Tag: news

French President Emmanuel Macron’s vision for a pan-European army might finally become a reality…in Germany.

According to the BBC, seven years after Germany abandoned conscription, the military of Europe’s largest economy is struggling to fill senior roles, and might need to start hiring non-German soldiers to occupy specialized positions in its armed forces like doctors and IT specialists, said Army general inspector Eberhard Zorn, who noted that Germany is being forced to “look in all directions” as it struggles to fulfill a promise to President Trump to raise its defense spending closer to the NATO-mandated target of 2% of GDP.

The country’s military has been beset by under-investment for years and is presently struggling to expand its armed fighting force by 21,000 people by 2025 and increase its defense budget from 1.2% to to 1.5% of its gross domestic product by 2024. Defense Minister Ursula von der Leyen said in an interview on Thursday that Germany now has 182,000 uniformed soldiers, an increase of 6,500 in two years. Within seven years, that number should reach 203,000. Of these, 12% of army recruits are women, and one in three applicants to officer positions are women.

Zorn was careful to point out that non-Germans would only be considered for “specialist” positions.

Gen Zorn told the Funke newspaper group that “of course the Bundeswehr needs personnel” and the army had to “push hard for a suitable new generation”, although EU citizens in uniform were “an option” to be examined only in specialist fields.

The media group said the government had already consulted EU partners and that most had reacted cautiously, particularly in Eastern Europe.

Of course, there’s one slight complication that could create problems for the German military: After World War II, Germany passed a law mandating that soldiers in the German army must be Germans. Suggestions that an exception might be made have been met with scepticism, particularly in Eastern Europe.

Though Hans-Peter Bartels, the member of Parliament responsible with overseeing the German armed services, noted that recruiting EU citizens was already a “kind of normality” as many members of the German army are immigrants or hold dual EU citizenship. Because of these exceptions, more than 900 foreign citizens are already employed by the German military in civilian roles.

And Germany isn’t the only European power hoping to add more non-citizens to the ranks of its military. Last month, the UK said more foreign nationals would be able to join its armed forces to meet a shortfall of 8,200 soldiers, sailors and “air personnel.”

Germany is hoping to have roughly 70% of its military ready for combat at any given time due to the perceived threat from Russia in the Baltics, which recently provoked the largest NATO exercise since the Cold War. Meanwhile, some academics see a 70% chance of a “hot war” erupting between NATO and Russia.

via RSS http://bit.ly/2ERtuw6 Tyler Durden

Authored by Burak Bekdil via The Gatestone Institute,

• In Freedom House’s democracy index, Turkey belongs to the group of “not free” countries, performing worse than “partly free” countries including Mali, Nicaragua and Kenya.

• Just as there cannot be a “not free” member of the EU, there cannot be a member that blatantly ignores rulings of the European Court of Human Rights.

• “I think that, in the long term, it would be more honest for Turkey and the EU to go down new roads and end the accession talks … Turkish membership in the European Union is not realistic in the foreseeable future.” – Johannes Kahn, EU Enlargement Commissioner; interview in Die Welt.

In September 2017, German Chancellor Angela Merkel said she will seek an end to talks for Turkish membership in the European Union. Pictured: Merkel and Turkish President Recep Tayyip Erdoğan meet in Berlin, September 28, 2018. (Photo by Sean Gallup/Getty Images)

When Turkey first applied for full membership in the European Union in 1987, the world was an entirely different place — even the rich club had a different name: the European Economic Community. U.S. President Ronald Reagan had undergone minor surgery; British Prime Minister Margaret Thatcher had been re-elected for a third term; Macau and Hong Kong were, respectively, Portuguese and British territory; the Berlin Wall was up and running; the demonstrations at the Tiananmen Square were a couple of years away; the Iran-Contra affair was in the headlines; the First Intifada had just begun; and what are today Czech Republic and Slovakia were Czechoslovakia.

In March 2003, just a few months after he was elected Prime Minister of Turkey, Recep Tayyip Erdoğan said that Turkey was “very much ready to be part of the European Union family.”

In October 2005, formal accession negotiations between Turkey and the EU began.

Today, 31 years after the first date, the alliance seems to be broken, with no signs in the foreseeable future of a marriage between two perfectly unsuitable adults. Knowing that, both sides in the past decade have played an unpleasant diplomatic game of pretension: not be the one that throws away the ring. This boring opera buffa is no longer sustainable.

Turkey’s democratic deficit has grown just too bitterly huge to make it compatible with Europe’s democratic culture. According to the advocacy group Freedom House:

“In addition to its dire consequences for detained Turkish citizens, shuttered media outlets, and seized businesses, the chaotic purge has become intertwined with an offensive against the Kurdish minority, which in turn has fueled Turkey’s diplomatic and military interventions in neighboring Syria and Iraq.”

In Freedom House’s democracy index, Turkey belongs to the group of “not free” countries, performing worse than “partly free” countries including Mali, Nicaragua and Kenya. The EU is certainly not a club of the “not free.”

Most recently, a legal dispute between Turkey and the EU highlighted, once again, the huge disparity between the understanding of the rule of law in Turkish and European democratic cultures. This time, Turkey and the EU clashed over the rights of a prominent Kurdish politician who has been in jail on flimsy charges of terror. In a November verdict, the European Court of Human Rights (ECHR), to which Turkey is a signatory, ruled that Turkey should swiftly process Selahattin Demirtaş’s case; the court said his pre-trial detention had gone on longer than could be justified. A Turkish court, however, ignoring the ECHR’s verdict, ruled against Demirtaş’s release from prison. The Turkish court’s decision was a clear violation of the Article 90 of the Turkish Constitution:

“In the case of a conflict between international agreements in the area of fundamental rights and freedoms duly put into effect and the domestic laws due to differences in provisions on the same matter, the provisions of international agreements shall prevail.”

Turkish Foreign Minister Mevlüt Cavuşoğlu described the ECHR ruling as motivated by politics, not the law, and asserted that the case would be determined by Turkey’s courts.

Just as there cannot be a “not free” member of the EU, there cannot be a member that blatantly ignores ECHR’s rulings.

Fortunately, there have been signs from Brussels that the “show must not go on.” In April 2017, the European Parliament called for a formal suspension of Turkey’s EU membership bid, which was already effectively frozen. In September 2017, German Chancellor Angela Merkel said she will seek an end to Turkey’s membership talks.

More recently, in November, the official overseeing the EU’s future enlargement said that, in the long term, it would be “more honest” for the bloc to give up talks on membership for Turkey. EU Enlargement Commissioner Johannes Kahn toldGerman daily Die Welt, “I think that, in the long term, it would be more honest for Turkey and the EU to go down new roads and end the accession talks … Turkish membership in the European Union is not realistic in the foreseeable future.” Kahn’s was honest talk, calling a cat a cat.

