Month: June 2018

In what appears to be the latest indication that North Korean leader Kim Jong Un’s talk about abandoning the country’s nuclear arsenal is disingenuous, US intelligence believes Kim has increased nuclear enrichment activities at several “secret” facilities in recent months, even after securing a major concession from the US and South Korea to cancel their upcoming joint military exercises. 

According to NBC News, the intelligence assessment appears to contradict President Trump’s declaration that the North is “no longer a nuclear threat,” and analysts at the CIA and other intelligence agencies agree.

Just landed – a long trip, but everybody can now feel much safer than the day I took office. There is no longer a Nuclear Threat from North Korea. Meeting with Kim Jong Un was an interesting and very positive experience. North Korea has great potential for the future!

— Donald J. Trump (@realDonaldTrump) June 13, 2018

Instead, the intelligence community sees the North’s overtures as part of a scheme to extract every concession it can from the Trump administration, while clinging to nuclear weapons it believes are essential to survival. Notably, the report comes just two weeks after the historic Singapore summit that produced a vague agreement between the two sides to “work toward” denuclearization.

While the North has stopped its nuclear tests, its enrichment activities have only accelerated.

In recent months, even as the two sides engaged in diplomacy, North Korea was stepping up its production of enriched uranium for nuclear weapons, five U.S. officials say, citing the latest intelligence assessment. North Korea and the U.S. agreed at the summit to “work toward” denuclearization, but there is no specific deal. On Trump’s order, the U.S. military canceled training exercises on the Korean peninsula, a major concession to Kim.

While the North Koreans have stopped missile and nuclear tests, “there’s no evidence that they are decreasing stockpiles, or that they have stopped their production,” said one U.S. official briefed on the latest intelligence. “There is absolutely unequivocal evidence that they are trying to deceive the U.S.”

Four other officials familiar with the intelligence assessment also said North Korea intended to deceive the U.S.

While the US has long been aware of North Korea’s enrichment facility at Yongbyon, as well as a second “secret” enrichment site that the US government has declined to name for security reasons, it appears satellites have discovered a second “secret” site where enrichment activities appear to be ongoing.

Satellite photos purport to show unusual movement at the facility that would suggest enrichment is continuing.

Courtesy of 38 North

While the the missile and nuclear tests have stopped, “there’s no evidence that they are decreasing stockpiles, or that they have stopped their production,” one anonymous US official told NBC News. “There is absolutely unequivocal evidence that they are trying to deceive the U.S.”

Courtesy of 38 North

To be sure, the Trump administration has already walked back the “not a nuclear threat” line, after Mike Pompeo told lawmakers on Wednesday that the North remains a nuclear threat, according to the Hill.

Courtesy of 38 North

Still, the findings underscore a belief that’s widely held by national security strategists, including Harry Kazianis, the director of the Center for the National Interest think tank, who told the Hill that “there is no way North Korea will ever give up its nuclear weapons – ever.”

He argued that the latest satellite imagery is evidence that North Korea has no intention of giving up its nuclear program, which it has long seen as key to its survival.

“Since the summit we have learned that North Korea is looking for one thing only from the Trump administration: nuclear acceptance, not disarmament,” Kazianis said.

But while Trump made significant concessions during the Singapore Summit, he also reaped several important (to Trump) benefits: Namely, a lift in his poll numbers that he’s hoping to extend with next month’s summit with Russian President Vladimir Putin. And of course, all of these ‘Trump-Kim Summit success’-busting headlines are coming from the same intel agencies who are “all” convinced Trump won because Russia colluded to fix the election – and we note that 38 North – the organization that provided and analyzed the satellite images – had this to say “Continued work at the Yongbyon facility should not be seen as having any relationship to North Korea’s pledge to denuclearize.”

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Every month this year we have said it couldn’t possibly get any worse for David Einhorn’s Greenlight, and the very next month we are proven wrong.

In April, we reported that Einhorn’s main hedge fund ended the first quarter with a 1.9% slump in March, bringing it down to -14% for the year, which we said that while superficially was not that bad (as it outperformed the S&P’s 2.5% March drop), that would hardly enthuse Greenlight’s long-suffering LPs who have been patiently waiting for Einhorn to have another home run, and which failed to happen despite the March tech bust, which Einhorn was expecting with his “short basket”.

“In other words”, we said “David will be sending another letter to his clients explaining why this all “must be frustrating to you.”

One month later, the deterioration continued, and Greenlight Capital fell another 1.1% in April, extending the total loss this year to a unprecedented – for Einhorn – 14.9%. In a letter to investors sent out in early April, Einhorn said that he had “encountered the perfect storm in the market”, where he lost money on both his longs, which slumped, and his shorts, which spiked, resulting in a roughly 14% loss in the first quarter. Indeed, as we reported two months ago, Einhorn’s, 20 biggest long positions fell 5.6%, while his 20 largest shorts jumped, leading to a double whammy -5.5% in P&L.

