Greece Braces For Tougher, Bolder Erdogan As Turkish Media Enters ‘War Mode’

Greece Braces For Tougher, Bolder Erdogan As Turkish Media Enters ‘War Mode’

Both Turkish and Greek media reports over the last days have been filled by heightened speculation that the two Mediterranean powers (and NATO “allies”… ironically enough) could be headed to war. This follows Saturday comments from President Recep Tayyip Erdogan wherein he issued a thinly veiled threat of military action against Greece.

Charging that Greece is “occupying” islands off Turkey’s coast and militarizing them, Erdogan said in a fiery speech aimed at Athens that “When the time comes, we’ll do what’s necessary. As we say, we may come down suddenly one night.” He added: “Look at history, if you go further, the price will be heavy.”

An English-language publication covering Greece, The National Herald, observed on Monday in follow-up to Erdogan’s threat: “Greece is bracing for what’s expected to be an emboldened Turkish President Recep Tayyip drawing lines in the sea and becoming more aggressive in asserting his claims to areas in the Aegean and East Mediterranean.”

Via Anadolu Agency: In his message, Erdogan mentions Izmir, a province on Türkiye’s western Aegean Sea coast that the Turkish army liberated from Greek occupation in 1922 during its War of Independence.

The publication notes that something seems different this time compared to prior threatening rhetoric coming from top Turkish officials over the past two years:

Erdogan typically mouths off against Greece with fiery rhetoric that frequently is followed by him backing away from threats but he’s been upping the ante and the volume, raising tension and growing worries of a conflict.

Seeing the European Union, NATO, United Nations and United States reluctant to provoke him, the hard-line Turkish leader has demanded Greece remove troops from islands near Turkey’s coast and said it would be a cause for war if Greece doubles its maritime boundaries to 12 miles.

All of this comes also as Ankara has lodged a formal complaint with NATO headquarters, saying that Greece last month achieved radar lock on its F-16s which had been flying over the Mediterranean.

Further, Turkey has charged that Greek jets have violated its airspace over 250 times in harassing maneuvers. “The ministry also informed that the Greek warplanes violated the Turkish airspace 256 times since the beginning of 2022,” Hurriyet reported. “In addition, they harassed the Turkish jets 158 times this year, the ministry said. On the sea, the Greek coastal guards violated the Turkish territorial waters 33 times, it added.”

Erdogan has for months refused to speak with Greek Prime Minister Kyriakos Mitsotakis – which heightens the potential for the longtime historic rival countries to stumble into conflict, as The National Herald continues:

Compounding the problem is that both Erdogan and Greek Prime Minister Kyriakos Mitsotakis face tough re-election campaigns in 2023 and are already playing to the masses and showing off military might.

Turkey also warned Greece that this year could bring “a new 1922,” marking 100 years since Greece suffered crushing defeats in Asia Minor that saw Turkey occupy the land.

Indeed, Erdogan still refuses to talk to Mitsotakis and there will unlikely be de-escalation talks anytime soon at the rate the jingoistic rhetoric is going.

Meanwhile, according to a local anonymous eyewitness in the region that we spoke to, “Greek evening news reporting that ALL and they emphasize ALL of Turkish media including TV, radio and newspapers are in war mode against Greece. Today Erdogan went so far as to display HOW the invasion of Greece would occur to national media.”

Tyler Durden
Tue, 09/06/2022 – 11:45

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New Data Show COVID School Closures Contributed to Largest Learning Loss in Decades


A masked student sits in front of a computer for virtual learning

Last week, the National Center for Education Statistics (NCES) released new data showing a dramatic decline in test scores among American 9-year-olds since the start of the COVID-19 pandemic. The data indicate a devastating learning loss among American schoolchildren, marking the largest decline in reading scores since 1990, and the first ever recorded drop in mathematics scores.

These results come from a special administration of the National Assessment of Educational Progress long-term trend (LTT) assessments, which measured reading and mathematics outcomes among 9-year-olds. Since its inception, the LTT has tracked a steady rise in educational performance among 9-year-olds. However, from 2020 to 2022, the LTT revealed a steep drop in 9-year-old students’ performance. Reading scores dropped by five points over the two-year period, while mathematics scores dropped by seven points. In all, the decline in test scores represents the reversal of around two decades of improvement in math and reading scores.

“These results are sobering,” Peggy G. Carr, commissioner of the National Center for Education Statistics, told The Washington Post. “It’s clear that covid-19 shocked American education and stunted the academic growth of this age group.”

