Drone racing is a high-tech sport sweeping across the United States. Millennials are rushing to become the next drone pilot building these fast and agile multi-rotor crafts in their parents’ basements.
All of these drones are controlled through FPV (First Person View) systems. FPV is a type of flying system where pilots use cameras to fly drones as if they were sitting in the cockpit. Some pilots fly using FPV monitors, whereas others use specialized goggles to give them a more immersive experience.
According to the Federal Aviation Administration’s (FAA) Michael Huerta said back in March 2017 that more than 777,000 drone registrations have been filed with the agency.
With that being said, the Federal Aviation Administration has created a list of rules called the Small Unmanned Aircraft Regulations (Part 107), which outlines what not to do while piloting a drone in U.S. airspace.
Granted, in the latest installment of absolute foolishness, the Federal Aviation Administration is investigating an incident in which someone piloted a racing drone feet from a jetliner on approach to land at McCarran International Airport in Las Vegas.
Ian Gregor, public affairs for the FAA Western-Pacific Region said, “We became aware of this incident this afternoon and we are investigating.”
A person who goes by the name, ‘James Jayo Older’ posted the video online to a Facebook group called “1% FPV.” In the post, he said, “Found the SD card.. 1%ers only.” The video shows the racing drone hovering in the flight path and then dive bombing the jetliner in a swoop maneuver.
By using landmarks in the video, the incident occurred approximately 3.14 miles away from McCarran International Airport, which could be a violation of FAA rules if the operator failed to the call air traffic control tower.
Nevertheless, dive bombing a jetliner is an unsafe practice, and the operator “could face fines from of up to $1,437 per violation, while businesses that fly unsafely can face fines of up to $32,666 per violation.,” said Las Vegas Now.
To make matters worse, the operator could also “face federal criminal penalties including fines of up to $250,000 and/or imprisonment for up to three years,” added Las Vegas Now.
Drone organizations have already condemned the incident.
“This pilot’s actions not only endangered the flying public but has the potential to discredit an entire sUAS industry,” Drone U said. “It is the opinion of Drone U and its members that the pilot receives swift and just punishment for this example of irresponsible and reckless flight. There is no excuse for this type of criminal behavior.”
“All drone and model aircraft pilots must stay well clear of manned aircraft. We condemn the type of operation depicted in this video,” said Chad Budreau, director of government affairs for the Academy of Model Aeronautics, in a statement.
“Anyone who violates aviation regulations or endangers public safety must be held accountable for their actions. We urge the FAA to take strong enforcement action against this drone pilot, and against any future violators,” he added.
The latest policy recommendations by the influential Director General of the Russian International Affairs Council (RIAC), one of the most well-respected and listened-to experts in Russia – to say nothing of the entire former Soviet space – is causing quite a stir by waxing nostalgically about the Obama years and even suggesting that Moscow should embrace the American “deep state”.
Mr. Kortunov’s Case For Russia’s “Deep State”-Democrat Partnership
Mr. Andrey Kortunov is one of the most brilliant minds in Russia and earned his place as the Director General of the Russian International Affairs Council (RIAC), and his words accordingly carry much weight for the fact that they set the tone for countless other analysts in the country and even an untold number of policymakers who look to him for guidance.
That’s why it caused quite a stir when he published his latest recommendation earlier this week at the famous Valdai Club titled “Russian Approaches to the United States: Algorithm Change Is Overdue”, in which he waxed nostalgically about the Obama years and even suggested that Moscow should embrace the American “deep state”.
Director of the Russian International Affairs Council Andrey Kortunov
So as not to put words in his mouth, the relevant passages are republished in their entirety below:
“First, it is better to avoid demonizing the Deep State, which is perceived by many in Moscow as the center of world evil and the stronghold of the pathological haters of Russia. Of course, most of the State Department or the CIA officials, the Congress staff, experts from the main think tanks are not Vladimir Putin’s fans. But these people, at least, have considerable experience of interaction with Moscow and can hardly be considered stubborn paranoids, exalted conspiracy theorists or genetic Russophobes. Deep State consists of rationally thinking professionals, who are always easier to deal with than romantic amateurs are. With all its shortcomings, it is the Deep State that limits Donald Trump’s most exotic and potentially most dangerous foreign policy oddities.
Second, it’s time to change the attitude toward the Democratic Party leadership. For some reason (probably because of inertia) the Barack Obama administration is constantly remembered in Russia in the worst possible way, with the two latest presidents constantly juxtaposed. How is Obama bad, and Trump is good? The stubborn facts show otherwise. For example, Obama pursued a consistent policy of rapprochement with Iran, and Trump returned to the most severe pressure on Tehran. Obama followed the international consensus on the status of Jerusalem, and Trump destroyed this consensus. Obama did not resort to direct military action against Bashar Assad, and Trump did not hesitate to give an order to launch missiles against the Syrian Al- Shayrat airbase. Well, who after all created more problems for Russia — Democrats or Republicans?”
Mr. Kortunov did indeed talk about other aspects of US-Russian relations, including the need for a bottom-up approach to improving his country’s soft power in America, but none of those proposals are controversial, at least not when compared to what he wrote about above.
A diversity of respectful views in any discourse is symptomatic of a healthy democracy, and Russian society is no different in this respect, which is why the dialogue on this topic would be greatly enriched by presenting some counterpoints to Mr. Kortunov’s article.
Deciphering The “Deep State”
The first is that the US’ military, intelligence, and diplomatic bureaucracies (“deep state”) are experienced and rational like Mr. Kortunov describes them as, but that they nevertheless bear primary responsibility for the deterioration in US-Russian relations under both the Obama and Trump Presidencies because the bulk of these professional bureaucrats always retain their jobs between leadership transitions in the country.
The President is supposed to determine the broad trajectory of their work in consultation with his closest advisors, some of whom are handpicked by him and approved by Congress to lead the relevant institutions of the “deep state” while others are more informal, but the rank-and-file members of the “deep state” are still largely more responsible for the execution of policy in practice than anyone else.
