Tag: news

Authored by Gordon Chang via The Gatestone Institute,

• The People’s Republic of China, nonetheless, is already an AI powerhouse, and for America to maintain its edge – and to prevent U.S. tech from being used for exceedingly disturbing purposes – Washington should force U.S. companies to end cooperative AI projects in China.

• The West should be seriously concerned: whoever wins at AI will both dominate the global economy and field the most destructive conventional military force.

• Unfortunately, American companies are helping China’s leaders in what many call – correctly – crimes against humanity. For instance, AI researchers from Microsoft, Rensselaer Polytechnic Institute, and Michigan State University gave keynote speeches at the Chinese Conference on Biometric Recognition in Xinjiang in August of last year on facial recognition, a social-control technology.

• Some of Google’s research is in China. The company has three AI operations there: the Google AI China Center in Beijing, established in 2017, and partnerships with China’s two premier educational institutions, Peking University and Tsinghua University… If the labs remain open, the net flow of AI learning will be out of the U.S. into China.

• Moreover, Chinese researchers, if they could not work for American companies in China, would not, as Vox suggests, necessarily find employment in their homeland. Some of those seeking research slots would follow other Chinese to the United States, and that would exacerbate one of Beijing’s big AI vulnerabilities. “China’s Path to AI Domination Has a Problem: Brain Drain,” is the title of an August 7 article posted by the MIT Technology Review. The U.S. can make that crucial problem even more severe.

China, writes Amy Webb in Inc., has been “building a global artificial intelligence empire, and seeding the tech ecosystem of the future.” It has been particularly successful, Webb, the founder of the Future Today Institute, believes. “China is poised to become its undisputed global leader, and that will affect every business,” she notes.

Not everyone shares Webb’s assessment that Chinese researchers are in the lead. America, after all, is home to most leading AI tech. The People’s Republic of China, nonetheless, is already an AI powerhouse, and for America to maintain its edge—and to prevent U.S. tech from being used for exceedingly disturbing purposes, Washington should force U.S. companies to end cooperative AI projects in China.

Chinese artificial intelligence. We need to ask what would happen if the world’s most dangerous regime were to dominate the world’s most powerful technology. Photo: Getty Images.

Artificial intelligence permits machines to mimic human functions such as driving vehicles, recognizing spoken words, and playing games of skill like chess and Go.

Especially Go, the Chinese game of strategy. If China had an “AI Sputnik moment,” it occurred in March 2016 when AlphaGo, developed by Alphabet Inc.’s DeepMind, took four out of five games from an 18-time champion in a challenge match in Seoul.

By the following year, Beijing was pouring even more money into AI research. Beijing in 2017 supplemented the AI component of its Made in China 2025 initiative with its “Next Generation Artificial Intelligence Development Plan, a three-part effort to lead global AI by 2030. Furthermore, Beijing made sure its determination to dominate the field was shared across society. Business chieftains and policy analysts in China are much more focused on AI than those in the West, surveys show.

The nationwide effort, Webb tells us, paid off. China, for instance, now publishes more AI machine learning papers than the United States.

The West should be seriously concerned: whoever wins at AI will both dominate the global economy and field the most destructive conventional military force. To borrow a phrase, we are witnessing the “Rise of the Machines.”

What if those “machines” are Chinese? We need to ask what would happen if the world’s most dangerous regime were to dominate the world’s most powerful technology.

We are getting a hint what will occur in what Beijing calls the Xinjiang Uygur Autonomous Region. There, facial recognition systems, powered by AI, are helping China’s leaders to continually track inhabitants.

In Xinjiang, Beijing is relentlessly eliminating cultural and religious identity and implementing race-based policies reminiscent of those of the Third Reich. For example, more than a million inhabitants are being held in concentration-camp-like facilities for no reason other than their Uighur or Kazak ethnicity or their adherence to Islam.

Unfortunately, American companies are helping China’s leaders in what many call—correctly—crimes against humanity. For instance, AI researchers from Microsoft, Rensselaer Polytechnic Institute, and Michigan State University gave keynote speeches at the Chinese Conference on Biometric Recognition in Xinjiang in August of last year on facial recognition, a social-control technology.

China is on the AI map in part because Beijing has been given a boost by U.S. companies sharing technology. Leaders in the field are both Alphabet and its Google unit. Alphabet is a major player in part due to its acquisition of DeepMind. Google also conducts extensive AI research.

Some of Google’s research is in China. The company has three AI operations there: the Google AI China Center in Beijing, established in 2017, and partnerships with China’s two premier educational institutions, Peking University and Tsinghua University.

Peter Thiel, the Silicon Valley investor, has in recent weeks severely criticized the search giant. “I think it is unprecedented in the last 100 years, or ever, that a major U.S. company refused to work with the U.S. military and has worked with our geopolitical rival,” he said on Fox News Channel’s “Sunday Morning Futures” on August 11th.

Google has in various statements denied charges like the ones Thiel has been making, but its contentions, although technically true, appear disingenuous.

First, the company has said it works with the Pentagon, but it is nonetheless not renewing its Project Maven contract, an AI project analyzing drone footage.

Second, Google denies working with the Chinese military, but as Thiel, a PayPal cofounder, points out, its “civilian” projects are actually military in disguise. “It’s not like the U.S., where you have different companies and different people and you have a government sector and a private sector and these things don’t always coordinate or work together,” Thiel said on Fox. “In China, these things are still tightly coordinated across the board.”

In the China of Xi Jinping, the aggressive ruler, “civil-military fusion” means nominally civilian research is pipelined into the Chinese military.

Thiel is right about the essential nature of China’s one-party state. The Communist Party, to which the People’s Liberation Army reports, has, in reality, near-absolute power over society, especially over something as important as scientific and technical research. Companies such as Google have to know about the military’s access to its AI research in China.

