Home Depot Shares Plunge Most Since 2008 After Slashing Sales Outlook

Home Depot Shares Plunge Most Since 2008 After Slashing Sales Outlook

Home Depot shares slumped more than 7% in premarket trade, putting shares on track for their worst daily drop since 2008, after the company slashed its full-year sales guidance on Tuesday.

The company also posted Q3 sales that slightly missed expectations.

Here’s BBG’s breakdown of the company’s Q3 earnings report…

  • Sees FY comparable sales about +3.5%, saw about +4%
  • Sees FY revenue about +1.8%, saw about +2.30%
  • 3Q comparable sales +3.6% vs. +4.80% y/y, estimate +4.6% (Consensus Metrix, average of 25 estimates)
  • 3Q EPS $2.53 vs. $2.51 y/y, estimate $2.53 (range $2.48 to $2.58) (Bloomberg data)
  • 3Q net sales $27.22 billion, +3.5% y/y, estimate $27.52 billion (range $27.35 billion to $27.72 billion) (BD)
  • 3Q U.S. comparable sales +3.8% vs. +5.40% y/y
  • 3Q average ticket sales $66.36, +1.9% y/y
  • 3Q total location count 2,290, estimate 2,290 (Bloomberg MODL)
  • 3Q customer transactions +1.5%
  • 3Q average ticket +1.9%, estimate +2.41% (MODL)

The action in Home Depot shares weighed on Dow futures ahead of the bell:

Home Depot CEO Craig Menear cited continued lumber deflation for the lower sales forecast.

 

 

Read the company’s press release below:

* * *

ATLANTA, November 19, 2019 — The Home Depot, the world’s largest home improvement retailer, today reported third quarter fiscal 2019 sales of $27.2 billion, an increase of 3.5 percent, or $921 million, compared to the third quarter of fiscal 2018. Comparable sales for the third quarter of fiscal 2019 were positive 3.6 percent, and comparable sales in the U.S. were positive 3.8 percent. Net earnings for the third quarter of fiscal 2019 were $2.8 billion, or $2.53 per diluted share, compared with net earnings of $2.9 billion, or $2.51 per diluted share, in the same period of fiscal 2018.

For the third quarter of fiscal 2019, diluted earnings per share increased 0.8 percent from the same period in the prior year. “Our third quarter results reflected broad-based growth across our business, yet sales were below our expectations driven by the timing of certain benefits associated with our One Home Depot strategic investments,” said Craig Menear, chairman, CEO and president. “We are largely on track with these investments and have seen positive results, but some of the benefits anticipated for fiscal 2019 will take longer to realize than our initial assumptions. As a result, today we are updating our fiscal 2019 sales guidance, and we are reaffirming our fiscal 2019 earnings-per-share guidance. We are encouraged by the momentum in our business as we invest to extend our competitive advantages. I would like to thank our associates for their hard work and continued dedication to our customers.”

Fiscal 2019 Guidance

The Company updated its guidance for fiscal 2019, a 52-week year compared to fiscal 2018, a 53-week year. The Company expects its fiscal 2019 sales to grow by approximately 1.8 percent and comp sales for the comparable 52-week period to increase approximately 3.5 percent. This compares to the Company’s prior fiscal 2019 sales growth guidance of 2.3 percent and comp sales growth of 4.0 percent. The Company reaffirmed its diluted earningsper-share guidance for the year and expects diluted earnings-per-share growth of approximately 3.1 percent from fiscal 2018 to $10.03. The Home Depot will conduct a conference call today at 9 a.m. ET to discuss information included in this news release and related matters. The conference call will be available in its entirety through a webcast and replay at http://ir.homedepot.com/events-and-presentations. At the end of the third quarter, the Company operated a total of 2,290 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico. The Company employs more than 400,000 associates. The Home Depot’s stock is traded on the New York Stock Exchange (NYSE: HD) and is included in the Dow Jones industrial average and Standard & Poor’s 500 index.

 


Tyler Durden

Tue, 11/19/2019 – 06:27

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Last 100 ‘PolyU’ Protesters Resist Hong Kong Police As Dozens Stage Daring Escape

Last 100 ‘PolyU’ Protesters Resist Hong Kong Police As Dozens Stage Daring Escape

It’s like something out of a movie.

After a three-day standoff, roughly 100 students remain trapped inside the campus of Hong Kong’s Polytechnic University. For more than a day, police have had the  campus surrounded, and have warned protesters that there’s only one way out – in handcuffs.