Unprecedentedly, many of them oppose President Trump’s stated desire to improve relations with Russia and have worked to unconstitutionally offset his plans, and the pressure that they’ve put on him to this end explains why he’s undertaken decisively anti-Russian policies during his first year in office despite his campaign pledge to do the opposite.
Seeing as how most of these “deep state” individuals naturally remained in the same positions that they had during the Obama Administration and would have probably still retained their jobs under Hillary’s Presidency, it’s inaccurate to attribute the deterioration of Russian-American ties to President Trump personally while overlooking the actions of the “deep state” that he’s still trying to reform to the best of his ability.
The “deep state” is rational – too rational, it can be argued – because it embraces a Neo-Realist paradigm of International Relations that sometimes correlates with Trump’s own views on certain topics but other times contradicts them like in the case of Russia, and the internal power struggle between Trump and the “deep state” is what’s really to blame for the worsening of bilateral relations, not the “amateur” President’s “romanticism” like Mr. Kortunov insists.
For these reasons, it can be argued that Mr. Kortunov’s belief that the “deep state” “can hardly be considered stubborn paranoids, exalted conspiracy theorists or genetic Russophobes” isn’t exactly accurate, since it’s indeed full of “stubborn paranoids” under the dual influence of the neoconservatives’ Neo-Realism and the Obama-Clinton worldview of “militant liberalism”.
That said, the “conspiracy theories” that he references are just a “deep state” infowar distraction to deceive the voting masses while the assertion that such a thing as a “genetic Russophobe” exists wrongly implies that an individual’s political views are irreversibly predetermined by their DNA.
To flip around Mr. Kortunov’s last comment on the matter, it’s more realistic to assert that “with all his shortcomings, it is Donald Trump that limits the Deep State’s most exotic and potentially most dangerous foreign policy oddities.”
Debunking The Dreams Of Democrat Rule
Relatedly, Mr. Kortunov’s views on the “deep state” clearly influence his attitude towards the Democrats and specifically the Obama Administration, which he thinks is unfairly “remembered in Russia in the worst possible way” because “the stubborn facts show otherwise” and apparently disprove the prevailing notion that “Obama (is) bad, and Trump is good.”
Mr. Kortunov thinks that Obama had pure intentions in signing the nuclear agreement with Iran, though it can cynically be argued that his “deep state” was in fact trying to co-opt the Islamic Republic’s “moderate/reformist” ruling elite in a bid to tip the scales to their favor in the country’s own “deep state” competition for influence with the “conservative/principalist” military-security faction, the failure of which would explain why Trump was tasked with “returning to the most severe pressure on Tehran.”
The enduring presence of most of the “deep state’s” personnel between presidential administrations doesn’t preclude the US from pivoting between policies but actually allows such moves to be more smoothly executed, as can be seen from the example of Nixon’s rapprochement with China in spite of Johnson’s antagonism towards it; Bush Sr. “betraying” Iraq even though Reagan aligned with it; Obama signing the nuclear deal against the former Bush Jr. Administration’s wishes; and Trump dismantling his predecessor’s plans.
Although the President might set the tone for the overall direction that each respective policy should go in and this sometimes reverses what the previous administration did, it’s ultimately the “deep state” that puts these ideas into practice and is able to maintain a degree of strategic continuity that advances America’s national interests regardless, though the case of Trump’s vision for US-Russia relations also shows that this same “deep state” can also conspire to obstruct the President’s will.
Another “stubborn fact” at variance with Mr. Kortunov’s nostalgia for Democrat rule is the practical significance of Obama “following the international consensus on the status of Jerusalem” and Trump “destroying” it since it inaccurately hints that the former was somehow ‘pro-Palestinian’ and that the latter’s announcement tangibly changed something on the ground, neither of which are true because Obama was actually very pro-Israel and Trump’s decision only stands to affect foreign aid recipients who voted against the US and the UN.
Looking beyond Obama’s highly publicized personal rivalry with Netanyahu and his populist rhetoric on the Palestinian issue, nothing that he did during his two terms had any influence on Israel’s occupation of East Jerusalem and unilateral claim to the entirety of the city being its capital; likewise, Trump’s words didn’t change any of this reality either and only resulted in word games being played at the UN and the Organization of Islamic Cooperation, neither of which did anything other than attempt to comfort the Palestinians.
As for Mr. Kortunov’s juxtaposition of Obama’s refusal to “resort to direct military action against Bashar Assad” with Trump “not hesitating to give an order to launch missiles against the Syrian Al- Shayrat airbase”, he’s totally overlooking the 44th President’s responsibility for the theater-wide “Arab Spring” Color Revolutions and the resultant Hybrid War of Terror on Syria which dealt incomparably more damage to Syria and its democratically elected President’s standing that Trump’s handful of one-off missiles.
In addition, Trump only ordered the attack because he was under intense “deep state” pressure to do so after having been caught in a Catch-22 trap where he was forced to “put his money where his mouth is” and respond to the false-flag chemical weapons attack that violated his “red line”, but truthfully speaking, what Mr. Kortunov might really resent is that it only took a few million dollars’ worth of missiles to call President Putin’s bluff in hinting at a military response to the exact same scenario in 2013 that got Obama to back down at the time.
To respond to Mr.Kortunov’s rhetorical question of “who after all created more problems for Russia — Democrats or Republicans?”, the reader should be reminded that the Obama Administration presided over or was outright responsible for the “Arab Spring” and its attendant regime changes, the War on Syria, the 2011-12 anti-government unrest in Moscow, EuroMaidan and the Ukrainian Civil War, the anti-Russian sanctions, and the fake news scheme of “Kremlin interference” in order to suppress Russia’s publicly funded international media outlets and harass their employees, among many other examples.
In comparison, Trump merely continued most of the policy trajectories that Obama and his Secretary of State Hillary Clinton first initiated, and even then he’s tried to resist some of the “deep state’s” pressure when it comes to Russia, so as bad as he’s been for Moscow’s interests, one should wonder how much worse Hillary would have been she entered into the Presidency and allowed the “deep state” to do as it pleases.
