Month: December 2016

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

The end of the year is always a time when there are currency and liquidity issues in China. This has to do with things like taxes being paid, and bonuses for workers etc. So it’s not a great surprise that the same happens in 2016 too. Then again, the overnight repo rate of 33% on Tuesday was not exactly normal. That indicates something like a black ice interbank market, things that can get costly fast.

I found it amusing to see Bloomberg report that: “As banks become more reluctant to offer cash to other types of institutions, the latter have to turn to the exchange for money, said Xu Hanfei at Guotai Junan Securities in Shanghai. Amusing, because I bet many will instead have turned to the shadow banking system for relief. So much of China’s financial wherewithal is linked to ‘the shadows’ these days, it would make sense for Beijing to bring more of it out into the light of day. Don’t hold your breath.

Tyler on last night’s situation: ..the government crackdown on the credit and housing bubble may be serious for once due to fears about “rising social tensions”, much of the overnight repo rate spike was driven by the PBOC which pulled a net 150 billion yuan of funds in open-market operations..”. And the graph that comes with it:

It all sounds reasonable and explicable, though I’m not sure ‘core leader’ Xi would really want to come down hard on housing -he certainly hasn’t so far-, but there are things that do warrant additional attention. The first has to be that on Sunday January 1 2017, a ‘new round’ of $50,000 per capita permissions to convert yuan into foreign currencies comes into effect. And a lot of Chinese people are set to want to make use of that, fast.

Because there is a lot of talk and a lot of rumors about an impending devaluation. That’s not so strange given the continuing news about increasing outflows and shrinking foreign reserves. And those $50,000 is just the permitted amount. Beyond that, things like real estate purchases abroad, and ‘insurance policies’ bought in Hong Kong, add a lot to the total.

What makes this interesting is that if only 1% of the Chinese population -close to 1.4 billion people- would want to make use of these conversion quota, and most of them would clamor for US dollars, certainly since its post-election rise, if just 1% did that, 14 million times $50,000, or $700 billion, would potentially be converted from yuan to USD. That’s almost 20% of the foreign reserves China has left ($3.12 trillion in October, from $4 trillion in June 2014).

In other words, a blood letting. And of course this is painting with a broad stroke, and it’s hypothetical, but it’s not completely nuts either: it’s just 1% of the people. Make it 2%, and why not, and you’re talking close to 40% of foreign reserves. This means that the devaluation rumors should not be taken too lightly. If things go only a little against Beijing, devaluation may become inevitable soon.

In that regard, a remarkable change seems to be that while China’s always been intent on keeping foreign investment out, now all of a sudden they announce they’re going to sharply reduce restrictions on foreign investment access in 2017. While at the same time restricting mergers and acquisitions by Chinese corporations abroad, in an attempt to keep -more- money from flowing out. Something that has been as unsuccessful as so many other pledges.

The yuan has declined 6.6% in value in 2016 (and 15% since mid-2014), and that’s probably as bad as it gets before some people start calling it an outright devaluation. More downward pressure is certain, through the conversion quota mentioned before. After that, first there’s Trump’s January 20 inauguration, and a week after, on January 27, Chinese Lunar New Year begins.

May you live in exciting times indeed. It might be a busy week in Beijing. As AFP reported at the beginning of December:

Trump has vowed to formally declare China a “currency manipulator” on the first day of his presidency, which would oblige the US Treasury to open negotiations with Beijing on allowing the renminbi to rise.

Sounds good and reasonable too, but how exactly would China go about “allowing the renminbi to rise”? It’s the last thing the currency is inclined to do right now. It would appear it would take very strict capital controls to stop the currency from plunging, and that’s about the last thing Xi is waiting for. For one thing, the hard-fought inclusion in the IMF basket would come under pressure as well. AFP continues:

China charges an average 15.6% tariff on US agricultural imports and 9% on other goods, according to the WTO.

 

Chinese farm products pay 4.4% and other goods 3.6% when coming into the United States.

 

China is the United States’ largest trading partner, but America ran a $366 billion deficit with Beijing in goods and services in 2015, up 6.6% on the year before.

