Tag: news

One week ago, when we first previewed this week’s infamous $60 billion pension fund rebalancing out of equities and into bonds  which resulted in record market gyrations and a violent snapback in the S&P from what was shaping up to be the worst December on record for stocks, we warned that while the buying would “finally be some good news for the bulls” however “the problem is that the sudden deluge of last minute buying may simply be too much for the market to handle, as liquidity has collapsed to the lowest level on record“ and as a result “investors and traders looking for a desperately needed respite from market gyrations may have to deal with yet one more “seismic bout” of volatility.“

That’s precisely what happened, and while many are still trying to understand the cause behind last week’s market violence which prompted comparisons to watching the cult classic Pulp Fiction, the bigger problem that has emerged is a far greater one: how does one trade in a market in which, as we warned over a week ago, liquidity has dropped to the lowest on record?

Practically speaking, the problem is simple as Bertran de la Lastra, CIO at Bestinver Gestion summarized: “If you go into the large caps and you try to do a significant trade – let’s say in a big fund company of $200 billion you’re trying to do a $50 million clip, a $100 million clip – you should be able to do it fairly quickly.” However, “the reality is that you may have to be working on it for a few days.”

Indeed, as Bloomberg writes this morning, as the decade-long equity bull run is ending, liquidity risk – the possibility markets will struggle to absorb selling demand without large price moves – has been mentioned by everyone from Goldman Sachs to Donald Trump. And while worries like that aren’t new – we have been discussing the ascent of algo trading, the market’s fragmented and often broken structure and the collapse in market liquidity ever since 2009 – and predictably increase when markets are in free fall as they have been recently. “rarely have they gotten a bigger test than in the last few weeks.”

And, as Bloomberg adds, few topics on Wall Street get blood boiling faster than liquidity, particularly when worries about exchange structure are dragged in, as they are by critics who decry the supplanting of human market makers by machines. While those arguments may never be convincingly decided – at least until we have the infamous market crash which sends the S&P plunging without snapping back as Goldman’s co-head of trading described his worst market nightmare back in June  – a few traders shared their thoughts on what they saw over the last few weeks amid some of the toughest markets in a decade.

Delores Rubin, senior equities trader at Deutsche Bank Wealth Management:

“I’ve had my normal activity, I haven’t had anything out of the ordinary from what I would see this time of year in terms of being able to trade in and out of names that I have on both sides of the market,” she said. “It’s really about the timing. If you happen to have a huge block to move, and it’s during one of those times that there’s other movement in that same direction, it does become more difficult.”

Jake Rappaport, head of equities at INTL FCstone Financial:

“We’re having a sell-off, but we still have buy orders. With the tax selling and the year-end coupled with the political turmoil — it’s scary, but I think it’s too soon to tell if people are going to stay on the sidelines,” he said. “Ultimately, they have to make a choice. Is the market giving them the price they’re willing to transact? … The panic ‘Get me out’ trades, we just haven’t seen them yet.”

Mike Beth, vice president for equity and derivative trading, WallachBeth Capital:

“As the markets has been getting more volatile, we have been seeing an increase in the number of people wanting to get rid of large blocks as a whole, basically take out the timing risk of the stock moving. There are two things that we’re looking at every day, market impact and timing risk, and you want to find a happy medium between the two. When the market’s moving around like this, it increases people’s urgency to get rid of large quantities at once.”

Joseph Saluzzi, Themis Trading LLC partner and co-head of equity trading:

“By definition when volatility picks up, liquidity is thinner, It’s not new. In this time it’s been more dramatic — I can judge that by the depth of liquidity in a particular quote. Maybe you’re used to seeing 5,000 shares on a bid — you’re now seeing maybe half of that, or lower numbers. People are willing to supply less liquidity because they don’t want to get run over.”

While to traders the liquidity situation may not seem dire just yet, as they are forced to trade in this market day after day, and thus the changes appear incremental and allow gradual habituation to the new reality, the reality as we noted over a week ago is that according to a Goldman analysis, the depth of the S&P 500 futures market has thinned by 70% over the past year to the lowest on record as single stock liquidity has fallen 42% over the past year to some of the lowest levels since the crisis.

We laid out the threat of plunging liquidity as follows: “ever feel like the smallest order gets to push the Emini around like a toy? It’s not just a feeling: it’s the truth, because as shown below, not only is the Emini futures top-of-book depth worse now than it was in the highest-vol weeks of October, it is also worse than it was during the record VIX surge in February. In fact, the top Emini orderbook has never been worse.”

To Goldman’s John Marshall, the problem of collapsing liquifity isn’t structural or related to HFT or ETFs, but can be explained by simple risk aversion among professional investors rather than the growth in electronic trading, which however is a very different view from what Goldman’s Chief Markets Economist Charlie Himmelberg, said back in May when the Goldman strategist warned that HFTs – due to their inability to process nuanced fundamental information – may trigger surprisingly large drops in liquidity that exacerbate price declines, and result in flash crashes. Himmelberg highlighted the growing market share of HFT and algorithmic trading across all markets, and warned that the growing lack of traditional, human market-makers has made the market increasingly fragile.

One month later, Brian Levine, Goldman’s co-head of Global Equities Trading, eased back on the bank’s criticism of HFTs, but doubled down on his concerns about the illiquid market, and in an internal Goldman interview published this past June, one of the world’s most influential traders said that there is one aspect of that the current broken market structure that keeps him up at night. As he admitted in the interview, “what’s more worrisome to me is a real flash crash, which I define as a situation when the market “breaks.”

This is how Levine described his own personal trading nightmare, one in which the crash is not a “flash” and the market simply breaks:

The data is wrong, everything trades at dislocated prices relative to the NBBO, and everyone—justifiably—widens their spreads. That happens almost every time there’s volatility, largely because message traffic increases dramatically. This is due to the fact that the opportunity set is greater and there’s no economic disincentive for sending messages to the market, so more electronic orders come in. This slows the system, widening spreads and generating price dislocations, which triggers even more orders and compounds the delays—a predicament that is only further exacerbated by the fragmentation of the equity markets. As this happens, stocks may trade outside of the NBBO briefly in millisecond or microsecond increments, constituting what I consider a genuine flash crash. All of this becomes a negative feedback loop that causes more volatility.

Interestingly, if you define a flash crash by the percentage of executions that took place outside the NBBO, one of the largest ones occurred in 2008 after the first TARP bill failed, according to internal analysis we did a few years ago. And the market didn’t snap back, with the SPX closing down 10% on the day and on its lows. I think that may have been why there wasn’t talk of a “flash crash” afterward, but clearly the market structurally failed pretty badly that day, too. This suggests to me that, in a situation with actual bad news, the current US market structure may not be able to handle it, and there could be a downward spiral.

In other words, there will come a day “with actual bad news” when the selling onslaught is so broad, not even BTFD HFTs will be able to  resist the sudden avalanche of selling. That’s the day when the increasingly fragile market, one in which “liquidity is the new leverage” will officially break and stocks will “trade outside of the NBBO constituting a genuine flash crash” in a “negative feedback loop that causes more volatility.” A selloff from which there will be no “snap back.”

While the apocalyptic liquidity scenario laid out by Levine was precisely what prompted broad market anguish in recent weeks, we are not there just yet, and the more benign explanation may suffice for now as evidence of risk aversion is everywhere as more than $5 trillion has been erased from U.S. stock values in the last three months as the S&P 500 slid within points of a bear market.

At the same time, share totals on U.S. exchanges have regularly exceeded 9 billion in the last few weeks, which skeptics highlights as an indication that liquidity is actually relatively stable. It’s not just common stock: the average volume in puts and calls surged 22% this year as the S&P 500 Index endured two corrections and a near bear market. At 20 million contracts a day, trading is poised to surpass the previous record of 18 million reached in 2011, data compiled by Options Clearing Corp. showed.