Concluding Thoughts
Mr. Kortunov seems to have wanted to spark a serious conversation about how Russia’s “deep state” should respond to the disappointment that it experienced throughout Trump’s first year in office, and if that was his intention, then he remarkably succeeded by controversially reinterpreting the Obama years as something to apparently be nostalgic about and boldly suggesting that his government reconsider its negative attitude to Trump’s “deep state” foes.
In the spirit of dialogue that Mr. Kortunov implicitly encouraged by publishing such a provocative piece, it’s only fitting that a rebuttal be presented to challenge his premise that the Democrats and their “deep state” handlers are supposedly more preferable to Russia than Trump is, especially seeing as how he selectively pointed to a few decontextualized examples that were presumably cherry-picked in order to promote his argument.
With all due respect to this prestigious gentleman, his entire notion is flat-out wrong and shows that he doesn’t at all understand Trump’s “Kraken”-like leadership and his never-ending struggle to survive the “deep state’s” permanent Clintonian Counter-Revolution that’s being waged in trying to undermine the Second American Revolution that the President is trying to carry out in America’s domestic and foreign affairs.
Instead of ignoring the plethora of evidence proving the Obama Administration’s hostility to Russia and its international interests, Mr. Kortunov should have at least made a superficial reference to it because this glaring omission implies a deliberate partiality towards that political faction and the “deep state” in general, which is fine to have in principle but nevertheless casts doubt on how effective his proposals would be in the overall sense of things if they were ever put into practice.
Mr. Kortunov is evidently unaware that the same “deep state” that he finds attractive in contrast to Trump had a controlling influence in determining the Obama Administration’s anti-Russian policies that the 44th President’s Secretary of State Hillary Clinton ended up implementing with ruinous consequences for Moscow’s grand strategic interests, and that she would have given the “deep state” free rein to do whatever it wanted had she won unlike Trump’s willingness to challenge its most extreme tendencies (though with mixed results).
Having said that, pragmatic working relations between Russia and the US’ “deep states” are inevitable because there isn’t any alternative to interacting with any national counterpart’s collection of military, intelligence, and diplomatic figures no matter how much one may disagree with their policies unless ties between the two sides are formally suspended, which isn’t foreseeable but would in any case still allow for the existence of communication backchannels.
What Mr. Kortunov is lobbying for is something altogether different because he wants Russian decision makers to reconceptualize the American “deep state” as a ‘positive’, ‘moderating’, and ‘responsible’ force against what he characterizes as Trump’s ”romantic”, “amateurish”, “most exotic and potentially most dangerous foreign policy oddities”, which is ironically a very “romantic” and “exotic” view to have of the US’ most dangerous anti-Russian institutional forces.
In all actuality, however, the “deep state” and its Democrat allies are the real reason why Trump hasn’t been able to succeed in his pledge to improve Russian-American relations, and these two problems shouldn’t ever be confused as part of the solution that’s needed to reverse this downward spiral, nor should a tactical partnership with these two actors ever be considered if Moscow hopes to maintain the upper hand in the New Cold War.
President Trump delivered his first State of the Union address this week. While the speech was received favorably by 75 percent of those who watched, according to a CBS poll, there were still those who disapproved.
Campus Reform’s Cabot Phillips went to John Jay College in NYC to talk to students who disapproved of the speech by asking them to react to a few select quotations.
Almost unanimously, the students found each of the quotes to be “warmongering”, “aggressive,” and “immature.”
What the students didn’t know was that all the quotes given to them were taken from President Obama’s State of the Union addresses.
How would they react when they found out it was President Obama, not Trump, who had spoken each of the quotes they disapproved of?
However, if there is any silver-lining from this disgusting display of cognitive dissonance, it is one of the students’ honest reflection that:
“While I’m actually not a huge fan of him… but i think being closed-minded is more dangerous than anything he could do…”
North Korea obtained ballistic missile equipment and technology using its embassy in Berlin, says the head of Germany’s domestic intelligence agency, Hans-Georg Maassen in an interview with public broadcaster NDR.
“We determined that procurement activities were taking place there, from our perspective with an eye on the missile program, as well as the nuclear program to some extent” -Hans-Georg Maassen
Hans-Georg Maassen
On Saturday, NDR released portions of the Maassen interview – with the full program airing Monday.
North Korea embassy, Berlin
Maassen did not divulge the exact technology and equipment North Korea procured through the Berlin embassy, aside from that they were so-called “dual-use” goods that can be used for military oir civilian purposes – making it difficult in some cases to identify technology to be used in the ballistic missile program.
“We found out that there were procurement activities from there, from our point of view with regard to the rocket program, and partly also to the nuclear program,” Massen told NDR. “If we find such things, we prevent it. But we cannot guarantee that this can be detected and prevented by us in all cases.”
Pyongyang also used a variety of other methods to procure the parts, which “were acquired via other markets, or that shadow firms had acquired them in Germany,” before reaching North Korea, says Maassen.
The BfV obtained information on North Korea’s procurements in 2016 and 2017, according to an investigation by NDR. These items were allegedly used for the country’s missile program.
In 2014, a North Korean diplomat reportedly tried to obtain a “multi-gas monitor” that is used in the development of chemical weapons. –DW
According to NDR, a longtime UN investigator has raised complaints that the trade embargo against North Korea is a joke, and has “more loopholes than stuffed holes,” (translated). The NDR report comes on the heels of a UN report that north Korea has been ignoring sanctions – having earned $200 million from banned exports in 2017.
Meanwhile – as we reported in January the Chinese military has been amassing assets near their shared border with North Korea around the Tumen River in Yanji city, Jilin province.
One source told the Daily NK, “there were so many soldiers in the car that there was a lot of traffic. I have not seen so many soldiers trucking to Yanji so far.”
Another source said, “Chinese troops are gathering around the Yalu and Tumen rivers. It is also heard that the tanks are moving to the North and the Chinese border.”
And according to the Daily Star: Chinese military officials have recently conducted the so-called “war ceremony” – urging their troops to be ready to fight.
If the media report is accurate, it would suggest that China – fearing the worst – is preparing for war on the Korean Peninsula. Previously, internal documents leaked from China’s main state-owned telecommunications company shows three villages and cities in the northeastern border province of Jilin, have been designated for refugee camps-if war breaks out. China is afraid a swarm of refugees from North Korea could cross the Tumen River into China.