The decline was even more pronounced among already struggling students. For example, math scores declined by only three points among the 90th percentile of performers. Among the 10th percentile, the drop was four times higher, at 12 points. In total, the bottom quartile of test-takers saw their math scores drop by 11 points from 2020 to 2022. Among students eligible for the National School Lunch Program, reading scores declined at twice the rate of noneligible students.

As these new data show, nearly two years of pandemic schooling has been a complete disaster for American schoolchildren. However, it didn’t have to be this way.

While outlets like The New York Times blamed “the pandemic” for this devastating learning loss, “the pandemic” didn’t force schools to close. Rather, the efforts of progressive politicians and teachers unions kept American children out of schools for a year or more, long after evidence suggested COVID-19 posed little danger to children.

District of Columbia Public Schools, for example, faced periodic COVID-19 closures as late as December 2021, nearly two years after the start of the pandemic. Now, Mayor Muriel Bowser is enforcing a “no shots, no school” program, requiring all students over the age of 12 to be vaccinated against COVID-19 to attend any of the city’s private or public schools. The program stands to exclude from education the 47 percent of black D.C. 12- to 15-year-olds who are currently unvaccinated. It will go into effect in January 2023.

While some teachers union members shirked the idea of learning loss and refused to return to classrooms in defiance of their own school districts, others engaged in needless fearmongering in order to justify continued school closures. “They are compromising the one enduring public health missive that we’ve gotten from the beginning of this pandemic in order to squeeze more kids into schools,” American Federation of Teachers President Randi Weingarten told The Washington Post after the Centers for Disease Control and Prevention shifted the recommended social distance between K-12 students form six feet to three. “I think that is problematic until we have real evidence in these harder-to-open places about what the effect is.”

However, it simply isn’t true that complicated reopening procedures were required to keep American schoolchildren safe during the pandemic. Nor were lengthy closures. Thankfully, COVID-19 generally spares the young. Sweden kept primary schools open for the entire pandemic, yet according to the Swedish Public Health Agency, COVID-19 cases among Swedish children were no higher than those in neighboring Finland, where schools temporarily closed. According to a 2022 study published in the International Journal of Educational Research, Swedish elementary schoolers suffered no learning losses during the course of the pandemic.

“This was a man-made disaster, not an inevitable consequence of COVID,” Michael Hartney, an adjunct fellow at the Manhattan Institute, said in a statement to The Hechinger Report. “Those who have been fighting to reopen schools since Fall 2020 knew that school was essential, that children faced the lowest risk of severe illness, and that children faced the most severe consequences of the prolonged shutdown. The children who have thrived are those who had the opportunity to attend school in person.”

The devastating learning loss suffered by American children over the past two years was not inevitable. It was the result of choices made by COVID-panicked teachers unions and progressive politicians who failed to carefully consider the educational damage at stake.

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Don’t Blame Ranked Choice Voting. Sarah Palin Was a Bad Candidate.


Former Alaska Gov. Sarah Palin

In a stunning upset last week, Democrat Mary Peltola defeated former Republican Gov. Sarah Palin in a special election for Alaska’s sole congressional district. The race garnered a lot of attention for its use of ranked choice voting. In 2020, Alaskans approved the new system, which allows voters to rank each candidate by preference. If no candidate wins an outright majority, then the lowest-performing candidate is eliminated and his or her voters’ ballots are tallied again, with the second choices counted first instead. This repeats until a candidate passes 50 percent.

After the first ballot, Palin trailed Peltola 40–31, with Nick Begich III in third with 29 percent. After Begich was eliminated and his ballots were re-tallied, Peltola prevailed over Palin 51–49.

In the days after Palin’s loss, prominent conservatives and Republicans criticized the new system for contributing to her defeat. After the results were announced, Sen. Tom Cotton (R–Ark.) tweeted, “Ranked-choice voting is a scam to rig elections.” (Previously, he has referred to it as a “radical scheme.”) Palin herself called the system an “experiment” that’s “crazy, convoluted,” and “confusing.” In National Review, Jim Geraghty termed it “a legitimate electoral system…that doesn’t make sense.”

But it’s not ranked choice voting’s fault; Palin was simply a bad candidate.

Geraghty complained that ranked choice voting was “more complicated” than “the familiar ‘first past the post’ system,” that “the Democrats came out the big winner, even though their candidate finished fourth in the first round of voting.” This is true, though the third-place finalist, Al Gross, withdrew from the race after the June primary and encouraged his voters to support Peltola.

Cotton complained that even though “60% of Alaska voters voted for a Republican…a Democrat ‘won.’” This is also true, though notably they did not all vote for the same Republican. Begich and Palin collectively accounted for 59.8 percent of the first-round vote, but only about half of Begich’s voters chose Palin as their second choice; nearly 30 percent picked Peltola, while 21 percent did not choose a second or third choice.