Not everyone is concerned about China’s militarization of research. “You’re not going to be able to stop or slow down Chinese AI progress by stopping these labs,” Jeffrey Ding of Oxford’s Center for the Governance of AI, told Vox, the popular American-based news site, while referring to foreign AI research facilities. “Either we try to get the best and brightest, or they have other options,” he said.

“If we rather someone work for Microsoft than the Chinese military,” Vox, asked, “why take away the option of working for Microsoft?”

Ding and Vox highlight an important aspect of the AI race. The competition, as a practical matter, is one for brainpower: people. As futurist George Gilder has noted, “The most precious resource in the world economy is human genius.” Axios reports that most of America’s best AI researchers have come from other countries.

“What has given the US its AI advantage has been, in significant part, the fact that the US attracts AI talent from all over the world,” Vox writes.

“While America is a much smaller country than China, it’s drawing on what is effectively a much larger talent pool, including attracting many top Chinese researchers.”

Chinese researchers, if they could not work for American companies in China, would not, as Vox suggests, necessarily find employment in their homeland. Some of those seeking research slots would follow other Chinese to the United States, and that would exacerbate one of Beijing’s big AI vulnerabilities. “China’s Path to AI Domination Has a Problem: Brain Drain,” is the title of an August 7 article posted by the MIT Technology Review. The U.S. can make that crucial problem even more severe.

Despite benefits of conducting AI research in China, the weight of evidence argues for closing American AI operations in that country. These labs leak out U.S. learning, and despite what Webb writes, it appears the United States is still ahead in cutting-edge AI. If the labs remain open, the net flow of AI learning will be out of the U.S. into China.

Although much AI research today is open-source—meaning it does not matter where researchers are based—it is becoming clear that in coming years AI work will not be published in open forums. That should put a premium on attracting the best talent to one’s own country.

Of course, there is no question that closing American facilities in China will inhibit, in some fashion, American AI work, but that loss is not nearly as great as the benefits of walling off China. Moreover, we cannot ignore the moral considerations of helping a militant, racist state.

It is the race of the century, and the U.S. urgently needs to improve the odds. It is time, therefore, for President Trump, by emergency order, to close the AI projects of American companies in the People’s Republic of China.

via ZeroHedge News https://ift.tt/2TVA3U5 Tyler Durden

Here we go with the unleashing of the new Cold War arms race 2.0: the United States has just tested a ground-launched cruise missile with a range of over 500km — previously banned under the now defunct Intermediate-Range Nuclear Forces treaty — just after Putin recently said Russia will be forced to deploy banned missiles if the US does. 

The Pentagon on Monday confirmed a flight test of a “conventionally configured ground-launched cruise missile” which happened on Sunday, and released video of the launch. 

“Data collected and lessons learned from this test will inform the Department of Defense’s development of future intermediate-range capabilities,” the DoD press release said. 

The test occurred at a range on San Nicolas Island, California, the Pentagon said Monday. The missile was reported as successfully hitting a target of more 500km (310 miles) away.

Crucially this comes on the heels of both the United States and Russia formally withdrawing from the landmark 1987 treaty which banned missiles  with a range of between 500km and 5,000km.

At the start of August US Defense Secretary Mark Esper had indicated plans to deploy previously banned missiles in Asia or the Pacific region:, “It’s fair to say, though, that we would like to deploy a capability sooner rather than later,” Esper said during a prior trip to Australia. “I would prefer months. I just don’t have the latest state of play on timelines.”

WATCH: U.S. flight-tests ground launched Tomahawk variant off of California in a test that went “more than 500km”, a first since the end of the INF treaty earlier this month. Notable that they chose the Tomahawk as the original ground-launched version of it was killed by INF pic.twitter.com/aIPKRFHdvC

— Jeff Martin (@JeffMartinDC) August 19, 2019

Putin had told a gathering of his defense chiefs days following news of the US deployment plans for Asia: “In our opinion, the United States’ actions, which have led to the termination of the Intermediate-Range Nuclear Forces Treaty, will inevitably entail devaluation, undermine the entire global security architecture, including the strategic offensive arms treaty and the Treaty on the Non-Proliferation of Nuclear Weapons,” he told the council, according to a Kremlin press service statement. 

“This scenario means the resumption of an unrestrained arms race,” Putin emphasized.

Russia’s defense ministry recently reiterated that it would refrain from deploying mid- and long-range missiles unless Washington did first. 

The Pentagon’s new missile test could mark the beginning of precisely such an “unrestrained arms race” which characterized the worst fears of the Cold War era. 

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

Authored by Michael Krieger via Liberty Blitzkrieg blog,

Is a murder committed more heinous than a suicide allowed? In its act, sure. In this context? NO.

An “unlucky accident” like this is the ONE THING that a non-corrupt State must prevent. It’s the non-corrupt State’s ONE JOB to keep Epstein alive for trial, and everyone knows that everyone knows this is their ONE JOB.

It is impossible to violate this common knowledge without premeditation and malice, without conspiracy and criminality aforethought. It is impossible to have an “unlucky accident” like this in a non-corrupt State.

– Ben Hunt, I’m a Superstitious Man

It’s entirely fitting that the death of Jeffrey Epstein is as disturbing, shady, bizarre and seemingly inexplicable as the rest of his life. It seems as if one could research this wretched man’s time on earth for years and still come up with more questions than answers. An unfortunate reality complicated by the fact we don’t have a mass media particularly interested in asking any of the big questions, such as:

• Where is Ghislaine Maxwell? Why isn’t she in custody and was she a Mossad spy like her late father Robert Maxwell?

• Explain the details of the relationship between Leslie Wexner and Jeffrey Epstein? Why does it seem as if Wexner helped set Epstein up with the appearance of extraordinary wealth, yet no one seems to know how Epstein actually came into all his money?

