public opinion: Trump promises super-dooper missiles and big red buttons, and his supporters immediately wave (Chinese made) US flags! But I assure you that the Russians (political leaders and even the general public) know what the real score is.

Yet the Empire still refuses to deal with Russia in any other way except insults, bullying, threats, accusations, sanctions, and constant sabre-rattling. This has never, and I mean never, worked in the past, and it won’t work in the future. But, apparently, NATO generals simply cannot comprehend that insanity can be defined as “doing the same thing over and over again, while hoping to achieve different results”.

Finally, I will conclude with a short mention of US politicians.

First, Trump. He now declares that the Russians stole the secret of hypersonic weapons from Obama. This reminds me of how the Brits declared that Russia stole their vaccine against the sars-cov-2 virus. But, if the Russians stole all that, why is it that ONLY Russia has deployed hypersonic weapons (not the USA) and ONLY Russia has both two vaccines and 2 actual treatments (and not the UK)? For a good laugh, check out Andrei Martyanov’s great column “Russia Steal Everything”.

And then there is Nancy Pelosi who, apparently, is considering, yes, you guessed it – yet another impeachment attempt against Trump? The charge this time? Exercising this Presidential prerogative to nominate a successor to Ruth Ginsburg. Okay, Pelosi might be senile, but she also is in deep denial if she thinks impeaching Trump is still a viable project. Frankly? I think that she lost it.

In fact, I think that all the Dems have gone absolutely insane: they are now considering packing both the Supreme Court and the Senate. The fact that doing so will destroy the US political system does not seem to bother them in the least.

Conclusion: quos Deus vult perdere prius dementat!

We live in a world where facts or logic have simply become irrelevant and nobody cares about such clearly outdated categories.  We have elevated “doubleplusgoodthinking” into an art form.  We have also done away with the concepts of “proof” or “evidence” which we have replaced with variations on the “highly likely” theme.  We have also, for all practical purpose, jettisoned the entire corpus of international law and replaced it with “rules-based international order“.  In fact, I can only agree with Chris Hedges who, in his superb book the “Empire of illusions” and of the “triumph of spectacle”.  He is absolutely correct: not only is this a triumph of appearance over substance, and of ideology over reality, it is even the triumph of self-destruction over self-preservation.

There is not a big “master plan”, no complex international conspiracy, no 5D chess.  All we have is yet another empire committing suicide and, like so many before this one, this suicide is executed by this empire’s ruling classes.

Submitted by SouthFront.org,

On September 27, a new regional war in South Caucasus arose from the Armenian-Azerbaijani conflict over the contested Nagorno-Karabakh region.

Pro-Armenian forces captured the region in the early 90s triggering an armed conflict between Armenia and Azerbaijan. Further development of the hostilities and the expected offensive by pro-Azerbajian forces were stopped by a Russian intervention in May of 1994. As of September 2020, the Nagorno-Karabakh region and nearby areas are still under the control of Armenian forces, de-facto making it an unrecognized Armenian state – the Republic of Artsakh (more widely known as the Nagorno-Karabakh Republic).

The 2018 political crisis in Armenia the led to a seizure of power in the country by de-facto pro-Western forces led by current Prime Minister Nikol Pashinyan which did not strengthen Armenian positions over the territorial dispute. The double standard policy of the Armenian government, which was de-facto conducting anti-Russian actions but keeping public rhetoric pro-Russian, also played its own role. For years, Russia has been the only guarantor of Armenian statehood and the only force capable to rescue it in the event of a full-scale Azerbaijani-Turkish attack. Nonetheless, the Armenian leadership did pretty well in undermining its strategic partnership with its neighbor.

On the other hand, the political and economic situation in Azerbaijan was more stable. Baku also was able to secure good working relations with Russia. Together with the developing strategic partnership with Turkey, a natural historical ally of the country, and the strengthening of Turkish positions in the Greater Middle East, led to an expected attempt by Azerbaijan to restore control over the contested territories.

The Azerbaijani advance started on in the morning of September 27 and as of September 28, the Azerbaijani military said that it had captured seven villages and several key heights in the Fuzuli and Jabrayil areas. The military also announced that Azerbaijan captured the Murov height of the Murovdag mountain range and established fire control of the Vardenis-Aghdar road connecting Karabakh with Armenia. The Ministry of Defense said that this will prevent the transportation of additional troops and equipment from Armenia along the route in the direction of the Kelbajar and Aghdar regions in Karabakh.

The Azerbaijani Defense Ministry also claimed that over 550 Armenian soldiers were killed and dozens pieces of Armenian military equipment, including at least 15 Osa air defense systems, 22 battle tanks and 8 artillery guns, were destroyed. All statements from the Armenian side about the casualties among Azerbaijani forces were denounced as fake news.