In early January, Kim Jong Un warned that North Korea would soon begin mass producing nuclear weapons – urging South Korea to join it for a much-needed dialogue ahead of the Winter Olympics in Pyeongchang, South Korea.
Former CIA Director John Brennan had harsh words for House Intelligence Chairman Devin Nunes on Sunday morning, calling the controversial four-page “FISA memo” created by Nunes’ staffers “exceptionally partisan” and that Nunes has “abused the office” by refusing to allow Democrats on his committee to make their own rebuttal document public.
“That Devin Nunes and Republicans denied the ability of the minority, the Democratic members of that committee, to put out its report is just appalling. I think it, it really underscores just how partisan Mr. Nunes has been. He has abused the office of the chairmanship of HPSCI. And I don’t say that lightly,” said Brennan on NBC’s Meet the Press.
WATCH: Former CIA Director John Brennan on NBC says Devin Nunes has “abused the office of the chairmanship” to protect Trump and that blocking Democrats from releasing their own memo is “appalling” pic.twitter.com/Jpl4FHl4pT
The ex-CIA chief, who last June called for a coup if Trump fires Mueller, defended the controversial “Trump-Russia” dossier assembled by former UK spy Christopher Steele which the FBI used to secure a FISA warrant to surveil one-time Trump advisor Carter Page – saying that the dossier did “not play any role whatsoever in the intelligence community assessment” presented to President Obama and President-elect Trump.
Steele Dossier did “not play any role whatsoever in the intelligence community assessment” that was presented to President Obama and then President-elect Trump, says Fmr CIA Director John Brennan#MTP#TrumpObstructed#Impeach#SuperBowlpic.twitter.com/xy1e2IbXfb
The Steele-authored dossier created by opposition research firm Fusion GPS (and which relies on senior Russian officials) was funded in part by Hillary Clinton and the DNC. While Nunes and the House Intel GOP claim in their memo that the dossier was used to obtain the FISA warrant on Carter Page, other Congressional Republicans have suggested that the Steele document was used to justify the FBI’s larger counterintelligence operation against Trump and his associates.
We proclaimed a dream of an America that would be a Shining City on a Hill.
—President Ronald Reagan, 1984
I believe in American exceptionalism with every fiber of my being.
—President Barack Obama, 2014
It has become obligatory. To be taken seriously in American politics, one must kneel before the altar of “American exceptionalism”—the messianic notion that the United States is a constant source for good in the world with a unique mission to spread its particular values.
At times, this manifests itself in absurdist minutiae, such as then-presidential candidate Barack Obama sparking controversy when he was seen without the requisite American flag pin on the lapel of his suit jacket. Gasp. Lambasted in the press for this unpatriotic symbolic gaffe, Obama soon sported the compulsory pin. He sported it safely through the presidency.
Both major political parties have long since reached a consensus of sorts on extolling America’s messianic global mission. To even question the contours of that crusade—despite 17 years of failing military quagmires—is to commit political suicide and be relegated to the margins of public life.
For once, the mainstream politicians might be right. A rigorous look at the United States of 2018 (or 2002, or 1850, for that matter) indicates that America may well be exceptional—only not in the ways most of its citizens think. On many issues and several levels, America’s culture of militarism (both at home and abroad) stands out as the unique dark side of the exceptionalist project. We are, in fact, extraordinary among the family of nations. Unfortunately, that which makes us exceptional is the dogged militarism that consistently brands the U.S. as an international pariah.
Perhaps we shouldn’t be surprised when regular global polling indicates that a large percentage of the earth’s population considers the United States the greatest threat to world peace. After all, ours was a nation founded—in part—by religious zealots obsessed with creating a New Jerusalem in North America (native inhabitants be damned). In fact, one could plausibly argue that America’s two key founding proclivities were “city on a hill” exceptionalism and greedy conquest. Just ask a Native American. Or a Mexican.
Still, in 2018, it’s worth reviewing just a few ways the United States is, indeed, darkly exceptional.
Other countries are sometimes aggressive and expansionist (think Russian irredentism and Chinese bullying in the South China Sea), but only the United States maintains a worldwide system of hundreds of military bases in scores of countries. The United States military even divides the entire planet into a series of geographic combatant commands (GCCs), each led by a four-star flag officer—a figure as much imperial proconsul as humble soldier. Most Americans can’t seem to fathom why these forward deployments on every continent appear aggressive to so many global citizens. Still, one wonders how the U.S. would react if China set up bases in Mexico or Russia did the same in Newfoundland.
How about prepping for and actually fighting overseas wars? Well, we’re the champs here, too. In 2016, baseline U.S. military spending reached $611 billion, and it’s only going to rise—by about $100 billion—under Trump. That’s more than China, Russia, Saudi Arabia, India, France, the United Kingdom, Japan and Germany combined. Oh, yeah, and the last six are all U.S. “allies” or “strategic partners.” Despite the prevailing rhetoric of peace and harmony, the U.S. is also the leader in global arms sales, including transactions with some of the world’s worst human rights abusers.
In terms of active conflict, the U.S. military has been at war now for nearly 17 straight years. In that time, America has conducted more overt regime changes—three—than any other country. Each of those regime change operations, whether in Afghanistan, Iraq or Libya, has led to chaos, civil war and millions of dead. None of these post-invasion countries could reasonably be labeled free or stable despite all the bloodshed and trillions spent. And America’s wars are still spreading. In 2016 alone, the U.S. dropped 26,000-plus bombs on at least seven countries. Given the current mood in Washington, expect that number only to rise.
Then there’s the American penchant for scuttling global agreements or retiring to pout in the corner rather than sign on to truly consequential conventions we don’t happen to like. Take the Paris Climate Accord. Every serious country—come to think of it, all countries—have now signed on to this modest global effort to stave off the effects of global warming. Everyone, that is, except Trump’s United States. Never mind that even the U.S. military considers climate change both real and a major security threat. Facts have such an annoying tendency to get in the way of things. The U.S. also hasn’t signed on to the International Criminal Court. Probably a smart move. Otherwise Dick Cheney and Don Rumsfeld might actually have been held accountable for, well, war crimes.