It appears sexually abusing children and accumulating associated blackmail on the rich and powerful was a full-time job for Epstein, so who was actually bankrolling/overseeing this operation? Was it Wexner, somebody else, or was it an intelligence agency as Alex Acosta claims he was told? Seems kind of important to get to the bottom of this.

I could go on and on, but then this would become a book. Rather, the purpose of this post is to highlight the outlandishness surrounding many of the details (or lack thereof) surrounding Epstein’s death a week ago in a Department of Justice operated New York City prison.

Indeed, what you’d have to believe in order to think this was a simple suicide is the actual conspiracy theory. 

Let’s begin with the initial attack, which happened three weeks before his death.

The Initial Attack

As everybody knows, on July 23, Jeffrey Epstein was found in a fetal position, semi-conscious, on the floor of his cell with neck injuries. His cellmate at the time was Nicholas Tartaglione, a former New York police officer who was arrested in December 2016 on charges of killing four men in a drug distribution conspiracy.

There was a giant haze surrounding this incident up until the moment of Epstein’s death, with everyone unsure whether he was attacked or if it was a suicide attempt. According to a report by NBC News, Tartaglione was subsequently cleared the day before Epstein was found dead. I suppose that means the initial attack was belatedly ruled a suicide attempt, but why did it take so long to figure that out? It took far less time to rule Epstein’s suspicious death a suicide.

Circumstances at the Prison Surrounding the Death

Either the stars all aligned perfectly for the most important prisoner in America to kill himself on that day, or he was somehow murdered to shield an extensive list of some of the most wealthy and powerful people on earth. Decide for yourself.

– One of Epstein’s Guards Was Not a Corrections Officer

The AP reported:

A person familiar with operations at the federal jail where Jeffrey Epstein killed himself says one of the two people guarding him the night he died wasn’t a correctional officer.

The person wasn’t authorized to disclose information about the investigation and spoke on condition of anonymity.

The person said Epstein hanged himself with a bedsheet, days after being taken off a suicide watch.

Federal prisons facing shortages of fully trained guards have resorted to having other types of support staff fill in for correctional officers, including clerical workers and teachers.

– Both of the Guards Fell Asleep at the Exact Same Time Giving Epstein a Chance to Die

Guards were supposed to have checked on Epstein every 30 minutes, but rather both of them fell asleep for 3 hours during the window of Epstein’s death.

Via Business Insider:

The two prison guards assigned to monitor Jeffrey Epstein in a high-security jail fell asleep for three hours, the night he died of an apparent suicide, The New York Times reported on Tuesday, citing unnamed officials…

According to reports, there were multiple breaches in protocol regarding the supervision of Epstein: prison guards were required to check on Epstein every 30 minutes, which they failed to do, officials told The Times, and Epstein was being housed alone after his cellmate was transferred and was not replaced.

– Epstein Guards Suspected of Falsifying Logs

AP reports:

A person familiar with the probe of Jeffrey Epstein’s death at a federal jail says guards are suspected of falsifying log entries to show they were checking on inmates in his unit every half hour, when they actually weren’t.

– Key People at the Prison Are Not Cooperating with the FBI

CNN reports

Even top officials in the department have been frustrated by their inability to get some answers from the prison, in part because initial answers turned out to be inaccurate in some cases…

The FBI probe is complicated by the fact that key people involved aren’t cooperating, people briefed on the matter say.

– Epstein Was Taken off Suicide Watch Less Than a Week After His Initial Suicide Attempt

New York Magazine reports:

Epstein was taken off of suicide watch on July 29 and returned to the MCC’s special housing unit after a psychiatric evaluation determined he was no longer at risk of harming himself. The Wall Street Journal reported that Epstein’s lawyers had requested he be removed from suicide watch.

– Epstein’s Cellmate Was Removed the Day Before Epstein Died

This makes no sense, unless you’re trying to create the perfect conditions for Epstein to die.

Via CNN:

In one instance over the weekend, officials believed the former Epstein cellmate had been released on bail. But it turns out he had been moved to another facility, one person briefed on the matter said. One of the first tasks for FBI agents this week was interviewing that former cellmate, who could provide information on Epstein’s behavior in the days before his suicide.

Who was Epstein’s cellmate before he died? After the first incident, it was revealed almost immediately who his cellmate was, but there’s been little to no details about the second cellmate. Who was he and what does he have to say?

Details Surrounding the Death Itself

– Epstein Hung Himself from a Bunkbed 

Via The Washington Post:

Epstein, 66, was found in his cell at the Metropolitan Correctional Center in Manhattan on Saturday morning, and an official said he hanged himself with a bedsheet attached to the top of a bunk bed. Epstein was rushed to a nearby hospital, where he was pronounced dead.

The bunkbed was conveniently available due to the fact his cellmate was inexplicably moved a day before.

– Epstein Suffered Multiple Breaks in His Neck Bones, Which Is More Common in Homicides

Also via The Washington Post:

An autopsy found that financier Jeffrey Epstein suffered multiple breaks in his neck bones, according to two people familiar with the findings, deepening the mystery about the circumstances around his death.

Among the bones broken in Epstein’s neck was the hyoid bone, which in men is near the Adam’s apple. Such breaks can occur in those who hang themselves, particularly if they are older, according to forensics experts and studies on the subject. But they are more common in victims of homicide by strangulation, the experts said.

– Little to No Details About Prison Camera Footage 

I assume some narrative will emerge here, but it’s already been too long for my comfort. We had all sorts of details emerge in the days following Epstein’s death, but almost nothing regarding the crucial hallway camera footage in the prison. This is something investigators would likely check immediately so why didn’t they, or if they did, why is it taking so long to inform the public?

Even Epstein’s lawyers seem confused as to whether the video footage exists.

Here is part of a statement from Epstein’s attorneys via NBC News:

“It is indisputable that the authorities violated their own protocols. The defense team fully intends to conduct its own independent and complete investigation into the circumstances and cause of Mr. Epstein’s death including if necessary legal action to view the pivotal videos — if they exist as they should — of the area proximate to Mr. Epstein’s cell during the time period leading to his death.”