Under a traditional primary system, Palin likely would have beaten Begich in a Republican primary and faced Peltola one-on-one. But Begich’s voters would not necessarily have then turned out for Palin—in fact, they had the opportunity to do so on the ranked-choice ballot, and more than half chose not to. Far from being some radically convoluted “scheme,” the most direct effect of ranked choice voting is to serve as an “instant runoff” by letting voters indicate which candidates they would prefer if their first or second choice didn’t win.

Many of these complaints elide Palin’s actual quality as a candidate. Many Alaskan Republicans were skeptical of her, as was reported by The Washington Post in April when she filed to run. Throughout the campaign, Palin criticized the ranked choice voting system, telling the crowd at last month’s Conservative Political Action Conference in Texas, “It’s bizarre, it’s convoluted, it’s confusing and it results in voter suppression…It results in a lack of voter enthusiasm because it’s so weird.” But as Geraghty noted, 85 percent of Alaskan voters polled by Alaskans for Better Elections found the new system either “somewhat simple” or “very simple.”

Ranked choice voting is not a “scheme to rig our elections” by “out-of-state liberal billionaires,” as Cotton has alleged. But as Geraghty correctly pointed out, it is also not a panacea for every issue in the current political duopoly. It is merely an alternative that gives voters more options than simply one Republican versus one Democrat. And as with any electoral system, a candidate still needs to convince voters to turn out for them.

The post Don't Blame Ranked Choice Voting. Sarah Palin Was a Bad Candidate. appeared first on Reason.com.

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Luongo: There Is ‘More Than A Whiff Of Desperation & Fear” Emanating Across Europe

Luongo: There Is ‘More Than A Whiff Of Desperation & Fear” Emanating Across Europe

Authored by Tom Luongo via Gold, Goats, ‘n Guns blog,

All I hear is that lonesome sound
The Hounds of Winter
They harry me down

– Sting

By a narrow margin Boris Johnson’s clownish Defense Minister Liz Truss will become the next Prime Minister of the United Kingdom. She doesn’t have a lot of time to put together a government lest the U.K. have to suffer through yet another general election.

Truss, by virtue of her full-throated support for Ukraine against Russia, was the choice of those Tories committed to maintaining the UK’s relationship with the US, leaving it nominally more independent from the European Union.

Davos man-child Rishi Sunak, the darling of the Remainers of City of London the true hounds of winter here, failed to overtake Truss in the end. What started as a Davos-style decapitation of Johnson, who rightfully deserves to be jailed for his undermining Russian/Ukrainian peace talks in April, ended with the female version of him in office.

While I’d like to say I’m happy to see Davos lose another major conflict in Europe, empowering the US neoconservatives is not a win here. In the end, the deep ties between the US and UK intelligence and military services won out in the Tory leadership battle.

Again, there are no winners from our perspective, here.

Truss comes in vowing to fix everything, from lowering taxes (good) to dealing with an energy crisis she helped create by leading the charge to sanction Russian energy to hell and back. She’ll deficit spend like she’s supposed to because making peace with Putin or breaking with Davos over developing Scotland’s energy reserves is verboten.

She wants to be thought of as the new Thatcher, but she has neither the support Maggie had nor one-third her talent or smarts.

And she doesn’t have the trust of the London banks, who themselves are now rightfully staring at a black hole thanks to her manifest stupidity and belligerence.

Truss is a typical midwit just smart enough to know who’s giving the orders and how to make them manifest but not smart enough to rise above that. I remind everyone that this is a woman so unqualified for the job she had that she doesn’t know where the borders of Russia and Ukraine are but believes in the ‘territorial integrity of Ukraine.’

Like all good servants of the elites she represents, she was rewarded for her incompetence.

The choice between Truss and Sunak was another classic Hobson’s Choice — continued war with Russia across every vector (Truss) or the surrender of the UK to the EU and the reversing of Brexit (Sunak).

Either way there is not much hope this morning if you are a Brit.

At best she will be an even weaker leader than Johnson was, since she has no issue to rally the country around, like Brexit, which she won’t even discuss in public. This was reflected in the final party leadership vote where 20% of Tories stayed home.

So, even if Truss is able to cobble together a government and presents it to the Queen to rubber stamp, she will do so with the Tories having been thoroughly discredited as a party. Not that Labour is any useful opposition here.

While the old guard of British politics may have won this fight, it is a Pyrrhic victory for them. It’s still a country with no friends as long as Biden is in power.

British politics have been frozen for months because of this ridiculous affair. All it did was extend everyone’s misery as the UK warmongers cling to the vestiges of their former power.

