Month: September 2018

Global markets slumped in suspense over today’s main events, with S&P 500 futures falling along with European and Asian shares as investors awaited the latest move in the U.S.-China trade war after the comment period deadline passed overnight, even as August payrolls data loomed later on Friday. A weaker dollar helped emerging-market equities snap seven days of declines while EM currencies also rose.

World shares limped toward their worst week in almost six months on Friday, with Asia carving out a 14-month trough as investors braced for a new salvo of Sino-U.S. tariffs. A Thursday slump in U.S. chip stocks and reports that President Trump had also weighed a trade feud with Japan dragged on tech-heavy Asia overnight, while Europe’s main bourses faded after an initial attempt push higher, with the Stoxx 600 index falling to session low, down 0.3% reversing gains of 0.2%, driven lower by banks and as travel stocks declined. The Europe STOXX 600 was set to end the week with a 2.3% loss, its worst weekly performance since the end of March. Emerging market stocks have lost even more, some 3%, while U.S. equity futures pointed to a softer open following a negative session in Asia as equities fell in Japan, South Korea and Australia, while those in China posted gains.

European banks dropped 1% after Dow Jones reported that China asked HNA Group to exit Deutsche Bank, and ING said its license to operate could be threatened because of information technology and working system problems. As a result, the European Bank Index dropped lowest since November 2016.

Core European bonds fell, while Italian bonds gained on optimism the government will stick to European Union budget-deficit rules. In fact, Italian bonds headed for the biggest weekly gain in almost three months after the country’s finance chief reassured investors that this month’s budget won’t breach European Union rules.

Chinese blue chips had managed their 0.5 percent bounce as beaten-down health care stocks found buyers after taking a savaging in recent months amid vaccine scandals. MSCI’s broadest index of Asia-Pacific shares outside Japan had still lost 0.3% though, having earlier reached its lowest since mid-July last year. The Nikkei shed 0.8 percent, undermined by a rising yen and reports U.S. President Donald Trump could be contemplating taking on Japan over trade.

Trader nerves have been frayed further after the public comment period for proposed tariffs on an additional $200 billion worth of Chinese imports passed. The tariffs could now go into effect at any moment, although there was no clear timetable. China has warned of retaliation if Washington launches any new measures. Australia’s dollar, often used in as play on China’s fortunes due to its huge metals exports there, hit a 2-1/2 year low early on it Europe.

“It is all linked to the trade comment period expiring and now we are wondering what the implementation plan is going to be and how China is going to respond,” Saxo Bank’s head of FX strategy John Hardy said. “The Aussie dollar of course is a proxy within G10 for that,” he added, also pointing to shares in mining giants such as BHP trading down near key technical levels.

There was a silver lining after the MSCI Emerging Market Index jumped 0.4%, on course to snap a 7-day losing streak after falling into a bear market earlier in the week. China had closed higher overnight despite the tariff feud and Turkey’s lira and South Africa’s rand and Argentina’s peso all looked relatively calm early on.

Other emerging markets were trying to steady after a punishing week, with Indonesia and the Philippines still badly scarred by fears of capital flight following crises in Argentina and Turkey and the rumbling U.S.-China trade strains.

“It seems unlikely the tariffs are not implemented as the U.S. administration believes that they are winning the trade war and will be in a stronger position to negotiate if they put more pressure on China,” JPMorgan analysts wrote in a note. “The tech sector was also very weak overnight, with a slide in Micron of almost 10 percent and further weakness in the Chinese Internet ADRs.”

Elsewhere in EM, Brazil’s stocks and currency jumped after presidential candidate Jair Bolsonaro was stabbed during a street rally as traders bet that the attack will wind up creating sympathy for the candidate and help propel him into the second round of voting.

The Turkish lira advanced for a third day and Turkish bonds rallied as an emerging-market currency rout showed signs of easing.

With the EM rout fading for now, traders returned to more familiar themes: trade tensions and central banks. The Thursday deadline for public comment on proposed U.S. tariff hikes on an additional $200 billion of Chinese imports came and went without any fresh announcement from Washington. Eyes now turn to the U.S. payrolls report for August which is expected to show a robust rise of 191,000 – in part as July was temporarily depressed by the closure of the Toys R Us chain that month – which investors will watch with particular attention following dovish comments by New York Fed President John Williams on Thursday.

Still, as we noted previously, Goldman analysts cautioned that: “Despite employment indicators pointing to another strong report, it is worth noting that there is a tendency for August payrolls to initially disappoint and then be revised up noticeably later.”

Just as important will be figures on U.S. wages where a rise above the 0.2 percent forecasted would likely boost the dollar and pressure Treasury prices.

The dollar could do with the lift, having lost out to the safe-haven yen and Swiss franc. It was changing hands at 110.70 yen after falling 0.7 percent on Thursday, the sharpest one-day loss in seven weeks. Part of the decline came after a Wall Street Journal columnist reported Trump had mused about starting a trade fight with Japan. The dollar also hit a four-month low on the franc around $0.9645. Against a basket of currencies, the dollar index nudged lower to 94.939 and was heading for a fourth weekly drop.

Elsewhere in G-10 FX, the pound was little changed on the day and headed for its first weekly loss since mid-August. The euro was a shade higher at $1.1645, while sterling idled at $1.2939 amid ongoing uncertainty over Brexit negotiations. The dollar dipped and Treasuries moved lower before the U.S. payroll report on Friday, which will offer clues on the labor market’s health, the state of wage inflation and the pace of future Fed rate hikes.

In commodities, WTI and Brent futures were marginally higher in early European trade thus far with the former hovering around the USD 68/bbl level. According to Reuters trade flow data, US imports of crude oil from Saudi Arabia in August and September are set to reach the highest 2-month level early of 2017, citing the relatively cheap prices as advantageous for US refiners. News flow remains light for the complex, however, next week will see the release of the EIA short-term energy outlook, OPEC’s monthly report and IEA’s oil market report. Elsewhere, spot gold trades flat as the yellow metal flirts with the USD 1200/oz level ahead of the release of key US jobs data later, while copper underperforms amid ongoing trade-related concerns.

Market Snapshot

• S&P 500 futures down 0.08% to 2,876.75
• STOXX Europe 600 down 0.1% to 373.05
• MXAP down 0.2% to 160.23
• MXAPJ down 0.2% to 515.81
• Nikkei down 0.8% to 22,307.06
• Topix down 0.5% to 1,684.31
• Hang Seng Index down 0.01% to 26,973.47
• Shanghai Composite up 0.4% to 2,702.30
• Sensex up 0.2% to 38,302.99
• Australia S&P/ASX 200 down 0.3% to 6,143.81
• Kospi down 0.3% to 2,281.58
• Brent Futures up 0.2% to $76.68/bbl
• Gold spot up 0.1% to $1,201.26
• U.S. Dollar Index down 0.1% to 94.91
• German 10Y yield rose 0.8 bps to 0.363%
• Euro up 0.2% to $1.1645
• Brent Futures up 0.2% to $76.68/bbl
• Italian 10Y yield rose 2.9 bps to 2.694%
• Spanish 10Y yield fell 0.7 bps to 1.442%