That, explanation however does not satisfy the critics who have expressed concern that structural changes since the crisis have made the market more vulnerable, and this is where some shift blame away from HFTs to ETFs.

As Bloomberg notes, a common complaint is that passive funds sap liquidity when pressed into “harmonized action” and that their selling overwhelms high-frequency market makers – a theory that academic research is skeptical of. Other critics cite post-crisis regulations that made it costlier for banks to hold positions.

“If you don’t play the market by trying to value one stock versus the other and those kinds of things, but by being in and out of the market, the minute you have a shift in the sentiment then it can reduce significantly the liquidity in the market,” said Francois Savary, chief investment officer at Prime Partners SA in Geneva.

Others blame a different culprit yet, namely the market’s changing microstructure: Spreads have widened because of the market’s changing structure, according to Aram Green, fund manager at ClearBridge Investments in New York, though he doesn’t agree that liquidity has worsened.

“You’ll see a price on your screen of a stock down 30 dollars and you go to buy it and there’s no volume to buy it. And next thing you know it’s back to flat,” he said. At the same time, “we decide that we’re going to get out of half a million shares, and the thing only trades 300,000 shares a day and we put it out there in some dark pool, and it’s gone in.”

Whatever the reason behind the record collapse in liquidity, whether it is the dominance of HFTs who all liquidity when it is not needed and soak it up when there is virtually non, or broken markets with countless exchanges as algos scramble to frontrun each other in normal days but lead to a trading panic during volatile days, or the lack of active market makers due to bank regulation which has forced dealers to shore up liquidity, or ETFs which collectively all decide to sell at the same time overpowering the market’s thinning top-level liquidity, or simply the result of central bank balance sheet shrinkage, the reality is that the problem is not going away and will only get worse as the bear market unfolds and as market volatility explodes.

Which, in turn reminds us Bill Blain’s ominous warning for 2019:

As the unwind continues, Financial Assets inflated by the free-money effects of QE are still finding new equilibrium valuations. Markets will remain volatile. Tech change and supply fundamentals will continue to shock us – look at oil prices for an example; turning a good year for oil and energy into a question market. Or look at how iPhone sales in India have fallen off a cliff as people buy cheaper phones that do the same – commoditisation!

The thing that scares me most is liquidity – the lack of it.

via RSS http://bit.ly/2An6Rg6 Tyler Durden

More than 700,000 Americans died from drug overdoses from 1999 to 2017, about 10% of them in 2017 alone, according to a new report published by the US Centers for Disease Control and Prevention (CDC). In total, there were a staggering 70,237 drug overdose deaths last year, which is more deaths than all US military fatal casualties of the Vietnam War. Opioids were involved in 67.8%, or 47,600 of those deaths. Of those opioid-related overdose deaths, 59.8% of them, or 28,466, were due to synthetic opioids. 

The report, which was published online in the CDC’s Morbidity and Mortality Weekly Report (MMWR), also examined drug overdose deaths from 2013-17. During that time, “drug overdose death rates increased in 35 of 50 states and DC, and significant increases in death rates involving synthetic opioids occurred in 15 of 20 states,” the report said adding that the rapid increase was driven by fentanyl.

Of the 35 districts reporting data, 23 states and DC noticed increased rates of death directly linked to synthetic opioids. Fentanyl overdose deaths surged 150% from 2016 to 2017.

In prior reports, synthetic opioid-related deaths primarily occurred east of the Mississippi River. The latest CDC data now shows 8 states west of the Mississippi had significant increases in such deaths: Arizona, California, Colorado, Minnesota, Missouri, Oregon, Texas, and Washington.

The CDC said overdoses were seen in both men and women, as well as non-Hispanic blacks, non-Hispanic whites and Hispanics, blacks, had the largest relative change, which was 25.2%. The most significant increase in deaths occurred among 25 to 44-year-old men, a sobering reality that demonstrates America’s prime working age men are deteriorating. 

“Through 2017, the drug overdose epidemic continues to worsen and evolve, and the involvement of many types of drugs (e.g., opioids, cocaine, and methamphetamine) underscores the urgency to obtain more timely and local data to inform public health and public safety action,” the report said.

From 2013-2017, the largest increase in drug overdose death rates involved synthetic #opioids (other than methadone) – likely fueled by illicitly manufactured #fentanyl. Read more @CDCMMWR: https://t.co/l3uXaje3vw pic.twitter.com/wFwBGuRhgC

— Dr. Robert R. Redfield (@CDCDirector) December 21, 2018

In a separate, but relevant report, Altarum, an Ann Arbor, Michigan-based health care research and consulting firm said the opioid epidemic’s economic toll is disastrous. The report said, “the societal benefit of eliminating opioid overdoses, death and use disorders reached $115 billion in 2017, up from $95.3 billion for 2016.”

The total exceeds $1 trillion when the costs from 2001 to 2017 are compiled. Another $500 billion is expected to be added to this sum by 2020. Lost earnings and waning productivity account for much of these costs and also result in declining tax dollars collected. 

Altarum estimated direct health care costs totaled $12.2 billion in 2016. Indirect health care costs totaled an estimated $9.2 billion.

Altarum also lists many “nonmonetized impacts” including decreased quality of life, emotional burdens and “disparate community impacts,” such as decreased property values and loss of perceived community well-being.

Despite President Trump pledging to put an “extremely big dent” in the drug addiction crisis in America, the problem continues to escalation at an exponential pace with little signs of slowing. And making matters worse, the crisis will likely deteriorate during the next recession, expected to materialize some time in late 2019, and just in time for the 2020 election.

via RSS http://bit.ly/2AjYn9k Tyler Durden

Authored by Viktor Katona via Oilprice.com,

For much of 2018, the internal situation of Russia’s oil market was remarkably peaceful – no hostile takeovers and no overt antagonization. To a significant degree, this was the result of U.S./EU sanctions which have indiscriminately left all major oil companies in a somewhat constrained position. This meant they would cooperate much more willingly against external pressure rather than bickering amongst themselves. Yet events unfolding in the past few weeks point to the possibility of a clash between ministerial offices in lengthy judicial battles. Rosneft is, as usual, involved in these developments, while Transneft is on the other side of the court.

First let’s analyze the two companies involved. Both are under the control of the Russian government – albeit to a different extent (the Russian state owns 78.55 percent of Transneft and 50 percent + 1 share of Rosneft). Both are controlled by people quite close to the Russian President Vladimir Putin, therefore, at least in principle, should count as equidistant to political decision-making authorities. Yet the similarities pretty much end there – Transneft’s actions are controlled and dictated by the Anti-Monopoly Service, whilst Rosneft can act freely, be it in cases of investing in a new endeavor or crashing the Russian ruble with one of its currency machinations. Controlling 46 of Russian crude production (as of December 2018), Rosneft is by far the most newsworthy Russian company, to put it mildly.

The first official shot in the Rosneft-Transneft standoff was fired in early 2017 when Rosneft and its newly acquired subsidiary Bashneft filed a claim against Transneft for process losses during pipeline transportation. In it, Rosneft stated that up to 0.7 million tons of crude were illegally misappropriated by Transneft – although other producers were roughly on equal footing and lost 0.13-0.15 percent of the crude transported, no one apart from Rosneft took the issue to court. The second point of contention emerged shortly thereafter when Transneft started to complain about deliberately low pipeline transportation tariffs (which supposedly were set by the Russian authorities with substantial backing, or lobbying you might say, from Rosneft) – instead of the 692 RUB per ton suggested by Transneft, the 2017 tariff was set by the Federal Anti-Monopoly Service (FAMS) at 399 RUB per ton.