Despite a potential 10-year prison sentence (laws against rioting, which are being applied to the protesters, carry heavy penalties), some 600 students have already walked off campus into the waiting arms of police. Some surrendered because they were in ill-health after hypothermia set in. Of the 600 who left, 400 were above the age of 18 and were immediately arrested, while the 200 minors were stopped, then sent home. They could still face charges pending further investigation, the NYT reported.

The battle over PolyU, which raged all weekend, will be remembered as one of the more intense incidents since the start of the protests. Students hurled hundreds of petrol bombs at police, and police spent hundreds of cannisters of tear gas and thousands of rubber bullets.

Outside the campus, a group of parents continued their vigil, awaiting news from their children while holding up signs that read: “Son, come out safely!” and “Save the kids, don’t kill our children.”

Elsewhere in Hong Kong, the city started to recover from a week of non-stop pro-democracy demonstrations. Some of the damage from those petrol bombs included burnt out cars.

On Tuesday afternoon, a pro-democracy lawmaker who had been holed up on campus with the protesters held a press conference to announce that he and a few dozen protesters would leave the campus, but warned that, should he be arrested, he isn’t “surrendering” to police.

Meanwhile, in video that appears to have been taken late Monday, a group of demonstrators staged a daring getaway when they climbed down off a bridge using ropes and sped away on motorbikes.

As some headed to work for the first time in days, citizens gathered on the street to help clean up bricks and debris left by the protests.

By the looks of it, the entrances to the PolyU campus, and many areas in and around, will probably need to be cleaned after days of skirmishes between police and students.

It’s like something out of a movie.

After a three-day standoff, roughly 100 students remain trapped inside the campus of Hong Kong’s Polytechnic University. For more than a day, police have had the  campus surrounded, and have warned protesters that there’s only one way out – in handcuffs.

Despite a potential 10-year prison sentence (laws against rioting, which are being applied to the protesters, carry heavy penalties), some 600 students have already walked off campus into the waiting arms of police. Some surrendered because they were in ill-health after hypothermia set in. Of the 600 who left, 400 were above the age of 18 and were immediately arrested, while the 200 minors were stopped, then sent home. They could still face charges pending further investigation, the NYT reported.

The battle over PolyU, which raged all weekend, will be remembered as one of the more intense incidents since the start of the protests. Students hurled hundreds of petrol bombs at police, and police spent hundreds of cannisters of tear gas and thousands of rubber bullets.

Outside the campus, a group of parents continued their vigil, awaiting news from their children while holding up signs that read: “Son, come out safely!” and “Save the kids, don’t kill our children.”

Elsewhere in Hong Kong, the city started to recover from a week of non-stop pro-democracy demonstrations. Some of the damage from those petrol bombs included burnt out cars.

On Tuesday afternoon, a pro-democracy lawmaker who has been holed up on campus with the protesters held a press conference to announce that he and a few dozen protesters would leave the campus, but warned that, should he be arrested, he isn’t “surrendering” to police.

Meanwhile, in video that appears to have been taken late Monday, a group of demonstrators staged a daring getaway when they climbed down off a bridge using ropes and sped away on motorbikes.

As some headed to work for the first time in days, citizens gathered on the street to help clean up bricks and debris left by the protests.

Meanwhile, in Beijing, the central government’s Hong Kong affairs office said that a ruling by a Hong Kong court “blatantly challenged the authority” of China’s legislature and of Hong Kong Chief Executive Carrie Lam. The court’s decision to rule that Lam’s anti-mask law was illegal had “severe negative social and political impact,” Beijing said. Legally, the Communists have the authority to interfere with the basic law.


Tyler Durden

Tue, 11/19/2019 – 06:00

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Royal Family Biographer Defends Prince Andrew: “Soliciting Sex From Minors Is Not Pedophilia”

Royal Family Biographer Defends Prince Andrew: “Soliciting Sex From Minors Is Not Pedophilia”

Authored by John Vibes via TheMindUnleashed.com,

Biographer for the Royal Family, Lady Colin Campbell, recently appeared on ITV’s Good Morning Britain where she defended Prince Andrew against claims of pedophilia.

In her defense of the disgraced prince, Campbell pointed to the “prostitution” charge that Jeffrey Epstein was convicted of in 2008, and attempted to downplay the fact that the girls were underage by suggesting that he was simply hiring sex workers.