In fact, a month earlier than Kahn’s comments, President Erdoğan proposed a most realistic solution – although not for reasons of honesty, but merely for pre-election bluffing. Evidently he is signalling exasperation with the election process. Erdogan seems to be trying to appeal to the EU-weary, nationalistic voters ahead of Turkey’s municipal elections on March 31, 2019 that Europe’s reluctance to let Turkey into the EU is based, supposedly, on “Islamophobla”. In an October speech, Erdoğan said he would consider putting Turkey’s long-stalled bid to join the EU to a referendum.

Good idea, assuming that Turkey’s most popular ever leader should campaign for Leave (the negotiations). All the same, as always, Erdoğan was bluffing, in a seeming effort to remind EU’s leaders of Turkey’s “strategic value” for Europe. At the same time, he was playing the tough man to his usually xenophobic, conservative voter base that has grown weary of being humiliated by ‘infidel Europe.’

This author believes that there should be simultaneous EU and Turkish referenda asking the Europeans if they endorse an eventual Turkish membership, and at the same time asking the Turks whether they want to drop their bid to join. A “No” vote triumphing in either referendum should suffice formally to end Turkey’s membership process; two “Yes” votes would mean the show must go on, that the audience is happy with the opera buffa.

The unconvincing pretention that Turkey should be “kept at bay” for strategic reasons is dishonest.

“Pulling the plug” is honest but probably not practical one: no one will wish to take that historic responsibility. In addition, polling numbers suggest a decline in Turkish public opinion for membership. On the other side, in the EU, the sympathy for Turkish membership is dramatically lower than in previous years. Support for Turkey’s entrance, for instance, is at 8% in France, 5% in Germany, 8% in the UK, 5% in Denmark, 7% in Sweden and 5% in Finland. There is no way the EU average could surpass the 50% threshold.

So, let the club members and the applicant decide on a membership bid for a marriage that will never work.

via RSS http://bit.ly/2Tkr2T1 Tyler Durden

Authored by Brandon Smith via Alt-Market.com,

Central bankers are sociopathic in nature and sociopathic people tend to behave like robots. When one understands the motivations of central bankers, or at the very least what their goals are, their actions become rather predictable. The question is, what truly motivates these people?

I believe according to the evidence that the central banks are motivated by ideological zealotry with the core purpose of total global centralization of economic and political power into the hands of a select group of elitists. This agenda is really just a modern “reboot” of feudalism or totalitarianism. They sometimes refer to the plan in public as the “new world order,” or the “global economic reset.” I often refer to the encompassing ideology as “globalism” for the sake of expediency.

To attain this goal, central bankers must influence mass psychology using traumatic events. Fear opens doors to centralization of power. This is simply a fact of social behavior and history. The more afraid a population is, the more willing they will be to give up freedoms in exchange for safety and security. Therefore, the most effective weapon at the disposal of the globalists and their central banking counterparts is engineered economic crisis — a weapon that can, if allowed, destroy entire civilizations almost as fast as a nuclear war, while still keeping most of the expensive infrastructure intact.

Beyond that, economic crisis is also a weapon that can influence a population to embrace even greater enslavement while viewing their slave masters as saviors rather than villains.

Despite what many people assume, central bankers are not driven by a desire for profit. They print their own capital, they hardly need to make a profit. Central bankers are also not driven by a desire to keep the current system afloat. They have demonstrated time and time again their habit of deliberately sabotaging the system through the use of inflationary bubbles followed by fiscal tightening into weak economic conditions. The U.S. economy today is just as expendable as any other economy the banks have destroyed in the past. It is not special.

This fact is becoming extremely clear lately as the Federal Reserve initiates policy tightening measures into obvious economic weakness; an action which is crashing stock markets as well as destabilizing other sectors of the economy including housing markets, auto markets and credit markets.

As noted, this was highly predictable. In September of 2015 I published an article titled ‘The Real Reasons Why The Fed Will Hike Interest Rates‘, predicting that the strategy the banks would use to bring about the next crisis would be interest rate hikes in the midst of financial instability. This was the same strategy they used to initiate the Great Depression. And as mentioned earlier, sociopaths act like robots — they tend to use similar tactics over and over again because these tactics have worked in the past.

At the time, the vast majority of analysts were predicting that the central banks would move towards negative interest rates. But if the goal of the banking elites is total centralization of the global economy, then keeping the U.S. system alive for another decade or longer makes little sense. They had already created the perfect financial bubble using QE and near zero interest rates to encourage debt accumulation at historic levels. It’s a veritable economic atomic bomb, why not use it?

At the beginning of this year, I published an article titled ‘New Fed Chairman Will Trigger A Historic Stock Market Crash In 2018‘. In that article, I predicted that Jerome Powell would push forward with interest rate hikes and balance sheet cuts. This would put extreme pressure on highly indebted corporations and they would be forced to stop spending capital on stock buybacks, which have been propping up equities for several years.

I would point out that not only has Powell in fact done exactly what I predicted, but that he has done it consciously, knowing what the results would be. In 2012, Powell outlined the exact consequences of policy tightening in the Fed October minutes. These minutes were not made public until recently. They PROVE that the Fed is fully aware of what it is doing, not acting blindly.

In September of this year, in my article ‘The Everything Bubble: When Will It Finally Crash?‘, I predicted that stock markets would begin crashing in December of 2018, despite many skeptics arguing that a “Santa Claus rally” was guaranteed. From the article:

“The Fed’s tightening policies have resulted in a severe reaction by emerging markets which are already crashing and have diverged greatly from U.S. markets. American stocks will not escape the same fate.

The Fed’s neutral rate efforts suggest a turning point in late 2018 to early 2019. Balance sheet cuts are expected to increase at this time, which would also expedite a crash in existing market assets. The only question is how long can corporations sustain stock buybacks until their own debt burdens crush their efforts? With such companies highly leveraged, interest rates will determine the length of their resolve. I believe two more hikes will be their limit.

If the Fed continues on its current path the next stock crash would begin around December 2018 into the first quarter of 2019. After that, other sectors of the economy, already highly unstable, will break down through 2019 and 2020.”

Though stock buybacks had saved markets from the plunge in February, they are long gone in the final quarter as the cost of corporate debt expands. Stocks are now in near free fall in December. The crash of the “everything bubble” has begun.  So far, intermittent bounces have been brief, lasting in some cases mere hours to a couple of days, then plunging into complete retraction.  The trend line indicates far more pain to come.

I was able to calculate this outcome because I am willing as an analyst to accept certain realities. The most important being that at this stage the Fed DOES NOT CARE about propping up the U.S. economy, and ultimately, the Fed does not even care what happens to itself as an institution. The truth is that the Fed is working towards an ideological end game of global centralization; this means one economy, one currency and eventually one world government (a plan which has been openly admitted to by globalists in the past). It has no loyalty to the U.S. system, and it will destroy the U.S. system if it must to achieve this prize.

The concept of the “plunge protection team” has become widespread in recent years, and for good reason.  It was the central banks in tandem with government agencies that have hidden honest economic data from the mainstream public as well as artificially inflated asset valuations to obscure the truth – that the US and much of the world has been suffering from systemic decline, a collapse that has been ongoing since at least 2008.