Asia equity markets traded negative following a lacklustre lead from the US where continued weakness in tech and underperformance in energy dragged most US majors lower, while upcoming NFP jobs data and trade-related concerns added to the tentative tone. ASX 200 (-0.6%) and Nikkei 225 (-0.9%) were lower with nearly all sectors in Australia in the red and energy among the worst hit following the recent pullback in crude, while Tokyo stocks underperformed on a firmer currency and after US President Trump hinted that Japan could be next on the agenda. Conversely, Hang Seng (-0.9%) and Shanghai Comp. (-0.1%) initially outperformed despite the potential escalation in the trade dispute with the consultation period for the proposed tariffs on USD 200bln of Chinese imports now expired. Furthermore, China had declared it would retaliate against fresh tariffs and plans to take necessary countermeasures to support its companies, while the PBoC were also active today and injected CNY 176.5bln through its 1yr MLF. Chinese stocks then deteriorated heading into the tariff deadline to conform to the overall risk-averse tone and amid increases in money market rates which saw the Hong Kong overnight CNH HIBOR hit its highest level since late June. Finally, 10yr JGBs were marginally higher as they tracked the prior session’s gains in T-notes and with support seen amid the risk averse sentiment in the region, while today’s enhanced liquidity auction for 2yr-20yr JGBs also saw improved results across all metrics.

Top Asia News

• Philippine Central Bank Pledges ‘Strong’ Action on Inflation
• Hong Kong, China Stocks Wobble as U.S. Tariff Consultations End
• China End-Aug. Forex Reserves at $3.1097T; Est. $3.115T
• Deutsche Bank Top Holder HNA Is Said to Plan Exiting Its Stake

European equities trade slightly softer (Eurostoxx 50 -0.4%) following a negative read from Asia with sentiment dampened on trade concerns and ahead of the upcoming NFP data, while UK’s FTSE 100 is pressured by miners on the back of softer base metal prices. Sector wise, telecom names outperform as French listed Iliad (+5.7%) shares jumped higher on rumours of going private. The company decline to comment.. In stock specific news, IAG (-2.9%) is under the hammer after subsidiary BA said at least 380,000 customers credit card details have been compromised in a data theft.

Top European News

• Europe’s Stocks Finally Get Some Love With 1st Inflows in 26 Wks
• Iliad Shares Soar as Oddo Says Buyout Scenario Is Credible
• Steve Bannon’s Favorite Swedish Party Is Set to Upend Status Quo
• How Did Russia’s Gas Giant Get Beaten by Its Smaller Rival?

In FX, AUD was the marked G10 underperformer and main victim of ‘pending’ $200 bn Chinese import tariffs by the US, alongside the threat that President Trump turns his trade offensive towards Japan next. Having failed yet again to clearly overcome resistance around 0.7200 vs the Usd, reported bids from exporters and short covering or profit taking demand at 0.7150 has been severely tested and briefly breached before a relatively firm bounce, albeit amidst broader Greenback weakness, as the Aud continues to lose ground against its NZD antipodean peer with the cross down under 1.0900 – Kiwi holding towards the upper end of a 0.6560-95 range vs the Usd and not really reacting to comments from RBNZ Governor Orr last night. EUR – Conversely, the single currency is the major front-runner vs the Dollar and overcame a post-German data wobble in early EU trade to test offers around 1.1650, with some technical impetus derived as the headline pair held just above the 100 HMA (1.1607). Note also, more decent option expiry interest in the mix with 1 bn running off between 1.1635-50 at the NY cut. CAD/CHF/JPY – All pretty flat against the Usd, but retaining the bulk of gains made on Wednesday as the Loonie benefited from positive NAFTA talk via the US President and reaffirmation of gradual rate hike guidance by BoC’s Wilkins. Usd/Cad currently circa 1.3130 and awaiting Canadian jobs data alongside US NFP. The Franc is also on the firmer side of recent ranges around 0.9650 and its safe-haven counterpart, Jpy trades around a new pivot of 110.50 and bang in the middle of 1 bn option expiries at the 110.00 and 111.00 strikes. EM – So far so good, as regional currencies continue their comeback, led by the Try that has extended its rebound on renewed CBRT tightening expectations, with the Lira now over 6.5000 again vs the Usd. Similarly, the Rouble has been boosted by signals from the Central Bank that a rate hike could well be in the offing next Friday (just a day after the CBRT policy meeting) and Usd/Rub is back below 69.0000 in response, while Usd/Zar has retreated further towards 15.0000.

In commodities, WTI and Brent futures are marginally higher in early European trade thus far with the former hovering around the USD 68/bbl level. According to Reuters trade flow data, US imports of crude oil from Saudi Arabia in August and September are set to reach the highest 2-month level early of 2017, citing the relatively cheap prices as advantageous for US refiners. News flow remains light for the complex, however, next week will see the release of the EIA short-term energy outlook, OPEC’s monthly report and IEA’s oil market report. Elsewhere, spot gold trades flat as the yellow metal flirts with the USD 1200/oz level ahead of the release of key US jobs data later, while copper underperforms amid ongoing trade-related concerns.

US Event Calendar

• 8:30am: Change in Nonfarm Payrolls, est. 191,000, prior 157,000
• 8:30am: Unemployment Rate, est. 3.8%, prior 3.9%
• 8:30am: Underemployment Rate, prior 7.5%
• 8:30am: Average Hourly Earnings MoM, est. 0.2%, prior 0.3%; Average Hourly Earnings YoY, est. 2.7%, prior 2.7%
• 8:30am: Average Weekly Hours All Employees, est. 34.5, prior 34.5
• 8:30am: Labor Force Participation Rate, prior 62.9%

DB’s Jim Reid concludes the overnight wrap

So a week to go until the 10-year anniversary of the Lehman default weekend. Of more immediate interest is that today we welcome in another payrolls Friday. They’ve generally been a bit dull over the last 7 months after the excitement of the average hourly earnings (AHE) spike in the release from the first week of February. As you’ll no doubt remember this caused unparalleled chaos in volatility markets. Since then, this number has been relatively well behaved. For today, DB are a tenth above consensus for AHE at +0.3% mom which, if correct, would equal the post-crisis yoy high of +2.8%. We should continue to keep a very close eye on this number as when the labour market is as tight as it is, the risks are virtually all on the upside for wages. Beware of the seasonality that often makes August’s payroll number weaker than expected. This is why unemployment and AHE will likely be more instructive today. The full preview is at the end.

So as we approach the end of the first week of September it’s been one where the negativity baton has been passed from EM to US tech. Indeed, the big mover yesterday was the NASDAQ again which tumbled -0.91% and so takes the three-day loss to -2.30% this week. The NYSE FANG index was also down -1.65% which means the -5.37% sell-off in the three days this week is now the biggest three-day move since the big selloff at the end of July. A not-so insignificant $158bn of value has also been wiped from that index over the last three days.