Finally, it’s worth pointing out that the NYC Medical Examiners Office, which ruled Epstein’s death a suicide, has a pretty sordid history.

Check out the following from a 2014 New York Post article, Lost Bodies, Wasted Money: Inside NYC’s Medical Examiner’s Office

The city Medical Examiner’s Office is a mess — plagued with errors, including bodies being lost, mistakenly cremated or wrongly donated to science — while millions of taxpayer dollars have been spent on plans and equipment useful only in a mass disaster…

Meanwhile, insiders say ME chiefs, caught up in the glamor of disaster, neglect the agency’s primary mission.

“They can’t take care of day-to-day business. They play war games,” one said.

The ME’s Office, with 625 employees and a $63.6 million budget, has a history of criminality, waste and incompetence.

The ME’s former chief of management information systems, Natarajan “Raju” Venkataram, and his co-worker girlfriend, Rosa Abreu, were busted in 2005 for embezzling more than $9 million from a $11.4 million FEMA grant meant to track and identify remains of 9/11 victims.

And bosses take lavish taxpayer-funded trips to conferences and symposiums.

Frank DePaolo, assistant commissioner for emergency management, has traveled to Las Vegas, the Hague, Hong Kong and Israel. Chief of Staff Barbara Butcher has gone to Croatia and Thailand…

The number of investigators, who examine bodies at death scenes, was slashed from about 40 to 20, among other cuts, they said.

“We’re told to do more with less, but the work is suffering,” one said.

Here’s some more while we’re at it:

If after everything I’ve highlighted, you still believe this was a simple suicide that’s fine. Anything is possible, but it really doesn’t matter. Even if it was mere incompetence that allowed a suicide to occur, this still demonstrates without a shadow of a doubt that the federal government is incapable or unwilling to protect the public.

The Epstein case was and remains a matter of extreme public interest since this was a man who systematically sexually abused and trafficked children while closely associating with, and collecting blackmail on, a large slew of the most wealthy and powerful people on the planet. If the government can’t protect you from that, and it most certainly went out of its way to deny justice for this criminal over decades including within prison itself, then you can’t trust the government for anything. As such, whenever the feds claim they’re doing something extreme to protect you, whether it’s mass surveillance or encryption backdoors, you can be 100% sure it is a giant heap of stinking bullshit.

The narrative now being formed is that it was all just a lot of incompetence. That the guards were tired and overworked. We’re also being told that it’s normal for an inmate on suicide watch to come off after a few days, but Jeffrey Epstein was not a normal inmate. Epstein and the people around him belong to a class I refer to as super predators, which are the most dangerous predators in society because their elite connections allow them to get away with anything and everything.

It’s become completely clear that rather than stopping such people and their criminal rings, the U.S. government protects them and ensures no justice is ever served upon them, even up to their last breath.

Our government isn’t there to protect us, save us or dispense any justice. Instead, it seemingly exists to protect, serve and encourage the elite criminal rings operating around us in plain sight, whether it’s bank CEOs or pedophile sex traffickers with apparent intelligence links.

We are truly ruled by gangsters.

Keep talking about Epstein. Don’t let it go. Keep digging. It’s a giant middle finger in the face of humanity. Never forget.

— Michael Krieger (@LibertyBlitz) August 19, 2019

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via ZeroHedge News https://ift.tt/2MqU0Rv Tyler Durden

Expanding on our June report, that outlined Australia is constructing a new naval port on its northern coast to counter a rising China in the Indo-Pacific­ region, Australian Defence Minister Linda Reynolds said the government recognized the “vital importance” of militarizing northern Australia for national security purposes.

Senator Reynolds said, “over $8 billion will be invested in defense infrastructure in the Northern Territory alone. Northern Australia is key to Australian international engagement in support of our strategic partnerships.”

This comes at a time when Washington and its strategic allies are falling into Thucydides Trap, referring to China, the rising power, challenging the US, the status quo, could one day lead to a shooting war somewhere in the heavily contested South China Sea and western Pacific waters.

Senator Reynolds said Australia had been warned it must militarize its northern borders amid threats of Chinese expansion in the Indo-Pacific­ region and prepare for the US losing its “milit­ary primacy” in the area.

The Australian Strategic Policy Institute (ASPI) and United States Studies Centre are expected to sound the alarm Monday on the lack of troops and military hardware in northern Australia and the need to increase weapon stockpiles and fuel reserves.

ASPI’s report requests the government to stress test defense, intelligence, and border security agencies in the North against sudden threats.

ASPI suggests troop deployment in the North is at decade lows calls for a “single scalable defense ­and national security ­ecosystem.”

Senator Reynolds said about 13,000 Australian Defence Force (ADF) troops are stationed in the North, and “thousands more participate in operations or training scenarios across the North annually.”

“We host over 2,500 US Marines and Air Force members in Darwin yearly, providing security benefits for Australia and the United States by deepening our interoperability and enhancing capabilities through increased combined training and exercises, stepping up our engagement with regional countries, and better position both nations to respond to crises in the region,” she said.

The US Studies Centre is also expected to release its report on Monday, stating that Washington no longer “enjoys military primacy in the Indo-Pacific­” and that its ability to “uphold a favorable balance of power is increasingly uncertain.”

The reshifting of focus on northern Australia and the Indo-Pacific region comes as China is attempting to become a dominating power in the area.

Both reports stress: Australia needs to fund military infrastructure projects across the North to combat a rising China.

The ADF operates army bases in Darwin and Townsville; the Royal Australian Air Force (RAAF) operates stations in Darwin, Katherine and Townsville; and the Royal Australian Navy (RAN) operates naval ports at Trinity Bay and Darwin.