It’s not just official agreements, either. The U.S. stances on several world issues—Israel/Palestine, for example—contribute to America’s pariah status and leave it alone and unafraid. President Trump’s unprecedented decision to reverse 70 years of bipartisan policy and recognize Jerusalem as Israel’s (but not Palestine’s) capital was a particularly “exceptional” one. After all, over 120 countries condemned his decision at the United Nations. But hey, at least the African nation of Togo backed Trump’s announcement.
Nonetheless, Trump’s move was only the latest among more than a half-century’s worth of U.S. policies backing Israel in the face of the near global condemnation of Israeli conquest and occupation since at least the Six Days’ War of 1967. Of course, there are plenty of explanations for America’s unflappable support of Israel, but one is particularly noteworthy, if counterintuitive: evangelical Christianity. That’s right, somewhere around one-third of America’s 40 million to 50 million evangelicals believe Israel has a distinct role to play in the imminent end of times. See, the Jews have to return to the Holy Land in order for Jesus Christ to come again in glory to judge the living and the dead. Never mind that most of these Christians believe all those Jews will then be banished to an eternity in hell—the Israeli right still is (cynical as ever) glad for the help with their settler-colonial project. How’s that for exceptional?
Back on the home front, the nexus of outward aggression and inward militarism is regularly on display, if, that is, you know where to look. No, I don’t mean the National Football League—though one does have to stand almost in awe of an increasing martial pageantry that blurs the line between sports stadium and Roman Coliseum. Nor am I referring to the fun new title for the Army college football team’s latest victory: the Lockheed Martin Military Bowl, a fun reminder that the military-industrial complex is alive and well. Rather, let us focus on the ways in which the empire, so to speak, has come home to roost.
It all connects. Today in America, militarized police patrol the streets of black and brown neighborhoods, sporting the same vehicles I once drove around Baghdad and Kandahar. These areas in U.S. cities are often full of desperate, impoverished citizens, the refuse of America’s hyper-free-market capitalism and resultant record income inequality.
Uneven, aggressive policing is necessary, law enforcement would argue, due to a heavily armed populace. They’re not all wrong, either. Americans are the most heavily armed people on earth. Yemen, a nation torn apart by Saudi aggression and persistent civil war, is a distant second.
All this militarized policing of an impoverished, gun-toting populace is bound to fill up the prisons. And, boy, does it. The United States has just 4 percent of the world’s population but 22 percent of its prisoners. Once again, the good old USA is highly exceptional, with the highest per capita incarceration rate in the world—four times as high as Saudi Arabia, which, incidentally, also beheads women for “sorcery.”
All this militarization, at home and abroad, adds up to one thing: a distinctly, and embarrassingly exceptional nation—a global pariah.
* * *
I’m not implying that the U.S. should dismantle its entire military, retreat behind its oceans and raise the white flag of surrender. This is a call, rather, for a more prudent, modest national security infrastructure that is less intrusive both at home and abroad.
Consider it the do less strategy.
It is time for America to look itself in the proverbial mirror and ask whether there just might be a connection between military intervention abroad and persistent—though overhyped—terror attacks at home. Given the chance, and some fresh thinking, the U.S. might figure out that the less interventionist (and scandalously socialist) Scandinavians have some of the right ideas. They’re prosperous, happy and they almost never get attacked.
Only don’t expect that anytime soon in gun-loving, flag-waving, soldier-worshiping, “We’re No. 1” America. At least not until the economy truly collapses under the weight of debt, military spending and internal strife.
For now, the question is not whether the U.S. empire will recede or be eclipsed, but rather how it handles its decline. The British version of empire, the predecessor to American hegemony, fought several brutal colonial wars and left behind some intractable messes (think Palestine). But at least it knew the limits of its military muscle. Being a self-aware middleweight power, it was saved from what eminent historian Eric Hobsbawm called “the megalomania that is the occupational disease of world conquerors.”
Will the American brand of imperialism age gracefully and quietly downsize its overseas commitments, or—as seems more likely—take the Hollywood route and go out kicking and screaming? Only instead of breast enhancements and plastic surgery, expect the empire’s aging denial to include lots of drones, bombers and boots on the ground.
Hobsbawn asked this question back in 2007, wondering if “the U.S. will learn [from the British] lesson … or be tempted to maintain an eroding global position by relying on politico-military force, and in doing so promote not global order but disorder.” The safe money is on the latter.
The sooner Americans realize the one salient, if inconvenient, truth of foreign affairs, the fewer people will have to suffer and die. The United States can be an exceptionalist empire, or it can be a laudable republic. It cannot be both.
The legalization of US oil exports may have “changed the game” for global oil prices – especially WTI – but that doesn’t mean old pricing models like the inverse correlation between inventories and prices still apply.
At least that’s what Art Berman, a petroleum geologist and the featured guest on this week’s episode of MacroVoices, told host Erik Townsend back in October during a previous appearance on the program. Berman argued this to justify his bet that oil prices would continue to head higher while causing the spread between WTI and Brent to compress.
And as it turns out, Berman had it right: WTI climbed above $70 for the first time in three years last month, the strongest signal yet that the bear market in oil that’s contributed to a string of bankruptcies in the oil patch and a devastating economic crisis in Venezuela is finally over, and that the long-anticipated “rebalancing” of inventories and prices has begun.
For Berman believes that, even though the price of oil has nearly doubled since June, the commodity has a long way to climb as accelerating economic growth and coordinated production cuts more than offset the impact of US exports and the booming shale industry in the US and Canada.
Berman explains, using slides from his latest chart deck, how OPEC’s response to the growing threat from the North American shale industry has been the dominating factor in energy markets since 2014. By reducing production, OPEC has shifted the WTI futures curve from Contango to Backwardation – a strong signal that prices will continue higher.
But, as with many things that we’ve seen in this market since prices collapsed three years ago, the rules are different this time. And when we’ve seen long positions so outnumber the shorts in the past couple of years, it always leads to a correction. I think the reason for that is that those were periods of sentiment-based excursion from the yield curve.