Anyway, the moves also weighed on the S&P 500 (-0.37%), while the DOW ended up bucking the trend to close +0.08%. The recent weakness is clearly being driven largely by tech given the outperformance for the other bourses. That said the VIX did rise above 15 intra-day for only the second time over the last two months (close 14.65). Here in Europe, the STOXX 600 (-0.59%) closed lower for the third session in a row. The FTSE MIB (-0.27%), despite finishing lower, continues to outperform much of Europe this week; it is now up +1.27% on the week compared to the STOXX 600’s -2.35% drop. Bond markets were generally a sideshow, with yields a couple of basis points lower for Treasuries and Bunds. EM FX meanwhile ended last night a rather modest +0.16% and in the grand scheme of things has had two days of fairly stable moves (although equities have been a lot weaker). Indeed the Argentine Peso (+2.84%) and Turkish Lira (+0.28%) both strengthened for the second day in a row while even the South African Rand (+0.58%) was stronger. In fact, there’s only been 2 other days since the start of August that those three currencies have all finished the same day stronger. The Russian Ruble fell -1.43% after Prime Minister Medvedev said he hopes the Bank of Russia takes an “active position” to address high interest rates. The new head of the Bank of Russia’s monetary-policy department, Alexey Zabotkin, issued similar comments by saying that financial conditions are already tightening, and that this will be part of the discussion around any future rate moves. Sentiment was not helped by the UK and allies’ joint statement formally accusing Russia of using the nerve agent Novichok on British soil.

Overnight the generally risk off tone has continued into Asia once again. Japan is leading the way in terms of underperformance (Nikkei -1.18%) not helped by a WSJ article which came out late last night suggesting that President Trump may turn his focus on trade tariffs over to Japan. Elsewhere the Hang Seng (-0.86%), Shanghai Comp (-0.13%), Kospi (-0.62%) and ASX (-0.63%) are also lower capping a tough week for the region. Coming back to trade there hasn’t been any news overnight post the deadline passing for the public comment period although there is a story on Bloomberg suggesting that some of the big US tech companies have made a big pushback to the proposed $200bn of tariffs on China. So we’ll see what today brings. NAFTA could also be in the spotlight after Canada’s Foreign Minister Chrystia Freeland said that a deal is unlikely this week but talks remain upbeat.

Coming back to yesterday which was a busy day for data but there were a couple of prints which stood out in the US. The first was the latest weekly initial jobless claims reading which at 203k (vs. 213k expected) marked a new cycle low and in fact the lowest since 1969. The second was the August ISM nonmanufacturing reading which backed up the manufacturing print earlier in the week by coming in at a much stronger than expected 58.5 (vs. 56.8 expected) – a jump of 2.8pts from July and so reversing much of the sharp decline that month. The details showed that the majority of significant components rose too, with the exception of prices. So further evidence that GDP growth isn’t showing signs of abating just yet.

In Europe, German manufacturing orders fell -0.9% in July, a big miss versus the expected +1.8% expansion. The fall was mostly attributable to a big drop in external orders from outside the Eurozone, suggesting some potential softening in external demand. Risks around Italy, trade, and EMs may also be contributing to uncertainty and may be weighing on business spending plans. In Switzerland, second quarter GDP printed at a very robust +3.4% yoy, exceeding expectations for +2.4%. This represents the strongest pace of growth since 2010, and the Swiss Franc rallied +0.75% versus the Euro to its strongest level in over a year. Apart from data, focus yesterday was on a speech by new NY Fed President John Williams (formerly of the San Francisco Fed). He broadly confirmed the house view for Fed policy and the economy. He downplayed the relevance of a flattening or inverted yield curve as a recession signal, assuming other asset prices maintain their positive signals. He described the outlook as “a bit of a Goldilocks economy from a policy maker point of view” and said that “we don’t feel the need to raise interest rates more quickly.” This supports DB’s expectations for two more rate hikes this year and four more in 2019. Williams also downplayed the risks to the US economy from stresses in emerging markets, “but we need to be on top of that.” Separately, Chicago Fed President Evans repeated his hawkish view that rates should proceed to neutral, or even a bit further. This is a big change from an FOMC member who used to be among the most dovish, but didn’t move markets. Separately, the Canadian dollar appreciated as much as +0.52% versus the US dollar after Deputy Governor Wilkins said that the Bank of Canada considered dropping their commitment to a “gradual approach” to rate hikes, which could signal a potential acceleration in the pace of hikes beyond the currently-discounted path of one per quarter. Food for thought internationally.

As for what to look forward to today the aforementioned US employment report dominates the agenda. Consensus is for a 191k payrolls reading which follows a much softer than expected 157k last month. Our US economists are slightly more cautious and have pegged a 185k forecast which is more conservative than their models imply largely because payrolls have missed consensus in the month of August for seven consecutive years which is a fairly telling stat. Indeed the average miss is 46k in the last seven Augusts. To be fair that probably dampens the importance of today’s data but the earnings numbers will still be a big focus.

The market is expecting a +0.2% mom average hourly earnings number which should be enough to keep the annual rate at +2.7% yoy. As mentioned earlier our economists actually expect a slightly stronger +0.3% earnings print which would push the annual rate up a tenth to +2.8% and just slightly behind September 2017’s hurricane-distorted post-recession high. Meanwhile our colleagues expect the unemployment rate to hold steady at 3.9% although the market expects a one-tenth fall to 3.8%.

Elsewhere, shortly after this hits your screens we’ll get July trade and industrial production data out of Germany followed shortly by the same in France. A couple of hours later we then get the final Q2 GDP revisions for the Euro area although the market isn’t expecting any changes from the +0.4% qoq advanced estimate. In the US all eyes will be on the aforementioned  August employment report while at some stage today we’ll also get August foreign reserves data out of  China. Meanwhile it’s a busy day for Fedspeak with Rosengren, Mester and Kaplan all on the cards. It’s worth noting that an informal meeting of EU economic and financial affairs ministers will also kick off today and continue into Saturday.

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In his most forceful rebuke of the Mueller probe to date, Trump attorney Rudy Giuliani told the Associated Press on Thursday that the president will not be answering any of the investigation’s questions about whether he obstructed justice last year by firing former FBI Director James Comey.

“That’s a no-go. That is not going to happen,” Giuliani said. “There will be no questions on obstruction.”

Earlier in the day, Giuliani had hinted that the Mueller probe had continued to push for an in-person interview with the president by revealing that they shared a “formula” for said interview with Trump’s lawyers. That followed reports earlier in the week that Mueller would be open to accepting at least some answers to his questions to be submitted in written form. In response, Giuliani suggested that Trump’s lawyers would be happy with this arrangement, though they’d like to stop Mueller’s team from asking follow-up questions.

“It would be in written form and if you want to follow up on our answers, justify it. Show us why you didn’t get there the first time,” Giuliani said. “We aren’t going to let them spring it on us,” said Giuliani, who has served as lawyer-spokesman for the president’s personal legal team

Trump’s lawyers have been battling with Mueller since late last year over whether Trump would sit for an interview with investigators, but so far the two sides have yet to reach an accord – though Giuliani had hinted earlier in June that a final decision might arrive soon. While Trump said early this year that he’d be happy to testify, his lawyers have reportedly been pushing him to refuse Mueller’s request. Mueller’s team has said it would subpoena Trump in the event of a refusal, which would almost certainly prompt a bitter legal battle that would likely rise all the way to the Supreme Court.