Rosneft was the only oil-producing major to refuse to sign a transportation contract with Transneft for quite some time, supposedly in a bid to carve out personal preferences. In the end, thanks to the mediation of the Russian Energy Ministry, the sides managed to resolve the case with a multi-faceted out-of-court settlement. Transneft vowed to bring down process losses to a level of approximately 0.1 percent by 2020, whilst Rosneft agreed to stick to the Russian process loss calculation standard and signed the 2017 transportation tariff agreement, reportedly on the same basis as every other Russian company did. In the end Rosneft did pull off a tour de force late 2017 when FAMS lowered the Russia-China tariff via Kazakhstan by 16.7 percent, even though all the other pipeline tariffs in Russia and Kazakhstan rose.

The latest confrontation took place just two to three weeks ago when Transneft signaled that it would seek damages from Rosneft due to the latter’s non-performance on using the new 8mtpa pipeline to its Komsomolsk Refinery in Russia’s Far East. The transportation company calculated that maintaining the pipeline in an idle condition from April 2018 to the current day cost it 1.5 billion rubles (roughly 25 million USD). Moreover, Transneft built the pipeline in a hurry and now its final ownership structure as well as its tariff regulation is still not settled. Rosneft stated that if it is to take part in the financing of the pipeline, it would want to take respective ownership of the pipeline.

One way or another, the underlying current in all the above-mentioned cases was Rosneft’s discontent with having to deal with a pipeline operator other than itself. This resentment has now finally emerged in public, with Rosneft pushing for a federal law amendment that would allow oil companies to own trunk oil and product pipelines. This might come across as a banality for the U.S. reader, yet amounts to a revolution in Russia, given that all the trunk pipelines are owned and operated by Transneft (companies only deal with tie-ins from and to those trunk pipelines). The proposal was already discussed when Dmitry Kozak, deputy prime minister in charge of supervising the oil sector, convened a meeting with representatives of relevant ministries, yet the meeting reached no consensus on the topic.

Testifying to the complexity of managing an oil sector in which monopolies antagonize to become ever-powerful, the federal law on the trunk pipeline transportation of crude oil and oil products is still obscure. Its first edition was prepared in July 2015 by the Russian Ministry of Energy, however, heretofore it was stalled pretty much everywhere it could be. After Rosneft’s ambitious move to rewrite the rules of the Russian energy game, any decision on the law would be pushed further back in time. Now the Ministry says discussions will continue in January, yet those talks would be anything but pleasant.

The latest row would most likely result in yet another Ministry-brokered truce. Moreover, once adopted, the federal law is generally expected to bring about an important distinction – it would differentiate between public and non-public pipelines. The former would remain Transneft-operated and would include all the major transportation conduits – ESPO, the trunk pipelines to Russia’s ports in the Baltic and Black Seas, as well as the Druzhba pipeline. The latter would comprise, as the name suggests, those that serve a single purpose for one exclusive partner – tie-ins from and to large production clusters of a particular company or single-use connections to refineries. The Komsomolsk Refinery is one such example – the tie-in has no other use than to connect it to the ESPO pipeline. Go figure who would be to profit from this.

via RSS http://bit.ly/2TmHFNV Tyler Durden

China’s first domestically built aircraft carrier, the Type 001A, has reportedly begun its fourth sea trial on Thursday ahead of its anticipated April 2019 commissioning, the Global Times reported. The vessel is expected to test its aviation systems, helicopters, and fighter jets.

The trial began after months of maintenance and upgrades on the Type 001A, a 315 meter (1,033 feet) long, 50,000-ton vessel, at its homeport of Dalian in Liaoning province.

Recent social media photos and videos showed three jet blast deflectors and three aircraft on the flight deck. The deflector is a safety device that redirects high energy exhaust from a jet engine to prevent damage and injury, indicating that the trial could involve takeoff and landing drills.

While no official announcement of the tests has been made, a Thursday statement by the Maritime Safety Administration of China said that a region of the east coast of Dalian in the northern Yellow Sea would be closed to regular marine ­traffic between Wednesday and Sunday for military exercises.

“During this sea trial, the carrier’s aviation division will be coordinated for the first time,” Wang Yunfei, a naval expert and retired PLA Navy officer, told the Global Times Thursday. He said the vessel would also be testing its radar, communication, air traffic control systems, along with its takeoff and landing equipment.

Wei Dongxu, a Beijing-based military analyst, told the Global Times that there would also be a test of the vessel’s systems including power, damage control, weapons, and navigation systems.

Yunfei believes the J-15 fighter jets and helicopters will fly around the carrier to test and coordinate systems related to takeoff and landing. “If everything works well, a takeoff and landing test is possible,” Yunfei noted.

Dongxu said that J-15 pilots have already trained for takeoff and landing on the Liaoning, China’s first aircraft carrier. He noted that full-sized models of the aircraft would also be used to test loading and maintenance equipment. 

Chinese Ministry of National Defense spokesperson Wu Qian said at a monthly press conference on Thursday that the PLA Navy is planning celebration activities for the 70th anniversary of its founding.

Yunfei said the PLA Navy might hold a maritime parade in April as a part of the celebration, according to state media reports. There is also reason to believe the ceremony could be based around the commisioning of the Type 001A. 

The aircraft carrier has already conducted three sea trials in May, August, and October respectively. 

Soon, the US Navy will have to keep tabs on two Chinese aircraft carriers, something that could complicate their freedom of navigation patrols in the South China Sea, and an early warning that conflict on the open seas could be ahead. 

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Authored by Nafeez Ahmed via Oriental Review,

Everyone’s talking about Brexit. Some about the French riots. But no one’s talking about why they are happening, and what they really mean. They might think they are, but they are usually missing the point.

On 6th May 2010, the Conservative Party took the reins of power for the first time since 1992, propped up with some help from the Liberal Democrats. Hours before the election result, I warned in a blog post that whichever government was elected, it would be the first step in a dramatic shift toward the far-right that would likely sweep across the Western world within 10 years.

“The new government, beholden to conventional wisdom, will be unable or unwilling to get to grips with the root structural causes of the current convergence of crises facing this country, and the world,” I wrote, describing the failure of all three political parties to understand why the heyday of economic growth was unlikely to return.

“This suggests that in 5–10 years, the entire mainstream party-political system in this country, and many Western countries, will be completely discredited as crises continue to escalate while mainstream policy solutions serve largely to contribute to them, not ameliorate them. The collapse of the mainstream party-political system across the liberal democratic heartlands could pave the way for the increasing legitimization of far-right politics by the end of this decade…”

My prediction was astonishingly prescient. The global shift to the far-right began within exactly five years of my forecast, and has continued to accelerate before the decade is even out.

In 2014, far-right parties won 172 seats in the European Union elections — just under a quarter of all seats in the European Parliament. In 2015, David Cameron was re-elected as Prime Minister with a parliamentary majority, a victory attributed in part to his promise to hold a referendum on Britain’s membership of the European Union.

Unbeknownst to many, the Tories had quietly established wide-ranging links with many of the same far-right parties that were now capturing seats in the EU.

The following year in June, the ‘Brexit’ referendum shocked the world with its result: a majority vote to leave the EU.

Six months later, billionaire real estate guru Donald Trump shocked the world again when he became president of the world’s most powerful country. Like the Conservatives in the UK, the Republicans too had forged trans-Atlantic connections with European parties and movements of the extreme-right. Since then, far-right parties have made continued electoral gains across Europe in Italy, Sweden, Germany, France, Poland and Hungary.