I don’t know about you, but I think I can see where Trump is coming from. Opinions may differ, but those tariff differences look as if they belong to another era, as in the era they came from, years ago. Lots of water through the Three Gorges since then. So the first thing the US Treasury will suggest to China on the first available and convenient occasion after January 20 for their legally obligatory talk is: let’s equalize this. What you charge us, we’ll charge you. Call it even and call it a day.

That would both make Chinese products considerably more expensive in the States, and open the Chinese economy to American competition. There are many hundreds of billions of dollars in trade involved. And of course I see all the voices claiming that it will hurt the US more than China and all that, but what would they suggest, then? You can’t leave this tariff gap in place forever, so what do you do?

I’m sure Trump and his team, Wilbur Ross et al, have been looking at this a lot, it’s a biggie, and have a schedule in their heads for phasing out the gap in multiple steps. Steps too steep and short for China, no doubt, but then, I don’t buy the argument that the US should sit still because China owns so much US debt. That’s a double-edged sword if ever there was one, and all hands on the table know it.

If you’re Xi, and you’re halfway realist, you just know that Trump will aim to cut the $366 billion 2015 deficit by at least 50% for 2017, and take it from there. That’s another big chunk of change the core leader stands to lose. And another major pressure point for the yuan, obviously. How Xi would want to avoid devaluation, I don’t know. How he would handle it once it can no longer be avoided, don’t know that either. Trump’s trump card?

One other change in China in 2016 warrants scrutiny. That is, the metamorphosis of many Chinese people from caterpillar savers into butterfly borrowers. Or gamblers, even. It’s one thing to buy units in empty apartment blocks with your savings, but it’s another to buy them with money you borrow. But then, many Chinese still have access to few other investment options. That’s why the $50,000 conversion to USD permission as per January 1 could grow real big.

But in the meantime, many have borrowed to buy real estate. And they’ve been buying into a genuine absolute bubble. It’s not always evident, because prices keep oscillating, but the last move in that wave will be down.

If I were Xi, all these things would keep me up at night. But I’m not him, and I can’t oversee to what extent his mind is still in the ‘omnipotent sphere’, if he still has the impression that in the end, come what may, he’s in total control. In my view, his problem is that he has two bad choices to choose from.

Either he will have to devalue the yuan, and sharply too (to avoid a second round), an option that risks serious problems with Trump and other leaders (IMF), and would take away much of the wealth the Chinese people thought they had built up -ergo: social unrest-.

Either that or he will be forced, if he wants to maintain some stability in the yuan’s valuation, to clamp down domestically with very grave capital controls, which carries the all too obvious risk of, once again, serious social unrest. And which would (re-)isolate the country to such an extent that the entire economic model that lifted the country out of isolation in the first place would be at risk.

This may play out relatively quickly, if for instance sufficient numbers of people (the 1% would do) try to convert their $50,000 allotment of yuan into dollars -and the government is forced to say it doesn’t have enough dollars- But that is hard to oversee from the outside.

There are, for me, too many ‘unknown unknowns’ in this game. But I don’t see it, I don’t see how Xi and his crew will get themselves through this minefield without getting burned. I’m looking for an escape route, but there seem to be none available. Only hard choices. If you come upon a fork in the road, China, don’t take it.

And mind you, this is all without even having touched upon the massive debts incurred by thousands upon thousands of local governments, and the grip that these debts have allowed the shadow banks to get on society, without mentioning the Wealth Management Products and other vehicles in that part of the economy, another ‘industry’ worth trillions of dollars. I mean, just look at the growth rates in these instruments:

There’s simply too much debt all throughout the system, and it’s due for a behemoth restructuring. You look at some of the numbers and graphs, and you wonder: what were they thinking?

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While everyone in the world appears convinced that (and positioned for) bond yields go higher, stocks go higher, gold goes lower, and risk has been vanquished, UBS notes that the world's largest, most active overweight crowded trade is in Amazon.com stock (followed cloesly by UnitedHealth.

At 175x P/E what could go wrong?

Notably, while Amazon is the most crowded long in the developed markets, Alibaba is the most over-crowded in global emerging markets…

UBS explains: How do we measure the active positions? Using the institutional ownership data provided by FactSet, we form an active trading portfolio by aggregating positions across global active managers. Essentially, we sum up all the holdings in dollar value across all the active managers and calculate the weights of stocks in this active trading portfolio. We then compare this weight with the relevant equity index benchmark to form the active weight.