However, fortunately for Trump and his team, the widely anticipated confirmation of Brett Kavanaugh as the next Supreme Court Justice will likely tilt the odds in his favor as the court’s two newest members would both be conservatives appointed by Trump. And with the legal precedent for compelling a president to testify remaining vague, Trump’s legal team is likely growing increasingly comfortable with the idea that, should Mueller issue a subpoena, it would be easily rebuffed. Mueller probably understands this, too – hence his recent attempts to get Trump’s team to at least agree to answering some questions in writing.

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Via GEFIRA,

Economic problems resulting from US sanctions and the decline in the value of the Turkish lira will increase the already record high trade deficit, currently half of which is related to energy imports. In 2017 it amounted to 77 billion USD, more than twice the amount of 2016. Erdoğan is determined to create a politically dominant state. To this end he needs to ensure energy independence, which can be done through the occupation of the oil fields in Kirkuk, and the acquisition of the gas fields of Cyprus.

Last year Turkey consumed more than 1 million barrels of oil a day. Energy spending increased from 27.16 billion USD in 2016 to 37.19 billion USD in 2017, which made up 50% of the trade deficit.

The increase in oil prices will affect the trade deficit even more, while 75% of its value will be energy imports. The average annual barrel price in 2017 was 54 USD, and this year the average cost is about 70 USD, and the price will continue to rise. All of this is a drag on Turkish economy. To counteract the negative balance sheet, Recep Erdoğan will take more determined steps to ensure energy independence. This, however, will lead to turmoil in the region.

1. Kirkuk, one of the oldest and largest oil fields in the Middle East, is located in the Kurdish autonomous area in northern Iraq. Iraqi Kurdistan took control of them in 20113) and decided to connect Kirkuk with the existing pipeline to Ceyhan to bypass Baghdad and sell Iraqi oil on the international market without the consent of the Iraqi authorities. After the Iraqi part of the Kirkuk-Ceyhan pipeline had been taken over by ISIS and partly destroyed, the Kurdish authorities created a pipeline transmission network, and so were able to export 300,000 barrels a day to Anatolia.In October 2017, the region was retaken by the Iraqi army. The government in Baghdad has committed itself to building a new transmission line from Kirkuk to the Turkish border (around 350 km), where it will merge with the existing oil infrastructure leading to Ceyhan.4) Both the Iraqi and Kurdish authorities want Turkey to be perceived as the most important oil importer from the Kirkuk fields (other countries adjacent to Iraq are self-sufficient in terms of oil), Erdoğan has a different strategy for this area.. Kurdish oil fields can produce up to 1 million barrels a day, which equals Turkish demand. In 2016 Erdoğan declared “If the gentlemen desire so, let them read the Misak-i Milli (National Oath) and understand what the place means to us,” The Turkish president referred to an Ottoman Parliament-sealed 1920 pact that designates Kirkuk and Mosul as parts of Turkey.

Ankara wants to regain these regions lost in 1926 as a result of the Treaty of Ankara regulating the border with Iraq, which was then a British colony. The agreement signed in 1926 stipulates that although the areas do not belong to Turkey, Ankara has the right to initiate military action in case of destabilization in the region. Thus, the agreement between Turkey, United Kingdom and Iraq is Erdoğan’s pretext for increasing Turkey’s military presence in Kurdistan.

In August 2018 Erdoğan said Turkey was taking steps to save Iraq’s Qandil (and possibly Sinjar) area from being a “nest of terror”. It took the form of the Tiger Shield operation, whose aim was to combat the Kurdistan Workers’ Party (PKK) with its headquarters and training bases in Northern Iraq.8)Both Ankara and Baghdad treat it as a terrorist organization threatening both countries. As a result Turkey has created 11 military bases in the Kurdistan area and doubled the number of soldiers stationed there. The Iraqi authorities, however, are afraid of the growing involvement of Turkey on Iraqi soil.

[The map of Turkey according to the Ottoman Parliament-sealed, 1920 National Oath that designates today’s Kurdistan Region, Mosul, Syrian Kurdistan, Aleppo, parts of the Balkans and Caucasus as Turkish soil.]

While an outright takeover of Kirkuk is not imminent, Ankara realises that the incorporation of Kirkuk into its economic sphere or creation of a Turkmen vassal-state will solve a large part of its energy problems. However, Erdoğan, being a statesman, will take his time in reaching his goal. The leader of the Iraqi Turkmen Front (ITF) said last month in support of Turkey: “An attack on Turkey is an attack on all of the region’s Turkmen,” he added “The situation of the region’s Turkmen — in both Iraq and Syria — is all connected,” he said: “As Turkmen, a strong Turkish lira is good for us.”

2. Turkey under the pretext that some areas of the coastal sea zone in Cyprus (like Block 3, which Gefira team analyzed in February) fall under the jurisdiction of Ankara-dependent Turkish Cypriot government (Northern Cyprus) intends to extract gas from the Cyprus Exclusive Economic Zone (EEZ). At the beginning of this year the Turkish navy prevented the Italian Eni group vessel from operating in the Cypriot economic zone. Erdoğan already made a statement addressed to the authorities in Nicosia and Athens:

“„We warn those who overstep the mark in Cyprus and the Aegean. (…) They are standing up to us until they see our army, ships and planes”.

The statement of the President of Turkey confirms the greater military involvement in this part of the Mediterranean and the intensification of the exercises. At the beginning of the month Foreign Minister of Turkey Mevlüt Çavuşoğlu said that Turkey could start drilling in the Eastern Mediterranean this autumn as the country had already purchased a platform. A conflict in this area is inevitable.President Erdoğan warned Cyprus and international gas exploration companies that the violation of Turkish interests would have bad consequences. We expect that if Ankara takes over Cypriot gas blocks, Israel will be on the side of Cyprus, which has its own interests in this area and whose troops are stationed there. In September, Greece, Israel and Cyprus will hold a summit about gas exploration in the Eastern Mediterranean and Turkish plans to drill in the region. Ankara is not invited.

3. Maintaining good relations with Qatar is essential for Turkey. Both Turkey and Qatar are supporters of Muslim Brotherhood and it is said that Qatar’s row with the Gulf countries is about its assistance to the brotherhood.22) Turkey is still a staunch supporter of Morsi, the abolished Egyptian Muslim Brotherhood president of Egypt. Ankara and Doha are strategic partners on political, economic and military levels. Qatar supplied Turkey with 1.5 billion tonnes of LNG.23) Ankara is Qatar’s important and natural security ally.As part of the 2014 military cooperation agreement, Turkey created a military base in Qatar, and in the aftermath of the 2017 Gulf Crisis decided to increase its contingent there.24) Ankara’s presence in Qatar is a better security guarantor than the US, which sacrificed their staunch ally Hosni Mubarak of Egypt. Turkey also provided Qatar with food by plane when the other countries of the Gulf blocked the latter’s supply lines.25)Doha repays Ankara by promising to help to the amount of USD 15 billion in the form of support for “many economic projects, investments and deposits” and a currency swap.26) In return for further military presence and support for Qatar through Turkey, Doha may repay further investments and financial measures aimed at stopping the decline of the Turkish lira.

Military forces have changed governments in Afghanistan, Iraq, Yemen, Libya but failed to do so in Syria. The goal is the same as with the actions against Venezuela, Iran and Turkey. Before the election the Gefira team predicted that the financial attack on Turkey would stop after the election, but we were wrong. We also said that Erdoğan would not give in, and we were right. Erdoğan’s plan for Turkey is the restoration of the Ottoman power and its role in the region and in the world. To accomplish that, he has to shrink its trade deficit and secure his energy supply.