We are on the cusp of a tidal wave, that looks poised to accelerate into a tsunami. Exactly as I had anticipated, far-right politics is no longer the province of the fringe, but is becoming increasingly normalised. This not an accident. It is the result of a system that is failing — and the efforts of a network of far-right groups to exploit the fractures emerging from this system-failure to tear everything down, and erect a new order of their own fashioning.

My prediction of the resurgence of the far-right was based on analysing the probable consequences of a long-term ‘system-failure’ in which we are unable to return to the levels of economic growth we had become accustomed to in the heyday of the 1980s and 90s. That system-failure, I explained, is rooted in the economics of the energy production that enables economic growth:

“…. a full and lasting recovery… is likely to be impossible in the constraints of the current system, because we’re running short on the physical basis of the last few decades of exponential (and fluctuating) ‘growth’ — and that is cheap, easily available hydrocarbon energies, primarily oil, gas and coal. The turning point has arrived, and without that global cheap energy source in abundant supply, we cannot continue growing, no matter what we do. Something has to give. Our economies need to be fundamentally, structurally, transformed. We need to transition to a new, clean, renewable energy system on which to base our economies. We need to transform the way money is created, so that it’s not linked to the systematic generation of debt. We need to transform our banking system on the same grounds. Whitehall, and the three political parties, recognize only facets of the picture, but they don’t see it as a whole.”

Turning point

The energy turning point is unequivocal. In the years preceding the historic Brexit referendum, and the marked resurgence of nationalist, populist and far-right movements across Europe, the entire continent has faced a quietly brewing energy crisis.

Europe is now a ‘post-peak oil’ continent. Currently, every single major oil producer in Western Europe is in decline. According to data from BP’s 2018 Statistical Review of Energy, Western European oil production peaked between 1996 and 2002. Since then, production had declined while net imports have gradually increased.

In a two-part study published in 2016 and 2017 in the Springer journal, BioPhysical Economics and Resource Quality, Michael Dittmar, Senior Scientist at the ETH Zurich Institute for Particle Physics and CERN, developed a new empirical model of oil production and consumption.

The study provides perhaps one of the most empirically-robust models of oil production and consumption to date, but its forecast was sobering.

Noting that oil exports from Russia and former Soviet Union countries are set to decline, Dittmar found that Western Europe will find it difficult to replace these lost exports. As a result, “total consumption in Western Europe is predicted to be about 20 percent lower in 2020 than it was in 2015.”

The only region of the world where production will be stable for the next 15 to 20 years is the OPEC Middle East. Everywhere else, concludes Dittmar, production will decline by around 3 to 5 percent a year after 2020. And in some regions, this decline has already started.

Not everyone agrees that a steep decline in Russia’s oil production is imminent. Last year, the Oxford Institute for Energy Studies argued that Russian production could probably continue to grow out to at least 2020. How long it would last thereafter was unclear.

On the other hand, the Russian government’s own energy experts are worried. In September 2018, Russia’s energy minister Alexander Novak warned that Russia’s oil production might peak within three years due to mounting production costs and taxes. In the ensuing two decades, Russia could lose almost half its current capacity. This sobering assessment is still broadly consistent with the Oxford study.

The following month, Dr Kent Moor of the Energy Capital Research Group, who has advised 27 governments around the world including the US and Russia, argued that Russia is scraping the bottom of the barrel in its prize Western Siberia basin.

Moor cited internal Russian Ministry of Energy reports from 2016 warning of a “Western Siberia rapid decline curve amounting to a loss of some 8.5 percent in volume by 2022. Some of this is already underway.” Although Russia is actively pursuing alternative strategies, wrote Moor, these are all “inordinately expensive”, and might produce only temporary results.

It’s not that the oil is running out. The oil is there in abundance — more than enough to fry the planet several times over. The challenge is that we are relying less on cheap crude oil and more on expensive, dirtier and unconventional fossil fuels. Energetically, this stuff is more challenging to get out and less potent after extraction than crude.

The bottom line is that as Europe’s domestic oil supplies slowly dwindle, there is no meaningful strategy to wean ourselves off abject dependence on Russia; the post-carbon transition is consistently too little, too late; and the impact on Europe’s economies — if business-as-usual continues — will continue to unravel the politics of the union.

While very few are talking about Europe’s slow-burn energy crisis, the reality is that as Europe’s own fossil fuel resources are inexorably declining, and as producers continue to face oil price volatility amidst persistently higher costs of production, Europe’s economy will suffer.

In September, I reported exclusively on the findings of an expert report commissioned by the scientific group working on the forthcoming UN’s Sustainability Report.

The report underscored that cheap energy flows are the lifeblood of economic growth: and that as we shift into an era of declining resource quality, we are likely to continue seeing slow, weak if not declining economic growth.

This is happening at a global scale. EROI is already beginning to approach levels seen in the nineteenth century — demonstrating how constrained global economic growth might be due to declining net energy returns to society.

Britain: the end of net energy growth

Britain, which is due to leave the European Union on 29th March 2019, is a poster boy for this brewing energy-economic crisis.

In January 2017, the Centre for Climate Change Economics and Policy run by the University of Leeds and London School of Economics, produced a startling analysis of Britain’s declining net energy problem. The study attempted to develop a methodology to examine national-level figures for Energy Return on Investment (EROI) — the amount of energy one uses to extract a particular quantity of energy.

The goal of the study was to pinpoint the EROI value as much as possible using Britain as a prime case-study. The concept of EROI fleshes out the recognition that a significant surplus of energy is required to fuel economic activity, separate to energy that is consumed precisely to extract energy in the first place.

The less energy we use to get new energy out, the more energy we have left to invest in the wider goods and services of economic activity. But if we keep using more energy just to get energy out, the amount of net energy we have left to fuel our economies decreases.

According to the study authors, Lina Brand-Correa, Paul Brockway, Claire Carter, Tim Foxon, Anne Owen and Peter Taylor:

“The higher the EROI of an energy supply technology, the more ‘valuable’ it is in terms of producing (economically) useful energy output. In other words, a higher EROI allows for more net energy to be available to the economy, which is valuable in the sense that all economic activity relies on energy use to a greater or lesser extent.”

The verdict on the UK predicament is stark. They find that “the UK as a whole has had a declining EROI in the first decade of the 21st century, going from 9.6 in 2000 to 6.2 in 2012… These initial results show that more and more energy is having to be used in the extraction of energy itself rather than by the UK’s economy or society.”

Citing the work of French economists Florian Fizaine and Vincent Court, which estimates a minimal societal EROI of 11 for continuous economic growth, the paper concludes:

“… the UK is below that benchmark.”

In other words, early last year, a major scientific study found that for the last two decades and beyond, Britain’s economic growth is fundamentally constrained by domestic net energy decline. But this groundbreaking news did not make the ‘news’.

Break-up

At the close of 2010, in my book A User’s Guide to the Crisis of Civilization, I predicted that large trans-national state structures like the European Union are likely to face challenges to their territorial integrity as a side-effect of these processes. The failure to address the systemic causes behind the 2008 financial crash, the incapacity to recognise it as a symptom of a system in decline, would lead to an increasingly authoritarian politics.

The integrity of large trans-national structures depends on the abundance of cheap energy flows to sustain them. If those flows come at greater cost and lower quality, then those structures will become increasingly strained and potentially even begin to break down. Costs to keep the system going increase while returns are squeezed, meaning that the surplus to invest in core social goods to maintain such structures declines.

That is why despite the so-called ‘recovery’ — tepid as it is and based on accelerating debt levels (in biophysical terms borrowing from the Earth today with promise of paying it back tomorrow with what has already been over consumed today) — in real terms, peoples’ purchasing power continues to decline.