Then, at the start of May, Einhorn reiterated his disappointment on a conference call for Greenlight Capital Re, the Cayman Islands-based reinsurer which he chairs. He repeated that Greenlight’s gains from his Micron long Tesla short did little to offset broader losses, led by an investment in General Motors and a short against Netflix. GM dropped 11.3% in the first quarter, while Netflix surged 54%.

Quoted by Bloomberg, Einhorn said that “the quarterly result was one of our worst. Despite a good earnings season for our portfolio, in which most of our largest positions recorded fundamentals that were consistent with our investment thesis, we managed to lose a bit of money on most positions with no material winners to offset the losses.”

Unwilling to thrown in the towel, Einhorn reiterated his bear thesis against Netflix, saying that while the company managed to pull in more subscribers than expected after spending on marketing, technology and development, free cash flow was deteriorating.

“In our view, Netflix has shown an ability to turn cash into subscribers, but not the ability to turn subscribers into cash.”

Unfortunately, by now none of this is new information to anyone, so – as we said at the start of May – absent the “growthy” story cracking, expect even more pain from Greenlight, until one of two things happens: the market starts trading rationally again, and tech names – i.e., the Greenlight short basket – finally blow up, or Greenlight’s LPs decide they have had enough and flood the fund with redemption requests.

There was some good news in May, when the Fund managed to recover some losses largely thanks to surge by GM – Greenlight’s largest position – on the last day of month, which brought Greenlight’s loss to a more “manageable” -12.2% for the year…

… however, the bounce was not meant to last, and in June, Greenlight’s pain hit epic proportions, when according to the latest performance update from Greenlight the fund crashed another 7.7% bringing the YTD loss to an unprecedented 19%, underperforming every benchmark, including the HFRX Global Hedge Fund Index (which is down 1% YTD), the HFR Fundamental Value Index (+1.8% through May), and of course the S&P itself, which is up 1.7% excluding dividends.

Being stubborn has proven painful for Einhorn, because while the GM surge – on the back of a $2.25 billion investment in its autonomous-car unit from SoftBank Vision Fund – faded fast amid the escalating trade war and potential retaliation on US auto imports, pushing GM stocks into the red for 2018, his infamous “short basket” has continued to rally, and in fact, its surge accelerated subject to what ten days ago we dubbed the biggest short squeeze ever, as the market’s most shorted stock soared in the middle of the month…

… as a result of one or more hedge funds with heavy tech short positions, such as Pelorus Jack, liquidating and forced to close out shorts, and leading to an unprecedented short squeeze starting in May, where the most shorted stocks outperformed the rest of the market by 20%.

In other words, Greenlight has been absolutely steamrolled by his “bubble basket” of tech shorts he is betting against, which is made up mostly of tech stocks including Netflix and Amazon, which have exploded by 104% and 45% respectively, this year. Meanwhile, Einhorn’s long book continues to bleed with three of his biggest four public stock holdings posted double-digit losses as of March 31.

And then there is the future to consider: after all, it is only a matter of time before the Fed will be forced to back off its tightening policy which has so far failed to notably hit US stocks which have again re-emerged as the “cleanest dirty shirt in the world”, and as several Fed presidents have recently hinted the Fed’s rate hikes may soon be over, especially if Trump tells Powell to stop hiking as Larry Kudlow hinted yesterday (and depending on how badly the market is hurt, QE4 may soon follow), which would lead to another burst in the most shorted names, eventually leading to a deadly blow to Greenlight. 

But the worst news for David Einhorn is that for Greenlight’s LPs enough may be enough, and after losing 28% since the end of May, Bloomberg reports that “investors have bolted“, pulling almost $3 billion out of the firm in the last two years. With only $5.5 billion in assets, Greenlight, like Pershing Square, is now well less than half the hedge fund it was at its peak.

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We imagine there are millions of American millennials who have made it through college, found a job, got married and would like to take their next crucial step on the way to adulthood: Buying a home. There’s only one problem: Thanks to stagnant wages and onerous student loan debt (factors that have helped jack up spending even as incomes have languished) most millennials don’t have any money.

Indeed, for the first time ever, millennials with student debt now have a negative net worth. 

While most Americans borrow when buying their homes, millennials can’t even afford the down payment that lenders typically require so that their customers have some “skin in the game.”

Yet, while most lenders view this fact as a risk (borrowers typically need to put up 20% of the price), a growing number of enterprising lenders see these broke borrowers as an opportunity. The latest example of this ill-advised trend was highlighted by the Wall Street Journal on Friday, with the absurdity inadvertently laid bare by WSJ’s social media team.

This will end well. pic.twitter.com/vaATQP16I9

— Lord Single Malt (@Singlemaltfiend) June 29, 2018

As WSJ explains, enabling millennials to buy homes they can’t afford risks igniting a re-run of the housing crisis – an outcome made more likely by the fact that home prices have already surpassed their excesses from the pre-crisis era. The phenomenon has been exacerbated by a shortage of homes that has persisted for years.