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The crisis in Britain’s NHS has been well documented this year, with a brutal winter period exposing the vulnerability within the UK’s healthcare system.

It will come as little surprise, then, as Statista’s Martin Armstrong points out, that of all of the countries surveyed by Ipsos this year, the largest share of people saying their healthcare system is overstretched were in Great Britain.

You will find more infographics at Statista

The 85 percent of respondents is in the company of the 80 percent in Hungary and a fair way ahead of third placed Sweden with 74 percent.

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Authored by Andrew Korybko via Oriental Review,

Germany is preparing to roll out its new foreign policy towards the US.

Foreign Minister Heiko Maas announced that his country will unveil Berlin’s new approach shortly but said that it would be “balanced” and seek to “strengthen the autonomy and sovereignty of Europe in trade, economic and financial policies” out of concern that the Trump Administration’s sanctions policies are endangering the country’s interests with its Russian, Chinese, and Turkish partners.

He also published an article last week where he said that the EU will consider creating an independent payment system for evading the US’ unilateral economic restrictions, which would in practice greatly contribute to de-dollarization if it was successfully achieved. It might appear as though Germany is preparing to bravely defy the US and take a principled stand for multipolarity, but the reality is a lot more nuanced.

The emerging Multipolar World Order would certainly benefit if Berlin is able to pull off what it’s planning, but no one should be under any illusions about why Germany is doing this.

Its ideological struggle with the US is due to Trump radically departing from his predecessors’ Liberal-Globalist goals and reorienting America as best as he can towards a nation-centric model of International Relations that’s considered by his team to be the best way for the US to adapt to some of the irreversible manifestations of multipolarity such as the emergence of influential Great Powers. Instead of indefinitely subsidizing the US’ vassal states through lopsided trade and military arrangements, Trump’s position is to coerce them all into sharing the burden of upholding a moderately reformed but nevertheless American-led international order.

The systemic transition that’s currently taking place is producing unparalleled paradigm shifts throughout every domain imaginable, which is in turn triggering a fierce competition for influence across the world even between ostensible allies like the US and Germany. Berlin, to its credit, continues to remain committed to the Nord Stream II project that will makes it a partial stakeholder in the success of Moscow’s multipolar initiatives, though at the same time, it shouldn’t be forgotten that Germany is also competing with Russia in some respects too, most notably in Ukraine.  For as much as Maas wants to use the polarizing personality of the American President to paint his country as a victim, it was nevertheless a willing collaborator when it came to EuroMaidan and continuing to support the Kiev government.

German Foreign Minister Heiko Maas

Some geopolitical determinants of foreign policy such as those that are driving Germany’s strategy towards Ukraine may not change, or at least not as quickly as others are in this sense, but that doesn’t prevent Berlin from breaking with the US in other spheres such as the interlinked trade, economic, and financial ones and therefore advancing some of the shared structural objectives of its Russian, Chinese, and Turkish partners.

That said, for as optimistic as some observers might be about its telegraphed moves, one shouldn’t take their success for granted because there are many ways that the US could influence Germany in order to slow down, co-opt, or sabotage these initiatives. Therefore, Germany’s new foreign policy towards the US should be welcomed as a signal of pragmatic intent but not yet interpreted as anything game-changing.

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In but the latest incident among a growing list that point to China’s expanding claims on the South China Sea, a British naval ship carrying Royal Marines had a confrontation with Chinese military vessels as it reportedly traveled through international waters.

The incident took place near the Chinese-controlled Paracel Islands in South China Sea, and while the UK claims its ship stayed only in recognized international waters, China’s foreign ministry is disputing that claim, calling the British navy’s actions a “provocation”. 

Reuters reports of the disputed incident: 

The HMS Albion, a 22,000 ton amphibious warship carrying a contingent of Royal Marines, exercised its “freedom of navigation” rights as it passed near the Paracel Islands, two sources, who were familiar with the matter but who asked not to be identified, told Reuters.

The vessel was traveling to Ho Chi Minh City, where it safely docked after the encounter which according to a Reuters source involved China deploying “a frigate and two helicopters to challenge the British vessel, but both sides remained calm during the encounter.”

The Paracel Islands are hotly disputed territory, and though occupied entirely by China are also claimed by Vietnam and Taiwan, the British vessel may have entered to within twelve nautical miles of the Paracels, which is the internationally recognized territorial boundary demarcating where sovereign waters extend.

Britain may have been testing China’s resolve regarding its recent claims to the Paracels. 

The incident took place on August 31, but has only now been revealed. China’s Foreign Ministry describes it as an act of aggression with no forewarning or permission to enter what it claims is its territorial waters. China’s foreign ministry described in a statement:

The relevant actions by the British ship violated Chinese law and relevant international law, and infringed on China’s sovereignty. China strongly opposes this and has lodged stern representations with the British side to express strong dissatisfaction.

“China strongly urges the British side to immediately stop such provocative actions, to avoid harming the broader picture of bilateral relations and regional peace and stability,” the statement continued. “China will continue to take all necessary measures to defend its sovereignty and security.”

A spokesman for the Royal Navy negated the claim, and responded with: “HMS Albion exercised her rights for freedom of navigation in full compliance with international law and norms.”

Current Britain-China relations have been described as “delicate” of late given London’s seeking a post-Brexit free trade deal from Beijing, which has suggested what’s being hailed as a potential future “golden era” in ties. 

In previous years multiple reports have documented an extensive Chinese military build-up in the Parcel Islands, including the deployment of Russian-made surface-to-air missiles, which China’s Defense Ministry long ago confirmed, saying it’s lawful for China “to deploy defense facilities within its territory, and the facilities have existed for years.”

The area is coveted for its potential oil and gas resources, and China’s heavy deployment and defense of the region has increased tensions among territorial claimants. 

This latest incident follows a string of similar encounters throughout the summer involving various international vessels and aircraft, including a last August incident where a US Navy plane flying 16,500 feet over the South China Sea was unexpectedly contacted by the Chinese and warned to “Leave immediately and keep out to avoid any misunderstanding”.

Beijing has laid down an extensive claim in what the rest of the world considers open international waters. China’s so called “nine-dash line” encircles as much as 90 percent of the contested waters in the South China Sea, and runs up to 2,000 kilometers from the Chinese mainland and within a few hundred kilometers of Malaysia, Vietnam, and the Philippines — all within this vaguely defined zone Beijing claims as within its “historical maritime rights”.

The UN estimates that one-third of global shipping passes through the expansive area claimed by China — and crucially there’s thought to exist significant untapped oil and natural gas reserves in region. 

Despite many Chinese warnings threatening the US, UK, and Australian vessels of late, which also involves aggressive encounters with the Philipines’ armed forcies, Washington and London have made it clear that they will maintain and increase an active presence in the region.

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Authored by Pepe Escobar via The Asia Times,

When China calls, all Africa answers. And Beijing’s non-politicization of investments and non-interference in internal affairs is paying off big time…

The dogs of war – cold, hot, trade, tariffs – bark while the Chinese caravan plies the New Silk Roads. Call it a leitmotif of the young 21st century.