However, things change, and the plans of central banks evolve.  It took a decade to create the ‘Everything Bubble’; an unprecedented bubble encompassing every facet of our economy including Treasury bonds and even the dollar.  The true purpose of most financial bubbles is to engineer a crash.  The “plunge protection team” is no longer a guaranteed element of US markets anymore.  If they are intervening, it has only been as a steam valve to slow the current crash to more manageable levels.  In other words, it’s a controlled demolition.

I don’t call them the “PPT” anymore – instead I think I’ll call them the PAC (Plunge Acceleration Commission).  The PAC-men are devouring the economy piece by piece and digesting it as they go.  They want a crash.  In fact, they need one.

Far too many people wrongly assume that the Fed is the apex of globalist power. The Fed is nothing more than a single tentacle of a larger vampire squid. It is the branch of a franchise, not the top of the pyramid.

I would liken the Fed to a saboteur and a suicide bomber. It was sent here to America with the explicit goal of undermining the U.S. economy and the U.S. currency over the period of a century in preparation for a final destructive act which would open the path to global centralization. It was sent here in disguise, to get close to the target, to explode our economy. Its job is to do as much damage as possible, even to the point of sacrificing itself. When the dust settles, other globalist institutions plan to move in to pick up the pieces and offer the desperate citizenry a pre-designed solution.

At this time, ending the Fed is still useful as a symbolic act, but strategically it would be pointless in saving the economy. The Fed has already accomplished its mission.

This is why I don’t take the ongoing WWF wrestling match between Donald Trump and the Fed very seriously.  Trump’s continued associations with banking and think tank elites suggest to me that his battle with the Fed is staged theater.  Consider this:  If the Fed is designed to blow up our economy and possibly itself, blame needs to be redirected away from the central banks.  What better way to do this than to let conservatives think they are “winning” by pursuing a shutdown of the Fed?  It’s an entity that the globalists were planning on sacrificing anyway.

Trump campaigned on the argument that the Fed was creating an artificial bubble in stocks through low interest rates.  Then he took full credit for the stock market rally for the past two years.  Now he is attacking the Fed for raising interest rates and causing markets to fall.  It seems to me that the future mainstream narrative will read that a spoiled Trump caused the crash, blamed the “innocent” central bank that was only attempting to “normalize” the economy, and in the process made the situation even worse.

I am already seeing a stream of articles defending Jerome Powell as some kind of heroic rebel willing to raise rates in the face of establishment opposition.  This idea is laughable when you consider the Fed’s long history of inflating and then imploding bubbles while banking elites siphon up hard assets and push the citizenry into further poverty and servitude.  Powell isn’t a “rebel”, he’s a middle manager carrying out the same old strategy that globalists have always used:  Problem – Reaction – Solution.  Debt bubble, debt crisis, financial collapse, public desperation, asset absorption, centralization.

I will be elaborating on Trump’s participation in the global economic reset scheme in my next article.  Needless to say, the false Trump vs. Fed paradigm was also predictable.  Read my article ‘In A Battle Between Trump And The Fed, Who Really Wins?’, published in February of 2017, as well as my article ‘Trump vs The Fed: America Sacrificed At the NWO Altar’, published in July 2018, for an in-depth analysis.

Ultimately, the Fed is a proxy threat.  A shadow of the greater monster that must be defeated.

Our focus now must be to determine who rebuilds the system after the crash runs its course. This means preventing global central bank hubs like the IMF or the BIS from becoming the dominant economic force in the world. It means a long and arduous struggle. It means defiant structures — localized economies and production, self reliant people providing their own necessities and engaging in trade, and communities formed around mutual aid and security. It means a fight is coming that goes beyond the information war.

*  *  *

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A sudden and sharp drop in luxury home valuations in Manhattan has baffled brokers and alarmed analysts who have begun warning about the possibility that softness in the high end of the market could soon spread throughout the market or portend a broader downturn nationwide, according to Bloomberg.

And in the latest sign that the softness isn’t just a temporary phenomenon, Bloomberg reported on Wednesday that the ten biggest Manhattan apartment sales this year brought in an aggregate $500 million, a sum that is significantly lower than the past three years.

The highest sales price of the year was a $73.8 million duplex penthouse in a new tower designed by Robert Stern. While still high, relatively speaking, that sum is down 26% from its high in 2014 of $100 million. In the last 12 months, eight out of the top 10 sales were heavily discounted – one apartment at 157 West 57th street took a $17 million price cut before it found a buyer. Meanwhile, in most neighborhoods across the city – but particularly in luxury buildings – rents are also falling as middle class New Yorkers increasingly struggle with a shortage of housing exaggerated in part by developers fixating on the luxury market.

Without further ado, here are the ten most expensive apartments sold in NYC this year (courtesy of BBG):

1. $73.8 Million for 520 Park Avenue (Unit DPPH60):

Square feet: 9,138
Beds: 6
Baths: 7.5
Initial asking price: N/A

2. $62 Million for 520 Park Avenue (Unit PH52):

Square feet: 9,256
Beds: 6
Baths: 8
Initial asking price: $73 million

3. $59 Million for 503 West 24th Street’s Penthouse:

Square feet: 10,000 (plus 2,700 outdoors)
Beds: 6
Baths: 7
Initial asking Price: N/A

4. $56 Million for 70 Vestry Street’s PHS:

Square feet: 7,808 (plus 3,687 outdoors)
Beds: 5
Baths: 6.5
Initial asking price: $65 million

5. $54 Million for 157 West 57th Street’s Unit 85:

Square feet: 6,240
Beds: 3
Baths: 4
Initial asking price: $70 million

6. $50 Million for 15 Central Park West’s Unit 16/17B:

Square feet: 5,417 (plus 400 outdoors)
Beds: 4
Baths: 5.5
Initial asking price: $56 million

7. $43.8 million for 443 Greenwich Street’s Unit PHA:

Square feet: 8,569
Beds: 5
Baths: 6.5
Initial asking price: $58 million

8. $43.5 Million for 160 Leroy Street’s Unit PHN:

Square feet: 7,750
Beds: 5
Baths: 5.5
Initial asking price: $51 million

9. $42 Million for 157 West 57th Street’s Unit 77:

Square feet: 6,240
Beds: 4
Baths: 4.5
Initial asking price: $52 million

10. $42 Million for 432 Park Avenue’s Unit 77B:

Square feet: 5,421
Beds: 4
Baths: 6.5
Initial asking price: $45 million

Of course, New York City isn’t the only luxury real-estate market that’s struggling: New York suburbs like Greenwich as well as tony Hamptons hamlets are suffering as buyers focus on smaller homes closer to urban centers (“small is the new big”).

via RSS http://bit.ly/2Q7kJQr Tyler Durden

Authored by Jeremiah Johnson (nom de plume of a retired Green Beret of the United States Army Special Forces) via SHTFplan.com,

Undoubtedly most of you know about some of the things that have happened this past week. The ban on “bump-fire” or “slide-fire” stocks came as a shocker to most. Many have tried to downplay it, but there is a point to be considered: when one thing is banned, it sets the stage for more to be banned. Each time this happens, the liberties we have left (not much, by the way) shrink just a bit further. I have written recently about how there is a concerted effort to destroy the United States internally, while the rest of the world moves toward globalism/socialism/communism.