What’s truly sad is that Johnson backed a Hail Mary in Ukraine surrounding the Zaporizhia Nuclear Power Plant (ZNPP) that may now have to be considered the British version of the Bay of Pigs, but with far vaster implications.

The massacre that occurred last week was a plan so retarded it reveals the mendacity and desperation of both British Intelligence and former Prime Minister Boris Johnson to escalate the conflict, remain in power and advance their ultimate agenda of weakening global support for Russia at the UN.

The Ukrainian Armed Forces, with significant help from British ‘advisors,’ staged a multi-pronged commando amphibious landing north of the ZNPP.  The goal was to attack it and take it over while the Russian garrison had been mostly removed while awaiting the IAEA inspectors.

The idea being to shame the Russians out of the ZNPP to show that it wasn’t being used as a military staging area and attack it while it was lightly defended. Then… and this is the insane part… take the entire IAEA delegation hostage but doing so POSING AS RUSSIAN TROOPS.

Here’s the link to the plan from Intel Slava Z’s Telegram Channel, of course salt to taste.

The Kremlin was aware of the plans of the Main Intelligence Directorate of the Armed Forces of Ukraine to take advantage of the arrival of the IAEA mission and carry out an amphibious landing in order to try to seize the Zaporizhzhya Nuclear Power Plant and make statements for days that it was Russian special forces.  Under ideal conditions for the work of the DRG, they calculated the task of taking the mission itself hostage and keeping the nuclear power plant under mines, making demands for the complete withdrawal of Russian troops to the territory of Crimea.

Boris Johnson brought the plan of operation and some of the instructors with him as a demobilization chord of his premiership, but if the GUR was successful, he would have refused to transfer power, referring to an international emergency threatening a catastrophe on a planetary scale.  At the moment, 47 DRG fighters have been destroyed, three have been taken prisoner (!), Two are in serious condition between life and death.  A group of 12 people is blocked on three sides and cut off from the water and boats, by 15:00 CTO will be over.  Zelensky’s statement on this situation is expected in the late afternoon, the head of the IAEA Mission has already been notified of the situation, as well as UN Secretary General Guterres.  The operation was coordinated by MI6 officers from their headquarters in the suburbs of Kyiv.

All 64 DRGs have recently completed training in the UK and traveled from Warsaw to Odessa on 29 August.

Now, clearly this is a Russian version of events. But it is backed up by the statements coming from the UN in the aftermath, praising the Russian military for securing the safety of the IAEA inspectors, something they would never have done.

Even if the whole ‘impersonating Russians holding IAEA inspectors hostage’ plan failed, the story is still deeply disturbing, because this type of multi-pronged (5 different invasion points of the area) operation had to have been planned well in advance.

The Russian Ministry of Defense’s version of the story is similar if cleaner, for diplomatic reasons if nothing else. They leave out the ‘impersonating Russians’ part but leave in all of Ukraine’s attempts to insert friendly Western media into the delegation who would then give us the ‘official story’ of what happened.

Moscow has suggested that Kiev’s plan was to capture the nuclear plant and then use the staff of the UN nuclear watchdog as “human shields” to maintain control over it.

What this means is that the Johnson and the US Dept. of Defense/National Security Council (all staffed by the move virulent Neocons) have been planning something like this for months which is why they refuse to allow the Ukrainians to surrender.  

It’s also why the EU/Davos (who clearly want out of this insanity) are throwing Johnson under the bus for blowing up April’s peace talks. Russian President Vladimir Putin keeps tightening the screws on the energy-starved Europeans causing all kinds of havoc there politically.

The timing of his announcement Gazprom was shutting down Nordstream 1 indefinitely while the IAEA inspectors were at the ZNPP is yet another clue to what the real story was. Moreover, note that since this inspection went off without a hitch there was little to no breathless reporting on it.

It vanished from the media as quickly as the prospects for the UK’s economic recovery with the announcement of Truss’ big win.

The Brits under Johnson and Truss have been trying to create a false flag incident to justify official NATO involvement in the Ukraine conflict since the beginning of the war.

The excuse of a multi-country nuclear meltdown incident would more than provide that justification.

This was their big operation to finally turn the entire world against the Russians by saying that in order to suppress the real story at the ZNPP Russia kidnapped peaceful IAEA inspectors and used them as political hostages.  

Because even if Ukrainian forces stormed the plant, do you think the lying British media would tell you a story even remotely pro-Russian?

No. These are the same people who have been trying to convince you that Russia was shelling its own troops there for weeks now.