John Coyne, author of ASPI’s report, Strong and Free?, indicates northern Australia is becoming the ADF’s forward operating base or its “lily pad to another forward ­position within the Pacific or the first or second island chain. There’s a need to reconceptualize northern Australia, defined as those areas north of the 26-degree south parallel, as a single scalable defense and ­national security ecosystem.”

Coyne said the forward ­operating base would allow the ADF to be in a “state of readiness to support a range of ­defence contingencies with little advance warning.”

The US Studies Centre report offers nine suggestions to ­respond to a rising China that is threatening the US’s supremacy in the Indo-Pacific­ region. It states that the readiness of US forces has been “eroded” after two decades of “near-continuous combat and budget instability.”

“Given the stresses of preparing for a possible conflict with China … the joint force will have to scale back other responsib­ilities, particular­ly in secondary regions like the Middle East,” ­report authors­ Ashley Towns­hend, Brendan Thomas-Noone and Matilda Steward said.

Writing in The Australian today, Alan Dupont, chief executive of geopolitical risk consultancy the Cognoscenti Group and member of the Northern Territory’s ­Strategic Defence Advisory Board, says “serious threats are emerging with disconcerting rapidity.”

“The problem is that we are underdone on defence infrastructure and manufacturing in the north and haven’t done nearly enough to think through, and ­invest in, the sustainment of forces deployed from the north,” ­Dupont writes.

“At a national level our fuel reserves­ and refining capacity are too thin. In a crisis, we can’t rely on others to provide the fuel we need for ADF operations and nationa­l emergencies. But a land-based, or offshore floating ­refinery in the North could help solve this problem.”

The US and its allies are preparing for war with China. Northern Australia could become a “lily pad” for coalition forces, used to attack Chinese militarized islands in the South China Sea.

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

Authored by Paul Joseph Watson via Summit News,

The Communist Chinese government is bragging about its social credit system has prevented 2.5 million “discredited entities” from purchasing plane tickets and 90,000 people from buying high speed train tickets in the month of July alone.

“China restricted 2.56 million discredited entities from purchasing plane tickets, and 90,000 entities from buying high-speed rail tickets in July,” tweeted the Global Times, a Chinese government mouthpiece.

China restricted 2.56 million discredited entities from purchasing plane tickets, and 90,000 entities from buying high-speed rail tickets in July: NDRC #socialcredit pic.twitter.com/4zAwJ7hrBn

— Global Times (@globaltimesnews) August 16, 2019

As I document in the video below, Chinese citizens are punished by having their social credit score lowered for engaging in a number of different behaviors, including;

– Bad driving.

– Smoking on trains.

– Buying too many video games.

– Buying too much junk food.

– Buying too much alcohol.

– Calling a friend who has a low credit score .

– Having a friend online who has a low credit score.

– Posting “fake news” online.

– Criticizing the government.

– Visiting unauthorized websites.

– Walking your dog without a leash.

– Letting your dog bark too much.

As of November 2018, 6.7 million Chinese people had already been banned from buying air and train tickets. That number now appears to be surging.

While many on the left and in the media decry China’s Orwellian social credit score system, they simultaneously advocate for a similar thing in the west, where people are deplatformed and have their right to engage in commerce revoked because of their political views.

“Big Tech has already implemented their own “social credit score” system where they punish people for their political views by deplatforming them, censoring their websites and closing their PayPal/bank accounts,” writes Chris Menahan.

“On the other hand, media outlets which push propaganda in accordance with the desires of our ruling oligarchs are rewarded by having their content algorithmically artificially boosted and handed millions of dollars.”

Imagine going to buy groceries with your credit card, but then having your payment declined because someone in an office in San Francisco thinks you posted something “hateful” on the Internet.

That’s our collective future.

Here’s a dystopian vision of the future: A real announcement I recorded on the Beijing-Shanghai bullet train. (I’ve subtitled it so you can watch in silence.) pic.twitter.com/ZoRWtdcSMy

— James O’Malley (@Psythor) October 29, 2018

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

Beijing will take “countermeasures” and impose serious “consequences” on Washington for its fast-moving deal to sell 66 F-16 fighter jets to Taiwan after President Trump approved the $8 billion deal this weekend. 

“The US has to bear all the consequences triggered by the sale,” Chinese foreign ministry spokesman Geng Shuang said on Monday. “China will take necessary measures to defend its self-interest based on the development of the situation.”

Geng indicated further Chinese officials have lodged multiple formal protests with the US over its weapons sales to Taiwan, which Beijing asserts historic claims over. 

While the statement didn’t give details as to what those “consequences” would be, Chinese rhetoric has in the recent past gone so far as to threaten war, and Beijing has backed this threat with frequent war games in the waters around Taiwan. 

On Sunday Trump told reporters that he approved the sale, set to be ratified by a supportive Senate. 

“It’s US$8 billion. It’s a lot of money. That’s a lot of jobs. And we know they’re going to use these F-16s responsibly,” he said.

The last US transfer of F-16s to Taiwan was based on a deal all the way back in 1992. The Obama administration had since rejected repeat requests by Taipei for more, only offering to upgrade the ageing fleet. 

The new variant of the F-16, the Viper, is expected to hold up better in the event of a mainland China attack, with a statement from the Taiwan presidential office saying the new jets would ensure “safeguarding peace and stability across the Taiwan Strait and in the region.”

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

Authored by Nicholas Anderson via The Mises Institute,

What is the governing dynamic causing both student loans and healthcare burdens to run away from us?

As a health economist, I spend my days working with incredibly innovative medical device and biotechnology companies who are commercializing into the healthcare space. By consequence, I’m obligated and prone to think about the financial and economic troubles facing the field of medicine. For seven years I worked for an integrated delivery network and had a seat on both the payer and hospital side of the table and was thereby privy to how all the sausage was made. During those same years, I was laden with a student loan burden that I’d heaped on myself during college and two master’s programs.