The President is a “slight hiatus,” a pause in the march toward the destruction of the United States… and merely a hiatus, as the elections themselves are illusory and are predetermined long before the phony tally of ballots occurs.

The United States would not have tolerated Hillary Clinton as president in 2016. The paradigm shift is occurring as we speak, and what was not tolerated then will be embraced in 2020. In the meantime, look at what has been accomplished thus far within the first two years of the administration. Next to nothing is the answer.

The best thing that the President accomplished was to strike down the individual mandate for Obamacare by executive order, and that is the only thing that has been truly accomplished.

One by one, the President’s staff is either being replaced, or they are exiting stage left. Mattis leaves. No big deal, right? Wrong. It has created a tremendous vacuum and contributes greatly to disorganization within the administration. We are on the brink of a nuclear war. We are pulling out of the INF treaty, and Putin has announced his country’s intentions of restarting the nuclear arms race by equipping heretofore conventionally-armed missiles with warheads. Ukraine is a powder keg getting ready to blow up in our faces with Petroshenko and the Kiev government pushing for a war between NATO and Russia that they will instigate.

The departure of Mattis is a big deal, because when vacuums such as this one are created at a sensitive level as his former position, the effects can be crippling or at least temporarily paralyzing: the vacuum presents the opportunity for an enemy to strike.

This departure from Syria is much more complex than it appears on the surface. Forget the politics, and that we’re an “evil empire,” and all of that.  We’re discussing particulars and what is in place now, as we speak. In Northeastern Syria, Special Forces teams as well as CIA and other clandestine service operatives have been deeply embedded since the Obama years. Now the plug has been pulled, and all of the intricate networks that have been obtained in the area are to be curtailed. Whether a shadow-presence will be left there is likely, although conjecture at this point, but Mattis’ reaction and resignation is, most likely at a minimum, twofold:

1. In consideration of what I just wrote, no Commander-in-Chief is privy to every motion that transpires within a given theater…and tactically, Mattis probably does not agree with the rapidity of the curtailment, from both an operational perspective.

2. Perhaps more importantly, it may give the Russians and Iranians the perception of weakness on our part…a perception that can lead to military action on their part. At the very least, it may present a haphazard picture of the President…calling in airstrikes on Syria at the onset of his presidency where there were no real targets or objectives…and now destroying an embedded network by a spontaneous withdrawal.

I believe there is a third reason that is not as obvious. All of the signs indicate that a war…a major war…is approaching, and Mattis doesn’t have the stomach for it, because he either believes he would not be allowed to win it…or that he cannot win it. Vladimir Putin reported at a conference packed with journalists that he believes the U.S. and Russia are headed toward a nuclear war. While he said he didn’t wish it, he reiterated that Russia will fight if it has to.

I have written over and over again that it is not as simple as two men who are unable to resolve their differences as needing to fight. This is not UFC-6 (done in 1994), although the analogy is appropriate. David “Tank” [of lard] Abbott rolled around with Oleg Tartakov for about 17 minutes, before Tartakov made him tap out (before he passed out) with the choke hold. But then: even as Tartakov’s hand was being raised in victory, it was when he was supine…almost unconscious.

Both men had been at it hard and heavy and suffered from oxygen depletion (it was in Wyoming). In the end, both the victor and the vanquished were lying on the ground, and the former even needed oxygen before regaining his feet and taking the championship belt…unable to give an interview.

That is how it will be if we go to war with them or vice versa. This isn’t about nationalism or patriotism: I’m not running away to any other country, and I’m going to stay and fight when the time comes. The problem is that our country is akin to Janus…with two faces. The first face is the remnant, the remaining citizenry with heart, understanding, and compassion for the nation: decent,god-fearing citizenry who still cherish a system founded on principles of freedom and rights…rights given by God, and then recognized and written down for us by the Founding Fathers.

The second face, however, is a part of our citizens who are evil, and follow only after evil, and a government that is no longer of, by, or for the people…whose only concerns are self-preservation, promulgation and continuity of power, and the surveillance, subjugation, repression, and domination of its people.

It is this side, this evil second face that will propel us into a world war while it sips glass-bottled kombucha tea a mile underground in a bunker with their families and the other rulers while We the People burn up above…in the ultimate end run to depopulate the planet…and reemerge into a whole new world.

If you doubt it, let me reiterate it is not only possible…it is probable. Please refer to the article that I wrote recently with an excerpt from the last installment of the “Resident Evil” series…or watch the movie, and listen to the clip I excerpted. These men and women at the heights of power have no moral compass, and no compassion for the average person. In their eyes, those who follow after evil or after good can be sacrificed equally. The only ones they will allow to remain? It is not “good” or “evil” that  concerns the rulers: it is a question of their “rating” that concerns the powers that be: what do they bring to the table, and will they be obedient, subservient, and useful?

People are winding down their business and getting ready for Christmas, and all, and this, too, is a hiatus… from the reality that surrounds us… that same reality that will be there when we return. Make no mistake: this calm is temporary. The domestic economy, the world political situation, the shifting economic balance in the world, and the threats arising in different areas will still be the same. It is the calm before the storm. A storm is coming: prepare for it now while there’s still a little time, as no one else will do it for you…especially not those in power…who are the cause of the coming storm.

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The government of India wants tech platforms such as Facebook, Twitter, WhatsApp and Google to remove content it deems “unlawful” within 24 hours of official notice, and develop “automated tools” which would “proactively identify and remove such material,” reports BuzzFeed, citing the publication of the proposed rules by India’s Ministry of Electronics and Information Technology (MeitY). 

The rules would also require companies to break end-to-end encryption to allow the government to snoop on communications. 

India’s Ministry of Electronics and Information Technology (MeitY) published the proposed rules on its website following a report on Monday by the Indian Express revealing the government’s proposal to modify the country’s primary IT law to work them in. The report comes days after India’s government seemingly authorized 10 federal agencies to snoop into every computer in the country last week.

The proposed measures have provoked concerns from privacy activists who say they would threaten free speech and enable mass surveillance. –BuzzFeed

THIS IS UNCONSTITUTIONAL. THIS IS CHINESE POLICY. HOW DID WE GO FROM PRIVACY AS FUNDAMENTAL RIGHT TO SURVEILLANCE? #censorship #surveillance #privacy #facebook #google

— Megha Mandavia (@MeghaMandaviaET) December 25, 2018

 Under the new rules, any platform with over 5 million users in India would be required to appoint a “person of contact” to provide “24×7 coordination with law enforcement agencies and officers,” while also maintaining records of “unlawful activity” for a period of six months – or indefinitely if ordered by a court. Each user would also be sent monthly notifications notifying them that the platform can and may “remove non-compliant information immediately and kick the user off.” 