This may have allowed Neocon-backed Johnson to stay in power through emergency powers and set the precedent for Biden to do the same thing before the mid-terms. Truss’ election as the head of the Tories in the UK ensure this type of insanity will continue uninterrupted because she’s too stupid to see the obvious ploy to discredit both the UK and the US while Europe plays the victim.

Playing through their strategy, any kind of ‘accident’ at ZNPP can be coordinated with a collapse of capital markets as NATO officially gets involved in Ukraine and vast nationalization of whole swaths of the West’s industrial base then ensues.

Thankfully the Russians escorting the IAEA inspectors into the ZNPP and the amphibious assaults vaporized (which they have), this entire disgusting affair ends.  

I bring this up not because I believe the entire story. I don’t. But it is emblematic of the mindset of the people in charge.

There is more than a whiff of desperation and fear emanating from all across Europe, but especially from the UK as they have been brought to the edge of extinction by inept leadership refusing to accede to the reality that not only has the sun finally set on the British Empire, but it’s not likely to rise again anytime soon.

The only hope the UK had was in the US supporting its bid for independence from the EU via Brexit. Once Biden was selected that hope died, minus an Oliver Cromwell moment.

What they got was Liz Truss.

The reason I’m so set on my thesis about the Fed being against Davos is the actions of the UK in this conflict. It was clearly an operation that both the US/UK neocons and the Davos globalists saw common ground in using Ukraine to attack Russia.

Their interests aligned all during the eight year lead up to Russia’s invasion.

They really did believe their own clownish stories about the fragility of Putin’s government, Russia’s economy and the depth of the West’s financial and legal power to extract pain from those that defied them.

Once it became obvious that the economic ‘shock and awe’ campaign to isolate Russia had failed and Putin’s Energy Counter-Offensive began, the cracks in the relationship opened and the power of ‘Outside Money’ — gold, commodities — exposed the weakness of ‘Inside Money.’

The failure of the Biden junta to secure the Fed means that not only did the Davos/Neocon alliance crack but US sovereigntist forces saw the opportunity to take out City of London and Amsterdam in the chaos. Now both the UK and the EU are caught between the Fed draining them dry in the capital markets and the Russians refusing them much needed energy.

When I look at a long-term chart of the British Pound all I see is oblivion.

It’s on pace for the lowest close in history this year. And thanks to Gordon Brown there are no gold reserves left to back the currency nor any new energy sources to stabilize it. It, along with the Canadian dollar are the ultimate form of ‘Inside Money.’

And Inside Money is falling fast, first to the US dollar (USDX knocking on 110 and rising) and then to the broad commodity sector and eventually gold itself.

The Euro chart is worse.

Russia and Putin understand this and all they have to do is continue doing nothing, or more explicitly pumping nothing, and the collapse will finally be complete. All the Fed has to do is stay its course.

So, while City of London thought they were circling the Brexiteers and Russia going for the kill, they were themselves encircled by the real dogs of war.

Maybe Davos wants this collapse. Sure, they talk a good game about Building Back Better and the Great Reset, but they didn’t imagine it would be on someone else’s terms, namely both the Americans’ and the Russians’.

Yes, they are selling the carbon-free future to their people but at what price and with what capital?

Yes, they believe they can consolidate their financial problems in the ECB, a European-style Resolution Trust bad bank, then default through George Soros’ idea of Perpetual Bonds and emerge with a clean balance sheet. But who is going to invest in them ever again after the pain they put everyone through?

Not Russia. Not China. Maybe a weakened US. Europe will be a smoking ruin for decades if this happens.

Putin is not only interested in finally besting Russia’s centuries-old enemy, Britain. He’s also no longer smitten with the ideas of old Europe. If there is to be détente between Europe and Russia it will be on Russia’s terms, not Europe’s.

So far the EU is doubling down on its stupidity because it fits their plan, as stupid as it is, much as I expect Truss to double down on Johnson’s because of legendary British arrogance and stubbornness. Just don’t expect Putin or Powell at the Fed to come to their rescue anytime soon.

Liz Truss is a woman more bloodthirsty than Hillary Clinton with one-tenth of her gravitas. The British people certainly deserve better because no one should be treated to such depravity. She is a band-aid on an open wound festering as the hounds of winter circle in for the kill.

*  *  *

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Tyler Durden
Tue, 09/06/2022 – 11:25

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Californians Ignore Pleas To Conserve Power As Grid Pushed To Brink

Californians Ignore Pleas To Conserve Power As Grid Pushed To Brink

California narrowly avoided rotating outages on Monday while power grid officials asked customers to conserve electricity amid a record-breaking heatwave.

The prospect of outages did not bother Californians. Many customers continued to use appliances, air conditioning, and at-home electric vehicle chargers despite conservation pleas from California Independent System Operator (CAISO). 