At the Forum on China-Africa Cooperation (FOCAC) in Beijing, President Xi Jinping has just announced a hefty US$60 billion package to complement another US$60 billion pledged at the 2015 summit.

That breaks down to $15 billion in grants and interest-free loans; $20 billion in credit lines; a $10 billion fund for development financing; $5 billion to finance imports from Africa; and waving the debt of the poorest African nations diplomatically linked to China.

When China calls, all Africa answers.

First, we had ministers from 53 African nations plus the African Union (AU) Commission approving the Beijing Declaration and the FOCAC Action Plan (2019-21).

Then, after the $60 billion announcement, we had Beijing signing memorandums of understanding (MOUs) with nine African nations – including South Africa and Egypt – related to the New Silk Roads/Belt and Road Initiative (BRI). Additionally, other 20 African nations are discussing further cooperation agreements.

Debt trap or integration?

That does not exactly paint the picture of the BRI as a vicious debt trap enabling China to take over Africa’s top strategic assets. On the contrary, the BRI is seen as integrating with Africa’s own Agenda 2063, a “strategic framework for the socio-economic transformation of the continent over the next 50 years” tackling unemployment, inequality and poverty.

Apart from letting the numbers speak for themselves, Xi deftly counter-punched the current, massive BRI demonization campaign:

“Only the people of China and Africa have the right to comment on whether China-Africa cooperation is doing well … No one should deny the significant achievement of China-Africa cooperation based on their assumptions and speculation.”

And once again Xi felt the need to stress the factor that does seduce, Africa-wide – Chinese non-politicization of investments, and Chinese non-interference in the internal affairs of African nations.

This comes right after Xi’s speech celebrating the five years of BRI, on Aug. 27, when he stressed Beijing’s organizing foreign policy concept for the foreseeable future has nothing to do with a “China club.”

What that reveals, in fact, is a Deng Xiaoping-style “crossing the river while feeling the stones” fine-tuning, bent on correcting mistakes in what is still the BRI’s planning stages, and including the approval of a mechanism of dispute resolution for myriad projects.

African leaders seem to be on board. For South African President Cyril Ramaphosa, the FOCAC “refutes the view that a new colonialism is taking hold in Africa, as our detractors would have us believe.” AU chairman Paul Kagame, also the president of Rwanda, emphasized a stronger Africa was an opportunity for investment, “rather than a problem or a threat.”

A ‘non-enduring contingency location’?

According to the China Chamber of International Commerce, over 3,300 Chinese companies have invested Africa-wide in telecommunications, transportation, power generation, industrial parks, water supply, rental business for construction machinery, retail, schools, hotels and hospitals.

China is, in fact, upgrading its investments in Africa beyond infrastructure, manufacturing, agriculture and energy and mineral imports. China is Africa’s top trading partner since 2009; trade expanded 14% in 2017, reaching $170 billion.

In November, Shanghai will host the first China International Import Expo – jointly managed by the Ministry of Commerce and the Shanghai municipal government, a convenient stage for African nations to promote their proverbial “market potential.”

Xi depicted as a new and ruthless Mao? China mired in abysmal corruption? China’s massive internal debt about to explode like a volcano from hell? None of this seems to stick Africa-wide. What does impress is that in three decades, a one-party system managed to multiply China’s GDP per capita by a factor of 17. From a Global South point of view, the lesson is “they must be doing something right.”

The ultra-sensitive military front

In parallel, there’s no evidence Africa will cease to be a key BRI node for investment; a market with an expanding middle class receptive to Chinese imports; and most of all, strategic reasons.

And then there’s the ultra-sensitive military front.

China’s first overseas military base was inaugurated on Aug. 1, 2017 – on the exact 90th anniversary of the People’s Liberation Army (PLA). The official Beijing spin is that Djibouti is a base for peacekeeping and humanitarian missions, and to fight pirates based on the Yemeni and Somali coastlines.

But it goes way beyond that. Djibouti is a geostrategic dream; on the northwest Indian Ocean and at the southern path to the Red Sea, en route to the Suez Canal and with access to the Gulf of Aden, the Arabian Gulf and most of all the Bab-el-Mandeb Strait. This prime economic connectivity translates into transit control of 20% of all global exports and 10% of total annual oil exports.

Not accidentally, Djibouti’s top capital source is China. Chinese companies fund nearly 40% of Djibouti’s top investment projects. That includes the $490 million Addis Ababa-Djibouti railway, whose strategic importance far exceeds elephants, zebras and antelopes“roaming freely alongside a railway.”

Djibouti’s aim, as expressed by President Ismail Omar Guelleh – who visited Xi in Beijing last November – is to position itself as the number one connectivity/transshipment node for all of Africa.

Now compare it with the Pentagon’s AFRICOM agenda – as in an array of Special Ops deploying nearly 100 secret missions across 20 African nations at any given time.

As Nick Turse extensively documented in his must-read book Tomorrow’s Battlefield, there are at least 50 US military bases Africa-wide – ranging from what AFRICOM designates as “forward operating sites” to fuzzy “cooperative security locations” or “non-enduring contingency locations.” Not to mention 36 AFRICOM bases in 24 African nations that have not previously made it to official reports.

What this spells out, once again, is further evidence of the ever-replicating Empire of Bases. And that brings us to Africa’s stark “contingency location” choice. In the ultra-high-stakes development game, who’re you gonna call? FOCAC and the New Silk Roads, or Ghostbusters AFRICOM?

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Submitted by William Anderson of Mises Institute

As our commuter train stopped at the Riga suburb of Tornakalns, we saw a small railroad boxcar standing by itself on the side. To the passenger from the train, it was a small memorial; to a Latvian nearly 80 years ago, it was at worst a death sentence and at best, transportation to exile in a Siberian labor camp.

Our train was taking us from an afternoon at Jurmala, the resort located by the Gulf of Riga, a place where leading Communist Party members from the old U.S.S.R. went to spend vacations, but today, just another place to enjoy the warm sunshine of the Latvian summer. The horrors of the Soviet invasion of Latvia, Estonia, and Lithuania in 1940 are long behind, surfacing only in the image of the boxcar and the Museum of the Occupation, now located in the former U.S. embassy in downtown Riga.

(The USA built a new embassy near the Riga International Airport, a beige, boxy construction that contrasts with the lovely embassies on the famed Embassy Row in Riga, featuring some of the world’s most prominent Art Nouveau facades. When the new embassy was being constructed, locals thought it was a new prison, which, given the USA’s penchant for imprisoning people, probably was not far off the mark.)

The three Baltic nations finally broke away from the U.S.S.R. in 1990 and 1991, but the Museum of the Occupation provides reminders of how the ancestors of people walking freely about the towns and cities of these countries suffered, and suffered greatly at the hands of those promoting the socialist ideology that even today won’t die. How thousands were summarily executed at the hands of the NKVD, the Soviet secret police. How thousands more were herded into those tiny boxcars and shipped to the hinterlands of Siberia, many to die brutal deaths in labor camps. All because they were people who worked in government or taught in schools and universities of the Baltic nations, or who owned businesses, or who were just inconvenient to Soviet authorities. All on the ultimate order of Josef Stalin, the Soviet dictator called “Uncle Joe” by American journalists and by presidents Franklin Roosevelt and, later, Harry Truman.