Still, Berman admits that speculation ultimately is the guiding force for oil markets, and that the record net long positioning in WTI futures could trigger a sharp correction if something triggers a vicious short squeeze. Right now, WTI longs outnumber shorts 12:1.
…As with many things that we’ve seen in this market since prices collapsed three years ago, the rules are different this time. And when we’ve seen long positions so outnumber the shorts in the past couple of years, it always leads to a correction. I think the reason for that is that those were periods of sentiment-based excursion from the yield curve.
And I recognize that as such. Mike Bodell, who developed this approach, recognized it as such. So the correction was back to what the fundamentals suggested. Don’t get me wrong, I’m not one of these total technical geeks who thinks that fundamentals rule the market. They don’t. It’s a speculative market. But eventually things have to regress to the norm based on fundamentals. And it can go on for a while. So what the fundamentals tell me, Erik, is that we are increasing in price for completely rational reasons as opposed to the excursions in early 2017 when it was an expectation of OPEC cuts. Or in early 2015 when it was expectation that happy days are here again and the oil price collapse wasn’t real.
And so we’re looking at a very strong and lengthy trend that’s been going on since February – almost a year now. And until I see enough data points that say we’re flattening or heading in the other direction, I’m saying this is the trend we’re on.
As Berman explains, according to his model, prices are nearing their five year average. His models says WTI should hit between $70 and $75 if inventories fall another 10 million barrels. The series of drawdowns in the US – including a massive 11.19 million barrel crude drawdown last month that registered as the biggest drop since September 2016 – though there’s definitely a limit to how much US exports will contribute to this trend.
As Townsend explains, Berman has an idiosyncratic approach to his pricing model for crude. Instead of using the EIA inventories data, he compares it to the same week from last year and works out a seasonally adjusted figure that gets plugged into his pricing model. His model shows US inventories have receded back to their five-year average.
In a slide deck created by Berman last week, the analyst illustrates how OPEC cuts have been chiefly responsible for the climb in prices to their recent highs.
The chart shows the whole arc of OPEC’s response to the plunge in prices, from August 2016 when it first floated the idea of cuts, to November of that year when they first implemented them, and beyond. One sign of the cuts’ success is the shift in the forward curve toward backwardation, which incentivizes the drawdown of inventories.
If we look at the slide, I’ve got two light blue lines there and it goes through the history of OPEC getting proactive beginning back in late August–September of 2016 when they first floated the idea of a production cut (as opposed to a freeze, which they had talked about for
much of that year).
And, of course, then they actually did institute the cut in November of ‘16. They extended the
cut in June of ‘17.
If you put a line through all those, that’s $43 a barrel more or less, WTI. And you look at where we are right now, or where we were a day or two ago when I made this chart, we were at about $66. That’s $23. So do I want to attribute all of that $23 or so per barrel rise to OPEC? Yeah, I kind of do. It’s got to do with taking an awful lot of oil off the market. And there’s a slide that we can discuss that in more detail later on. But remember what the intent was of these cuts. The intent was to get inventory back to the five-year average. And the way you do that is to force the forward curve from contango, where the future price is greater than the spot price, into backwardation, where the spot price is greater than the future price, so that there is incentive to move oil out of storage.
And the graph on the right shows kind of a monthly progression from September through January. And we see September was clearly a contango term structure. October was – I’m not sure what it was. Maybe very, very slightly backwardation. By the time we got to November, December, January, unquestionable backwardation.
Next, Berman and Townsend delve into one of the most persuasive “conspiracy theories” circulating among commodity traders: That OPEC is deliberately trying to depress prices a few years out on the curve to make it more expensive for shale producers to hedge.
As Berman points out, it’s a complicated question: Nobody outside of the cartel’s leadership knows what it’s strategy is. But judging by the impact that the cuts have had on inventories and prices, it’s not an unreasonable suggestion. Of course, given that US production soared 10% last year, this strategy hasn’t been quite as successful lately – though it’s not the first time OPEC has been suspected of deliberately engineering policy to kneecap one of its most formidable rivals.
QUOTE
But I’ve contended all along that the narrative about a price war between Saudi Arabia and some of their OPEC members versus US shale is largely – it’s an American invention. It’s a hubris-based model that says we’re so great that they’re waging war on us.
I think the truth is, probably, they chose not to control prices back in late 2014 because they didn’t want to repeat the mistake they felt they’d made back in 1982 – which was to take a tremendous amount of oil off the market and lose a huge amount of revenue – and not influence prices at all. I think that the OPEC oil minister at the time said, “I’m never making that mistake again.” Of course, he wasn’t actually the minister who made the mistake. So, yeah, there may be an element of that. But I think it’s much more of a profit motive on their part. That if we can turn this thing around by withholding a relatively small amount of production for a relatively short amount of time, we’re money ahead.
The other point of argument, I suppose, is Rystad Energy just published a chart yesterday, or this week anyway, showing the hedged positions of all the major US shale players. Of course they go from completely unhedged – some of the majors Anadarko (not a major but a big company) – to Pioneer – I don’t remember the percentage but it’s at least 75% hedged.
While Berman declined to speculate about the cause of last week’s plunge in the premium between WTI and Brent.
Before that, the spread had widened dramatically, something Berman attributes to US exporters undercutting international competition by selling their oil at a discount, because they’re still earning more than they would’ve in the US.
We’re looking at the difference between the price of international oil or Brent and WTI or the Brent/WTI spread, and weekly crude oil exports that are now legal from the United States. And what we see pretty clearly there is that the increase from about 8 or 9 hundred thousand barrels a day clear up to 2 million barrels a day of exports coincides perfectly with the widening of that Brent/WTI spread.
And the reasons are very simple. It’s an arbitrage issue. It shows there that the maximum was $7.24. If I can get $5 or $6 – even more – by selling the oil internationally than I can domestically, then I can afford to discount my price by a couple of dollars so that foreign customers have incentive to buy my oil as opposed to what amounts to higher-priced oil from someone else. And I’m still making more money than if I sold it here in the United States.