But what’s even more alarming than the fact that lenders are out there chasing this business (despite the fact that nearly 40% of renters ages 25 to 34 said they save nothing every month for a down payment) are the schemes that some lenders have devised to help their borrowers “fund” their down payments.

To wit, CMG Financial created HomeFundMe, a service it launched last year. As its name would imply, HomeFundMe helps would-be borrowers beg for cash from their friends and family by sending passive aggressive emails.

Reese and Kyle Rademacher weren’t sure how they would afford a down payment to buy a home until their real-estate agent mentioned an offbeat idea: crowdfund the money from friends and family.

Mrs. Rademacher, a 28-year-old construction technician, set up an online profile with a program called HomeFundMe to solicit donations. Her parents and a few others responded, and in March the Rademachers closed on a $320,000 home in Cheyenne, Wyo.

HomeFundMe, a service launched by lender CMG Financial last year, is among a growing suite of services that help borrowers cobble together the funds to buy homes. These companies — startups and established players in the housing market alike — say they’re offering options for borrowers who have good credit and income but are struggling to save.

…

About 400 borrowers have used HomeFundMe to help buy homes since the program launched in October. On average, they raise about $2,500, though CMG also can kick in matching grants, and most borrowers have some of their own money saved as well, said chief marketing officer Paul Akinmade. Friends and family can also make their gifts conditional, meaning borrowers won’t get the money unless they actually purchase the home.

Mrs. Rademacher said she felt uncomfortable at first asking for help through HomeFundMe. But the Rademachers’ budget was tight after paying for their wedding, and a credit union had already denied their mortgage application because they didn’t have enough in savings.

“Whenever I emailed people the link, I would explain, ‘This isn’t fake, this is real,'” Mrs. Rademacher said. Now, some of her friends are interested in following suit. “It just worked out so well,” she said, “that people were like, ‘No way, I want that!'”

One startup lender called Loftium will supply $50,000 for a down payment, on the condition that the homebuyer agrees to rent out a room a Airbnb.

Erik and Rafaela de los Reyes considered applying for an FHA loan to buy a home in Seattle but were put off by the mortgage insurance and other costs. They instead got $28,000 from Loftium, the startup that offers funding in exchange for a cut of their Airbnb income. The couple have pledged to rent out their mother-in-law suite for three years.

“If you don’t have the down payment, it’s a great way to start,” said Mrs. de los Reyes, a 29-year old flight attendant. She and Mr. de los Reyes had never been Airbnb hosts before, so they were apprehensive. But as for their guests, Mrs. de los Reyes said, “we barely see them.”

Yifan Zhang got the idea for Loftium after renting out a spare room in her Seattle home. One of her goals, she said, is to even the playing field between millennials whose parents can help them buy their first home and those who are trying to save on their own.

“If you’re willing to kind of sacrifice and generate this extra income, then you should be able to have this leg up in homeownership,” said Ms. Zhang, the company’s CEO and co-founder.

Perhaps these lenders have forgotten the most enduring lesson from the financial crisis: When borrowers don’t have “skin in the game” – ie they’re playing with “other people’s money” – they’re much more likely to walk away when home prices fall.

Economists caution that actions such as loosening credit standards or supplying borrowers with more down payment money worsen the problem by creating more demand in a supply-constrained market, leading to a further overheating of home prices. And if home prices later fall, borrowers with little of their own money invested are more likely to simply walk away, they say.

These aren’t the only options for young people. And as we’ve previously pointed out, Freddie Mac recently revised its “3% down” mortgage program to eliminate pesky income restrictions and geographic restrictions allowing a new wave of “income-challenged” Americans to rush into already-hot housing markets. The Federal Housing Administration has a similar 3%-down program.

Then again, while some people are turned off entirely by the GoFundMe concept, the idea isn’t so hard to rationalize: Why shouldn’t boomers pitch in to help millennials make their down payments? After all, they’re the ones who wrecked the economy and the housing market, right?

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Earlier this week, when within minutes of each other, news hit last Tuesday that first Saudi Arabia would boost production to a record 10.8mmb/d, an increase of nearly 1 million barrels per day from the Kingodm’s current 10.03mmb/d output, only to be followed almost immediately by a warning from the State Department advising US allies of a crackdown on Iran, and demanding they cut their Iranian oil exports to 0 by the Nov. 4 deadline, oil first dipped then spiked, as the market weighed the news of the potential drop in Iranian production far more than any potential Saudi output: after all that was already largely priced in during last weekend’s OPEC summit.

As we said then, “the confluence of these two reports, first sent the price of oil sliding on the Saudi report, followed by a modest boost on the Iran news, thereby assuring more angry tweets from the president.“

More angry tweets were guaranteed because since last Tuesday the price of oil has continued to rise, with WTI hitting a fresh 4 year high while Brent is back to $80/barrell.

Sure enough, the “angry tweet” finally came on Saturday morning, when in his 3rd direct address to either OPEC or Saudi Arabia on Twitter, the president said he asked Saudi Arabia to significantly boost its oil production to bring down crude prices.

“Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference…Prices to high! He has agreed!.”

Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference…Prices to high! He has agreed!