The consequence of which was 1) a fantastic education in neuroscience, bioimaging, and business and 2) a four-figure monthly payment to student loan servicers that, but for the grace of God, almost torpedoed my wife and me monthly.

We were the embodiment of the “student loan crisis” that is so frequently discussed these days. Professionally I was left to grapple with the ever-raising healthcare price problem while personally grappling with how my father paid $60 a quarter when he was in college where I was practically paying that amount daily in student loan interest. Was there no other way to obtain the remarkable education I received but at a fraction of the cost? Is there no other way for a patient to receive a 30-minute colonoscopy for less than $1,500?

I invite you and your significant other, life-long friends of mine, to choose the restaurant of your choice whereby I vow to pay 80 percent of the bill. You rightfully choose the best 5-star place in town to enjoy a fantastic meal. There’s no price on the menu and you remind yourself that “if I have to ask, I probably can’t afford it.” Then you remember that I’m going to pay 80 percent of the bill and you go for it. The bill arrives for the two of you and it’s an eye-popping $1,500 for which, of course, you’re responsible for $300. You call me in a fit of confusion, angst and heartsickness and ask how this ever could have happened. I tell you that after I made the offer to pay 80 percent, I then called up the restaurant and told them of our arrangement. Neither of us, at that point, are confused as to why the restaurant so dramatically raised the price; the server doesn’t work for me and thereby has no profit-and-loss stewardship and you were ignorant to the costs of the meal. You then ask me the obvious question, “Why on earth did you call the restaurant and tell them of the agreement? Once they knew I could pay at any price, of course, they’d raise the charges!”

Healthcare

When the patient arrives at the hospital for a tonsillectomy, among the simplest procedures known to medicine, they are ignorant of the costs, charges, and requisite talent to perform the task. In 1924 Roald Dahl, for the record, had his removed without anesthetic and walked home holding a popsicle. My father had his removed in 1945 at a cost of $10 by an old, shaky-handed physician on Center Street in Provo, no insurance requested or accepted. Our son had his removed in 2013 and the bill was an astonishing $3,500. My wife and I didn’t know the price and if we did we likely wouldn’t have cared, insurance was going to cover most of the bill anyway. Why is a mammogram so expensive? Breast compression and 2-D, full-field, digital mammography could be done behind a curtain at a 7-Eleven for $5 with the image assessed by a radiologist in India for $10. Rather it’s done by an Indian radiologist in Salt Lake City at a metropolitan hospital for $200. The reason is that the radiologist doesn’t work for the insurance company, they work for the hospital just as the server at the restaurant didn’t work for me, they work for the restaurant. Before the woman showed up for her mammogram, the insurer had already told the radiologist that the bill would be covered. Simply put, if physicians worked for Aetna, Cigna, or BCBS (the “payer”) instead of working for the hospital, whose incentives are based on the treatment of the sick, innumerable perversities of modern healthcare would be rectified. No physician should work for “Saint Marks Hospital.” Aetna members should be treated by Aetna physicians at Aetna hospitals, not by “Saint Marks physicians” who are subsequently reimbursed by Aetna.

Student Loans

When I graduated from Mountain View High School in Utah and went off to college with my diploma, I arrived at Purdue University ready to learn behavioral neuroscience. The problem was, Sallie-Mae (now Navient) had already visited the school and told them that I could pay at any price. There was now little room, if any, for negotiation. At best I was adequately trained, with my government-issued high school diploma in tow, to do little more than mow lawns or clean glassware in a lab. Yet because Sallie-Mae had preempted me and told the professors, who work for the university instead of working for the student loan servicer, that they would cover me, they did what the restaurant and hospital in the previous examples did and took Sallie-Mae up on the offer. Student loans, in effect, are student insurance where the bill is paid in full by the payer (Navient) and the premium is paid upon graduation.

When the user isn’t the primary payer, misalignment of incentives occurs. If you were the CFO of this hypothetical “St. Marks Hospital” and a payer told you that they’d pay 80 percent of the bill, what would you do? You’d take them up on the deal. If you were the CFO of a university knowing that thousands of kids were showing up in August and that they could pay at any price, you’d do what hospitals do and charge as much as you’d like. No physician wants to work for Aetna and no professor wants to work for Navient but to unstitch the embroidery of “St. Marks” and “Purdue” and reissue scrubs and tweed jackets with “Aetna” and “Navient” so inscribed would realign incentives and costs would subsequently decline.

via ZeroHedge News https://ift.tt/2HfJ2dg Tyler Durden

Bee apocalypse has unfolded in four of Brazil’s southern states in 1Q19. More than half a billion bees died earlier this year, in a short period, experts are suggesting that pesticides are likely to be blamed, reported Bloomberg.

Around half a billion bees dropped dead in 4 of Brazil’s southern states in the first few months of this year. Samples showed most of the dead had been poisoned with Fipronil, a insecticide proscribed in the EU, classified as a possible human carcinogen by the U.S. EPA (thread)

— Bruce Douglas (@bruceecurb) August 19, 2019

Most of the dead bees had traces of Fipronil, an insecticide classified by the European Union and the US Environmental Protection Agency as a human carcinogen.

Since President Jair Bolsonaro took control in January, the Ministry of Agriculture has approved sales of a record 290 pesticides, up 27% YoY for the same period. There’s also a bill sitting in Congress that would dramatically decrease pesticide standards.

Brazilian companies such as Cropchem and Ouro Fino, as well as major international firms including Syngenta, Monsanto, BASF and Sumitomo,  have recently won new pesticide registrations.

Data from the United Nations discovered Brazil’s pesticide use jumped 770% from 1990 to 2016.

Brazil’s health watchdog Anvisa recently published a food-safety report which found 20% of samples contained pesticide residues above government accepted levels.