So arbitrage has been key. Now this graph is a week old, and that Brent/WTI spread has plummeted in the last week. It’s gone down to about $2.50 or $2.75 just this week.
So, what drove the drop in Brent that resulted in the spread compression this past week? It’s difficult to say, but Berman believes a new pipeline carrying light crude from Bakken directly to a large refinery in Tennessee, juicing the US export market and luring more buyers away from US producers’ rivals.
But like many things in the oil market, Berman says the future of the still nascent market for US oil exports will play a limited, but still important role in both international and domestic prices. These issues will likely play out over the coming years as prices continue to climb.
After FBI offices in three cities were told in July of 2015 that sports doctor Lawrence “Larry” Nassar had been molesting elite gymnasts, the agency advised officials with the US Gymnastics team “not to discuss the case with anyone,” before sitting on their hands for over a year – while dozens of girls continued to fall victim to the once-respected Doctor.
Nasser routinely gave his teenage victims highly inappropriate massages under the guise of providing legimiate therapy, with some as young as 12.
Jane Doe is an Olympic medalist who claims she was sexually assaulted by Nassar from 1994 to 2000, from when she was 12 or 13 until she was 18. She is also suing USA Gymnastics and three of its past presidents, according to the Indianapolis Star. The lawsuit claims the organization was warned about Nassar and did not adequately address concerns about him.
In the lawsuit she accuses Nassar of “groping and fondling” her “vagina and anus.”
The lawsuit claims Nassar began “grooming” her in 1994 “under the guise of care, athletic training, osteopathy and kinesiology to normalize intimate, inappropriate and sexually abusive contact.”
She accuses Nassar of fondling and groping her “feet, ankles, thighs, buttocks, hips, waist, breast, arms, shoulders and neck” while claiming it was part of the treatment. –Heavy (July, 2016)
The New York Times identified “at least 27 girls and women who say Dr. Nassar molested them between July 2015, when he first fell under F.B.I. scrutiny, and September 2016, when he was exposed by an Indianapolis Star investigation.”
The New York Times has identified at least 27 girls and women who say that Dr. Nassar molested them between July 2015, when he first fell under FBI scrutiny, and September 2016, when he was exposed by an @IndyStar investigation https://t.co/2tlBffRjBE
The three alleged victims then at the center of the F.B.I.’s inquiry were world-class athletes; two were Olympic gold medalists. Nearly a year passed before agents interviewed two of the young women.
The silence at times drove the victims and their families to distraction, including Gina Nichols, the mother of the gymnast initially known as “Athlete A”: Maggie Nichols, who was not contacted by the F.B.I. for nearly 11 months after the information she provided sparked the federal inquiry.
“I never got a phone call from the police or the F.B.I.” during that time, Gina Nichols, a registered nurse, said. “Not one person. Not one. Not one. Not one.” –NYT
The FBI declined to comment on the investigation, aside from a 112-word statement that said “the safety and well-being of our youth is a top priority for the F.B.I.,” while adding that the many allegations against Dr. Nassar “transcended jurisdictions” – an apparent excuse for the agency’s lack of action on the case.
Many girls and young women still seeing Dr. Nassar received no warning of the sexual assault allegations.
Nasser has been sentenced to 40-175 years in Michigan prison – which follows a previous 60-year sentence for child pornography charges. 156 victims testified against him in open court during his sentencing hearing, while he also faces lawsuits from over 100 women who have accused him of sexual abuse.
How the FBI became involved:
After the mother of one of Nasser’s victims, Gina Nichols, told U.S.A. Gymnastics president Steve Penny about her daughter’s molestation – telling him police had to be called immediately, Penny advised her to keep quiet:
Gina Nichols, Maggie’s mother, recalled telling Steve Penny, then the president of U.S.A. Gymnastics, that the police had to be called immediately. But he insisted that she not tell anyone, she said. The organization would take care of alerting law enforcement.
Weeks of silence passed, Gina Nichols said, interrupted occasionally by admonitions from Mr. Penny to keep quiet about the matter — although the United States Olympic Committee has said that U.S.A. Gymnastics reported that one of its physicians had been accused of abusing athletes “and was in the process of contacting the appropriate law enforcement authorities.” –NYT
U.S.A. Gymnastics would eventually hire a specialist in workplace harassment, who recommended that Dr. Nassar be reported to law enforcement following her investigation.
On Monday, July 17 2015, officials from the US Gymnastics organization contacted the Indianapolis FBI field office. After meeting with agents the next day who assured them they had come to the right place, the gymnastics officials handed the FBI the contact information for three gymnasts: Ms. Nichols, Ms. Raisman, and McKayla Maroney – a retired Olympic gold medalist who had become a minor celebrity.
Video evidence of Dr. Nasser demonstrating his technique were also handed to agents:
They also turned over copies of videos of Dr. Nassar demonstrating his technique as he chatted clinically about pulled hamstrings, buttocks and trigger points. Reporters for The New York Times have seen the videos, which show him kneading the legs of girls before his ungloved hands begin to work under a towel, between the girls’ legs.
“It’s not a fun place to dig,” Dr. Nassar says to the camera.
“Do the hand-shaky thing,” he adds later, demonstrating how he shakes his hand vigorously when it is deep between a girl’s legs.
Part of the FBI’s bungling of the Nasser case may stem from jurisdictional issues; although the agency received the complain in Indianapolis, the alleged sexual abuse by Dr. Nassar had taken place in Texas and Michigan, while one of the victims lived in California.
When we consulted with the U.S. attorney, we knew right away that we would not have venue,” said Indianapolis FBI agent W. Jay Abbott, who added “It was never really our case.”
Asked why federal law enforcement officials did not notify people — other gymnasts, parents, coaches — that a potential child molester was in their midst, Mr. Abbott said, “That’s where things can get tricky.”
“There is a duty to warn those who might be harmed in the future,” he said. “But everyone is still trying to ascertain whether a crime has been committed. And everybody has rights here” — a reference to both the alleged victims and the person being accused.
An internal debate also took place within the FBI as to whether or not Nasser’s techniques were a legitimate medical procedure.