The failure to understand and engage with the root, systemic causes of the crisis also means that policymakers put themselves in a position where they can only address surface-symptoms.

All too often, that means short-term, reactionary responses. And so in France, instead of addressing the question of how to galvanise a third industrial revolution to speed a post-carbon transition and infrastructure revival, Macron’s response to the climate crisis was to protect fossil fuel and nuclear producers while hiking up fuel taxes. He didn’t want to tackle the horrendous supply chains of big French corporations. He didn’t want to penalise the powerful oil, gas and nuclear lobbies that he hopes might help him get re-elected, and did next to nothing to speed a viable post-carbon transition that might transform economic prosperity on more sustainable foundations.

Riots in Paris

And so by placing the burden almost exclusively on French workers and consumers, Macron triggered the spiral of rage and riots. Protestors have set fire to banks, smashed and looted shops, and even targeted the Arc de Triomphe. They demand an end to corporate freeloading, along with nationalist demands such as ‘Frexit’, France’s departure from the EU, and preventing migration. It is telling that while some demands are compelling, there is no semblance of understanding the real planetary crisis beyond banal tropes about Big Banks. The French state has responded with its own violence, firing water cannons and tear gas on protestors, arresting over a thousand people, and threatening to bring in the French Army.

This is a microcosm of what can happen when states and peoples both fail to understand the deeper dynamics of a failing system: everyone responds to what is in front of them. Protestors blame Macron. The French state cracks down on violence. Politics becomes militarised, while scepticism of the liberal incumbency across the political spectrum finds vindication.

France’s riots therefore did not come out of the blue. They are part and parcel of a wider process of slow-burn EROI decline in which the returns to society from economic activity are being increasingly constrained by the higher energetic costs of that activity and productivity declines of the ageing centralised industrial-era infrastructure and technology. It was only a matter of time before the average person began to feel the impact of that squeeze in their day to day lives. Macron’s tax hikes were not the cause, but the trigger. They lit the match, but the tinder box was already fuming.

Brexit

But we’ve been here before, in Syria and beyond.

Brexit was triggered in the context of global system dynamics which remain poorly understood. Over the decade preceding the 2008 financial crisis, Britain’s economic growth was being undermined not merely by a debt-bubble in the housing markets, but by an ailing fossil fuel dependent energy system.

That ailing system was indelibly linked to the European migrant crisis, which saw over a million refugees from the Middle East and North Africa seeking sanctuary across Europe, including the UK and France, that fuelled the surge in nationalist populism sweeping across the continent.

The migrant crisis, too, did not come out of the blue, but followed hot on the heels of the turbulence of the Arab Spring. The destabilisation of Syria, Egypt, Yemen and beyond was a long time coming — but it was triggered by a perfect storm of crises. Domestic oil production declines which pulled the rug out from beneath oil-export dependent state revenues conspired with global oil price spikes thanks to the plateauing in world production of cheap conventional oil. A string of climate crises across the world’s major food basket regions led to crop failures and droughts which boosted food price spikes.

Global systemic crisis interacted with the breakdown in local national systems. As I’d reported in 2013, a natural drought cycle in Syria was massively worsened due to climate change, devastating agriculture and driving hundreds of thousands of Sunni farmers into Alawite-dominated coastal cities. As Syrian oil revenues plummeted, its domestic conventional oil production having peaked in the mid-1990s, the government’s slashing of critical fuel and food subsidies just as prices were spiking globally was the last straw. People could not even afford bread, so they hit the streets.

Bashar al-Assad responded with escalating brutality, including shooting civilians in the streets. When protestors picked up arms in response, the cycle of violence kicked in. Outside powers intervened to coopt their favoured sides, Russia and Iran backing Assad, the West backing various rebel groups — neither particularly interested in supporting Syrian civil society. The conflict escalated, devastating the country, and fuelling an unprecedented refugee crisis.

When NATO intervened in Libya, when the US and UK backed Saudi Arabia’s indiscriminate aerial bombardment of Yemen, it only destabilised the region further. The arc of collapse across the Middle East and North Africa resulted from a fatal combination: an earth system crisis, compounded by short-sighted and self-serving responses from human systems.

When families and children began turning up in their droves on European shores, the earth system crisis ‘out there’ came home. The West could not shield itself from the long-range consequences of the unsustainability of the very postwar system it had nurtured since the Second World War: structural dependence on fossil fuels, a patchwork of alliances with regional despotic regimes, laying the groundwork for converging climate change, crude oil depletion and the resulting domino effect of food and economic crises.

The earth system crisis that erupted in Syria triggered a wave of human system destabilisation of which Brexit was merely the first eruption.

And so the Syria crisis is indeed a taste of things to come. Europe is already a post-peak oil continent, whose domestic fossil resources are in decline. Most credible studies of Europe’s shale gas potential show that it is extremely weak and not similar to the American situation. If we are hell-bent on maintaining dependence on fossil fuels, we will be forced to import.

But as I showed in my scientific monograph for Springer Energy Briefs, Failing States, Collapsing Systems: BioPhysical Triggers of Political Violence (2017), if demand growth increases at current rates, it is unlikely that Central Asian and Russian suppliers will be capable of meeting that demand at costs we can cope with in coming decades.

Meanwhile, certain climate impacts are already locked in. Between 2030 and 2045, large parts of the Middle East and North Africa (MENA) are likely to become increasingly uninhabitable due to climate change. This is the same period in which oil production across the MENA region has been forecast to begin plateauing and declining. As the energy costs of fossil fuel production and imports increases, and as the EU is likely hit again by the challenge of large-scale migration from the Middle East due to climate devastation, the challenges to the EU’s territorial integrity will not go away.

Brexit is merely a ripple on the surface of deeper currents. It is a symptom of the great civilisational phase-shift to life after fossil fuels.

In this sense, the Brexit fiasco is an example of how distant we are as a species from the conversations we need to be having. Talking about being in or out of Europe and in what way is not unimportant, but it’s also a massive distraction from the deeper systemic crisis that is unfolding beneath the very issues driving our immediate concerns about Brexit.

Earth system disruption does not inevitably result in destabilisation of human systems. But if human systems refuse to engage and adapt to those disruptions, then they will be destabilised. As long as Britain, Europe and their citizens continue to obsess myopically on the symptoms rather than the causes, we will be incapable of responding meaningfully to those causes. Instead, we will fight with each other manically about the symptoms, while the ground beneath our feet continues to unravel.

The crisis of Brexit and the eruption of the riots in France are symptoms of a great unfolding civilizational transition, in which an old reductionist paradigm of materialist self-maximation is dying. Citizens and policymakers, activists and business leaders, need to wake up to what is actually happening to have the conversations that can kick-start meaningful approaches to systemic transformation.

This is not a far-flung crisis that is going to happen years in the future. This is now. This is happening and it is affecting you, your children, and those you love the most. And it will affect their children, and their children.

This is your legacy. This is your choice. This is your chance to engage with and become an agent of a new paradigm, one that speaks for all humans, all species, and the Earth itself. Maybe we don’t know exactly what the emerging paradigms will look like. But we know that it’s time to ask ourselves: where do we stand? With the old, or with the new?

Source: the author’s page at Medium.com

via RSS http://bit.ly/2QV75oJ Tyler Durden

Authored by Max Blumenthal via ConsortiumNews.com,

Too many of those protesting the removal of U.S. forces are authors of the catastrophe that tore Syria to pieces…

President Donald Trump’s announcement of an imminent withdrawal of US troops from northeastern Syria summoned a predictable paroxysm of outrage from Washington’s foreign policy establishment. Former Secretary of State and self-described “hair icon” Hillary Clinton perfectly distilled the bipartisan freakout into a single tweet, accusing Trump of “isolationism” and “playing into Russia and Iran’s hands.”