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Celebrity chef and host of CNN’s Parts Unknown Anthony Bourdain is no fan of Trump, and he made as much clear in today’s interview with Reason. When asked what concerns him about Trump, he responded: “what I am not concerned about with Trump? Wherever one lives in the world right now I wouldn’t feel too comfortable about the rise of authoritarianism. I think it’s a global trend, and one that should be of concern to everyone.”

However, while a liberal bashing Trump is hardly news, what was more noteworthy is that the celebrity chef also unloaded on “his own side”, when he called out elite east coast liberals – of which he admitted he is part of – saying that their “utter contempt” for working-class Americans was unhelpful and nauseating.

The utter contempt with which privileged Eastern liberals such as myself discuss red-state, gun-country, working-class America as ridiculous and morons and rubes is largely responsible for the upswell of rage and contempt and desire to pull down the temple that we’re seeing now.

Bingo. It is also why the “shocking” Trump presidency is nothing more than the public’s revolt to “Eastern liberals” shooting themselves in the foot by overly believing their own BS.

But Bourdain did not stop there, next lashing out at the tidal wave of artificial political correctness sweeping over the nation: “I hate the term political correctness, the way in which speech that is found to be unpleasant or offensive is often banned from universities. Which is exactly where speech that is potentially hurtful and offensive should be heard” Bourdain said.

He continued:

The way we demonize comedians for use of language or terminology is unspeakable. Because that’s exactly what comedians should be doing, offending and upsetting people, and being offensive. Comedy is there, like art, to make people uncomfortable, and challenge their views, and hopefully have a spirited yet civil argument. If you’re a comedian whose bread and butter seems to be language, situations, and jokes that I find racist and offensive, I won’t buy tickets to your show or watch you on TV. I will not support you. If people ask me what I think, I will say you suck, and that I think you are racist and offensive. But I’m not going to try to put you out of work. I’m not going to start a boycott, or a hashtag, looking to get you driven out of the business.

But it was his commentary on the arrogance of the liberal superclass that all other liberals (and conservatives) should note and learn from, and it is 100% accurate.

I’ve spent a lot of time in gun-country, God-fearing America. There are a hell of a lot of nice people out there, who are doing what everyone else in this world is trying to do: the best they can to get by, and take care of themselves and the people they love. When we deny them their basic humanity and legitimacy of their views, however different they may be than ours, when we mock them at every turn, and treat them with contempt, we do no one any good. Nothing nauseates me more than preaching to the converted.

 

The self-congratulatory tone of the privileged left—just repeating and repeating and repeating the outrages of the opposition—this does not win hearts and minds. It doesn’t change anyone’s opinions. It only solidifies them, and makes things worse for all of us. We should be breaking bread with each other, and finding common ground whenever possible. I fear that is not at all what we’ve done.

Bourdain is, of course, correct, although we fail to see how America manages to cross so many great divides – racial, ethnic, social, religious, and of course, wealth – in the near future, no matter who the president is, in a peaceful manner.

Finally, in an amusing twist, Bourdain despises such shining examples of self-righteous liberals as Bill Maher even more than he hates Trump. When asked what he thinks of Bill Maher, his answer was emphatic:

Insufferably smug. Really the worst of the smug, self-congratulatory left. I have a low opinion of him. I did not have an enjoyable experience on his show. Not a show I plan to do again. He’s a classic example of the smirking, contemptuous, privileged guy who lives in a bubble. And he is in no way looking to reach outside, or even look outside, of that bubble, in an empathetic way.

In retrospect, if more people could see the world through Bourdain’s eyes, there may still be hope.

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Upon his death in 1799, George Washington’s will set aside 50 shares of the Potowmack Company in his estate to fund the creation of a national university in the nation’s capital.  Just over 20 years later, an Act of Congress created the Columbian College in the District of Columbia which subsequently changed its name to George Washington University in 1904 in honor of Washington. Per WikiPedia:

George Washington, the first president of the United States, had indicated to Congress through various letters, as well as his last will and testament, that he wanted to establish a university within the nation’s capital. Washington left fifty shares of the Potowmack Company in his estate for a national university in the District of Columbia. The university was chartered by an Act of Congress on February 9, 1821, as the Columbian College in the District of Columbia. In 1904, it changed its name to the George Washington University in honor of Washington.