“You all seem to have forgotten that Jeffrey Epstein, the offense for which he was charged and for which he was imprisoned, was for soliciting prostitution from minors. That is not the same thing as pedophilia,” Campbell told a shocked panel Monday morning.

Host Piers Morgan immediately challenged her claims, saying:

If you solicited a 14-year-old for prostitution, you’re a pedophile.

You’re procuring an underage girl for sex. That’s what he was convicted of. I’m sorry, I’m sorry, with respect, that is nonsense.”

Campbell then immediately attempted to backpedal, claiming that a distinction must be made between a minor and a child.

“Was he? 14? Well, I’m not justifying Jeffrey Epstein. Pedophilia, I suspect there’s a difference between a minor and a child,” she said.

“A 14-year-old is a child. Legally, she’s a child,” Morgan replied.

Campbell then admitted that the prince may have “made many mistakes,” but insisted that his only mistake was being too clueless to realize that one of his closest friends was a predator.

“You can’t criticize someone because they aren’t as bright as you would like them to be,” she said.

The controversy surrounding Prince Andrew has grown since his Newsnight interview with Emily Maitlis. In the interview, the prince gave a variety of bizarre excuses and defenses for the accusations against him, including a claim that he could not sweat due to a rare physical condition.

He also denied knowing about the trafficking victim, Virginia Giuffre—formerly known as Virginia Roberts—despite appearing in photos with her when she was under the age of 18. However, he has previously suggested that these photos are “doctored.” Photographic evidence has been uncovered showing that the prince does, in fact, sweat. He also claimed that even though he did not remember meeting the victim on the night that she said, he does vividly remember his alibi, saying he went to a Pizza Express in Woking before returning home that night.

“Going to Pizza Express in Woking is an unusual thing for me to do, a very unusual thing for me to do. I’ve never been… I’ve only been to Woking a couple of times and I remember it weirdly distinctly,” he said.

The interview was so disastrous for the Royal Family that one of Prince Andrew’s PR advisors quit in response to the broadcast. And to make matters even worse, a video clip from 1984 recently resurfaced showing Johnny Carson, then-host of The Tonight Show, making a joke about Prince Andrew being a pedophile.

None of this looks good for the Royal Family.


Tyler Durden

Tue, 11/19/2019 – 05:00

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Brickbat: The Last Place You Look

Four years ago, Minneapolis police said they had 194 untested rape kits. They now say they have more than 1,700 untested rape kits, some dating back to the 1990s. Police Chief Medaria Arradondo says he does not know why so many rape kits have been left untested. But Mike Sauro, who used to run the sex crimes unit, defended the department, saying that many of the kits uncovered in the 2015 audit were “restricted,” meaning the alleged victim was not cooperating with police. “We reviewed all the kits from the year 2000 all the way up to 2015,” he said. “People have this misconception that all kits have to be and should be tested, and that’s just not true. … If you don’t have an official police report made, we can’t enter them into the national database, so we can’t test them.”

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Pope Suddenly Replaces Top Vatican Financial Regulator In Developing ‘Mystery’ Scandal

Pope Suddenly Replaces Top Vatican Financial Regulator In Developing ‘Mystery’ Scandal

Now over six years since Pope Benedict took the nearly unprecedented step of abdicating the throne in 2013, with rumors at the time swirling that it was due to irregularities and scandal at the Vatican Bank — though it was health reasons officially cited (a papal resignation hadn’t happened in the prior 600 years) — the Vatican Bank is once again at the center of scandal. 

The Vatican’s top financial regulator, René Brülhart, has unexpectedly resigned (or was apparently sacked) related to a new scandal first revealed last month centered on the Holy See’s investment initiatives in London real estate, specifically involving attempts to secure an €100 million ($110 million) loan to acquire luxury property in London’s Chelsea neighborhood, The Wall Street Journal reports.

St. Peter’s Basilica at the Vatican, file image.

Brülhart served as president of the Vatican’s Financial Information Authority, or AIF, and has been replaced effective Monday.

The office had been established under Benedict in 2010 in order to root out financial corruption and widespread reports of money-laundering, and to bring the Vatican Bank into international norms and greater transparency after a series of major scandals rocked the sovereign Vatican City State in the heart of Rome, and brought embarrassment to the papacy.

