Full Passenger And Cargo Manifest Of Flight MH 17

It took Malaysian Airlines two months of media prodding before it finally released the full cargo manifest of the disappeared light MH 370. Following the tragedy of flight MH 17 it took just over a day to get the same information. The full manifest is shown below and aside from several live animals including two dogs, five pigeons and five otherwise unidentified live birds and a 9.4kg “shipment of pot”, there is little that draws attention. The full tragic list of 283 tragic passengers who passed away was also just released by Malaysian Airlines.

The full passenger manifest:

And the complete cargo haul:




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Death Toll Hits 330 As Israel Uncovers 13 Tunnels, Faces “Suicide Donkeys”

With large anti-Israel protests in London, Paris, Brussels, and Madrid, the social media PR blitzkrieg continues between the IDF and Hamas. Palestinian officials claim over 100 civilian deaths in the last 48 hours (and over 330 since Operation Protective Edge began). Israel continues to reference the ongoing bombardment of rockets from Gaza (militants in Gaza have launched 1,663 rockets…The IDF has struck “2,300 terror targets” in Gaza). As LA Times reports, fighting continued above and below ground Saturday as Israeli soldiers have located dozens of shafts dug under homes and green houses leading to 13 tunnels. CNN reports local witnesses saying very 30 seconds to a minute a shell comes down in or around Beit Lahya. Perhaps most fascinating is The IDF claims that their forces have been attacked by explosive-laden “suicide donkeys.”

 

Anti-Israel protests are spreading…

As the violence and death count rises…

Israel’s military continued to pound the Gaza Strip with heavy shelling on Saturday, calling on more civilians to leave their homes on the second day of its expanding ground operation against rocket launchers and cross-border tunnels while top diplomats were set to converge on the region to pursue a cease-fire.

 

Aircraft and artillery fire struck rocket-launchers, cars and houses throughout the coastal enclave. One strike killed five family members in their Beit Hanoun home, pushing the death toll above 330, according to Palestinian officials.

 

Fighting between Israeli troops and Hamas and other militants continued above and below ground Saturday. Overnight, around 20 militants were killed after engaging forces with gunfire and grenades as Israeli soldiers continued to comb Gaza for tunnels that Israel views as a strategic threat.

 

The Israeli military has reportedly located dozens of shafts dug under homes and green houses leading to 13 tunnels and intends to blow them up in coming days. At least three Israeli soldiers were injured Thursday in a battle with heavily armed militants who used one such tunnel to enter Israel from the central Gaza Strip with plans to attack a nearby community, a military official said.

The strikes so far… (via CNN)

Since Operation Protective Edge began, militants in Gaza have launched 1,663 rockets, the IDF said in a statement Saturday. Israeli rocket defense system Iron Dome has intercepted 346 of them.

 

The IDF has struck “2,300 terror targets” in Gaza, the statement said. In its recently launched ground operations, the IDF targeted 95 rocket launching sites and 13 tunnels.

CNN offers some local perspective

In his Gaza home, Ramez al-Madhoun listens Saturday to the thunder of Israeli tank shells battering the neighborhood — some a little less than a mile away, some closer.

 

A few miles south of him, Gazan militants’ rockets stream into the sky — about seven in 15 minutes — toward Israel.

 

The tanks are gunning for tunnels leading into Israel and the Gazan attack squads that use them.

 

Al-Madhoun says he feels safer during Israeli airstrikes.

 

“If it was an airstrike, it would be more of a precision strike, but the tanks shells are more dangerous, they are destroying more than the airstrikes,” he says.

 

Every 30 seconds to a minute a shell comes down in or around Beit Lahya. The local imam has told residents to stay home and pray, because the shelling has made it to dangerous to go outside, al-Madhoun says.

Hamas is using alternate tactics

According to the IDF, ground forces operating in Gaza Strip were attacked by an explosives-laden donkey

 

The latest such incident happened on Friday in the Rafah area, the IDF reported Saturday. 