After not hearing back from the FBI for some time, Mr. Penny and another U.S.A. gymnastics official visited the FBI’s Los Angeles bureau.
“As time passed, concern about a perceived lack of development prompted Board Chair Paul Parilla and C.E.O. Steve Penny to report the matter asecond time to a different F.B.I. office,” U.S.A. Gymnastics said in a statement to The Times on Friday.
So – after two complaints to the FBI over a case that would eventually include three FBI field offices – one of which recommended not saying anything about Nassar – at least 40 victims were molested over the course of the next 14 months.
One father to three of Nasser’s victims, Randall Margraves, attempted to attack Nassar last Friday in a Michigan courtroom. It took three uniformed deputies and a plain-clothes officer to detain him.
“Let me at that son of a bitch” Margraves shouted in court.
Margraves apologized, telling the court “I feel very remorseful… this cannot be a lawless society, I know that. I lost control but I regained control later in a holding cell,” he said.
In the aftermath of last week’s market rout, it now appears that risk-parity is about to become a household word within financial circles, for obvious reasons discussed already on severalprioroccasions.
Confirming this sentiment, is a note published late on Sunday London time (yes, there is a distinct urgency here) by Deutsche Bank’s chief macro strategist, Alan Ruskin, focusing precisely on the threat of a sharp Risk Parity unwind, and what it means for FX.
As Ruskin writes in “Risk Parity, FX & the end of financial repression” two or more consecutive weeks of higher US bond yields and lower equity prices, have become progressively less common since the 1980s/1990s, and especially since the 2008 financial crisis. “Three weeks of equities down, 10y yields up, has not happened for more than a decade.” This is shown in the charts below.
Which brings us to what Ruskin calls “The bad news”, namely that “the markets may be contending with a shift in two big macro factors that point to a change in the post-2008 world: i) reduced financial repression, and, ii) some inflation creep.”
Some more details:
Bond and equity prices falling sharply on the week may feel like an unusual environment, because in the last decade, it has become unusual. However, especially as we go back to the 1980s and 1990s it was a more frequent occurrence to see the following causal chain develop: Equities go up, supporting growth with a lag, pushing bond yields up, to the point where higher bond yields eventually pull equities down. In this way the equity – bond causality and correlation shifts, from a positive correlation where equities drive up yields, to a negative correlation as bond yields take the causal lead in pushing equities down.
From a macro perspective what is intriguing about this dynamic is two old school factors could be back in play: i) At least in the US there is a confluence of inflationary factors – lagged demand, tight labor markets, the tax reforms impact on wages/bonuses and growth, higher oil prices, latent protectionism, and the weak USD. All these factors are apt to have a cumulative effect, chipping away at global disinflation and inflation inertia. ii) the Fed and other Central Bank’s balance sheet adjustments, may signal the end of financial repression, and this repression likely helped risk parity trades.
Risky assets are understandably worried because these are indeed important changes.
How does risk-parity get involved? Well, as Ruskin noted, consecutive week after week of both bond and equity price declines is unusual, and very painful for risk-parity funds. This is likely to prove true in current circumstances, where the US bond market is such a stand-out relative to other G10 bond markets.
Still, according to the DB strategist, risk parity – and the broader market will likely be spared a broader rout, as 10y TSY yields will likely not easily soar much above 3% without finding some real support, most obviously near the 3.03% January 2014 yield peak.
Ruskin then makes a very good observation: “were bond yields to keep on going higher, it would do enough damage to stocks to start hurting growth expectations, in turn supporting bonds. Bond bears would in this way create the source of their own demise, which is not an unusual self correcting mechanism.”
In that sense we do not want to exaggerate the prospect of weeks like we have gone through that threaten risk parity trades consistently. At the same time, if inflation pressures and quantitative tightening are not about to change, then the weeks where both equities and bonds sell-off will become a good deal more frequent than we have seen since the Great Financial crisis.
This, again, is a way of summarizing the “bad news.”
* * *
So what does this all mean for currencies, and how should one trade said bad news?
The table below shows how currencies have traded under different bond (10y yield) and equity (S&P) scenarios.
Here Deutsche first demarcate each week as falling into one of 4 scenarios: S&P up, 10y yield up; S&P up 10y yield down; S&P down and 10y yield down, and S&P down, 10y yields down. We then looked at how currencies traded, taking medians and averages of the weekly performances for ach scenario.
According to Ruskin, the table below shows the following:
The percent of time when S&P is down and 10y yields are up is roughly 1 in 6 trading weeks, so not all that unusual, but certainly less common than the other scenarios.
In the environment where 10y yields go up and equities go down, the USD tends to go up sharply versus the AUD at least in the past decade. The USD also goes up substantially versus the JPY. The USD is mixed to near flat versus the EUR (or before the EUR the DEM). This leaves the USD up moderately on a Trade weighted basis. Since 1999, the USD also appreciates (somewhat less than we might expect) versus EM carry – using the Bloomberg EM-8 carry index of cumulative total returns. The USD’s positive response versus EM looks much more substantial when using average weekly gains as distinct from median weekly gains. This suggests that every now and then there are some very large negative EM moves, when US bond prices and stock prices go down, which is not a huge surprise.
To summarize the “worst case” trade, one which sees stocks tumbling and yields continuing to surge, “history supports the thesis that when it feels like there is nowhere to hide between poor simultaneous trading conditions in the equity and fixed income markets, the USD and more recently the EUR have been the currencies to shelter in”, Rusking concludes. .
“With bond and equity prices tumbling in the last week, the FX markets price action conformed remarkably closely to how the USD and other currencies have traded in tough risk parity environments of the past 30 years.”
Of course, with a gigantic $10 trillion global synthetic dollar short – according to the BIS – one which has so far avoided a squeeze thanks to the record surge in risk assets, it is hardly rocket surgery then if the carpet is pulled from under the market, it is the US Dollar that will surge; after all that is precisely what has happened during every previous crisis.
The real question is what happens if stocks and bond tumble, and the dollar does not go up. That would be the real crisis, and one which would explain not only the record recent cryptocurrency bid, but also confirm the fact that the dollar’s day as the world’s primary reserve are numbered.