The high level regulator’s replacement is the culmination of events which began in October when police raided the offices of AIF and the Secretariat of State, the latter which functions as a Vatican executive branch (though the Pope ultimately exercises supreme decision-making power), after the attempt to secure the €100 million loan stirred suspicions.

Thus far the exact nature of possible criminal activity in the London real estate deal has yet to be revealed by Vatican officials, the precise details of wrongdoing remaining a mystery and carefully confined within the usually opaque ancient city-state’s circle of top churchmen.

Domenico Giani, chief of Vatican police had also resigned over the developing scandal centered on the Vatican financial watchdog AIF. Image source: CNS

But there has been a great deal of ‘house cleaning’ since, with the AIF chief being the highest official to fall, along with nearly half a dozen lower level employees.

Among the things the AIF regulator has been busy with is closing thousands of suspicious accounts with the Vatican bank due to their having nothing to do with “works of religion”.

And previously, the longtime chief of the Vatican police and lead bodyguard for Pope Francis, Domenico Giani (above), resigned in mid-October over leaks related to the surprise Oct. 1 raid on the offices of the Vatican’s Secretariat of State and the city-state’s financial watchdog authority.

René Brülhartm now former president of the Vatican Financial Information Authority. Image source Zuma Press via WSJ.

According to the WSJ:

Since then, the Vatican has suspended five employees — including AIF’s No. 2 official, Tommaso Di Ruzza — and its security chief has resigned in connection with the investigation. It isn’t clear what, if anything, the suspended employees were suspected of doing. Last month, AIF’s board, led by Mr. Brülhart, released a statement expressing “full faith and trust in the professional competence and honorability” of Mr. Di Ruzza.

But again though Vatican officials have yet to comment on specifics, it certainly appears the now dismissed officials were caught overseeing likely major criminal activity.

Or at the very least they may have been in involved in making reckless and high-risk investments, given a theme of Pope Francis this year has been to halt “poorly managed spending and investments,” according to the WSJ report.


Tyler Durden

Tue, 11/19/2019 – 04:15

via ZeroHedge News https://ift.tt/37id3oq Tyler Durden

Brickbat: The Last Place You Look

Four years ago, Minneapolis police said they had 194 untested rape kits. They now say they have more than 1,700 untested rape kits, some dating back to the 1990s. Police Chief Medaria Arradondo says he does not know why so many rape kits have been left untested. But Mike Sauro, who used to run the sex crimes unit, defended the department, saying that many of the kits uncovered in the 2015 audit were “restricted,” meaning the alleged victim was not cooperating with police. “We reviewed all the kits from the year 2000 all the way up to 2015,” he said. “People have this misconception that all kits have to be and should be tested, and that’s just not true. … If you don’t have an official police report made, we can’t enter them into the national database, so we can’t test them.”

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The Roger Stone–Wikileaks–Russia Hoax

The Roger Stone–Wikileaks–Russia Hoax

Authored by Craig Murray,

As ever, the Guardian wins the prize for the most tendentious reporting of Roger Stone’s conviction. This is not quite on the scale of its massive front page lie that Paul Manafort visited Julian Assange in the Ecuadorean Embassy. But it is a lie with precisely the same intent, to deceive the public into believing there were links between Wikileaks and the Trump campaign. There were no such links.

The headline “Roger Stone: Trump Adviser Found Guilty On All Charges in Trump Hacking Case” is deliberately designed to make you believe a court has found Stone was involved in “Wikileaks hacking”. In fact this is the precise opposite of the truth. Stone was found guilty of lying to the Senate Intelligence Committee by claiming to have links to Wikileaks when in fact he had none. And of threatening Randy Credico to make Credico say there were such links, when there were not.

It is also worth noting the trial was nothing to do with “hacking” and no hacking was alleged or proven. Wikileaks does not do hacking, it does “leaks”. The clue is in the name. The DNC emails were not hacked. The Guardian is fitting this utterly extraneous element into its headline to continue the ludicrous myth that the Clinton campaign was “Hacked” by “the Russians”.

It is worth noting that not one of those convicted of charges arising from or in connection with the Mueller investigation – Manafort, Papadopolous, Stone – has been convicted of anything to do with Wikileaks, with anything to do with Russia or with the original thesis of the enquiry.