A MeitY official discussed modifying India’s IT law to work in the new rules with representatives from at least seven tech companies including Google, Facebook, WhatsApp, and Twitter in a confidential meeting last week, reported the Indian Express.

If the proposals were to go ahead, it “would be a tremendous expansion in the power of the government over ordinary citizens, eerily reminiscent of China’s blocking and breaking of user encryption to surveil its citizens,” the Internet Freedom Foundation, a digital advocacy organization based in New Delhi, wrote on its website. –BuzzFeed

“[On] the face of it, [the government seems] to be contemplating pro-active censorship and breaking encryption with traceability,” said Indian Supreme Court lawyer Apar Gupta, who co-founded the Internet Freedom Foundation. “They will make the internet a corporal environment, damaging the fundamental rights of users,” he told the Indian Express. 

WhatsApp would be one of the largest companies affected by the proposed rules, with over 200 million users in India. The company has resisted the Indian government’s repeated demands to build in message traceability, after after people who fell for rumors and hoaxes killed over 30 people this year. 

Sources familiar with WhatsApp’s thinking told BuzzFeed News that just a few months ago, it seemed India was preparing to support the most robust national privacy frameworks in the world, referring to a comprehensive data protection framework that a government committee formulated earlier this year that is yet to receive parliamentary approval.

It’s not clear, said these sources, whether India will now choose to be a leader in privacy or mass surveillance. –BuzzFeed

Earlier this month Australia passed a hotly contested encryption bill requiring technology companies to break encryption if asked by law enforcement agencies, claiming that it was essential to stop criminals and terrorists who utilize secure messaging to communicate. 

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Authored by Eric Zuesse via The Strategic Culture Foundation,

The invasion and occupation of Syria by tens of thousands of jihadists who were recruited from around the world to overthrow Syria’s President Bashar al-Assad, was financed mainly by US taxpayers and by the world’s wealthiest family, the Sauds, who own Saudi Arabia and the world’s largest oil company, Aramco.

America’s international oil companies and major think tanks and ‘charitable’ foundations were also supportive and providing propaganda for the operation, but the main financing for it came from America’s taxpayers, and from the Saud family and from the Government that they own.

One of the best articles that the New York Times ever published was by Mark Mazzetti and Matt Apuzzo, on 23 January 2016, “US Relies Heavily on Saudi Money to Support Syrian Rebels”. They reported that,

“the C.I.A. and its Saudi counterpart have maintained an unusual arrangement for the rebel-training mission, which the Americans have code-named Timber Sycamore. Under the deal, current and former administration officials said, the Saudis contribute both weapons and large sums of money, and the C.I.A takes the lead in training the rebels. …

From the moment the C.I.A. operation was started, Saudi money supported it.” 

Furthermore, “The White House has embraced the covert financing from Saudi Arabia — and from Qatar, Jordan and Turkey.” But “American officials said Saudi Arabia was by far the largest contributor to the operation.” The invasion and occupation of Syria by jihadists from around the world was primarily a Saud operation, though it was managed mainly by the US Government.

Prior to the failed US-backed coup-attempt on 15 July 2015 to replace Tayyip Erdogan as Turkey’s President, Turkey was part of the U.S-Saudi alliance to overthrow and replace Syria’s Government. But afterwards, Turkey increasingly switched against the US and Sauds, and toward instead supporting the target of the Sauds and of America’s aristocrats: Syria. And, so, Turkey has increasingly joined Syria’s alliance, which includes Iran and Russia. That’s one of the major geopolitical changes in recent decades.

The NYT continued:

“The Saudi efforts were led by the flamboyant Prince Bandar bin Sultan, at the time the intelligence chief, who directed Saudi spies to buy thousands of AK-47s and millions of rounds of ammunition in Eastern Europe for the Syrian rebels. The C.I.A. helped arrange some of the arms purchases for the Saudis, including a large deal in Croatia in 2012.”

The US preferred to be supplying the jihadists weapons that weren’t from US manufacturers, in order to impede any tracing back to the United States the arming of the movement to oust and replace Syria’s secular, committedly non-sectarian, Government. The Sauds — who are just as committedly sectarian, and are even supporters of the extreme fundamentalist Wahhabist sect of Sunni Islam — likewise tried to cover their tracks in this operation, but their tracks were financial. The Sauds have been especially skillful at covering their tracks. Prince Bandar bin Sultan al-Saud was a buddy of George W. Bush, and had secretly donated over a million dollars in cash to Al Qaeda prior to the 9/11 attacks, according to Osama bin Laden’s financial bagman, who had picked up personally each one of the million-dollar-cash donations to that organization until 9/11 and who named amongst those donors not only Prince Bandar but also Prince Salman al-Saud, who subsequently became King Salman, who is now the father of Crown Prince Salman, who recently murdered the columnist Jamal Khashoggi. Crown Prince Salman is also a close friend of America’s current ‘prince’, Jared Kushner, the US President’s son-in-law.

So, the Saud family are very close with America’s Republican aristocrats, perhaps even closer than they are with America’s Democratic aristocrats. But especially because of the business links, the Sauds are deeply influential throughout America’s aristocracy. Not only is Saudi Arabia the world’s most oil-rich country, but it is also the world’s largest purchaser of weapons from Lockheed Martin and the other American ‘defense’ contractors, which sell exclusively to the US Government and to the governments that are allied with it (such as to Saudi Arabia). So, those corporations depend upon the Sauds more than upon any other family, even than any single American family.

The Saud family are also crucial allies with Israel’s aristocracy, who include such American billionaires as the Republican Sheldon Adelson and the Democrat Lesley Wexner.

Prince Bandar was also reported by the FBI to have financed directly from his personal checking account the US stays, and the pilot-training, of at least two of the 15 Saudis who were among the 19 jihadists who carried out the piloting and plane-seizings on 9/11. So, if Bandar didn’t (perhaps in consultation with George W. Bush) actually plan those attacks himself, he at least was one of their chief financial backers.

The NYT article also mentioned that “In late 2012, according to two former senior American officials, David H. Petraeus, then the C.I.A. director, delivered a stern lecture to intelligence officials of several gulf nations at a meeting near the Dead Sea in Jordan. He chastised them for sending arms into Syria without coordinating with one another or with C.I.A. officers in Jordan and Turkey. Months later, Mr. Obama gave his approval for the C.I.A. to begin directly arming and training the rebels from a base in Jordan, amending the Timber Sycamore program to allow lethal assistance. Under the new arrangement, the C.I.A. took the lead in training, while Saudi Arabia’s intelligence agency, the General Intelligence Directorate, provided money and weapons, including TOW anti-tank missiles,” so as to conquer Syria, for the Sauds.

These authors were, however, misguided when they wrote that “While the intelligence alliance is central to the Syria fight and has been important in the war against Al Qaeda, a constant irritant in American-Saudi relations is just how much Saudi citizens continue to support terrorist groups, analysts said.” That “support” to jihadists, to the extent that it was financial, came actually not from “Saudi citizens,” but from the Saudi aristocracy, mainly from the Saud family itself. Moreover, in a monarchy — which Saudi Arabia is — there are no actual “citizens”; there are only the monarch and his or her “subjects” not “citizens” (citizens such as exist in a democracy — even it’s only a so-called one). There are only the monarch and his/her subjects — especially in an absolute monarchy, such as Saudi Arabia. So: that term “citizens” was a false and misleading term in that context.