American publications like the New York Times were so in love with the ideals of the Bolshevik Revolution (and still are, given the NYT’s series last year lamenting the fall of the Soviet Union and its Eastern Europe satellites) that they could not be bothered to tell the truth about what the communists did in the Baltics, just as they denied that Stalin had created a famine that killed more Ukranians than Jews that were killed in the Holocaust . Even now, as one looks at photos of the Baltic people being shot, arrested, buried in mass graves, and forced into labor camps, one is reminded that the Soviet Union did not provide a new way of living, as socialist apologists and American journalists have claimed, but rather just another way of dying – and dying violently.

But that was then. Today, the Baltic nations are wealthier and freer than they were in the days of Soviet occupation. For that matter, Russia also is freer and wealthier than it was when the Hammer and Sickle flew over the Kremlin. After spending time in Riga and Tallinn, Estonia, along with Helsinki, Finland (we were there the day of the Trump-Putin summit), we drove into Russia.

Our first stop was at the border, which passed without incident and certainly was not the ordeal we would face a week later when re-entering the United States. Soon after entering Russia, we came to Vyborg, which once belonged to Finland before being seized by the U.S.S.R. in the brief 1939-40 war between Finland and the Soviet Union.

Although Russia has moved on from its days of communism, it is clear that Vyborg has been slower with the transition. The city reminded me of what I saw in East Germany in 1982, with its drab and hulking Soviet-era high-rise apartment buildings and general shabbiness. The famous castle that dominates the edge of town is in scaffolding and one wonders how long that has been the situation. At least the coffee we had at the small coffee shop near the castle was very good, something I doubt would have been the case in the days of Commieland.

So, we drove onto St. Petersburg mostly on a two-lane road cut through the boreal forest of the northern latitudes. It was here that I witnessed something that amazed all of us – how vehicle drivers cooperated to turn two lanes into de facto four lanes of traffic.

As faster drivers moved to pass slower vehicles, the slower vehicles would move onto the asphalt shoulder and even as our bus moved over the center line, the oncoming traffic would shift to the right, too. It all was spontaneously coordinated and everyone on the road was in on the scheme.

Entering St. Petersburg was an experience in itself. With five million people spread over a number of islands, we saw new high-rises standing alongside the old Soviet-era apartment buildings. No one, however, comes to St. Petersburg to see the relics of the U.S.S.R. Instead, they come to see the czarist palaces and the stunning 18thand 19th century architecture that dominates the city. It may be the birthplace of the Bolshevik Revolution, but people come to pay homage to the way of life the Bolsheviks wanted to destroy and to Czar Nicholas II and his family, infamously and brutally murdered on Lenin’s orders in 1918.

A century later, the bones of the last royal family of Russia lie safely in St. Peter and Paul Cathedral. Despite more than 70 years of communist rule, and despite all of the blood spilled to keep the likes of Lenin, Stalin, and the others in power, and despite the massive propaganda that ordinary people in the U.S.S.R. had to endure, St. Petersburg is the city of the czars, not the Bolsheviks.

Parts of St. Petersburg are run down – as nearly the entire city was during the days of communism – but other parts of it absolutely are amazing to see. Likewise, I enjoyed interacting with the locals and especially the young people that made up most of the workforce of our hotel, from running the desks to cleaning our rooms. The legendary dour Soviet worker was replaced by a competent employee who patiently answered our questions and took care of whatever we needed.

For all of the talk in the USA that Russia is a dictatorship under the iron thumb of Vladimir Putin, Russia did not seem like a dictatorship. Our Russian tour guide often would take a swipe at Putin (including likening his face to a painting of dogs at the Hermitage) and life itself there seemed to have the kind of normalcy that could not have been possible when people were compelled to inform on one another.

The St. Petersburg we visited was not the Leningrad that Logan Robinson described in his humorous 1982 book An American in Leningrad , which described life as a post-graduate student living among Russian students and developing friendships with local writers, artists, and musicians, people who often harassed, persecuted, and arrested by local authorities. That city was an armed camp full of soldiers and had been relegated to being a backwater by Joseph Stalin and his successors who made Moscow the Soviet “showplace,” leaving the city founded by Peter the Great to succumb to the northerly elements.

The citizens of the Baltic countries were not the only ones suffering under communism. No other city in the U.S.S.R. underwent the horror of a 900-day siege by German armies during World War II. Disease and starvation were rampant, but Leningrad held out. In “rewarding” the city for its courage and fortitude, Stalin reinstituted the infamous Purges shortly after the war ended, killing party members, writers, intellectuals, artists, and anyone else Stalin might have deemed even an imaginary threat. On top of that, the first Five-Year Plan after the war had Leningrad being the last city to be rebuilt.

Americans cannot fathom what it is like to have entire cities destroyed or badly-damaged by bombs and artillery and have ruthless armies fight each other over their territories. Nor can we imagine having governments carry out massive executions of people whose only “crime” was not being what the government leadership wanted them to be. We cannot imagine the starvation, the disease, and watching family and friends be shipped off to places like Siberia where they surely would die terrible deaths.

Yet, as I sat in the Old Town section of Riga eating and drinking and listening to live music, I strained to imagine the place as a battle zone with death and destruction all around where now I sat. I imagined the stores that now are full of goods and restaurants with food and drink being empty or stocked with subpar merchandise in the aftermath of the war as the Soviets imposed their primitive communist system and oppressed the people in the name of “liberating” them for many decades until they finally left in the early 1990s.

No, I cannot see people in our cities having experienced anything like what the people of the Baltics and St. Petersburg had to tolerate for decades. And, yet, there are people in high places in the USA, those at the New York Times and elsewhere in the media and in academe that believe that communism had brought in a superior civilization – if only those blinded by capitalism had the courage and foresight to see what these “intellectuals” were imagining they saw.

I recently saw a photograph of American Antifa protesters holding up a communist flag with the hammer-and-sickle and images of Mao, Lenin, and Marx. Perhaps they and the editors of the New York Times want to see the USA embrace a system that others that have lived under it now reject, and reject vehemently. Given that Antifa increasingly is providing shock troops for the causes espoused by prominent members of the Democratic Party like Bernie Sanders, the new drive for communism might not be as fringe as one might hope, and if a century of bloodshed, murder, vast prison systems, and starvation won’t convince the advocates of communism among American millennials, then perhaps nothing will.

Perhaps the ultimate irony will be that Americans of the future might have to travel to the former U.S.S.R. in order to see free people and see a relatively free economy. One hopes not, but the daily onslaught of socialism into our body politic says this no longer is an impossible scenario.

Bill Anderson is a professor of economics at Frostburg State University in Frostburg, Maryland.

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Authored by Caitlin Johnstone via Medium.com,

If any evidence existed to be found that Donald Trump had illegally colluded with the Russian government to rig the 2016 presidential election, that evidence would have been picked up by the sprawling surveillance networks of the US and its allies and leaked to the Washington Post before Obama left office.