— Donald J. Trump (@realDonaldTrump) June 30, 2018

While it wasn’t clear whether Trump was saying the king agreed that prices were too high or to increase output, but clearly the Saudi monarch wanted to placate Trump and get him off the line as soon as possible. The WSJ said that a representative of the Saudi government wasn’t immediately available to comment early Saturday.

Saudi Arabia is already boosting production, having agreed after last weekend’s OPEC summit to scale back compliance with output cuts that have been in place since the end of 2016. According to Saudi Energy Minister Khalid Al-Falih indicated, OPEC would add nearly 1 million barrels a day to the market (although other OPEC states disagreed over the “real” number, with Iran claiming it would be no more than 500kb/d).

As Bloomberg adds, if Saudi Arabia were to concede to Trump’s request, while it would likely send the price of oil sliding – if only briefly – it would also stretch the world’s spare production capacity to the limit, meaning that any supply outage could have an outsized effect on oil prices.

A Saudi concession would also further aggravate other OPEC members, such as Iran and Venezuela, which initially sought to prevent any increase as OPEC, along with allies led by Russia, headed into their Vienna meetings: Venezuela is fighting hyperinflation and is scrambling to keep the price of oil as high as possible, and while Iran is not quite there, it is fast approaching an economic crisis as well, and is therefore in dire need of both higher prices and not losing market share to Saudi Arabia.

The irony behind all this of course, is that it is Trump’s own crackdown against Iran, and his renewed sanctions against Tehran’s oil production that is the main reason behind the oil price surge (an outcome we previewed back in late 2016 in “Will Trump Send The Price Of Oil Soaring?”) and which the president is now desperately trying to beckpedal against as high US gas prices threaten to unfo the positive impact of Trump’s fiscal stimulus and tax cuts and cripple the US economy as consumer are forced to spend more money on gas and less on discretionary purchases, as explained previously. 

Brent topped $80 a barrel on May 17, the highest level since November 2014. It closed Friday at $79.44l; $80 Brent has also emerged as a “red line” for Trump.

It is unclear of Trump will order an accelerated liquidation from the Strategic Petroleum Reserve if Saudi Arabia drags its feet in boosting output further, although some have suggested this may be the next step.

The bigger strategic problem for Trump is that between Saudi Arabia and Russia pumping at near capacity, it puts the US at the mercy not only of Riyadh but also of, drumroll, Moscow which – in light of the imminent release of the Mueller report – is the last place the president would like to find himself. After all, should Russia decide to slash production indefinitely by 1, 2mmb/d or more, watch as gas prices in the US explode.

 

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President Trump said Friday that he has narrowed down a list of 25 candidates for Supreme Court to just five finalists – including two women, and that he plans to announce his nominee to replace the retiring Justice Kennedy on July 9.

This will be Trump’s second Supreme Court pick, the first being Neil Gorsuch who replaced Justice Antonin Scalia after his February, 2016 death at a West Texas ranch.

“I like them all,” Trump told reporters flying with him on Air Force One. “It is a group of highly talented, very brilliant, mostly conservative judges.”

“Outside of war and peace, of course, the most important decision you make is the selection of a Supreme Court judge, if you get it,” Trump said, adding “As you know, there are many presidents who never get a choice.”

In response to Kennedy’s retirement announcement, Democrats have come out in force – demanding that Trump “not consider a Supreme Court Justice in an election year,” suggesting that holding up the process because of the upcoming midterm elections is somehow equivalent to doing the same during a Presidential election year, as was the case after Scalia’s death. 

Enter Hillary

And just like that, Hillary Clinton is back – bracing for a battle against whoever Trump nominates to the highest court in the land.

In a Friday tweet, Clinton threw her support behind Demand Justice, a leftist 501(c)(4) advocacy organization headed by her former press secretary, Brian Fallon, that intends to fight “Trump’s hateful vision for America” by opposing his Judicial picks across the country – including the Supreme Court.  

Given the news coming out of the Supreme Court this week, I’m excited to support @WeDemandJustice‘s critical work by welcoming them into the @OnwardTogether family. https://t.co/DrxSqwVn4H

— Hillary Clinton (@HillaryClinton) June 29, 2018

“Long after Donald Trump is no longer our President, his takeover of our courts will keep alive his hateful vision for America for decades to come,” their website reads. “Trump’s judges are overwhelmingly white men. Many are not at all qualified for their posts. And they consistently hold extreme, right-wing views.”

“If we truly want to stop Trump, we can’t surrender this fight.” -Demand Justice

Demand Justice also employs chief counsel Christopher Kang, a former congressional aide who was deeply involved in the Obama administration’s vetting of judicial nominees. 