On 6 March 2013, Britain’s Guardian bannered regarding General Petraeus “From El Salvador to Iraq: Washington’s man behind brutal police squads” and reported his having created the death squads in El Salvador and designed the post-Saddam Iraqi torture program for trying to extract from detainees (though the Guardianfailed to note this) whatever information they might have about Saddam Hussein’s role in the 9/11 attacks. Nothing was mentioned in the Guardian, about 9/11, but only that “The aim: to halt a nascent Sunni insurgency in its tracks by extracting information from detainees” — but nothing was said there about what type of “information” was being sought, or why. “With Petraeus’s almost unlimited access to money and weapons, and Steele’s field expertise in counterinsurgency, the stage was set for the commandos to emerge as a terrifying force.” But force for what? The Guardian offered nothing on that.

Thierry Meyssan at Voltairenet, on 9 May 2011, headlined “What you don’t know about the Bilderberg-Group” and he wrote: 

“The operation was controlled in reality by William J. Donovan, the former commander of the OSS (the US intelligence service during the war), now in charge of building the American branch of the new secret service of NATO, Gladio …

Moreover, the security of each subsequent meeting was not provided by the police of the host country, but by the soldiers of the NATO Alliance.” 

Meyssan said that “Henry Kissinger is the main person responsible for invitations to the Bilderberg Group.” Another of the “core group” was “Henry R. Kravis: US financier, investment fund manager KKR. He’s a major fundraiser for the Republican Party.” Meyssan called this “The Lobby of the most powerful military organization in the world [NATO].” 

Furthermore:

During the last US presidential elections, it was reported that Barack Obama and Hillary Clinton disappeared on June 6, 2008, in order to negotiate an end to their rivalry. In reality, they participated in the annual conference of the Bilderberg Group in Chantilly, Virginia (USA). The following day, Mrs. Clinton announced that she was retiring from the race. … 

According to our sources, something else happened. Barack Obama and Hillary Clinton concluded a financial and political agreement. Senator Obama bailed out his rival financially and offered her a position in his administration (Clinton refused the vice-presidency and instead chose the State Department) in exchange for her active support during the campaign against McCain. Then, the two leaders were presented by James A. Johnson to the Bilderberg Conference, where they assured the participants that they would work together. [Hillary had a solid record and reputation as a neoconservative and as a supporter of overthrowing Syria’s Government.] Barack Obama had already been NATO’s candidate for a long time. [But his campaign rhetoric had nonetheless caused worries amongst the Establishment.] Mr. Obama and his family have always worked for the CIA and the Pentagon. Moreover, the initial funds for his campaign were provided by the Crown of England, via a businessman named Nadhmi Auchi. [See, e.g.: this and this and this and this.] In presenting the Black Senator to the Bilderbergers, the Atlantic Alliance was, in fact, organizing public relations at the international level for the future president of the United States.

Of course, that was even before Obama won the Nobel Peace Prize in 2009.

On 11 December 2018, Meyssan headlined “Whom does Emmanuel Macron owe?” and he wrote that, “he owes his electoral campaign mostly to Henry Kravis, the boss of one of the world’s largest financial companies, and to NATO – a considerable debt which weighs heavily today on the solution to the Yellow Vests crisis.”

Macron had first met “Henry and Marie-Josée Kravis, in their residence on Park Avenue in New York. (This meeting probably took place in 2007. Thereafter, Emmanuel Macron systematically visited the Kravis couple whenever he was in the USA, and Henry Kravis welcomed him in his offices on Avenue Montaigne when he visited Paris.) The Kravis couple, unfailing supporters of the US Republican Party, are among the great world fortunes who play politics out of sight of the Press.”

Furthermore:

In December 2014, Henry Kravis created his own Intelligence agency, the KKR Global Institute. He nominated at its head the ex-Director of the CIA, General David Petraeus. With the Kravis couple’s private funds (the KKR investment funds), and without referring to Congress, Petraeus pursued operation «Timber Sycamore» which had been initiated by President Barack Obama. This was the largest weapons traffic in History, implicating at least 17 states and representing many thousands of tons of weapons worth several billion dollars [7]. As such, Kravis and Petraeus became the main suppliers for Daesh [8].

On 6 June 2017, Meyssan headlined “Confrontation at Bilderberg 2017” and wrote:

There exist no photographs of the meeting of the Bilderberg Group, whose work is confidential. Security for the meeting is not handled by the FBI, nor the Virginia police force, but by a private militia organised by NATO.

The Bilderberg Group was created in 1954 by the CIA and MI6 in order to support the Atlantic Alliance. …

The 2017 meeting is also described there: Among the Board of Directors, mostly international corporate luminaries, was “Marie-Josée Drouin-Kravis: Economic columnist in print and broadcast media in Canada. Researcher at the very militaristic Hudson Institute. She is the third wife of Henry Kravis.”

Both Petraeus and his two KKR sponsors are regular attendees at the Bilderberg meetings. What financial stake — if any — in assisting the Sauds to take over Syria, KKR has, is not known. But if there is such, then the US Government’s recent decision to quit its military occupation of Syria will presumably be, to that extent, unfavorable for KKR, and unpopular amongst the 150 companies in which it holds stock.

The great investigative journalists Dilyana Geytandzhieva, Andrey Fomin, Manlio Dinucci, Thierry Meysan, and the South Front site, have, in several articles, documented that the Governments of US, UAE, Qatar, and mainly Saudi Arabia, are financing and overseeing a multibillion-dollar privately operated weapons-smuggling operation to Sunni jihadist groups such as Al Qaeda in Africa, the Middle East, Pakistan, and Asia. Meyssan writes:

In less than three years, Silk Way Airlines transported at least one billion dollars’ worth of armament.

One thing leading to another, journalist Dilyana Gaytandzhieva uncovered a vast system which also supplied the jihadists not only in Iraq and Syria, but also in Afghanistan, Pakistan and Congo – also paid for by the Saudis and the Emiratis. Some of the arms delivered in Arabia were redirected to South Africa.

The arms transported to Afghanistan were delivered to the Talibans, under the control of the US, which is pretending to fight them. …

Although, according to the international treaties, neither civil nor diplomatic flights are authorised to carry military material, requests for recognition as «diplomatic flights» require the explicit detailing of the cargo transported. However, at the request of the US State Department, at least Afghanistan, Germany, Saudi Arabia, Bulgaria, Congo, the United Arab Emirates, Hungary, Israël, Pakistan, Poland, Romania, Serbia, Slovakia, the Czech Republic, Turkey and United Kingdom closed their eyes to this violation of international law, just as they had ignored the CIA flights to and from their secret prisons. …

According to Sibel Edmonds – ex-FBI agent and founder of the National Security Whistleblowers Coalition – Azerbaïdjan, under President Heydar Aliyev, from 1997 to 2001 hosted in Bakou the number 2 of Al-Qaïda, Ayman el-Zawahiri. This was done at the request of the CIA. Although officially wanted by the FBI, the man who was then the number 2 of the international jihadist network travelled regularly in NATO planes to Afghanistan, Albania, Egypt and Turkey. He also received frequent visits from Prince Bandar ben Sultan of Saudi Arabia.