 

A donkey suspiciously began to approach forces. The Forces Engaged the Donkey and it Exploded at A Safe Distance, whereas no Injuries Were Sustained by the IDF as A result, ” the Israeli Report Said.

 

“Sending an animal to ITS Death to serve Terrorist Purposes May SEEM Shocking, but Certainly Last night was not the first time Palestinian Terrorists Adopted this despicable Tactic,” the IDF Said. 

 


Israel is urging civilians to evacuate…

 

*  *  *

Which leaves just one question… Do the donkeys go to heaven with 72 virgins?




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Fade the Break?

There is a generally shared view that growth differentials will lead to wider interest rate differentials that will spur the long awaited dollar rally.   The markets are anticipatory in nature, and many observers suspect that dollar rally has begun.  

 

The Dollar Index rose to a one-month high before the weekend, extending the push through the 200-day moving average that had occurred earlier in the week.  At midweek, the 50-day average moved above the 200-day average in what some technicians refer to as the golden cross.

 

Despite the disappointing housing starts, other economic data suggests the US economy not only expanded by a little more than 3% in Q2, but the positive momentum has carried over into the start of Q3.  The Bloomberg consensus expects the world’s largest economy to expand at a 3.1% annualized clip in both Q3 and Q4.  

 

However, the US 10-year yield has no traction.  It dipped below 2.44% last week, as stock market fall, housing st.  arts crumbled (only in the south, but enough to drag the national aggregate dramatically lower) and geopolitical tensions rose.  The yield is off seven bp in the past week and 14 bp in the past month.  The 2.48% close was the lowest weekly close since the end of May.  

 

Some of the factors that drove US yields down also drove the yen higher, like the geopolitics and the sharp sell-off in stocks on July 17.  The dollar successfully tested the JPY101 level for the second time in two weeks.   There is a band of resistance in the JPY101.50-65 area.  It needs to be overcome to take the pressure off a re-test.  

 

Before the weekend, the euro broke below the $1.35 level for the first time since February.  It is approaching a trend line on the weekly bar charts that comes in near $1.3470.  Although technical indicators, like the MACDs, are trending lower, and the 5-day average is below the 20-day, we are not convinced this is the long anticipated breakout.     

 

We suspect the euros’s break of $1.35 was a bit of a fluke, perhaps driven by the cross against the yen.  The break took many by surprise, but strong bargain hunting quickly emerged and the euro finished  net-net little changed from the previous session, which itself was little changed from its previous session.  Essentially the euro has been unchanged on a closing basis since July 16. 

 

A combination of an upside surprise on US inflation and a downside surprise of the euro area flash PMI readings could give the market the incentive to push the euro through the weekly trend, in which case the next target is $1.34.  Nevertheless, we suspect the $1.35-$1.37 trading range will remain intact, even if it frays a bit.  

 

Sterling technical tone has deteriorated, and the 5- and 20-day moving averages are set to cross over the next couple of sessions.  Sterling spiked to new highs in response to the CPI’s upside surprise.  However, that high was not confirmed by the technical indicators.  This has created a bearish divergence. 

 

We do not think that sterling has peaked yet, but the technicals and market positioning suggests caution is warranted.  New buying is likely to emerging on a further pullback into the $1.6950-$1.7000 area. 

 

Within a narrow consolidative range, the Australian dollar staged an outside up day as the government seemed more relaxed about the currency’s strength than the central bank.  The technical tone is favorable.  The RSI has turned up, and the MACDs are about to.  The next target is near $0.9460. 

 

The technical tone of the Canadian dollar is not as favorable.  The Aussie looks set to outperform the Loonie.  It is flirting with CAD1.01, which it tested three times last week.  A break of this would signal a move toward CAD1.0200-50. 

 

The US dollar spiked to CAD1.08 on the central bank’s statement indicating that although the CPI has not peaked, the gains are likely to prove temporary and full capacity utilization was pushed out again.   As if on cue, before the weekend the June CPI figures were stronger than expected and the greenback fell to almost CAD1.07.