While this may be yet more pop-up activism from the left in order to snipe Trump’s Supreme Court picks – or it could become something more:

The funding for Demand Justice is also suspect. As a 501(c)(4) organization, Demand Justice does not have a legal obligation to disclose its donors, and the group is too young to have submitted annual IRS tax filings. However, Director Fallon indicated as early as May that Demand Justice was well on its way to reaching its $10 million goal. Coupled with the fact that Fallon recently spoke at the Atlanta Conference of the Democracy Alliance, a shadowy network of left-leaning donors including George Soros, it is clear that Demand Justice could be well on its way to becoming something much bigger than the obscure nonprofit it is now. As a (c)(4), it is allowed to engage in unlimited lobbying. But it can also support or oppose candidates for election (as long as that activity isn’t the organization’s primary purpose, which currently means spending no more than 49 percent of expenditures on electioneering). –Capital Research

After comparing herself to Winston Churchill this week and telling The Guardian that she’s not going to “call it a day” anytime soon – exclaiming “I’m not going anywhere,” it will be interesting to see how Hillary’s notorious brand of feminism intersects with a female Trump pick for the Supreme Court, should that occur. 

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Authored by Philip Giraldi via The Strategic Culture Foundation,

The United States has decided to no longer participate in the United Nations 47-member Human Rights Council (UNHRC). The number one reason cited by U.S. Ambassador Nikki Haley was that the council is unfairly critically focused on Israel.

The United States had already left the U.N.’s cultural organization UNESCO last October, the last straw reportedly being when the organization named the city of Hebron on the West Bank a Palestinian World Heritage site, which Israel declared to be unacceptable. At that time, the number one reason cited by Haley for the withdrawal was that the organization was too critical of Israel.

Haley has also made a number of other comments relating to the United Nations and Israel. Immediately upon taking office she complained that “nowhere has the U.N.’s failure been more consistent and more outrageous than in its bias against our close ally Israel” and vowed that the “days of Israel bashing are over.” In February 2017, she blocked the appointment of former Palestinian Prime Minister Salam Fayyad to a diplomatic position at the United Nations because he is a Palestinian. In a congressional hearing she was asked about the decision: “Is it this administration’s position that support for Israel and support for the appointment of a well-qualified individual of Palestinian nationality to an appointment at the U.N. are mutually exclusive?” Haley responded yes, that the administration is “supporting Israel” by blocking every Palestinian.

There is clearly a disinclination on the part of the Trump Administration to support multinational bodies, evident in the rejection of climate, trade and non-proliferation agreements. Complete withdrawal from the United Nations is not unthinkable in the current climate, though the Democrats and some moderate Republicans would no doubt strongly resist such a move.

In my opinion, the United Nations is a dystopian mess but it is better to have it than not as it provides a forum where nations that otherwise cannot meet are able to do so and discuss transnational issues. And it should be conceded that the U.N.’s inability to actually function is largely both structural and bureaucratic due to the veto power given to the Security Council’s five permanent members, a function that Nikki Haley has repeatedly used to stop resolutions that might be offensive to the United States or Israel.

Beyond that, Haley’s constant citation of concern for Israel gives strength to the suggestion that there is something unnatural about its bilateral “special” relationship with the United States. In the Middle East in particular, Israel would seem to be driving U.S. policy, particularly vis-à-vis Syria, Lebanon and Iran. Israel is intent on continuing political chaos in Syria lest there be a threat to its continued occupation of the Golan Heights and has warned about possible preemptive action in Lebanon to punish Hezbollah. It also wants the United States to deal decisively with Iran. By all accounts, those agendas are proceeding very well as Washington has been regularly threatening Iran and last week vowed to take military action if Damascus seeks to recover territory in the Syrian southwest that until recently was held by terrorists.

It is difficult to discern what the joint United States-Israeli strategy might be towards the United Nations and other international bodies. Neither has recognized the authority of the International Criminal Court in The Hague for fear that its own senior officials might be arrested and tried for war crimes. To be sure, both countries are protected against any serious challenges in the U.N. itself by the American veto power over the Security Council, which alone has the authority to mandate sanctions or peacekeeping operations.

But the U.S. withdrawal from U.N. agencies is, if anything, a sign of weakness rather than strength. If Washington were indeed confident in its own brand of international leadership it would welcome the opportunity to sit on panels and help shape the views of other countries with which it has a politically neutral or adversarial relationships.

That it does not choose to do so suggests that there is an understanding that what Washington is selling no one is buying.

The complete isolation of the United States at the United Nations and also elsewhere, to include G-7, was exhibited recently during June 1st votes at the U.N. Security Council. A resolution sponsored by Kuwait seeking an inquiry into the Israeli killing of unarmed demonstrators in Gaza and a motion by Haley seeking to blame Hamas for the deaths both were voted on. Haley’s was the only vote against the former and the only vote in favor of the latter. She predictably commented afterwards that “Further proof was not needed, but it is now completely clear that the U.N. is hopelessly biased against Israel.”

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If you’re wondering whether that strange light you saw zipping across the night sky was a UFO, you’re not alone. According to the National UFO Reporting Center, more than 1,300 UFO sightings have been reported so far this year.

However, that number represents a decline in recent seen in recent years.

While the organization only recorded 307 sightings back in 1990, they reached a peak of 8,619 in 2014, before falling slightly to 5,516 in 2016.