International relations are controlled by international corporations, but the identities of the persons who control those are often hidden; so, it’s not easy to say whom has been enriched by the invasion and occupation of Syria. And, probably, there won’t be funding for investigative journalists to do the costly research to find out whom those persons actually are. But they controlled both Obama and Trump, both of whom carried out their policy on Syria.

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Ever since the Steele dossier was released, many of its claims have been under dispute. However none of them have been more scrutinized than whether or not Trump Organization lawyer Michael Cohen was traveling to Prague during August 2016 to meet with representatives of Russian intelligence. Today, it’s being reported by McClatchy, citing four unnamed sources, that a phone traced to Cohen “briefly sent signals ricocheting off cell towers in the Prague area in late summer 2016.”

While some in the media will likely cling to this report as gospel and some type of “smoking gun,” others have been skeptical, noting how easy it could be to clone Cohen’s phone for nefarious purposes.  

According to the Steele dossier, the alleged meet up was for the purposes of “compris[ing] questions on how deniable cash payments were to be made to hackers who had worked in Europe under Kremlin direction against the [Clinton] campaign and various contingencies for covering up these operations and Moscow’s secret liaison with the [Trump] team more generally.”

McClatchy previously reported in April that two unidentified sources claimed special counsel Robert Mueller had evidence of Cohen’s presence in Prague during the 2016 campaign. 

Defending themselves vehemently, Cohen, Trump and others associated with the president all insisted that he had never even been to Prague once in his entire life. Here is a clip of Cohen stating “I’ve never been to Prague” earlier this year on Hannity. He further goes on to say that he allowed Trump to inspect his passport in order to corroborate his innocence. 

4/ Of course, you can hear it straight from the horse’s mouth- @MichaelCohen212 went on @seanhannity‘s show during the transition- just after @BuzzFeedBen published the dossier on @BuzzFeedNews– to deny the entire thing and ask for an apology. pic.twitter.com/UJd6wA8FzQ

— Justin Hendrix (@justinhendrix) October 10, 2018

Lanny Davis, a former attorney to Cohen and his current adviser, vehemently denied even after Cohen was sentenced in his legal cases that Cohen ever went to Prague. Davis most recently commented on the allegations on Dec. 17.

“No, no Prague, ever, never,” Davis told MSNBC’s Kasie Hunt.

Davis offered a similar comment to McClatchy, saying that Cohen “has said one million times he was never in Prague.”

“One million and one times. He’s never been to Prague. … He’s never been to the Czech Republic,” he told McClatchy this week.

Cohen also denied the dossier’s allegations about him during testimony to the House and Senate in 2017. But his guilty plea in the Mueller case did not include any reference to false statements about the dossier. –Daily Caller

This extremely firm and verbose denial has been the cornerstone of doubt and skepticism that has surrounded the dossier since then.

Also of interest, the Daily Mail raised the question of how easy it could be to clone a phone like Cohens, stating that “a Cohen adversary might have obtained the unique digital ID of his phone and put it on another,” which the paper calls “a simple task for the technically inclined.”

Back in April of this year, it was reported that the Mueller team had obtained evidence that Cohen was in fact in Prague. Also reportedly during that period, an Eastern European intelligence agency supposedly electronically surveilled a conversation in which a Russian had stated that Cohen was in Prague. Follow up on the April report has been spotty so far. 

On August 21 Cohen pleaded guilty in New York to tax evasion, bank fraud and making an illegal campaign contribution to porn star Stormy Daniels, for which he was sentenced to three years in federal prison on December 12. 

Notably, he has not been charged by the Special Counsel regarding the alleged Prague trip – which, according to the Dossier, was for the purposes of influencing the 2016 US election. Perhaps in the fullness of time the McClatchy report will be corroborated by more news outlets who can independently assess the evidence, however it seems odd that a “smoking gun” related to Mueller’s original mandate wouldn’t have seen the light of day by now assuming any of this is true.  

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Authored by Lance Roberts via RealInvestmentAdvice.com,

Yesterday, saw a record surge in the markets (and another epic buying program today).

Such was not surprising given the extreme oversold condition in the market. More importantly, throughout market history, the biggest bull rallies have occurred during bear markets.

$SPX +5% or greater days since 2000. Big picture, bulls DON’T want to see this pic.twitter.com/nYwfperhKi

— Matt Thompson, CFA (@dynamicvol) December 26, 2018

The last two day’s relief rally was simply that.

As shown in the chart below, following the breakdown of the market from its consolidation pattern in October and November, the market plunged 20% from its previous all-time highs. Despite the massive surge in stocks yesterday, all the market managed to do was recoup 2-days of losses.

From the previous peak in early December, the market has yet to even achieve a 38.2% retracement of that decline. It would not be surprising to see this rally try and recoup a full 61.8% of the decline over the next several weeks.

However, that may not even be enough to solve the biggest risk to the market currently. 

In 2010, as Ben Bernanke was preparing to unleash the second round of “Quantitative Easing” upon the economy, he noted specifically the goal was to increase the “wealth effect” in order to assist the nascent economic recovery that was underway.

What exactly does that mean?

“The wealth effect is a theory suggesting that when the value of equity portfolios are on the rise because of accelerating stock prices, individuals feel more comfortable and confident about their wealth, which will cause them to spend more.” – Investopedia

This targeting of the “wealth effect” became known as the Fed’s “Third Mandate” which remains alive and well today as recently noted by Bill Dudley during a speech at the BIS Annual General Meeting:

“As I see it, financial conditions are a key transmission channel of monetary policy because they affect households’ and firms’ saving and investment plans and thus influence economic activity and the economic outlook.” 

Over the last decade, successive rounds of both monetary and fiscal policy in the U.S. has created an inflation of asset prices to historic levels.

The problem, as I have shown previously, is that it failed to translate across the broader economic spectrum as intended. Instead, it simply boosted the wealth of the wealthiest 10% of Americans.

This was also shown in a recent study by the World Economic Forum on negative wealth. To wit:

“With respect to assets, we ask respondents how much money is in their defined contribution plan(s)—including 401(k), 403(b), 457 or thrift savings plans—and Individual Retirement Arrangement accounts, which cover the most common channels through which Americans save for retirement. We also ask the respondents about their total savings and investments, such as money in their checking accounts, stocks, and other financial instruments they may possess. Homeowners are asked to self-appraise the current value of their home. Finally, we ask for self-appraised valuations of any additional land, businesses, vehicles, or other assets the respondent’s household may own. The measure of total assets is then the sum of financial wealth, retirement wealth, home value, and other assets.”