Russiagate is like a mirage. From a distance it looks like a solid, tangible thing, but when you actually move in to examine it critically you find nothing but gaping plot holes, insinuation, innuendo, conflicting narratives, bizarre mental contortions to avoid acknowledging contradictory information, a few arrests for corruption and process crimes, and a lot of hot air. The whole thing has been held together by nothing but the confident-sounding assertions of pundits and politicians and sheer, mindless repetition. And, as we approach the two year mark since this president’s election, we have not seen one iota of movement toward removing him from office. The whole thing’s a lie, and the smart movers and shakers behind it are aware that it is a lie.

And yet they keep beating on it. Day after day after day after day it’s been Russia, Russia, Russia, Russia. Instead of attacking this president for his many, many real problems in a way that will do actual damage, they attack this fake blow-up doll standing next to him in a way that never goes anywhere and never will, like a pro wrestler theatrically stomping on the canvass next to his downed foe.

What’s up with that?

In Opinion

In an anonymous Op-Ed, a senior Trump administration official says he and others are working ​to frustrate the president’s “misguided impulses.” https://t.co/qW1IoM3AYY pic.twitter.com/rCHnQfcRjG

— The New York Times (@nytimes) September 5, 2018

As you doubtless already know by now, the New York Times has made the wildly controversial decision to publish an anonymous op-ed reportedly authored by “a senior official in the Trump administration.” The op-ed’s author claims to be part of a secret coalition of patriots who dislike Trump and are “working diligently from within to frustrate parts of his agenda and his worst inclinations.” These “worst inclinations” according to the author include trying to make peace with Moscow and Pyongyang, being rude to longtime US allies, saying mean things about the media, being “anti-trade”, and being “erratic”. The possibility of invoking the 25th Amendment is briefly mentioned but dismissed. The final paragraphs are spent gushing about John McCain for no apparent reason.

I strongly encourage you to read the piece in its entirety, because for all the talk and drama it’s generating, it doesn’t actually make any sense. While you are reading it, I encourage you to keep the following question in mind: what could anyone possibly gain by authoring this and giving it to the New York Times?

Seriously, what could be gained? The op-ed says essentially nothing, other than to tell readers to relax and trust in anonymous administration insiders who are working against the bad guys on behalf of the people (which is interestingly the exact same message of the right-wing 8chan conspiracy phenomenon QAnon, just with the white hats and black hats reversed). Why would any senior official risk everything to publish something so utterly pointless? Why risk getting fired (or risk losing all political currency in the party if NYTAnon is Mike Pence, as has been theorized) just to communicate something to the public that doesn’t change or accomplish anything? Why publicly announce your undercover conspiracy to undermine the president in a major news outlet at all?

This stunning OpEd in the New York Times by a senior @realDonaldTrump official is a cry for help. It also validates what 3 books & numerous articles have laid out: Trump is unfit to lead our great nation.

But the GOP Congress remains complicit. You can change that. Vote this Nov https://t.co/skJTFUPYK3

— Ted Lieu (@tedlieu) September 5, 2018

Does the so-called “Senior Administration Official” really exist, or is it just the Failing New York Times with another phony source? If the GUTLESS anonymous person does indeed exist, the Times must, for National Security purposes, turn him/her over to government at once!

— Donald J. Trump (@realDonaldTrump) September 5, 2018

What are the results of this viral op-ed everyone’s talking about? So far it’s a bunch of Democratic partisans making a lot of excited whooping noises, and Trump loyalists feeling completely vindicated in the belief that all of their conspiracy theories have been proven correct. Many rank-and-file Trump haters are feeling a little more relaxed and complacent knowing that there are a bunch of McCain-loving “adults in the room” taking care of everything, and many rank-and-file Trump supporters are more convinced than ever that Donald Trump is a brave populist hero leading a covert 4-D chess insurgency against the Deep State. In other words, everyone’s been herded into their respective partisan stables and trusting the narratives that they are being fed there.

And, well, I just think that’s odd.

Did you know that Donald Trump is in the WWE Hall of Fame? He was inducted in 2013, and he’s been enthusiastically involved in pro wrestling for many years, both as a fan and as a performer. He’s made more of a study on how to draw a crowd in to the theatrics of a choreographed fight scene than anyone this side of the McMahon family (a member of whom happens to be part of the Trump administration currently).

You don’t have to get into any deep conspiratorial rabbit hole to consider the possibility that all this drama and conflict is staged from top to bottom. Commentators on all sides routinely crack jokes about how the mainstream media pretends to attack Trump but secretly loves him because he brings them amazing ratings. Anyone with their eyes even part way open already knows that America’s two mainstream parties feign intense hatred for one another while working together to pace their respective bases into accepting more and more neoliberal exploitation at home and more and more neoconservative bloodshed abroad. They spit and snarl and shake their fists at each other, then cuddle up and share candy when it’s time for a public gathering. Why should this administration be any different?

I believe that a senior Trump administration official probably did write that anonymous op-ed. I do not believe that they were moved to write it out of compassion for the poor Americans who are feeling emotionally stressed about the president. I believe it was written and published for the same reason many other things are written and published in mainstream media: because we are all being played.

The more I study US politics, the less useful I find it to think of it in political terms. The two-headed one party system exists to give Americans the illusion of choice while advancing the agendas of the plutocratic class which owns and operates both parties, yes, but even more importantly it’s a mechanism of narrative control. If you can separate the masses into two groups based on extremely broad ideological characteristics, you can then funnel streamlined “us vs them” narratives into each of the two stables, with the white hats and black hats reversed in each case. Now you’ve got Republicans cheering for the president and Democrats cheering for the CIA, for the FBI, and now for a platoon of covert John McCains alleged to be operating on the inside of Trump’s own administration. Everyone’s cheering for one aspect of the US power establishment or another.

Whom does this dynamic serve? Not you.

If you belonged to a ruling class, obviously your goal would be to ensure your subjects’ continued support for you. In a corporatist oligarchy, the rulers are secret and the subjects don’t know they’re ruled, and power is held in place with manipulation and with money. As such a ruler your goal would be to find a way to manipulate the masses into supporting your agendas, and, since people are different, you’d need to use different narratives to manipulate them. You’d have to divide them, tell them different stories, turn them against each other, play them off one another, suck them in to the tales you are spinning with the theater of enmity and heroism.

As a result of the New York Times op-ed, if this administration engages in yet another of its many, many establishment capitulations (let’s say by attacking the Syrian government again), Trump’s supporters won’t see it as his fault; it will be blamed on the deep state insiders in his administration who have been working to thwart his agendas of peace and harmony. Meanwhile those who see Trump as a heel won’t experience any cognitive dissonance if any of the establishment agendas they support are carried out, because they can give the credit to the secret hero squad in the White House.

Would a billionaire WWE Hall of Famer and United States President understand the theater of staged conflict for the advancement of plutocratic interests, and willingly participate in it? I’m going to say probably.

*  *  *

The best way to get around the internet censors and make sure you see the stuff I publish is to subscribe to the mailing list for my website, which will get you an email notification for everything I publish. My articles are entirely reader-supported, so if you enjoyed this piece please consider sharing it around, liking me on Facebook, following my antics on Twitter, checking out my podcast, throwing some money into my hat on Patreon or Paypal, or buying my book Woke: A Field Guide for Utopia Preppers.

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