You will find more infographics at Statista

But the decline in sightings doesn’t mean interest in UFOs by both the public and the military has fallen off.

One recently leaked military report revealed fascinating new details about a 2004 incident involving what appears to be a UFO. The incident is better known as “the Tic Tac incident” due to the Tic Tac-like shape of the purported UFO.

The Department of Defense released three separate videos taken of the AAVs (anomalous aerial vehicles) from the incident after a secret Pentagon program intended to find signs of alien life was revealed by the New York Times to have been defunct since 2012. However, the paper’s sources said the program continues to exist in some form, despite being stripped of its explicit funding.

And why not? The American military – and the air force in particular – has been investigating incidences of UFOS for decades. In 1947, the Air Fore started investigating more than 12,000 claimed UFO sightings before the project ended in 1969. While the program concluded that most of the sightings involved conventional aircraft of spy planes, more than 700 incidences remained explained.

Perhaps we’ll learn more after President Trump launches his ‘Space Force’.

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Authored by Daisy Luther via The Organic Prepper blog,

The rhetoric in the United States is heating up and we’re sounding anything but… well… united. It seems to most media pundits like we are too far down the path to Civil War 2.0 to turn back now. Activists are laying siege to government offices. Threats toward people who disagree are growing in ferocity. It’s ugly and getting uglier. It’s a powder keg that is about to erupt. (Here are some thoughts on what a full-fledged Civil War might look like.)

It is only a matter of time before civil unrest begins to escalate and spread throughout the country. Many people are wondering, how do you keep your family safe during widespread unrest? It’s not about being fearful. It’s about being prepared.

My thoughts on this manipulated division are fodder for another article. (You can find it here.) This article is apolitical (to the best of my ability, anyway) and focuses strictly on what you need to know to survive should the unrest come to your neighborhood.

You need to understand how riots unfold.

First things first, you need to understand how this kind of unrest unfolds so that you can see the warning signs earlier. Never underestimate the power, rage, and motivation of a mob.

Here’s the pattern:

• An outrage occurs.

• Good people react and protest the outrage.

• Those perpetrating the outrage try to quell the protest because they don’t think that the outrage was actually outrageous.  (And whether it was or not can fluctuate – in some cases, force is necessitated, but in more and more cases, it is flagrantly gratuitous.)

• Others react to the quelling and join the protest.

• A mob mentality erupts. Thugs say, “Hey, it’s a free for all. I’m gonna get some Doritos and while I’m at it, beat the crap out of some folks for fun.”

• All hell breaks loose.

• The military gets called in.

• The city burns, and neighborhoods get destroyed, and no one in the area is safe.

• Cops act preemptively, out of fear, and for a time, there is no rule of law.

• If you happen to be stuck there, know this: you’re completely on your own.

Tess Pennington wrote about societal breakdowns in more detail – read her excellent article for more information on these predictable scenarios.

Some people are just waiting for the opportunity to behave in this fashion. They’d love to act like that every single day, but they don’t want to spend the rest of their lives in jail. But when a verdict gets rolled out, when a storm takes out the power, when a disaster strikes, they delight in the chance to rob, pillage, loot, and burn.  Who can forget the day before Superstorm Sandy hit the East Coast, when thugs were coordinating looting rampages via Twitter?

I remember learning about “sublimation” in a high school psychology class.

Sublimation is a defense mechanism that allows us to act out unacceptable impulses by converting these behaviors into a more acceptable form. For example, a person experiencing extreme anger might take up kickboxing as a means of venting frustration. Freud believed that sublimation was a sign of maturity that allows people to function normally in socially acceptable ways. (source)

If you believe Freud’s theory, then it’s easy to see that many people look for an excuse to revert to their true natures.  In a situation where “everyone” is doing something, they are able to cast off the normal control of their impulses without much fear of reprisal. The number of looters and thugs far outstrips the number of arrests going on in Baltimore, so there’s a very good chance that someone swept up in that mentality can go burn somebody else’s home or business and completely get away with it.

Make a flexible plan.

With situations of civil unrest, it isn’t as clear-cut as disasters like a looming storm or a chemical spill.  It depends on where you live. In a small town, far away from riots and protests, your lockdown area could be much greater than your own home. It could encompass your immediate community, too, and life might go on as it always has for you, aside from the need to stay just a little closer to home than before.

However, if you live in a city or suburb, it may become essential to make a decision quickly. Do you lock your doors and stay home? Or do you get out of Dodge?  It is a question only you can answer. One thing that is very important is this: if you need to go, do NOT miss your window of opportunity to do so safely. If the entire city feels the same way, you’ll most likely be stuck in traffic and trapped in your car. Protesters have shut down the highways more than once in recent years, and you’ll be far safer behind the brick and mortar of your home than you will be in your car.

By the way, there’s always someone who chimes in with a snide remark about how cowardly it is to lockdown with your family in order to stay safe. Blah, blah, blah. If you want to go get involved in a battle to make a political point, that’s certainly your prerogative. However, my priority is the safety of my family, and as such, I hope to avoid engaging altogether.