Astonishingly, in the case of Stone, he has been convicted of saying that the Mueller nonsense is true, and he was a Trump/Wikileaks go-between, when he was not. Yet despite the disastrous collapse of the Mueller Report, and despite the absolutely devastating judicial ruling that there was no evidence worthy even of consideration in court that Russiagate had ever happened, the Guardian and the neo-con media in the USA (inc. CNN, Washington Post, New York Times) continue to serve up an endless diet of lies to the public.

Randy Credico was the chief witness for the prosecution against Roger Stone. That’s for the prosecution, not the defence. This is the state’s key evidence against Stone. And Credico is absolutely plain that Stone had no link to Wikileaks. The transcript of my exclusive interview with Randy has now been prepared (thanks to Sam and Jon) and follows here.

I spoke to Randy yesterday to clarify one point.

The full unedited interview from 10 November can be found here.

The first conversation Randy ever had with Julian Assange was on 25 August 2016 and it was on-air on Randy’s radio show. There was no private talk off-air around the show. That was Randy’s only contact of any kind with Julian Assange before the 2016 election. His next contact with him, also an on-air interview, was not until Spring 2017, well after the election.

He could not have been in any sense a channel to Wikileaks.

*  *  *

Unlike the Integrity Initiative, the 77th Brigade, Bellingcat, the Atlantic Council and hundreds of other warmongering propaganda operations, Craig’s blog has no source of state, corporate or institutional finance whatsoever. It runs entirely on voluntary subscriptions from its readers – many of whom do not necessarily agree with every article, but welcome the alternative voice, insider information and debate. Subscriptions to keep Craig’s blog going are gratefully received.


Tyler Durden

Tue, 11/19/2019 – 03:30

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US Publicly Backs Iran Protests As Khamenei Says Crackdown On “Thugs” Coming

US Publicly Backs Iran Protests As Khamenei Says Crackdown On “Thugs” Coming

It took Washington all of two days to jump behind the large popular protests over gas price hikes which gripped cities across Iran since Friday. Over the weekend the US State Department predictably came out in favor of more protests, in a volatile situation in the sanctions-ravaged country which has already witnessed multiple demonstrators killed and over a thousands arrested, and banks and gas stations torched in anger over soaring gas prices

Given Uncle Sam is all too eager to hijack any Iranian domestic protests for the purpose of ‘regime change’ in what’s currently a middle and lower class driven movement over the deteriorating economic situation and drastic change in policy which saw petrol subsidies suddenly slashed, this could be the very recipe which brings the unrest to a halt. Ayatollah Khamenei already labeled those behind vandalism and sabotage as “thugs” and described them as “counter-revolutionary” forces, in reference to Iran’s ‘Islamic revolutionary’ government. 

Central Bank In Behbahan, Iran being engulfed in flames as demonstrators chant.

The Islamic Republic’s clerics and political leaders will now no doubt paint the crowds in the streets as being the servants of US and Israeli imperial aggression and interference. But then again, considering that the Trump administration established a special CIA unit reportedly named the ‘Iran Mission Center’ — with an express purpose to facilitate US-driven political change in the country — the mullahs might not be too far off the mark in their paranoia and suspicions at any “spontaneous” uprising. 

“The proud Iranian people are not staying silent about the government’s abuses,” Pompeo said in a statement published Sunday, saying that “the United States is with you,” and will stand against Iran’s “tyranny.” The statement said further, “We condemn the lethal force and severe communications restrictions used against demonstrators” and described the unrest as a “Cautionary tale of what happens when a ruling class abandons its people and embarks on a crusade for personal power and riches.”

Protests and clashes with police began Friday when petrol prices suddenly rose by at least 50% after government subsidies on it were slashed. Government statements said the plan is to divert the funds in order to make cash payments to low-income households. 

The AP reported that while at the start of this week drivers were allotted up to 250 liters a month at the pump at at a controlled 10,000 rials per liter, as of Friday that changed drastically to an allowance of 60 liters (or 13 gallons) of petrol a month at 15,000 rials ($0.13; £0.10) a liter. Additional liters after that cost 30,000 rials. 

Khamenei in a speech on Sunday defended the move: “If the heads of the three branches of the government make a decision [about it], I will support,” he said. “The decision must be implemented.”

Banks filmed up in flames over the weekend in a serious escalation:

Khamenei blamed opponents and foreign enemies for “sabotage” after multiple banks and gas stations were torched over the weekend. He described that,”The counter-revolution and Iran’s enemies have always supported sabotage and breaches of security and continue to do so.”