Now, some 200 years later, GWU, like many of the nation’s universities, has been overrun with liberal, elitist professors who have decided to shun America’s first president, and the inspiration behind the founding their university, by removing U.S. History as a required course for history majors.  Of course, why would U.S. history be important for history majors…this country has been a fairly irrelevant player in shaping world history for the past 200 years.

Syndicated radio host Larry Elders recently blasted the decision on Fox News as just another effort to indoctrinate students with the notion that “America is nothing more than a series of incidents that oppress people,
whether it’s Native Americans or women or blacks or Hispanics or Asian
people.”

“According to a lot of professors, the founding fathers are a bunch of old rich white guys who owned slaves,” syndicated radio host Larry Elder said Monday on “Fox & Friends.” “As a result, they’re no longer relevant.”

 

“I call this the access of indoctrination. Schools have long since passed the line from education to indoctrination, and this is one more step toward that.”

 

“Kids are learning that America is nothing more than a series of incidents that oppress people, whether it’s Native Americans or women or blacks or Hispanics or Asian people,” he said. “That’s what they’re learning.”

Meanwhile, the chair of GWU’s history department told the school’s newspaper that the move was nothing more than an effort to cater to the university’s snowflakes who may be saddened by the burden of being forced to take a U.S. history course.

Katrin Schultheiss, the chair of the history department, said faculty made the changes to the requirements largely due to enrollment pressures. She said by becoming more flexible and more responsive to students’ interests, the department hopes to recruit students who might not have decided to major in history otherwise.

 

“I think the main gain for students is that they have a great deal more flexibility than they had before, and they can adapt it to whatever their plans are for the future,” Schultheiss said. “Whatever they want to do, there’s a way to make the history department work for them.”

This pretty much sums up our thoughts:

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Submitted by Mike Krieger via Liberty Blitzkrieg blog,

After coming under attack, the alternative media successfully appropriated and reassigned the now ubiquitous term “fake news” to a variety of disingenuous mainstream media outlets. The corporate media is not too happy about this, and it’s doing what it does best (aside from cheerleading for war); it’s whining about it to its readers.

Nothing more perfectly highlights the mainstream media’s instinctual response to complain than an article published on Christmas Day in The New York Times, which reinvents history by claiming alternative media is to blame for turning “fake news” into an overly expansive and thus meaningless term. Here are a few excerpts:

WASHINGTON — The C.I.A., the F.B.I. and the White House may all agree that Russia was behind the hacking that interfered with the election. But that was of no import to the website Breitbart News, which dismissed reports on the intelligence assessment as “left-wing fake news.”

 

Rush Limbaugh has diagnosed a more fundamental problem. “The fake news is the everyday news” in the mainstream media, he said on his radio show recently. “They just make it up.”

 

Some supporters of President-elect Donald J. Trump have also taken up the call. As reporters were walking out of a Trump rally this month in Orlando, Fla., a man heckled them with shouts of “Fake news!”

 

Until now, that term had been widely understood to refer to fabricated news accounts that are meant to spread virally online. But conservative cable and radio personalities, top Republicans and even Mr. Trump himself, incredulous about suggestions that fake stories may have helped swing the election, have appropriated the term and turned it against any news they see as hostile to their agenda.

The line highlighted above is a complete fabrication, and is either the result of extreme ignorance or intentional deceit. Either way, The New York Times should be ashamed of itself.

“Fake news was a term specifically about people who purposely fabricated stories for clicks and revenue,” said David Mikkelson, the founder of Snopes, the myth-busting website. “Now it includes bad reporting, slanted journalism and outright propaganda. And I think we’re doing a disservice to lump all those things together.”

As someone who followed the fluid and rapid progression of the “fake news” meme very closely, I can tell you that it didn’t happen the way The New York Times claims. First, let’s discuss what the term “fake news” should mean. I think the Snopes definition above is fine: “people who purposely fabricated stories for clicks and revenue.” If mainstream media had held to this standard following the election, there wouldn’t have been a problem. Nobody in alternative media would’ve cared, but that’s not what happened.