The first thing you need to do is get home.

If your area is beginning to devolve, the first thing you’re going to want to do is to get everyone in the family home. (Or if your home is in the thick of things, to a safer secondary location.)

In a perfect world, we’d all be home, watching the chaos erupt on TV from the safety of our living rooms.  However, reality says that some of us will be at work, at school, or in the car when unrest occurs.  You need to develop a “get-home” plan for all of the members of your family, based on the most likely places that they will be.

• Devise an efficient route for picking up the kids from school.  Be sure that anyone who might be picking up the children already has permission to do so in the school office.

• Discuss the plan with older kids – there have been rumors that children could be moved by the schools to a secondary location in the event of a crisis.  Some families have formulated plans for their older kids to leave the school grounds in such an instance and take a designated route home or to another meeting place.

• Keep a get-home bag in the trunk of your car in case you have to set out on foot.

• Stash some supplies in the bottom of your child’s backpack – water, a snack, any tools that might be useful, and a map.  Be sure your children understand the importance of OPSEC.

• Find multiple routes home – map out alternative backroad ways to get home as well as directions if you must go home on foot.

• Find hiding places along the way.  If you work or go to school a substantial distance from your home, figure out some places to lay low now, before a crisis situation.  Sometimes staying out of sight is the best way to stay safe.

• Avoid groups of people.  It seems that the mob mentality strikes when large groups of people get together.  Often folks who would never ordinarily riot in the streets get swept up by the mass of people who are doing so.

• Keep in mind that in many civil disorder situations the authorities are to be avoided every bit as diligently as the angry mobs of looters. Who can forget the scenes of innocent people being pepper sprayed by uniformed thugs in body armor just because they happened to be in the wrong place at the wrong time?

• Know when to abandon the plan to get home. Sometimes, you just can’t get there. Going through a war zone is not worth it. Find a different place to shelter. Pay attention to your instincts.

The reality is, family members are likely to be at work or school when things start to break down. You need to have a plan laid out in advance to get everyone together and you need to be flexible enough to know when to go on to Plan B.

Be ready for lockdown.

Once you make your way home or to your bug-out location… STAY THERE.

By staying home, you are minimizing your risk of being caught in the midst of an angry mob or of sitting in stalled traffic while looters run amok.  In most scenarios, you will be far safer at home than you will be in any type of shelter or refugee situation. (Obviously, if there is some type of chemical or natural threat in your immediate neighborhood, like a toxic leak, a flood, or a forest fire, the whole situation changes – you must use common sense before hunkering down.)

This is when your preparedness supplies will really pay off. If you are ready for minor medical emergencies and illnesses, a grid down scenario, and a no-comm situation, you will be able to stay safely at home with your family and ride out the crisis in moderate comfort.

Here’s a quick checklist:

• Check your pantry and fill any gaps in your food preps.

• Order emergency food buckets

• Get your water preps in order

• Get cash in small denominations out of the bank.

• Make sure you have enough garbage bags, pet supplies, and toiletries.

• Pick up a copy of a comprehensive preparedness guide like The Prepper’s Blueprint

• Check your supply of candles, matches, and lighters. (This article has more information)

• Flashlight and spare batteries and/or dynamo wind up flashlights.

• Make sure all electronics are fully charged and keep them charged during the lead-up to an event

• Make sure any cell phone battery packs are fully charged.

• Fill up your gas tank up to the max.

• If your vehicle isn’t in a garage park it trunk end in as close to a wall as you can. This makes it harder to get to the tank to either steal the fuel or set fire to it.

• Check your home security – walk around looking at your property as if you were a burglar and take appropriate action to improve security if required.

• Have something on hand for the kids to do in case of school closures.

• Make sure you have a fully stocked first aid kit and enough OTC medications to last the family for at least a month.

• Check and clean your firearms and be prepared to defend your family if trouble comes to you

• Pick up some extra ammo

• Plan to keep pets indoors

• Make sure you have enough of needed prescription medications to last a few weeks

Staying home is the number one way to keep yourself safer from during a civil unrest situation. If you find yourself in an area under siege, the odds will be further on your side for every interaction in which you avoid taking part. Every single time you leave the house, you increase your chances of an unpleasant encounter.  Nothing will be accomplished by going out during a chaotic situation.

Try to stay under the radar.

Your best defense is avoiding the fight altogether. You want to stay under the radar and not draw attention to yourself.  The extent to which you strive to do this should be based on the severity of the unrest in your area. Some of the following recommendations are not necessary in an everyday grid-down scenario, but could save your life in a more extreme civil unrest scenario.

• Keep all the doors and windows locked.  Secure sliding doors with a metal bar.  Consider installing decorative gridwork over a door with a large window so that it becomes difficult for someone to smash the glass and reach in to unlock the door.

• Put dark plastic over the windows. (Heavy duty garbage bags work well.)  If it’s safe to do so, go outside and check to see if any light escapes from the windows. If your home is the only one on the block that is well-lit, it is a beacon to others.