Why have more than 500,000,000 bees dropped dead in Brazil so far this year? pic.twitter.com/CKWMt4JABI

— Bloomberg TicToc (@tictoc) August 19, 2019

Bloomberg noted that Anvisa’s test didn’t even include glyphosate, one of Brazil’s best-selling pesticide, which is outlawed in at least a dozen countries around the world.

“The death of all these bees is a sign that we’re being poisoned,” said Carlos Alberto Bastos, president of the Apiculturist Association of Brazil’s Federal District.

At least 18% of Brazil’s economy is agriculture. And it makes sense why President Bolsonaro is relaxing pesticide rules; he’s trying to spark an economic boom by deregulating chemical standards for farmers.

“This is your government,” Bolsonaro told legislators from the agriculture caucus, and his administration has even allowed farmers this year to use whatever pesticides they want.

Greenpeace said 40% of Brazil’s pesticides are “highly or extreme highly toxic,” and 32% of them aren’t allowed in the European Union.

Marina Lacorte, a coordinator at Greenpeace Brazil, told Bloomberg that new approvals for pesticides are being rushed through without proper examination from experts.

“There isn’t another explanation for it, other than politics,” she said.

Making farmers great again was a campaign commitment for Bolsonaro. He even told farmers that he was going to ease pesticide restrictions.

Andreza Martinez, manager for regulation at Sindiveg, a group representing pesticide producers, told Bloomberg about half of the new approvals are ingredients, not final products. This is due to insects developing resistance to legacy formulas.

“It brings more tools to farmers, but that doesn’t mean an increase in the use of products in the field,” she said.

The increased, and sometimes untested chemicals, however, alarms toxicologists. “The higher the number of products, the lower our chances of safety, because you can’t control them all,” said Silvia Cazenave, a professor of toxicology at the Catholic Pontifical University of Campinas.

It’s not just the bees who are being poisoned — it’s also humans, the health ministry said. More than 15,000 cases of agricultural pesticide were seen in 2018, a likely underreported figure.

President Trump has also been approving new pesticides that are dangerous to bees.

A new report showed US beekeepers lost 40% of their colonies in the past year, raising fresh concerns that pesticides are poisoning farmlands.

Making farmers great again not just in Brazil but also in the US could be an uphill battle, as the unintended consequences of deregulating pesticides have led to a global bee apocalypse.

via ZeroHedge News https://ift.tt/33UlXa2 Tyler Durden

Submitted by Eric Hickman, president of Kessler Investment Advisors

The bull market in U.S. Treasury bonds is in full swing and there is plenty more return to be made.

Two articles I wrote last October for Advisor Perspectives (here and here) identified the business-cycle peak in long-term U.S. Treasury yields. Yields have fallen dramatically from those points, generating significant capital gains for Treasury bond holders. The chart below shows when those articles were published and the path of U.S. Treasury yields before and after:

I identified the inflection point by comparing yield and economic behavior to the prior three recession eras – essentially taking historical lessons from the shape of the yield curve, the housing market (the best leading indicator), and business cycle length (I define a “recession-era” to be the period before, during, and after a recession in which U.S. Treasury yields are falling. The term is used to include the negative economic climate before and after a recession).

This method is notably different from the standard day-to-day financial commentary. The standard approach processes new information in near isolation from the past. This information is then reduced down to a few popular narratives to describe what is moving the market. The problem is that these narratives are not discussed as long as the phenomenon is present, are just a small subset of what is going on in the world, and are too short term to help trading the market.

For instance, the idea that U.S. rates need to fall to close the gap between U.S. and other developed economy sovereign yields (say Germany) has become popular in the last week. But this wide gap has been present (and greater) late last year. In another example, Brexit has moved off the front pages temporarily, but it is still the same unresolved situation. While of course it is important to be aware of what others are talking about, this approach often misses the reality of the broader business cycle.

And, because equity price movements don’t have much historical consistency, this is the primary way to make sense of them, which bleeds over to interest rate discussions. But the U.S. Treasury market is different. It has a wealth of similarities and correlations to past economic behavior. This is under-appreciated and under-used.

Where my prior articles aimed to find the starting point of the bull market, this article studies the bull markets themselves for further context and an expectation for what’s next.

A refresh of the “recession era 4” concept

Three recessions have occurred in the U.S. over the last 30 years – the longest period in which there is rich financial and economic data. Each of these periods show a similar pattern of interest rates (see chart below).

Look at the approach to the orange-boxed recession eras. All three interest rates shown in the chart (Fed Funds, 2-year, and 30-year) go up as the Fed is raising rates; with the 2-year rising faster than the 30-year (i.e., the yield curve flattens). Then if you look at the left-side of the orange-boxed areas, all three rates converge to roughly the same place (the yield curve gets flat or inverted), the Fed then stops raising and term rates (the 2-year and 30-year) begin to fall in anticipation of a slowdown in the economy. The Fed then starts cutting rates and the 2-year falls more than the 30-year (i.e., the yield curve steepens). The recession then starts a little after the Fed starts cutting rates. The recession ends and term rates continue to fall for years after. With minor variations, this is what happens each time.

We are going through “recession era 4.” The housing market peaked in December 2017, the yield curve (10-year yield minus 3-month bill) inverted in March of this year, industrial production peaked in December 2018, the expansion in the U.S. is now the longest in U.S. history and the Fed has now begun to cut rates. The Fed will talk about how its July 31 cut was a “mid-cycle adjustment,” but that mention was a nod to the two “no-cut” dissenters (George and Rosengren) to not make a determination about the future (i.e. retain a neutral bias).

In fact, be prepared for the “risk-on” community and national policy-makers (read the Trump administration and Federal Reserve) to present reasons why a recession isn’t coming. People often predict what they need to happen, not what will happen.