Rather, ensconced in an election-loss driven hysteria, various mainstream media outlets intentionally starting blurring the definition of fake news in order to slander the competition. This really got started with the promotion of a ridiculous list of websites to avoid compiled by a loony professor at Merrimack college. I covered the story barely a week after the election in the post, Zerohedge Included in What NY Magazine Calls ‘Extremely Helpful List of Fake and Misleading News Sites.’ Here’s some of what I observed.

Who cares that some assistant professor made a list of sites she doesn’t like and warns people about them? Why should we pay attention?

 

We should care because it is being promoted heavily by the mainstream media. For example, look at how a writer at New York Magazine promoted the list (seems kinda “clickbait-y” doesn’t it):

 

That article ended up being the most popular piece published on New York Magazine’s website that day. I never would’ve highlighted the professor’s ridiculous list if mainstream media wasn’t promoting it, and NY Mag wasn’t the only one. As I also noted:

The Los Angeles Times today published an article titled, Want to Keep Fake News Out of Your Newsfeed? College Professor Creates List of Sites to Avoid, in which it noted:

 

During the election, many people fell prey to fake news stories on social media — even the president-elect ended up retweeting fake statistics. A professor of communication has created a list of unreliable news sites to help people do better.

 

Melissa Zimdars, an assistant professor of communication at Merrimack College in Massachusetts, put together a publicly available Google doc cataloging “False, misleading, clickbait-y and satirical ‘news’ sources.” It’s been making the rounds on social media as people seek to cleanse their newsfeeds of misinformation.

In its headline, the Los Angeles Times explicitly promotes this list as a helpful tool to avoid “fake news.” Alternative media, Trump supporters and conservatives didn’t bastardized the term, mainstream media did.

Of course, that was just the beginning. What really enraged everyone, including myself, was when The Washington Post dropped all journalistic standards to promote a “fake news” list created by the unknown, anonymous and obviously clownish organization PropOrNot. You all know what happened next, but if you want to revisit my thoughts on the topic, see:

Liberty Blitzkrieg Included on Washington Post Highlighted Hit List of “Russian Propaganda” Websites

Additional Thoughts on “Fake News,” The Washington Post, and the Absence of Real Journalism

After all that, alternative media rightly appropriated the term, and accusations of “fake news” are now more often directed at billionaire-owned mainstream media than independent media. The response? Corporate media is crying foul and reinventing history by claiming that it was alt media barbarians who twisted the term “fake news” for propaganda purposes, when the exact opposite happened. Monumentally pathetic.

To conclude, I’d like to remind everyone of the following:

And The Washington Post likes to lecture us about fake news.#bitcoin http://pic.twitter.com/mKR9RtUpnd

— Michael Krieger (@LibertyBlitz) December 28, 2016

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Today, the Department of Homeland Security and FBI released a report alleging Russian hacking.

The report itself is only five and a half pages long in large print (with another 7 pages for future security recommendations).

It’s important to note what the report does NOT say …

It does NOT allege any of the following:

• It doesn’t claim that it’s accurate. Instead, the report starts with a disclaimer, and uses the same type of weasel words – “as is”, “does not provide any warranties of any kind regarding any information” – that someone selling a lemon uses when he doesn’t want to talk about the fact that the blasted thing won’t run and doesn’t want to get sued for intentional misrepresentation or wilful concealment:

• It doesn’t mention Wikileaks … not even once.  In other words, the report does not allege that the Russians gave any Democratic Party or Podesta emails to Wikileaks

• It doesn’t address the fact that Russia is too sophisticated to have used widely- known  hacking methods (and wouldn’t have paid tribute within the code to a famous Russian intelligence officer), and that anyone could have copied these methods and names

• It doesn’t address the fact that top NSA whistleblowers say that the NSA possesses records showing exactly how the emails went from the Democratic Party to Wikileaks, as it tracks all electronic communications in the U.S.