So, what did the results show after a decade of booming asset prices?

“The chart below displays, in the leftmost column, the average and median asset and debt levels for households with non-negative wealth. The next three columns display the same statistics separately for each tercile of negative-wealth households, for example, the second column illustrates the data for those with the least negative wealth and the final column reflects households with the most negative wealth. The very low median levels of assets for all negative-wealth households are readily apparent, as are the large average and median debt amounts among households with larger negative wealth.”

The lack of distribution of wealth across the economy explains why growth, outside the short-term impact of natural disasters and deficit spending, has remained so weak.

“More importantly, if we assume that inflation remains stagnant at 2%, as the Fed hopes, this would mean a real rate of return of just 0.5%.

Economic growth matters, and it matters a lot.

As an investor, it is important to remember that in the end corporate earnings and profits are a function of the economy and not the other way around. Historically, GDP growth and revenues have grown at roughly equivalent rates.”

Wealth Effect Runs In Reverse

Of course, the problem for the Fed, who are now in the process of reversing a decade of monetary stimulus, is when the “wealth effect” reverses. As noted by my friend Doug Kass:

“The prospects for economic and profit growth are waning in the face of the rapid drop in stock prices. 

According to Wilshire Associates, the U.S. stock market fell by $2.1 trillion last week.

That loss in value is more than 10% of the 2017 U.S. Gross Domestic Production (GDP) of $19.3 trillion. (Our domestic GDP represents approximately 31% of world GDP). The loss in value from the September 2018 market top is well in excess of $5 trillion, representing about 25% of projected 2018 U.S. GDP.

The fixed income’s message of slowing economic and profit growth has been resounding — and until recently has been dismissed by most who were intoxicated by rising equity prices and favorable (but lagging) economic data.

Given the steady drumbeat of disappointing high-frequency economic data that suggest consensus growth expectations are too optimistic and underscores the fragile state of the domestic economy, this is a particularly untimely period for stocks to crater.

The economy — from a rate of change standpoint — is now at a critical point. No doubt a lot of damage to forward 2019 economic growth has already occurred and will result in a reduction in consensus profit forecasts.”

Of course, Doug is absolutely correct and we have already been consistently warning about the downdraft in forward earnings expectations which still remain way too elevated. As shown below, the forward estimates for 2019 have already fallen by more than $13/share and will likely hit our target of $146 by early next year.

By the way, that decline will wipe out the entire benefit of the “tax cuts.”

But that decline in profitability should not be surprising given the decline in confidence among consumers. Our friends at Upfina recently penned an interesting piece on this point:

“The consumer expectations index minus the current situation index in the consumer confidence report is signaling a recession is coming. 

We are reviewing where consumer spending is headed by showing the differential between expectations and the current situation. As you can see from the chart below, the current differential is worse than the last cycle, but still higher than the 1990s cycle. Recessions come after this indicator bottoms, and there isn’t much room for it to fall further.”

The chart below is a slightly different variation of Upfina’s which shows the composite index of both University of Michigan and the Conference Board measures of confidence. However, the results are virtually the same with the difference between forward expectations and current conditions ringing in at levels that have normally preceded recessions.

Given that GDP is roughly 70% consumption, deterioration in economic confidence is a hugely important factor. Rising interest rates which bite into discretionary cash flows, falling house and stock prices, and job losses weigh heavily on spending decisions by consumers. Reductions in spending reduce corporate profitability which leads to lower asset prices, so forth, and so on, until the cycle is complete.

None of this should be surprising, of course, as we head into 2019. We saw record low levels of unemployment and jobless claims. Record high levels of sentiment on many different measures. However, as I wrote in August of this year:

“Record levels” of anything are “records for a reason.”

Remember:

• Bull markets END when everything is as “good as it can get.”

• Bear markets END when things simply can’t “get any worse.”

Currently, we are in the early stages of the transition from “bull” to “bear.” 

As investors begin to understand the magnitude of their losses in “dollar” terms, the impact to confidence will become an important headwind for the market. With higher rates already curtailing home and auto purchases, falling asset values will likely start to weigh more significantly on other purchasing decisions.

This was a point made by Bloomberg yesterday:

“The outlook [for additional rate hikes], however, is likely to be tempered by market volatility as falling stocks hurt consumption by reducing household wealth. Business confidence is damaged as volatility rises, the cost of capital increases, and uncertainty over government policies — be it a trade war or an assault on the Fed — forestalls investment.”

Confidence drives everything.

Which also continues to suggest the risk of a recessionary onset in 2019 has risen markedly in recent months.

In other words, it is quite likely the recent roar of the “bear” is not the last we are going to hear.

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After losing a series of high profile cases, the UK government has suffered yet another embarrassing failure in its efforts to hold white collar criminals accountable for financial fraud. But this time, instead of displaying a casual indifference toward crimes committed by the wealthy or an ineffectual prosecutorial strategy, the National Crime Agency (the UK’s equivalent of the FBI) has been tainted by allegations of corruption. The Wall Street Journal reported Thursday that the NCA is conducting an internal probe into allegations that one of its employees leaked information to members of a European insider trading ring that undermined its own probe – the latest black eye for the agency as it seeks to ramp up its prosecution of financial crimes.

The NCA’s internal corruption unit is looking into whether a government translator who had access to wiretap recordings tipped off the target of an investigation to try and disrupt the probe.

A spokesperson for the NCA, which was set up in 2013 to help bolster the government’s prosecution of financial crimes in the wake of the crisis, refused to confirm or deny whether the rumor was true. As we’ve noted in the recent past, the Financial Conduct Authority, one of the agencies tasked with bringing insider trading cases, has an abysmal record with putting criminals away. The FCA has opened 172 insider-trading cases since the 2014; only three have resulted in regulatory action. Even when the agency is successful, the cases typically take years to prosecute. A conviction won against two bankers in 2016 stemmed from trading activity that took place between 2006 and 2008.

Though the name of the translator was not released, the details behind the investigation sound like something ripped from a premium-cable crime drama. For example, the NCA was tipped off about the moles by one of suspects, who wrote himself a letter explaining how the insider trading ring had been aided by “three people working for him” from within the NCA.

One of the suspects in the alleged insider-trading ring wrote a letter to himself that he hid under a carpet in his home before his arrest. In the letter, reviewed by The Wall Street Journal, he described how another suspect told him of a joint NCA investigation with the FCA into their trading.

The other suspect told him he had “three people working for him at the agency,” according to the letter, referring to the NCA.

That suspect told him that a translator working with investigators contacted him through a party known to both of them, according to the letter and people familiar with the matter. The translator tipped him off about the investigation and subsequent discoveries by investigators, including what the other suspect was saying on the phone, the letter and people said.

The other suspect said that they could pay off NCA officers working on the case by transferring money to a bank account in Macau, according to the letter.

This embarrassment follows closely on the heels of the FCA’s latest failed insider-trading prosecution: Earlier this month, the trial of a former UBS compliance officer who fed information to a notorious day trader ended in a hung jury.

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