Monday was the fifth straight day CAISO warned about a blistering heat wave that pushed its electric system to the brink. Even though no widespread blackouts were reported, electricity demand surged to one of the highest levels (52,646 megawatts), outlining how customers widely ignored conservation calls. 

A Reuters report showed soaring demand for electricity sent power prices in the state to the highest levels since August 2020.

Power prices at the Palo Verde hub in Arizona and SP-15 in Southern California rose to $850 and $505 per megawatt hour, respectively. That was their highest levels since hitting record highs of $1,311 in Palo Verde and $698 in SP-15 in August 2020 when the ISO last imposed rotating outages.

CAISO predicts demand could reach all-time high levels today as homes and businesses turn their thermostats down to escape triple-digit temperatures.

And since Californians aren’t conserving electricity as demand steadily rises, this could mean CAISO would instruct utilities to start imposing rotating outages if duress on the grid continued — maybe then, after the fact, customers will get the message to conserve. 

Elliot Mainzer, CEO of CASIO, said Monday: “We need a reduction in energy use that is two or three times greater than what we’ve seen so far as this historic heat wave continues to intensify.”

Tyler Durden
Tue, 09/06/2022 – 11:05

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Ukraine Offers Europe Gas To Curb Rising Prices, Asks For More Weapons

Ukraine Offers Europe Gas To Curb Rising Prices, Asks For More Weapons

Authored by by Kyle Anzalone & Will Porter via The Libertarian Institute,

On Monday, Ukraine’s Prime Minister Denys Shmyhal met with European leaders to request more weapons and suggest Kiev could help bring down gas prices. European Union foreign policy chief Josep Borrell pledged the bloc would continue to support Ukraine no matter what.

Shmyhal made the proposal while attending the EU-Ukraine Association Council summit in Brussels. “We need more modern weapons, such as air defense, missile defense and ship defense,” he said. Shmyhal additionally requested aircraft and armored vehicles. 

Ukrainian Prime Minister Denys Shmyhal in an April meeting with Secretary of Defense Lloyd J. Austin III. Image source: DoD

The government in Kiev has relied on America and its European partners to fund and arm its soldiers as they fight to repel the invading Russians, with Washington sending tens of billions in weapons and direct economic support. 

In April, Kiev and Moscow had worked out broad details for a deal to end the war, but Ukraine’s President Volodymyr Zelensky was pushed to keep fighting by UK Prime Minister Boris Johnson

In addition to the Western support for Ukrainian forces, the US and its allies have also launched an economic war against Moscow. The sanctions regime was intended to cripple the Russian economy and halt the Kremlin’s machine, but has largely backfired, with Europe now plagued by high energy prices as Russia finds alternative buyers for its oil and gas. 

Along with requesting more weapons, Shmyhal said Kiev could help ease high gas prices on the continent. “30 billion cubic meters is what we have in our gas stores, and we can offer some of it to our European partners in order to replace the Russian Federation in the unstable market,” he said.

Last week, the burgeoning energy war intensified when the G7 announced it would place a maximum price on Russian oil. The Kremlin responded by announcing the indefinite closure of the Nord Stream 1 pipeline, sending gas prices skyrocketing by as much as 30% on Monday. 

Borrell suggests the EU is committed to supporting Ukraine’s war effort no matter what happens in the coming months. “We will provide our support politically, financially, humanitarian and militarily as long as it takes and as much as needed,” he said.

Tyler Durden
Tue, 09/06/2022 – 10:47

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Nomura: Yields Soar As Europe Unleashes Fiscal Stimulus Tsunami Which Will Require Debt Monetization

Nomura: Yields Soar As Europe Unleashes Fiscal Stimulus Tsunami Which Will Require Debt Monetization

Equities are rallying, and yields are surging, with the 10Y rising above 3.30%…

… on what according to Nomura’s Charlie McElligott is one clear catalyst – the same one we laid out in “Europe Unleashes Energy Hyperinflation Bailout Bazooka” – namely Europe’s “moment of intervention” from various euro governments with regard to the Euro Energy crisis via mega-stimulus, while a report from MNI citing “ECB sources” and stating that President Lagarde is “likely to opt for 50” bps hike only at the upcoming meeting, which is a de facto easing relative to recent expectations which have built for 75bps hike, certainly helping.

Regarding the EU / UK “Minsky Moment” Energy situation, which we profiled extensively over the weekend, McElligott writes that “the worse the crisis gets, the more asymmetric the crisis response becomes, and he we are now entering the “sovereigns take on the credit- and market- risk via stimulus and intervention” phase, as European and British leadership assume the fiscal bill (price caps, tariff deficits) and or directly engage in Energy markets.