To those who ask me, “Is the U.S. going to go through a recession in the near term?” I say of course it is…..the arguments against it are just from those desperate for it not to happen, not from careful analysis. Some are waiting to spot the primary driver that will define this recession (like the S&L crisis in the early 1990s, the dot-com crash in 2000-01 or the subprime crisis in 2008), but this will be defined in arrears. Don’t make the mistake of waiting to see a tidy ”why” before accepting that a recession is coming. Consider some of the common protests against a recession:

• An eventual trade deal with China will remove the problem. The global economy was slowing well before the trade war started. It is certainly an exacerbating factor, but it going away will not avoid a recession.
• The economy looks good. The parts of the economy that are still good – the labor market and consumer spending – are expected to still be strong at this point in the cycle. Leading indicators are still in the process of making cyclical peaks. This suggests that labor will only weaken after that process has occurred. Counterintuitively, the unemployment rate is always the lowest at the start of recessions. Waiting to see full “proof” of the recession will be too late.
• The Fed will lower rates and prevent a recession. It is often misperceived, but the Fed mitigates a business cycle, it doesn’t prevent one. The economic forces in a recession (the actions of hundreds of millions of people, even billions) are so much larger than what the Fed can respond with.
• The stock market has remained near its high. In the last recession era (2007-2011), the stock market (S&P 500) peaked after the first rate cut. Don’t wait for confirmation from the stock market. It will fall dramatically but marches to the beat of its own drummer.

The Fed will cut rates to 0%-0.25%, just like in 2008. The 2-year yield will fall to its 2011 low of 0.16% or below and the 10-year yield will fall below 1%. Also, a globally synchronized recession could easily push the 2-year yield into negative territory, providing additional capital appreciation. More than half (56%) of global developed economy 2-year sovereign bonds are already trading with a negative yield (see below).

Recession eras dissected

It is useful to deconstruct the long-term chart of yields above into individual charts for each recession era. Each chart has a four-year span. There are several things to notice about them:

• The 2-year yield drops much more than the 30-year (this is why we use leverage at Kessler; explained here).
• The recession occurs in the middle of 2-year yields falling (not at the beginning or the end.)
• Each recession-era takes three to four years.
• The 2-year yield has one or two major backups (> 2 months) during the process.

Taking the statistics from these past recession eras, similarities emerge. And because it is baseball season, why not break it down into nine innings (see below):

These averages can be generalized into a rough expectation of how this cycle will evolve (see below.) The averages have dispersion – it isn’t that they hold the answer to exactly how this cycle will evolve; they should serve as a baseline from where new thinking/modifications should start – not from scratch, as if everything is new.

The first Fed rate cut (three weeks ago) indicates the start of the third inning. This concept rings true in the sense that recession conditions are not present yet. The recession will likely arrive sometime this fall/winter, not to be officially confirmed until a year or so later by the National Bureau of Economic Research (NBER).

There has been a long period of rates falling (4 innings) after recessions. Because the Fed is more dovish in this cycle, they will cut faster than before and because the market is primed to expect low rates for an extended period, rates may get to their trough faster. With that said, don’t extrapolate the pace of the 2-year yield falling heretofore into the future. Thus far, rates have only moved in one direction.

Along those lines, past recession eras all have one or two major back-ups in yields (higher yields) within them. You can see these highlighted in green in the four detailed charts above. These backups often occur from lagging inflation (1990, 2001, and 2008). Be aware of these. During them, the world will be convinced that the recession is nearly over, the Fed needs to raise rates, and/or that rates will continue higher. In other words, there will be a false dawn. Getting through these phases without giving up on the position requires deep analysis of the cycle looking beyond the short-term. Keep tuned to our analysis to guide Treasury bond ownership throughout the cycle.

U.S. Treasury yields have a strong historical basis that is often missed. It is tempting to think that everything is new and unique every time. But it is more challenging to accept that there are historical norms that explain the medium-term Treasury yield trend. “Recession era 4” is following this playbook quite well. As more and more pieces of the puzzle fit into the mold, it gives increasing assurance that this is the right model to use in this economic climate.

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Axios is calling it President Trump’s Venezuela naval blockade “obsession” based on accounts of unnamed administration officials: “President Trump has suggested to national security officials that the U.S. should station Navy ships along the Venezuelan coastline to prevent goods from coming in and out of the country, according to 5 current and former officials who have either directly heard the president discuss the idea or have been briefed on Trump’s private comments,” according to a new report. 

He’s said to have repeatedly raised the idea in private as a way to finally deliver regime change in Caracas, after prior attempts – including a short-lived push for military coup – failed earlier this year. Supposedly, the plan would be to station US Navy ships along the coast such that all vessels would be blocked from entering or exiting the South American country.

While Trump has acknowledged to the press in recent weeks that it’s “an option” that’s being discussed, his private comments have been more pointed and extensive. Axios quotes one source as follows: “He literally just said we should get the ships out there and do a naval embargo,” the source described upon hearing the president’s comments. “Prevent anything going in,” the official said.

“I’m assuming he’s thinking of the Cuban missile crisis,” the source said further. Push back against the president’s floating such a blockade have not been centered around the potential humanitarian disaster by further cutting off the already cash-deprived country as food and energy are already at crisis shortages.

Instead, the concern voiced focused on the feasibility from a US perspective of taking on such as massive enterprise as blockading a coastline that stretches more than 1700 miles.

Per Axios, an administration source argued it’s unrealistic:

“But Cuba is an island and Venezuela is a massive coastline. And Cuba we knew what we were trying to prevent from getting in. But here what are we talking about? It would need massive, massive amounts of resources; probably more than the U.S. Navy can provide.”

While there’s no official blockade in place yet, the US has recently made efforts to block individual vessels from getting to Venezuela in the context of new oil sanctions by the US Treasury. 

That’s a lot of coastline:

Early this summer, Trump appeared to have cooled on pursuing regime change against Nicholas Maduro; however, his alleged “obsession” means the standoff could become a front and center national security priority once again. 

via ZeroHedge News https://ift.tt/33MFFUO Tyler Durden