“Setting a bank on fire is not an act done by the people. This is what thugs do,” Khamenei said.

The top cleric further signaled a severe crackdown is coming as protests were reported to have hit 100 cities across the country of 80 million people.

Meanwhile, new video emerging from Monday protests and clashes with police appears to show some incidents of security forces using ‘live fire’ to disperse the crowds.

In some places gas prices have jumped to as much as 300% compared to what they were before last Friday. 

While protests began on Friday, they appeared to get more confrontational by Saturday, as police were filmed using riot control measures against crowds, and with some reports of deadly force being used by police, as has been the case over the past month in neighboring Iraq. 


Tyler Durden

Tue, 11/19/2019 – 02:45

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Is The Middle East Beginning A Self-Correction?

Is The Middle East Beginning A Self-Correction?

Authored by Alastair Crooke via The Strategic Culture Foundation,

“Two years, three years, five years’ maximum from now, you will not recognize the same Middle East”, says the former Egyptian FM, Arab League Secretary General and Presidential Candidate, Amr Moussa, in an interview with Al-Monitor.

Mousa made some unexpected points, beyond warning of major change ahead (“the thing now is that the simple Arab man follows everything” – all the events). And in reference to the protests in Iraq, Moussa says that Iraq is in “a preparatory stage for them to choose their way as Iraqis — emphasizing that “the discord between Sunni and Shia is about to fade away.”

The present regional turbulence, he suggests, is [essentially] a reaction to the US playing the sectarian card – manipulating “the issues of sect and religion, et cetera, was not only a dangerous, but a sinister kind of policy”. He added however, “I don’t say that it will happen tomorrow, but [the discord between Sunnis and the Shi’a fading away], will certainly happen in the foreseeable future, which will reflect on Lebanon too.”

What we are witnessing in Iraq and Lebanon, he adds, “are these things correcting themselves. It will take time, but they will correct themselves. Iraq is a big country in the region, no less than Iran, no less than Turkey. Iraq is a country to reckon with. I don’t know whether this was the reason why it had to be destroyed. Could be. But there are forces in Iraq that are being rebuilt … Iraq will come back. And this phase – what we see today, perhaps this is the — what can I say? A preparatory stage?”

Of course, these comments – coming from a leading Establishment Sunni figure – will appear stunningly counter-intuitive to those living outside the region, where the MSM narrative – from Colombia to Gulf States – is that the current protests are sectarian, and directed predominantly at Hizbullah and Iran. Certainly there is a thread of iconoclasm to this global ‘Age of Anger’, targeting all leaderships, everywhere. In these tempestuous times, of course, the world reads into events what it hopes and expects to see. Moussa calls such sectarian ‘framing’ both dangerous and “sinister”.

But look rather, at the core issue on which practically all Lebanese demonstrators concur: It is that the cast-iron sectarian ‘cage’ (decreed initially by France, and subsequently ‘corrected’ by Saudi Arabia at Taif, to shift economic power into the hands of the Sunnis), is the root cause to the institutionalised, semi-hereditary corruption and mal-governance that has infected Lebanon.

Is this not precisely articulated in the demand for a ‘technocratic government’ – that is to say in the demand for the ousting of all these hereditary sectarian Zaim in a non-sectarian articulation of national interests. Of course, being Lebanon, one tribe will always be keener for one, rather than another, sectarian leader to be cast as villain to the piece. The reality is, however, that technocratic government exactly is a break from Taif – even if the next PM is nominally Sunni (but yet not partisan Sunni)?

And just for clarity’s sake: An end to the compartmentalised sectarian constitution is in Hizbullah’s interest. The Shi’i – the largest minority in Lebanon – were always given the smallest slice of the national cake, under the sectarian divide.

What is driving this sudden focus on ‘the flawed system’ in Lebanon – more plausibly – is simply, hard reality. Most Lebanese understand that they no longer possess a functional economy. Its erstwhile ‘business model’ is bust.

Lebanon used to have real exports – agricultural produce exported to Syria and Iraq, but that avenue was closed by the war in Syria. Lebanon’s (legal) exports today effectively are ‘zilch’, but it imports hugely (thanks to having an artificially high Lebanese pound). All this – i.e. the resulting trade, and government budget deficit – used to be balanced out by the large inward flow of dollars.