• Keep pets indoors. Sometimes criminals use an animal in distress to get a homeowner to open the door for them. Sometimes people are just mean and hurt animals for “fun”.  Either way, it’s safer for your furry friends to be inside with you.

• Don’t answer the door.  Many home invasions start with an innocent-seeming knock at the door to gain access to your house.

• Keep cooking smells to a minimum.  The goal here is not to draw attention. The meat on your grill will draw people like moths to a flame.

• Keep the family together.  It’s really best to hang out in one room. Make it a movie night, go into a darkened room at the back of the house, and stay together. This way, if someone does try to breach your door, you know where everyone is who is supposed to be there. As well, you don’t risk one of the kids unknowingly causing a vulnerability with a brightly lit room or an open window.

• Remember, first responders may be tied up.  If the disorder is widespread, don’t depend on a call to 911 to save you. You must be prepared to save yourself.  Also keep in mind, as mentioned earlier in the article – the cops are not always your friends in these situations.

Be prepared for defensive action.

If, despite your best efforts, your property draws the attention of people with ill intent, you must be ready to defend your family. Sometimes despite our best intentions, the fight comes to us.  (Have you seen the movie The Purge?)

Many preppers stockpile weapons and ammunition for just such an event.  I know that I certainly do. Firearms are an equalizer. A small woman can defend herself from multiple large intruders with a firearm if she’s had some training and knows how to use it properly. But put a kitchen knife in her hand against those same intruders, and her odds decrease exponentially.

When the door of your home is breached, you can be pretty sure the people coming in are not there to make friendly conversation or borrow a cup of sugar.  Make a plan to greet them with a deterring amount of force.

• Don’t rely on 911. If the disorder is widespread, don’t depend on a call to 911 to save you – you must be prepared to save yourself.  First responders may be tied up, and in some cases, the cops are not always your friends.  In the aftermath of Hurricane Katrina, some officers joined in the crime sprees, and others stomped all over the 2nd Amendment and confiscated people’s legal firearms at a time when they needed them the most.

• Be armed and keep your firearm on your person.  When the door of your home is breached, you can be pretty sure the people coming in are not there to make friendly conversation over a nice cup of tea.  Make a plan to greet them with a deterring amount of force. Be sure to keep your firearm on your person during this type of situation, because there won’t be time to go get it from your gun safe. Don’t even go to the kitchen to get a snack without it. Home invasions go down in seconds, and you have to be constantly ready.

• Know how to use your firearm. Whatever your choice of weapon, practice, practice, practice. A weapon you don’t know how to use is more dangerous than having no weapon at all. Here’s some advice from someone who knows a lot more about weapons than I do.

• Make sure your children are familiar with the rules of gun safety. Of course, it should go without saying that you will have pre-emptively taught your children the rules of gun safety so that no horrifying accidents occur. In fact, it’s my fervent hope that any child old enough to do so has been taught to safely and effectively use a firearm themselves. Knowledge is safety.

• Be ready for the potential of fire.  Fire is a cowardly attack that doesn’t require any interaction on the part of the arsonist. It flushes out the family inside, leaving you vulnerable to physical assaults. Have fire extinguishers mounted throughout your home. You can buy them in 6 packs from Amazon. Be sure to test them frequently and maintain them properly. (Allstate has a page about fire extinguisher maintenance.) Have fire escape ladders that can be attached to a windowsill in all upper story rooms.  Drill with them so that your kids know how to use them if necessary.

• Have a safe room established for children or other vulnerable family members. If the worst happens and your home is breached, you need to have a room into which family members can escape. This room needs to have a heavy exterior door instead of a regular hollow core interior door. There should be communications devices in the room so that the person can call for help, as well as a reliable weapon to be used in the unlikely event that the safe room is breached. The family members should be instructed not to come out of that room FOR ANY REASON until you give them the all clear or help has arrived. You can learn more about building a safe room HERE.  Focus the tips for creating a safe room in an apartment to put it together more quickly.

Again, even if your plan is to bug in, you must be ready to change that plan in the blink of an eye. Plan an escape route.  If the odds are against you, if your house catches on fire, if thugs are kicking in your front door… devise a way to get your family to safety.  Your property is not worth your life. Be wise enough to accept that the situation has changed and move rapidly to Plan B.

You have to remember that civilization is just a veneer.

So many times, when interviewed after a disaster, people talk about being “shocked” at the behavior of others.  Their level of cognitive dissonance has lulled them into thinking that we’re safe and that we live in a civilized country.  They are unwilling to accept that civilization is only a glossy veneer, even when the evidence of that is right in front of them, aiming a gun at their faces, lighting their homes on fire, or raping their daughters.

They refuse to arm themselves and prepare for an uncivilized future.

Accept it now, and you’ll be a lot better off when the SHTF.

Look at what happened during the Ferguson riots. Look at the behavior of the stampeding masses on any given Black Friday shopping extravaganza. Look at the horrifying rhetoric espoused by people angry about the politics of our country.

Then tell me again how “civilized” our country is.

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