• It doesn’t address the fact that top former NSA and CIA officials (and Wikileaks) claim that these were not hacks at all … but rather leaks by American insiders

• It doesn’t address American intelligence services’ less-than-stellar history of truthfulness, and the fact that they routinely skew intelligence to justify preordained policy outcomes

• It doesn’t address the fact that – according to the Los Angeles Times – the U.S. interfered in foreign elections 81 times between 1946 and 2000  … compared to only 36 times by the Ruskies

• It doesn’t address the fact that most Americans aren’t buying the whole claim that the Russians hacked our election

In other words, the report really doesn’t say much of anything …

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In a relatively weak initial statement, president-elect Trump has rather diplomatically commented that:

"It’s time for our country to move on to bigger and better things.

 

Nevertheless, in the interest of our country and its great people, I will meet with leaders of the intelligence community next week in order to be updated on the facts of this situation."

This response follows House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell comments on the sanctions against Russia as being overdue.

As we noted earlier, Trump is relatively boxed in for now, so this initial statement is unsurprising…As Duran.com's  Alexander Mercouris noted, like many of Obama’s other recent moves, this one is not really targeted at Russia.  The additional sanctions will hardly affect Russia, though the wholesale expulsion of Russian diplomats will undoubtedly complicate the work of Russian diplomatic missions in the US.

The true target of these sanctions is Donald Trump.

 

By imposing sanctions on Russia, Obama is lending the authority of the Presidency to the CIA’s claims of Russian hacking, daring Trump to deny their truth.

 

If Trump as President allows the sanctions to continue, he will be deemed to have accepted the CIA’s claims of Russian hacking as true. 

 

If Trump cancels the sanctions when he becomes President, he will be accused of being Russia’s stooge.

 

It is a well known lawyer’s trick, and Obama the former lawyer doubtless calculates that either way Trump’s legitimacy and authority as President will be damaged, with the insinuation that he owes his Presidency to the Russians now given extra force.

 

Like so many of Obama’s other moves in the last weeks of his Presidency, it is an ugly and small minded act, seeking to undermine his successor as President in a way that is completely contrary to US tradition.

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Billionaires are the richest of the rich. Many young entrepreneurs hope to one-day reach this ultimate financial milestone. But before these entrepreneurs are allowed to join this group, they first must ask how did billionaires acquire their wealth in the first place? Take a look at the map below to see the distribution of billionaires by country and type.

As HowMuch.net details, the map above shows each country of the world separated by the percentage of billionaires into various types. The size of each country on the map is relative to its total number of the world’s billionaires. There are five categories of billionaires designated by the colors found in the legend: Inherited, Company Founders, Owners and Executives, Political Connections and Resource Related and the Financial Sector. The data was compiled from this report by the Peterson Institute for International Economics.

The first and most obvious conclusion to draw from the map is the large number of billionaires found in the United States. The world’s largest economy has close to 30 percent of the world’s billionaires and far more than any other single country. The distribution of billionaires in the United States is mostly equal, with the exception of the Political Connections and Resource Related type. Only 3.8 percent of American billionaires attained their wealth through political or resource related ventures, a likely consequence of the US government’s historical hands-off approach to business.

China, the world’s second largest economy, has very few billionaires who inherited money. Before China’s economic success of the past few decades, the country was exceptionally poor. But the rapid growth of its economy through a manufacturing boom has created over 200 billionaires. Around 40 percent of these billionaires are company founders, while around one-quarter are company owners or executives. An opposite trend can found nearby in South Korea. The majority of South Korean billionaires, a whopping 74.1 percent, inherited money from family. In Japan, the majority of billionaires are company founders at 63 percent.

The trend in South Korea can also be found in Europe to an extent. With the exception of the United Kingdom, many of the billionaires in the major economies of Europe inherited their wealth. Denmark has the highest percentage, with 83.3 percent of billionaires inheriting their money. Germany comes in second, at 64.7 percent, while Sweden comes in at a close third at 63.2 percent. Europe follows a slightly different path than the United States. While American billionaires are less likely to have inherited wealth, they are more likely the be either the founder of a company or come from the financial sector.

The United States boasts the highest number of billionaires by far and American billionaires acquire wealth almost equally from inheritance, the founding of a company and the financial sector. The number of Chinese billionaires has grown rapidly, with most being either company founders, owners or executives. Many European billionaires inherited wealth, but a large number are also either company founders or from the financial sector.