Michelle Flournoy, the DC apparatchik who would have been Hillary’s Secretary of Defense, slammedthe pull-out as “foreign policy malpractice,” while Hillary’s successor at the State Department, John Kerry, threw bits of red meat to the Russiagate-crazed Democratic base by branding Trump’s decision “a Christmas gift to Putin.” From the halls of Congress to the K Street corridors of Gulf-funded think tanks, a chorus of protest proclaimed that removing US troops from Syria would simultaneously abet Iran and bring ISIS back from the grave.

Yet few of those thundering condemnations of the president’s move seemed able to explain just why a few thousand U.S. troops had been deployed to the Syrian hinterlands in the first place. If the mission was to destroy ISIS, then why did ISIS rise in the first place? And why was the jihadist organization still festering right in the midst of the U.S. military occupation?

Too many critics of withdrawal had played central roles in the Syrian crisis to answer these questions honestly. They had either served as media cheerleaders for intervention, or crafted the policies aimed at collapsing Syria’s government that fueled the rise of ISIS. The Syrian catastrophe was their legacy, and they were out to defend it at any cost.

Birthing ISIS From the Womb of Regime Change

During the run-up to the invasion of Iraq, Clinton, Kerry, and the rest of the Beltway blob lined up reflexively behind George W. Bush. The insurgency that followed the violent removal of Iraq’s Ba’athist government set the stage for the declaration of the first Islamic State by Abu Musab Zarqawi in 2006. Five years later, with near-total consent from Congress, Hillary enthusiastically presided over NATO’s assault on Libya, cackling with glee when she learned that the country’s longtime leader, Moammar Gaddafi, had been sodomized with a bayonet and shot to death by Islamist insurgents — “We came, we saw, he died!” It was not long before an Islamist Emirate was established in Gaddafi’s hometown of Sirte, while 31 flavors of jihadi militias festered in Tripoli and Benghazi. 

Architects of chaos in Syria.

While still defending her vote on Iraq, Hillary made the case for arming the anti-Assad opposition in Syria. “In a conflict like this,” she said, “the hard men with the guns are going to be the more likely actors in any political transition than those on the outside just talking.”

In 2012, the CIA initiated a one billion dollar arm-and-equip operation to fund the so-called “moderate rebels” united under the banner of the Free Syrian Army (FSA). A classified Defense Intelligence Agency memo distributed across Obama administration channels in August of that year warned that jihadist forces emanating from Iraq aimed to exploit the security vacuum opened up by the US-backed proxy war to establish a “Salafist principality in eastern Syria” — an “Islamic State,” in the exact words of the memo.  

Referring to Al Qaeda in Mesopotamia’s Syrian affiliate by its name, Jabhat al-Nusra, before Western media ever had, the DIA emphasized the close ties the group had fostered with Syria’s “moderate rebels”: “AQI supported the Syrian opposition from the beginning, both ideologically and through the media. AQI declared its opposition to Assad’s regime from the beginning because it considered it a sectarian regime targeting Sunnis.”

The memo was authored under the watch of then-Lt. Gen. Michael Flynn, who was convicted this year of failing to register as a foreign agent of Turkey — an extremely ironic development considering Turkey’s role in fueling the Syrian insurgency. Predictably, the document was ignored across the board by the Obama administration. Meanwhile, heavy weapons were flowing out of the U.S. Incirlik air base in Turkey and into the hands of anyone who could grab them across the Syrian border.

As early as February 2013, a United Nations independent inquiry report concluded, “The FSA has remained a brand name only.” The UN further issued a damning assessment of the role of the United States, UK and their Gulf allies in fueling extremism across Syria. “The intervention of external sponsors has contributed to the radicalization of the insurgency as it has favoured Salafi armed groups such as the al-Nusra Front, and even encouraged mainstream insurgents to join them owing to their superior logistical and operational capabilities,” the report stated.

US Arms, ISIS Caliphate

How ISIS overran large swaths of territory in northeastern Syria and established its de facto capital Raqqa is scarcely understood, let alone discussed by Western media. That is partly because the real story is so inconvenient to the established narrative of the Syrian conflict, which blames Assad for every atrocity that has ever occurred in his country, and for some horrors that may not have ever taken place. Echoing the Bush administration’s discredited attempts to link Saddam Hussein to Al Qaeda, someneoconservative pundits hatched a conspiracy theory that accused Assad of covertly orchestrating the rise of ISIS in order to curry support from the West. But the documented evidence firmly established the success of ISIS as a byproduct of the semi-covert American program to arm Assad’s supposedly moderate opposition.

Opposition activists fly the flag of the US-backed Free Syrian Army alongside the flag of ISIS in the center of Raqqa, December 2013. (Raqqa Media Center)

Back in March 2013, a coalition of Syrian rebel forces representing the CIA-backed FSA, the Turkish and Qatari proxy, Ahrar al-Sham, and the Al Qaeda affiliate, al-Nusra, overwhelmed the Syrian army in Raqqa. Opposition activists declared the city the “icon of the revolution”and celebrated in Raqqa’s town center, waving the tricolor flags of the FSAalongside the black banners of ISIS and al-Nusra, which set up its headquarters in the city’s town hall.

But disorder quickly spread throughout the city as its residents attempted to order their affairs through local councils. Meanwhile, the US-backed FSA had ceded the city to al-Nusra, taking the fight to the front lines against government forces further afield. The chaos stirred by the insurgents and their foreign backers had created the perfect petri dish for jihadism to fester.

A month after Raqqa was taken, the Iraqi zealot and ISIS commander Abu Bakr al-Baghdadi revealed that al-Nusra had been a Trojan horse for his organization, referring to its commander, Mohammed Jolani, as “our son.” Jolani, in turn, admitted that he had entered Syria from Iraq as a soldier of the Islamic State, declaring, “We accompanied the jihad in Iraq as military escorts from its beginning until our return [to Syria] after the Syrian revolution.”

By August, Baghdadi completed his coup, announcing control over the city. According to the anti-Assad website, Syria Untold, the U.S.-backed FSA had “balked in the face of ISIS and avoided any military confrontation with it.” Many of its fighters quickly jumped ship to either the Islamic State or al-Nusra.

“The [FSA] battalions are scared to become the weakest link, that they will be swallowed by ISIS,” a media activist named Ahmed al-Asmeh told the journalist Alison Meuse. “A number joined ISIS, and those who were with the people joined Jabhat al-Nusra.”

Backing “Territorial ISIS”

As the insurgency advanced towards Syria’s coast, leaving piles of corpses in its wake and propelling a refugee crisis of unprecedented proportions, the U.S. stepped up its arm-and-equip program. By 2015, the CIA was pouring anti-tank missiles into the ranks of Nourredine Al-Zinki, an extremist militia thateventually forged a coalition with bands of fanatics that made no attempt to disguise their ideology. Among the new opposition umbrella group was one outfit called, “The Bin Laden Front.”

Despite all its war on terror bluster, the U.S. was treating ISIS as an asset in its bid to topple Assad. Then Secretary of State Kerry copped to the strategy in a leaked private meeting with Syrian opposition activists in Sept. 2016: “We were watching,” Kerry revealed. “We saw that Daesh [ISIS] was growing in strength and we thought Assad was threatened. We thought, however, we could probably manage, you know, that Assad might negotiate and instead of negotiating, you got Assad, ah, you got Putin supporting him.”

When Russia directly intervened in Syria in 2015, the Obama administration’s most outspoken interventionists railed against its campaign to roll back the presence of Al Qaeda and its allies,comparing it to the Rwandan genocide. These same officials were curiously quiet, however, when Russia combined forces with the Syrian military to drive ISIS from the city of Palmyra, to save the home of the world’s most treasured antiquities from destruction.