Azerbaijan calls the ongoing advance a “counter-offensive” needed to put an end to Armenian ceasefire violations and to protect civilians. President Ilham Aliyev signed a martial law decree and vowed to “restore historical justice” and “restore the territorial integrity of Azerbaijan” Turkey immediately declared its full support to Azerbaijan saying that it is ready to assist it in any way requested, including military support.

In its own turn, the Armenian military admitted that Azerbaijan captured some positions near Talish, but denied that the Vardenis-Aghdar road was cut off. According to it, at least 200 Azerbaijani soldiers were killed, 30 armored vehicles and 20 drones were destroyed. The Armenian Defense Ministry also said that it has data about Turkish involvement in the conflict, the usage of Turkish weapons and the presence of mercenaries linked to Turkey. Earlier, reports appeared that Turkey was deploying members of its Syrian proxy groups in Azerbaijan. Arayik Harutyunyan, the President of the Nagorno-Karabakh Republic, openly stated that the republic is at war with both Azerbaijan and Turkey.

The Washington establishment that helped Pashinyan to seize power is also not hurrying up to assist its ‘new friends’ in Armenia. They see the Nagorno-Karabakh region as a point of possible conflict between Russia and Turkey (which is useful to promote the US agenda in the Greater Middle East). The instability in South Caucasus, close to the borders of Russia and Iran, also contributes to the geopolitical interests of the United States. Therefore, the Pashinyan government should not expect any real help from the ‘democratic superpower’.

On the other hand, the direct involvement of Russia and thus the Collective Security Treaty Organization on the side of Armenia is unlikely until there is no direct attack on its territory. Moscow would intervene into the conflict both politically and militarily, but only as far as necessary to prevent a violation of Armenia’s borders. Russia would not contribute military efforts to restore Armenian control over Nagorno Karabakh should the region be captured by Azerbaijan.

If the regional war between Azerbaijan and Armenia develops further in the current direction, Armenia could loose at least a part of its positions in the contested region. In the worst-case scenario for the Armenian leadership, Azerbaijan, with help from Turkey, will have a real chance to restore control over the most of the contested Nagorno-Karabakh region.

Authored by Lawrence Franklin via The Gatestone Institute,

The United States is in a “Tech War” with China, the victor will control the global dissemination of information. The winner will also write the world’s rules and standards for emerging technologies in the digital economy.

Chinese Communist Party (CCP) Chairman Xi Jinping threw down the gauntlet to the U.S. in a May 2017 speech, where he outlined the plan for establishing a Chinese-supervised “Digital Silk Road.” President Xi realizes that the information dimension of modern war is bound up with China’s apparent overall objective of unseating the United States as the leader of the existing liberal democratic world order.

Xi seemingly wants to secure a commanding lead in the emerging hi-tech disciplines to create a sense of inevitability about China’s rise to world domination. The U.S. still has the time, talent and resources to secure a victory over China in this contest for global leadership, provided that the U.S. has the will, self-discipline and flexibility to institute a total societal mobilization over decades.

China specialists such as Gordon Chang and policy officers in the Trump Administration have sought to educate the American public on how China came to emerge as a potent challenger to U.S. global primacy in hi-tech disciplines. Many of the methods by which China rose to contender status include stealing intellectual property on a massive scale, with the collusion, sadly, of many Americans; forced transfer of entrepreneurial secrets of U.S. firms as a prerequisite to operating in the Chinese market; meticulous, long-term planning to secure China’s national priorities; legal and illegal recruitment of foreign human talent, and lavish state support for Chinese hi-tech firms.

China may have unintentionally alerted the Free World to its present danger by revealing the CCP regime’s true face — not exactly the one presented by “A rising China is a … positive ­development not only for China, but for America” — as well as its global ambitions. China has revealed this true face by an abominable human rights record, underscored by its genocidal policy toward China’s Uighur minority in Xinjiang Province. China’s aggressive territorial expansion against Hong Kong and several of its Asian neighbors — not to mention how it deliberately exported the Wuhan virus internationally while closing transportation to limit its spread within China — has helped strip away its carefully orchestrated image as a responsible major power and has exposed a belligerent state controlled by the CCP.

Now, a Chinese physician and virologist, Dr. Yan Limeng, who fled China and is in hiding in the U.S., has said that China released the virus “intentionally” — perhaps, one surmises, as a way of torpedoing both President Trump’s prospects for re-election and his effort to alter trade deals that have favored China by $600 billion a year. Meanwhile, Twitter thoughtfully deleted Yan’s clearly important account.