 

We suspect that the quick move to CAD1.08 was a shakeout of weak late longs.   As of July 15, the speculators in the futures market had a gross long Canadian dollar position that was the largest in nearly 18 months.  It has doubled in the past month. A consolidation phase would not be surprising in the near-term. 

 

The US dollar closed just below MXN12.95 before the weekend.  It is the lowest weekly close in six weeks.  The net long position in the futures market has been essentially unchanged for the past four-reporting periods.  However, what appears to be the driving force is the demand for peso-denominated government debt.  Foreign holding of official peso debt is at a record. They are anticipating the opening up of Mexico’s energy market, with draft rules approved by Senate committees last week. 

 

The next level of support is seen near MXN12.90.  We still look for a retest on the MXN12.80 area, even though the previous head and shoulders pattern did not unfold as hoped.    

 

 

Lastly, given the anticipated growth and price pressures, we continue to think that US 10-year yields below 2.5% are not sustainable.  A move back above the 2.56%-2.57% area will help stabilize the tone.  

 

 

Observations from the speculative positioning in the futures market:

 

1. Position adjustments were minor in the latest Commitment of Traders report for the week ending July 15.  Of the 14 gross currency futures positions, 11 were adjusted by less than 5k contracts. The only significant position adjustment  (we define as more than 10k contract change) was the 11.5k contracts added to the gross short position.  It now stands at 112.4k contracts, which is by far the largest short position among the currency futures.  The gross short yen position of 71.3k is is the second largest.  

 

2.  Speculators continued to accumulate Canadian and Australian dollars.  The gross long Canadian dollar position edged 2.1k contracts higher to 60.4k.  This is twice as much as a month ago.  The gross long Australian dollar position rose 4.2k contracts and has grown 7-fold since mid-March to 70.9k contracts.  

 

3.  Although gross sterling longs slipped fractionally, at 86k contracts  it is still larger than the gross long euro, Swiss franc and yen futures positions combined.  

 

4.  There was a sharp reduction in the net short 10-year Treasury futures.  This was not a function of short covering.  In fact, the gross shorts edged higher by 5.7k contracts to 479.2k.  The reason the net short position fell to 53.6k contracts from 96.8k is because new longs came into the market. The gross long Treasury position increased by more than 10% to 425.6k contracts 




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Fade the Break?

There is a generally shared view that growth differentials will lead to wider interest rate differentials that will spur the long awaited dollar rally.   The markets are anticipatory in nature, and many observers suspect that dollar rally has begun.  

 

The Dollar Index rose to a one-month high before the weekend, extending the push through the 200-day moving average that had occurred earlier in the week.  At midweek, the 50-day average moved above the 200-day average in what some technicians refer to as the golden cross.

 

Despite the disappointing housing starts, other economic data suggests the US economy not only expanded by a little more than 3% in Q2, but the positive momentum has carried over into the start of Q3.  The Bloomberg consensus expects the world’s largest economy to expand at a 3.1% annualized clip in both Q3 and Q4.  

 

However, the US 10-year yield has no traction.  It dipped below 2.44% last week, as stock market fall, housing st.  arts crumbled (only in the south, but enough to drag the national aggregate dramatically lower) and geopolitical tensions rose.  The yield is off seven bp in the past week and 14 bp in the past month.  The 2.48% close was the lowest weekly close since the end of May.  

 

Some of the factors that drove US yields down also drove the yen higher, like the geopolitics and the sharp sell-off in stocks on July 17.  The dollar successfully tested the JPY101 level for the second time in two weeks.   There is a band of resistance in the JPY101.50-65 area.  It needs to be overcome to take the pressure off a re-test.  

 

Before the weekend, the euro broke below the $1.35 level for the first time since February.  It is approaching a trend line on the weekly bar charts that comes in near $1.3470.  Although technical indicators, like the MACDs, are trending lower, and the 5-day average is below the 20-day, we are not convinced this is the long anticipated breakout.     