Inward remittances from the 8 – 9 million Lebanese living overseas was one key part – and dollar deposits arriving in Lebanon’s once ‘safe-haven’ banking system was the other. But that ‘business model’ effectively is bust. The remittances have been fading for years, and the Banking system has the US Treasury crawling all over it (looking for sanctionable Hizbullah accounts).

Which brings us back to that other key point made by Moussa, namely, that the Iraqi disturbances are, in his view, “a preparatory stage for them to choose their way as Iraqis … and that will reflect on Lebanon too”.

If the ‘model’ – either economically or politically – is systemically bust, then tinkering will not do. A new direction is required.

Look at it this way: Sayyed Nasrallah has noted in recent days that other alternatives for Lebanon to a US alignment are possible, but have not yet consolidated into a definitive alternative. That option, in essence, is to ‘look East’: to Russia and China.

It makes sense: At one level, an arrangement with Moscow might untie a number of ‘knots’: It could lead to a re-opening of trade, through Syria, into Iraq for Lebanon’s agricultural produce; it could lead to a return of Syrian refugees out from Lebanon, back to their homes; China could shoulder the Economic Development plan, at a fraction of its projected $20 billion cost – and, above all it could avoid the ‘poison pill’ of a wholesale privatisation of Lebanese state assets on which the French are insisting. In the longer term, Lebanon could participate in the trade and ‘energy corridor’ plans that Russia and China have in mind for the norther tier of the Middle East and Turkey. At least, this alternative seems to offer a real ‘vision’ for the future. Of course, America is threatening Lebanon with horrible consequences – for even thinking of ‘looking East’.

On the other hand, at a donors’ conference at Paris in April, donors pledged to give Lebanon $11bn in loans and grants – but only if it implements certain ‘reforms’. The conditions include a commitment to direct $7 bn towards privatising government assets and state property – as well as austerity measures such as raising taxes, cutting public sector wages and reducing social services.

Great! But how will this correct Lebanon’s broken ‘business model’? Answer: It would not. Devaluation of the Lebanese pound (almost inevitable, and implying big price rises) and further austerity will not either make Lebanon again a financial safe-haven, nor boost income from remittances. It is the classic misery recipe, and one which leaves Lebanon in the hands of external creditors.

Paris has taken on the role of advancing this austerity agenda by emphasising that only a cabinet acceptable to the creditors will do, to release crucial funds. It seems that France believes that it is sufficient to introduce reforms, impose the rule of law and build the institutions – in order to Gulliverise Hizbullah. This premise of US or Israeli acquiescence to this Gulliverisation plan – seems questionable.

The issue for Aoun must be the potential costs that the US might impose – extending even to the possible exclusion Lebanese banks from the dollar clearing system (i.e. the infamous US Treasury neutron bomb). Washington is intent more on pushing Lebanon to the financial brink, as hostage to its (i.e. Israel’s) demand that Hizbullah be disarmed, and its missiles destroyed. It might misjudge, however, and send Lebanon over the brink into the abyss.

But President Aoun, or any new government, cannot disarm Hizbullah. But Israel’s newly ambiguous strategic situation (post – Abqaiq), will likely hike the pressures on Lebanon to act against Hizbullah, through one means or another. Were Aoun or his government to try to mitigate the US pressures through acquiescence to the ‘reform’ package, would that be the end to it? Where would it all end, for Lebanon?

And it is a similar conundrum in Iraq: The economic situation though, is quite different. Iraq has one-fifth of the population of neighbouring Iran, but five times the daily oil sales. Yet the infrastructure of its cities, following the two wars, is still a picture of ruination and poverty. The wealth of Iraq is stolen, and sits in bank accounts abroad. In Iraq, it is primarily the political model that is bust, and needs to be re-cast.

Is this Moussa’s point – that Iraq presently is in the preparatory stage of choosing a new path ahead? He describes it as a self-correcting process leading out from the fissures of sectarianism. Conventional Washington thinking however, is that Iran seeks only a Shi’i hegemony for Iraq. But that is a misreading: Iran’s policy is much more nuanced. It is not some sectarian hegemony that is its objective, but the more limited aim to have the strategic edge across the region – in an amorphous, ambiguous, and not easily defined way – so that a fully sovereign Iraq becomes able to push-back against Israel and the US – deniably, and well short of all-out war.

This is the point: the end to sectarianism is an Iranian interest, and not sectarian hegemony.


Tyler Durden

Tue, 11/19/2019 – 02:00

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