China’s domestic implementation of advances in surveillance technology to control its own population also has contributed to the negative transformation of China’s international image. The CCP has employed these advances to create a surveillance state to monitor the actions of Chinese citizens, and many countries have purchased Chinese facial recognition products. These state customers run the gamut of political systems from dictatorships to democracies.

Artificial intelligence (AI) is another emerging technology where China is making inroads on the reported U.S. lead. China has set a goal of overtaking the U.S. in AI by 2030. AI is a scientific discipline that teaches machines to imitate human actions. Such applications have enormous potential to impact the efficiency and accuracy of modern weapon systems such as missiles. AI exercises have produced results as in assisting surgery and where machines have bested world-class Chess Masters and Go enthusiasts.

Five factors contribute to breakthroughs in AI and other emerging technologies: patents, investment, hardware, talented labor and academic research. Both China and the U.S. are improving the ability of AI to capture the nuance of languages.

China has now surpassed the U.S. in the number of published scientific studies, but there is a caveat: U.S. scientific publications remain, on the whole, qualitatively superior. These studies help keep the U.S. a step ahead in basic software such as computer data management, processing and in operating system software.

Another critical discipline where the U.S. maintains a clear advantage over China is semiconductor chip technology, necessary for the manufacture of various electronic devices. The Trump administration’s decoupling of China’s Huawei Technologies Co., Ltd from the American market has helped slow Beijing’s effort to catch up to the United States in semiconductor technology. The electronic materials, chemical gases, and lithographic technology — all components necessary for the production of the most advanced semiconductors — can presently only be produced in Free World states such as the U.S., Japan, and the Netherlands

Perhaps the most spirited and public manifestation of the U.S.-China “Tech War” is in space. This competition may recall the drama of the “space race” between an earlier generation of superpower rivals, the United States and the Soviet Union. Rather than the US-USSR rivalry to reach the moon, the focus in the current US-China contest is in space weaponry — and reaching Mars. China is making impressive strides in space operations by recently deploying the BeiDou constellation of 30 satellites, its rival to the U.S. Global Positioning System (GPS). China also has plans to launch its own space station as an alternative to the International Space Station that highlights global cooperation, especially between the U.S. and Russia. Ominously, China appears to be doubling down on its effort to checkmate the West’s capability to use space-based systems during conflict. If China can successfully blind U.S. systems by offensive cyber operations or outright destruction of U.S. systems by anti-satellite attacks, the war-fighting advantage currently possessed by the West can be annihilated. China executed a successful anti-satellite strike as early as 2007; it showed its capability by destroying one of its own aging weather satellites.

Still another new technology with enormous potential for solving complex mathematical and scientific problems more quickly than today’s computers can is quantum computing. While the U.S. claims to have created the first quantum computer, China appears to be leading in the military application of this new science. China has already demonstrated the ability to create unbreakable encrypted messaging, an accomplishment that could keep other countries in the dark about planned secret Chinese military operations, such as, say, an invasion of Taiwan.

The U.S. still leads China in Research and Development (R&D) spending, but Beijing has made great strides in this area as well. In order to keep pace with China’s all-out effort to dominate emerging technologies, a well-disciplined, coordinated approach by the U.S. government, sort of a “Manhattan Project” in all of the key hi-tech areas, might help. The costs to the US of falling behind could well prove catastrophic.

After previously touting that his own daughter was among the first to take the Sputnik V coronavirus vaccine, standing in as a prominent early ‘guinea pig’ of sorts vouching for its safety, Russian President Vladimir Putin has said he plans to receive it soon, according to a story in Newsweek on Monday.

Without specifying precisely when he would receive the vaccine, which was met with approval by government regulators in August, Putin reportedly indicated it would come before his next trip to South Korea. 

“Putin has not yet committed publicly to receiving the vaccine—the development of which has been financed by the state Russian Direct Investment Fund—but told South Korean President Moon Jae-in by phone Monday that he would have the shot before a planned visit to Seoul, Newsweek reports.

Moon personally invited Putin to come to South Korea during a call upon the occasion of the 30th anniversary of establishment of the Russian-South Korean diplomatic relations.

According to a summary of the call, Russian media sources indicate that Putin told Moon:

“I will come to South Korea… I will personally take the Russian vaccine and go.”

Russia’s Sputnik V vaccine was developed by Moscow’s Gamaleya research institute with help from the Russian defense ministry. It was tested at Moscow’s state medical university.

Initially met with broad global skepticism, Russia’s health ministry last month announced it expects to begin mass anti-coronavirus vaccinations by October, with the first rounds to be administered to front line medical workers as well as teachers.

Global critics have charged Russia appears to be ‘rushing’ out a vaccine amid the international race to come up with a preventative ‘cure’ for countries’ populations.

And apparently Putin plans to be among these front line early recipients of the Russian vaccine as well, given his international travel schedule.