In other words, from PPP for covid, we have shifted to PPP for energy hyperinflation.

Case in point on magnitude/scope of what they have to solve for, earlier we noted that the ongoing European bailout will have to pay at least $1.5 trillion in margin calls, according to Norgwegian energy giant Equinor (f/k/a Statoil):

“European energy trading risks grinding to a halt unless governments extend liquidity to cover margin calls of at least $1.5 trillion, according to Norwegian energy company Equinor ASA.

Aside from inflating bills and fanning inflation, the biggest energy crisis in decades is sucking up capital to guarantee trades amid wild price swings. That’s putting pressure on European Union officials to intervene to prevent energy markets from stalling.

“Liquidity support is going to be needed,” Helge Haugane, Equinor’s senior vice president for gas and power, said in an interview. The issue is focused on derivatives trading, while the physical market is functioning, he said, adding that the company’s estimate for $1.5 trillion to prop up so-called paper trading is “conservative.””

… or the even bigger shock, namely what we showed last night was Goldman’s estimate of a $2 trillion surge in European Energy bills by 2023, roughly 15% of Europe’s GDP (more in a subsequent post).

Here McElligott says that speaking pragmatically, he is “not really sure how fiscal stimulus works to address Energy supply shortage realities…but hey, I’m just a grunt laborer.”

In any case, with Europe now on a collision course with the hard, cold, commodity-free reality, one should get out of the way of governments according to the Nomura strategist (at least in the beginning), “because the left-tail scenario odds get slashed by “moving the goalposts,” “kicking the can” and re-writing the rules mid-game, despite likely unintended and / or second-order consequences of solutions which are normally associated with “money-printing” down-the-road.”

Here the x-asset strategist asks another rhetorical question, one which we – and rabobank – have been comtemplating this morning: “Honestly, how does one handicap the market impact of the reported Truss’ fiscal package upwards of £130B to cap energy bills for UK households and businesses, as it relates to Gilts and Sterling?” His answer:

On one hand, the govt is planning to somehow cut taxes while simultaneously and violently expanding their deficit…big yikes

And as Jordan Rochester notes, the UK / Truss plan as it relates to GBP could actually make trade flows WORSE as it supports consumption

But on the other, the outlook for CPI inflation will dramatically shift if the UK govt does indeed freeze energy prices, which then seemingly risks downside to current BoE hike trajectory

Being realistic regarding the eventual “footing the bill” for this largesse, Charlie says that it always “boomerangs” back to the central banks and quasi- “monetization”—so this will be an FX / Rates trade long-term, which locally then risks an unruly squeeze higher in US Dollar as the “cleanest dirty shirt.”

The more nuanced message is that with yields now blowing out as governments foot the fiscal stimulus to offset the massive costs, central banks will need to resume QE in the very near future to avoid a bond market collapse!

And separately, as we have seen throughout the life of this particularly idiosyncratic energy crisis, the Nomura strategist repeats what we first said yesterday, namely that nearly all of the response from governments and authorities have been forms of solutions (whether subsidies, price caps and tax unwinds) which perversely create “demand construction”…

… which not only offset what central banks are trying to do, but also contributing to higher likelihood of further shortages, as opposed to allowing for higher prices to do the work of “demand destruction” and force behavioral “consumption” change…

What does this mean for markets? Well, as McElligott notes, as this 1) “eventual monetization” relates to the current global interest rates trajectory zeitgeist, it’s just another source of negative pressure outside of 2) “higher for longer” global theme, 3) max cap US QT and 4) bearish Fall seasonality. Hence, Nomura sees G10 Bond Yields continuing higher yet-again, as “Shorts” are further emboldened, and indeed yields are surging this morning as markets now will demand central banks to start monetizing bonds again!

This too risks strengthening the global FCI tightening sledgehammer that is “higher US Dollar” (what currency do you want to be “long” on the other side?!), occuring alongside the recent surge in US Real Yields, both conspiring to further “choke-out” global inancial conditions

Finally, a part of this flow is likely showing-up in futures Spec positioning, with last reporting week (8/30) showing another sale of -$5.6mm / 01 and making seven consecutive weeks of selling—with the aggregate at ~-$180mm of Shorts being pressed (of course, a short squeeze is inevitable… but not yet).

Tyler Durden
Tue, 09/06/2022 – 10:33

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US Stocks & Bonds Are Getting Monkeyhammered…

US Stocks & Bonds Are Getting Monkeyhammered…

Well with Labor Day a distant memory, US markets are waking up to European pain and dumping any overnight gains in a hurry…

Nasdaq is now down 1.3% from Friday’s close, after being up over 1% in the pre-market…

Bonds are also being clubbed like baby seals (5Y yields are up 15bps)….