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As reported earlier today, amid the sweeping sanctions unveiled by Obama in response to Russian “hacking” of the elections, President Obama ordered the shut down, or rather confiscation, of a Russian-owned compound on Maryland’s Eastern Shore. Obama gave Russia 72 hours to leave the 45-acre property, which the Soviet government bought in 1972.

Live video shot from NBC Washington on Thursday afternoon showed multiple unmarked cars on the perimeter of the property. Officials appeared to set up an antenna and lights at each entrance. Intelligence officials tell NBC News the property was used for work to monitor the National Security Agency (NSA) headquarters in Fort Meade, Maryland, and another NSA building on Kent Island.

In what amounted to the strongest retaliation against Russia by the U.S. in decades, the administration also sanctioned two Russian intelligence services as well three companies officials said aided them, while expelling 35 diplomats. The administration also denied access to a recreational compound in Queen Anne’s County that officials said had been used for “intelligence collection activities.”

Why the focus on the Maryland compound? Here is a brief history of the property in question, courtesy of Baltimore Sun.

The 45-acre site on the Eastern Shore waterfront near Centreville was purchased by the Soviet Union in 1972, a State Department official said. Its ownership was not a secret — it has been widely covered by news organizations for decades — and Russian officials have previously said the site has been used as a retreat for diplomats and their families.

Property records show that the Russian government owns two parcels of land on Town Point Lane, about five miles west of Centreville, near where the Chester River meets the Corsica River. One parcel of 45.52 acres is valued at about $8 million for tax purposes, while the other is just shy of an acre and is valued at $537,200.

Both were transferred from the Soviet government to the Russian Federation in 1995, according to property records.

The U.S. Department of State also owns a 4-acre property on Town Point Lane. It has a 6,845-square-foot office building built in 1960, according to property records.

A spokesman at the Russian Embassy in Washington did not immediately respond to a request for comment about the Maryland property. In Moscow, a spokesman for Russian President Vladimir Putin told the Associated Press that the Kremlin regrets the new U.S. sanctions and will consider retaliatory measures.

* * *

Below, is a 1992 report from AP on the Russian Federation’s takeover of the Maryland Vacation retreat which 24 year later was repossessed by the US:

Russian Federation Takes Over Maryland Vacation Retreat

While turmoil and bloodshed surrounded the breakup of the Soviet Union, a vacation retreat in Maryland became the property of the the Russian Federation.

”It was bought by the former Soviet Union,” said Ivan Rumyantsev, a spokesman for the Russian Embassy in Washington.

There are no plans to sell the 45-acre estate, valued at $3 million, said Rumyantsev. It occupies prime property on the banks of the Corsica River, two miles outside Centreville, on Maryland’s Eastern Shore.

It was purchased by the Soviet Union in 1972 as a vacation getaway for diplomats and their families.

The fenced compound is the former estate of John J. Raskob, who was the chief aide to Pierre S. du Pont, board chairman and president of the Du Pont Co. in the early 1900s.

Raskob’s brick mansion has been renovated into about 12 apartments. There also are a dozen cottages each with four apartments. The compound can accommodate 40 families, each of whom pay a small fee used for maintenance.

The retreat has four lighted tennis courts, a swimming pool and soccer field. The Russians conduct a camp for diplomats’ children for three months in the summer and two weeks at Christmas.

Not many families visit during the winter, but those who do usually go for fishing and fresh air, Rumyantsev said.

”My family usually goes during the spring and fall when it’s not too hot,” he said.

Centreville residents were curious, but not overly concerned about whether their Russian neighbors would still be around following the breakup of the Soviet Union. Locals said the diplomats are just regular folks, even if they don’t all speak English or at least appear not to know the language.

”I live down the road from them. We fish and crab with them. There’s usually one that speaks English for the group,” said Bonnie Delph, who works in the meat department at the Acme supermarket.

When it comes to fixing Maryland steamed crabs, she said, the Russians do it a little differently than the locals, who throw the live crabs in a pot of boiling water.

”They stab them with a screw driver, break the back shell off, clean them and then boil the body,” she said.

Rumyantsev had nothing bad to say about Centreville.

”They are ordinary Americans. They have work to do and they are quite polite,” he said. ”And the city is an example of a small American town with a Main Street. It’s a good example of how people live, not like a New York or a Chicago.”

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Submitted by David Gordon via The Mises Institute,

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