At a March 24, 2016, press briefing, a reporter asked U.S. State Department spokesman Mark Toner, “Do you want to see the [Syrian] regime retake Palmyra, or would you prefer that it stays in Daesh’s [ISIS] hands?”

Toner strung together empty platitudes for a full minute.

“You’re not answering my question,” the reporter protested.

Toner emitted a nervous laugh and conceded, “I know I’m not.”

About a year later, New York Times columnist Thomas Friedman openly called for the U.S. to use ISIS as a strategic tool, reiterating the cynical logic for the strategy that was already in place. “We could simply back off fighting territorial ISIS in Syria and make it entirely a problem for Iran, Russia, Hezbollah and Assad,” Friedman proposed. “After all, they’re the ones overextended in Syria, not us. Make them fight a two-front war—the moderate rebels on one side and ISIS on the other.”

Giving ISIS ‘Breathing Space’

Palmyra saved twice from ISIS. (Wikimedia Commons)

When the U.S. finally decided to make a move against ISIS in 2017, it was gripped with anxiety about the Syrian government restoring control over the oil-rich areas ISIS controlled across the northeast.

With help from Russia, and against opposition from the U.S., Syria had alreadyliberated the city of Deir Ezzor from a years-long siege by the Islamic State. Fearing that ISIS-occupied Raqqa could be next to be returned to government hands, the U.S. unleashed a brutal bombing campaign while its allies in the Kurdish-led Syrian Democratic Forces (a rebranded offshoot of the People’s Protection Units or YPG) assaulted the city by ground.

The U.S.-led campaign reduced much of Raqqa to rubble. In contrast to Aleppo, where rebuilding was underway and refugees were returning, Raqqa and outlying towns under U.S. control were cut off from basic government services and plunged into darkness.

The U.S. proceeded to occupy the city and its outlying areas, insisting that the Syrian government and its allies were too weak to prevent the resurgence of ISIS on their own. But almost as soon as U.S. boots hit the ground, ISIS began to gather strength. In fact, a report this August by the UN Security Council’s Sanctions Monitoring Team found that in areas under direct American control, ISIS had suddenly found “breathing space to prepare for the next phase of its evolution into a global covert network.”

This October, when Iran launched missile strikes against ISIS, nearly killing the ISIS emir, Baghdadi, the Pentagon complained that the missiles had struck only three kilometers from U.S. positions. The protest raised uncomfortable questions about what the top honchos of the Islamic State were doing in such close proximity to the American military, and why the U.S. was unwilling to do what Iran just had done and attack them. No answers from the Pentagon have arrived so far.

Target: Iran

With the appointment this August of James Jeffrey, a self-described “Never Trumper” from the pro-Israel Washington Institute for Near East Policy, as Trump’s special representative for Syria engagement, it became clear that the mission to eradicate ISIS was of secondary importance. In testimony before Congress this December, Jeffrey laid out an agenda that focused heavily on what he called “Iran’s malign influence in the region,” “countering Iran in Syria,” and “remov[ing] all Iranian-commanded forces and proxy forces from the entirety of Syria.” In all, Jeffrey made 30 mentions of Iran, all of them hostile, while referring only 23 times to ISIS. It was clear he had regime change in Tehran on the brain.

Trump, for his part, had been mulling a removal of U.S. forces from northern Syria since at least last Spring, when he put forward a vision for an all-Arab military force funded by Saudi Arabia to replace them. But when Saudi journalist Jamal Khashoggi was sawed apart inside his country’s embassy in Istanbul this October, Trump’s plan went to pieces as well. Turkish President Recep Tayyip Erdoganexploited the Khashoggi saga to perfection, helping to transform Saudi Crown Prince Mohamed Bin Salman from the darling of America’s elite into persona non grata in Washington. As a result, he arranged a front line position for Turkey in the wake of any U.S. withdrawal.

There are now real reasons to fear that a Turkish advance will ignite a resurgence of ISIS. Turkey was not only a source of aid and oil sales to the jihadist group, it currently oversees a mercenary force of Salafi militiamen that includes droves of former Islamic State fighters. If the Turkish onslaught proves destabilizing, Iran and its allied Shia militias could ramp up their deployment in Syria, which would trigger a harsh reaction from Israel and its Beltway cut-outs.

Then again, the Kurdish YPG is in high level negotiations with Damascus and may team up with the Syrian military to fill the void. From an anti-ISIS standpoint, this is clearly the best option. It is  therefore the least popular one in Washington.

Whatever happens in Syria, those who presided over U.S. policy towards the country over the past seven years are in no position to criticize. They set the stage for the entire crisis, propelling the rise of ISIS in a bid to decapitate another insufficiently pliant state. And though they may never face the accountability they deserve, the impending withdrawal of American troops is a long overdue and richly satisfying rebuke.

*  *  *

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A Chinese court in Nanjing has sentenced a dissident “citizen journalist” to four years imprisonment for retweeting 25 social media posts that contained “subversive” content, Radio Free Asia reported.

The reporter, Sun Lin, who uses the pen name Jie Mu, was found guilty of “incitement to subvert state power” by the Nanjing Intermediate People’s Court following a trial in February. He was sentenced in absentia this week with only his lawyer in attendance (Sun, his attorney said, was being held in detention but was able to communicate with the jury via video link).

Sun’s lawyer said the sentence wasn’t a surprise given the fact that his client was tried as a re-offender. Sun had previously served a four year sentence between 2007 and 2011 for “picking quarrels and stirring up trouble” after documenting alleged abuses of power in his local party government. The dissident, his lawyer said, has been financially dependent on relatives for years since he has been unable to find work due to his police record.

Sun Lin

The case against Sun rested on 25 social media posts and videos that he shared on social media, as well as his decision to shout “down with the Communist Party” during an official party meeting in his neighborhood.

“We don’t believe that this amounts to incitement to subversion,” Sun’s lawyer said.

The convicted journalist was initially jailed two years ago as he tried to film the opening of a trial of a Nanjing-based human rights activist named Wang Jian. Wang said he believes Sun is innocent.

“I think he’s innocent,” Wang said. “Detaining and sentencing him is outright political persecution, under international law and under the Chinese constitution.”

China has imprisoned more journalists and bloggers than any other country, with 60 behind bars currently in cases that human-rights groups claim amount to political persecution. Authorities often use charges of “picking quarrels and stirring up trouble” as a pretext to crack down on peaceful dissent.

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Authored by Rainer Mausfeld, translated by Terje Maloy via Off-Guardian.org,

The citizens are disenfranchised and conditioned to be politically apathetic consumers. In recent decades, democracy has been replaced by the illusion of democracy. New forms of organization of power and psychological methods for manipulation of our consciousness protect the powerful against the risks of democratic empowerment and strengthen their position.

Democracy and freedom. Two words that are charged with unheard-of social promises and that can release tremendous energies of change to achieve them. Today, hardly more than a shadow remains of the hopes originally associated with them. What happened? Never before have two words, to which such passionate hopes were attached, been emptied of their original meaning in such a socially far-reaching way. They have been falsified, abused, and turned against those whose thoughts and actions are inspired by them.

Democracy today really means an elected oligarchy of economic and political elites, in which central areas of society, especially the economy, are fundamentally removed from any democratic control and accountability; at the same time, large parts of the social organization of our own life lie outside the democratic sphere.

And freedom today means above all the freedom of the economically powerful.