Notably rate-cut expectations for next year are plummeting…

Stocks still have more room to catch down to STIRs reality…

And the dollar is continuing to strengthen (consistently bid during the EU session)…

Is the market starting to realize Powell’s not kidding about ‘pain’?

Tyler Durden
Tue, 09/06/2022 – 10:11

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US Services Sector Weakest Since ‘Peak COVID Lockdown’ (Or Strongest Since April)

US Services Sector Weakest Since ‘Peak COVID Lockdown’ (Or Strongest Since April)

After a mixed picture from the manufacturing side of the US economy (ISM stable, PMI weak), US services surveys were expected to both show more weakness in August.

S&P Global’s US Services PMI did indeed fall and disappoint, printing 43.7 vs 44.1 expected (and below its flash print) and well below its 47.1 print for July – that is the lowest since May 2020.

Of course, in keeping with the utter insanity of the ‘baffle em with bullshit’ data we are seeing, US ISM Services unexpectedly rose in August – extending July’s unexpected rise – at 56.9 (above 55.4 expected) and its highest since April.

Source: Bloomberg

Take your pick – either US Services are contracting at the fastest pace with the lockdowns or are expanding at their fastest pace in 5 months… and the picture was the same mixed view in Manufacturing…

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said:

“August saw the US economy slide into a steepening downturn, underscoring the rising risk of a deepening recession as households and business grapple with the rising cost of living and tightening financial conditions.

“Businesses are reporting a deterioration in output and order books of a degree exceeded since the global financial crisis only by that seen during the initial pandemic lockdowns.

“While orders are being lost across the board as a result of rising prices and the cost-of-living squeeze, the steepest downturn is being recorded in the financial services sector, reflecting the additional impact of higher interest rates and worsening financial conditions.

“Jobs growth has meanwhile cooled as companies grow increasingly reluctant to expand in the face of falling demand and an uncertain outlook, which will serve to further dampen growth in the coming months.

One positive form the survey was a substantial fall in the rate of input cost inflation, which should help to moderate consumer price growth in the months ahead, albeit with the rate of increase remaining stubbornly elevated.”

Overall, the S&P Global US Composite PMI Output Index posted 44.6 in August, down from 47.7 in July, to its weakest since peak COVID lockdown.

The US is now the weakest on a composite PMI basis of all the majors…

This signals a sharp contraction in business activity across the private sector.

Despite the degree of confidence rising to a three-month high, weak client demand led to a softer increase in employment in August.

Tyler Durden
Tue, 09/06/2022 – 10:06

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Trump’s Truth Social SPAC Plummets After Shareholders Reject Extension

Trump’s Truth Social SPAC Plummets After Shareholders Reject Extension

Shares in the Truth Social’s special purpose acquisition vehicle (SPAC) opened down over 16% on Tuesday following a Rueters report that the company, which was set to merge with Trump Media & Technology, failed to achieve enough shareholder support for a year’s extension to complete the deal.

The stock fell down more than 22% premarket on Tuesday to $19.45, which comes on the heels of a YTD decline of more than 50%.

The outcome of the vote is set for Tuesday at a meeting of DWAC holders – most of whom are individual investors. According to CEO Patrick Orlando, it has been a struggle to get them to vote through their brokers.

DWAC needs at least 65% of shareholders to support the extension, which was nowhere near the case on Monday evening.

The merger has been delayed by a SEC investigation into the deal after announcing the merger plan last October. The company has warned previously that if the deal isn’t extended, the SPAC may be forced to liquidate.

According to Reuters, one option under consideration is to postpone the vote deadline as it tries to rally support for an extension. If they are unable to do so, the company has the right for a six-month extension without holder approval – though it’s unclear whether the company will attempt to do so.

Another issue for Digital World (DWAC) is that a $1 billion PIPE commitment group of investors is set to expire on Sept. 20 unless the transaction with Trump Media & Technology Group is completed. Investment banks for DWAC have been contacting PIPE investors in the last few weeks to see if they would consider extending the PIPE, Reuters added. –Seeking Alpha

In August DWAC filed to delay the release of its Q2 results. 

Meanwhile, Google continues to bar the app from its Pay Store platform over ‘insufficient content moderation.’

Turns out it’s not so easy to just ‘build your own Twitter.’

When news of the SPAC merger first broke, shares in DWAC gained more than 350%, and have since dropped 74% from 2022 highs in March.

Tyler Durden
Tue, 09/06/2022 – 09:57

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