With this Orwellian reinterpretation, these two words now have a special place in the endless dictionary of falsified words throughout history. With the poisoning of these two words, our hopes for a more humane society and a containment of violent ways of solving things are confused, clouded, broken and almost wiped out from the collective memory. The loss of the civilizing dreams associated with these two concepts makes it hard for us today to politically articulate an attractive, decent alternative to the prevailing power relations, or even worse, think of any at all.

Democracy, which was originally associated with great hopes for political self-determination and a safeguarding of internal and external peace, is left only as a formal shell in the real structure of society. Democracy has been reduced to a staged spectacle of periodical elections, where the population can choose from a given «elite spectrum». Real democracy has been replaced by the illusion of democracy; free public debate has been replaced by opinion- and outrage-management. The guiding principle of the responsible citizen has been replaced by the neoliberal ideal of the politically apathetic consumer.

Of the hopes associated with the concepts of democracy and freedom, only the empty words of a false promise have been retained by the powerful; with these words it is possible to effectively manipulate the consciousness of the subjugated majority.

International law has also today largely developed into an instrument of undisguised power politics. The self-declared ‘Western community of values’ has openly reverted to its almost religious belief in the effectiveness of violence, the wholesomeness of bombs and destruction, drone killings and torture, support for terrorist groups, economic strangulation, and other forms of violence that serve their purposes. This is a political fetishization of violence, whose effects can be seen all over the globe.

Hardly more than a historical memory is left of the great hopes originally associated with democracy and international law, namely, the hopes that civilization could contain power and violence. The populace is all the more being forcefully convinced of the political rhetoric of democracy and international law, with which the economically or militarily strong seek to win the consent or tolerance of the populace for their actual practice of a violent realpolitik. In today’s realpolitik, the right of the strongest has again long been accepted.

Two hundred years after the Enlightenment, which we praise so much our political rhetoric, we live in a time of radical counter-enlightenment. At the same time, when it serves their power interests, the powerful like to refer to the Enlightenment in order to affirm their claimed civilizational superiority over those they consider to be their enemies.

An elitist democracy is a contradiction in terms. While there are formal democratic elements in an elitist democracy, they are structurally kept to a minimum. Despite this minimalistic democracy, from the point of view of the actual economic and political centers of power, democratic elements are not necessarily as risk-free as they would like.

So in order for the present power elite to secure their status, they are dependent on securing themselves against democratic aspirations.

The weak point is now the public debate space, which – especially in the periodic elections – could potentially become a risk against stability. How can this be controlled in an elitist democracy? How can the risk that democracy potentially poses be kept as low as possible? If the remaining democratic residual elements were removed, it would no longer be possible to maintain the democratic rhetoric useful for preventing revolution; for public debate and periodic elections are indispensable even for the mere illusion of democracy. So if the real centers of power want to keep these formalities, they need appropriate ways to build stability that can make democracy risk-free for them.

Over the past few decades, the powerful have made great efforts to develop new ways of securing such stability, in order to protect the democratic residual elements remaining in elitist democracy from the risks posed by democratic empowerment.

These include, in particular, novel structural forms of organizing power, as well as psychological methods for manipulating our consciousness. Of course, the roots of these developments go much further back, but these developments have accelerated rapidly and become institutionally solidified in recent decades. The social transformation process associated with these things is similar to the effects of a «revolution from above», i.e. a revolution that represents a project of the economic elites and serves to expand and consolidate their interests. The transformation process that accompanies this revolution essentially rests on two pillars.

The first pillar of this transformation process is that the organizational forms of power are designed more abstractly and with a purposeful diffusion of social responsibility, so that the unease, indignation or anger of those ruled can find no concrete, i.e. politically effective, targets. Thus a will for change in the population can no longer find expression among the actual decision-makers.

This process of transformation consists of a creeping – and for the populace as invisible as possible – creation of suitable institutional and constitutional structures. With these structures, power relations can be stabilized and the redistribution processes permanently removed from democratic access, and thereby be made largely irreversible. For this, the democratic structures historically won after hard struggles must be eliminated or eroded, so that their effectiveness is neutralized.

In addition, domestic and international law must be ‘developed’ in such a way that the centers of economic and political power can legally enforce their interests authoritatively in the legal framework thus created. In particular, a legal framework must be created to enable the transformation of economic power into political power, and to provide a legal framework for the desired or already established upwards redistributive mechanisms, so that the minimum remaining democratic possibilities cannot undo them.

The organized crime of the propertied class is not only legalized by such lawmaking, but also protected for the future and sealed against possible democratic interventions.

The second pillar is the development of sophisticated and highly effective techniques that can in a targeted way manipulate the consciousness of the ruled. Ideally, those who are ruled should not even know that there are centers of power behind the political surface, presented by the media, of seemingly democratically controlled power. The most important goal is to neutralize any social will to change in the population or divert their attention to politically insignificant goals.

To achieve this in the most robust and consistent way possible, manipulation techniques aim for much more than just political opinions. They aim at a purposeful shaping of all aspects that affect our political, social and cultural life as well as our individual ways of life. They aim, as it were, at the creation of a «new human being» whose social life is absorbed in the role of the politically apathetic consumer.

In this sense, they are totalitarian, so that the great democracy theorist Sheldon Wolin rightly speaks of an «inverted totalitarianism», a new form of totalitarianism, which is not perceived by the population as totalitarianism. The techniques for this have been and are being developed for about a hundred years, at great expense and with substantial involvement from the social sciences, whose importance in society is closely linked to the provision of methods of social control.

A central element of these techniques for manipulating the consciousness of the population is the creation of appropriate ideologies that are largely invisible to the population as ideologies and thus provide a barely questionable framework that gives meaning to all the individual’s social experiences.

The core of these ideologies, culminating in neo-liberal ideology in recent decades, is the ideology of an expertocratic «capitalist elite democracy», in which competent and well-committed elites should direct the fate of society in the most efficient manner possible.

Both developments serve to make power unidentifiable and therefore invisible, in order to undermine our natural mental defense mechanisms against being ruled by others. Both are characteristic of the modern forms of contemporary capitalist elite democracies.

We can only develop promising strategies of resistance to the current order based on power and violence if we sufficiently understand these new organizational forms of power. The same applies to the manipulation techniques, through which specific properties of our mind can be exploited for political purposes.

via RSS http://bit.ly/2QWjAjV Tyler Durden

After investing some $190 million in development via a public-private partnership project dubbed “Kortezh”, the Russian state has revealed that a new presidential limousine designed specifically for Russian President Vladimir Putin will soon enter mass production at a factory in the eastern region of Tatarstan, as the government hopes sales of the bulletproof limo will help offset some of that investment.

According to RT, the first mass market iterations of the Aurus will roll off the production line in 2020. The cars will be built at a factory owned by Russian carmaker Sollers, which is located in the special economic zone of Alabuga, Tatarstan Republic, according to the Trade Minister Denis Manturov.

The factory should be able to handle producing about 5,000 of the vehicles per year. The Aurus, as the limo is called, is currently being produced by the state-run Central Scientific Research Automobile and Automotive Engines Institute, which has an annual output of about 250 cars – far below the level needed to meet demand, according to the Russian state. The Aurus is presently being produced in a limo and a sedan model, with an off-road vehicle set to enter production some time in 2021-2022.

The project that led to the car’s development was initially intended to bolster Russia’s domestic auto industry by ensuring that more cars were produced in Russia using domestic parts. But it ran massively over budget during the five years it took to develop the car.

Putin debuted the car to the world when he rode in it during his summit with President Trump in Helsinki:

The car made its debut as a mass-market vehicle at the Manila International Auto Show earlier this year:

Maybe if sales are robust, the Aurus could inspire copycats: For example, maybe the Vatican would consider a mass-market version of the Pope Mobile.

via RSS http://bit.ly/2QbcH9k Tyler Durden