 

We suspect the euros’s break of $1.35 was a bit of a fluke, perhaps driven by the cross against the yen.  The break took many by surprise, but strong bargain hunting quickly emerged and the euro finished  net-net little changed from the previous session, which itself was little changed from its previous session.  Essentially the euro has been unchanged on a closing basis since July 16. 

 

A combination of an upside surprise on US inflation and a downside surprise of the euro area flash PMI readings could give the market the incentive to push the euro through the weekly trend, in which case the next target is $1.34.  Nevertheless, we suspect the $1.35-$1.37 trading range will remain intact, even if it frays a bit.  

 

Sterling technical tone has deteriorated, and the 5- and 20-day moving averages are set to cross over the next couple of sessions.  Sterling spiked to new highs in response to the CPI’s upside surprise.  However, that high was not confirmed by the technical indicators.  This has created a bearish divergence. 

 

We do not think that sterling has peaked yet, but the technicals and market positioning suggests caution is warranted.  New buying is likely to emerging on a further pullback into the $1.6950-$1.7000 area. 

 

Within a narrow consolidative range, the Australian dollar staged an outside up day as the government seemed more relaxed about the currency’s strength than the central bank.  The technical tone is favorable.  The RSI has turned up, and the MACDs are about to.  The next target is near $0.9460. 

 

The technical tone of the Canadian dollar is not as favorable.  The Aussie looks set to outperform the Loonie.  It is flirting with CAD1.01, which it tested three times last week.  A break of this would signal a move toward CAD1.0200-50. 

 

The US dollar spiked to CAD1.08 on the central bank’s statement indicating that although the CPI has not peaked, the gains are likely to prove temporary and full capacity utilization was pushed out again.   As if on cue, before the weekend the June CPI figures were stronger than expected and the greenback fell to almost CAD1.07.

 

We suspect that the quick move to CAD1.08 was a shakeout of weak late longs.   As of July 15, the speculators in the futures market had a gross long Canadian dollar position that was the largest in nearly 18 months.  It has doubled in the past month. A consolidation phase would not be surprising in the near-term. 

 

The US dollar closed just below MXN12.95 before the weekend.  It is the lowest weekly close in six weeks.  The net long position in the futures market has been essentially unchanged for the past four-reporting periods.  However, what appears to be the driving force is the demand for peso-denominated government debt.  Foreign holding of official peso debt is at a record. They are anticipating the opening up of Mexico’s energy market, with draft rules approved by Senate committees last week. 

 

The next level of support is seen near MXN12.90.  We still look for a retest on the MXN12.80 area, even though the previous head and shoulders pattern did not unfold as hoped.    

 

 

Lastly, given the anticipated growth and price pressures, we continue to think that US 10-year yields below 2.5% are not sustainable.  A move back above the 2.56%-2.57% area will help stabilize the tone.  

 

 

Observations from the speculative positioning in the futures market:

 

1. Position adjustments were minor in the latest Commitment of Traders report for the week ending July 15.  Of the 14 gross currency futures positions, 11 were adjusted by less than 5k contracts. The only significant position adjustment  (we define as more than 10k contract change) was the 11.5k contracts added to the gross short position.  It now stands at 112.4k contracts, which is by far the largest short position among the currency futures.  The gross short yen position of 71.3k is is the second largest.  

 

2.  Speculators continued to accumulate Canadian and Australian dollars.  The gross long Canadian dollar position edged 2.1k contracts higher to 60.4k.  This is twice as much as a month ago.  The gross long Australian dollar position rose 4.2k contracts and has grown 7-fold since mid-March to 70.9k contracts.  

 

3.  Although gross sterling longs slipped fractionally, at 86k contracts  it is still larger than the gross long euro, Swiss franc and yen futures positions combined.  

 

4.  There was a sharp reduction in the net short 10-year Treasury futures.  This was not a function of short covering.  In fact, the gross shorts edged higher by 5.7k contracts to 479.2k.  The reason the net short position fell to 53.6k contracts from 96.8k is because new longs came into the market. The gross long Treasury position increased by more than 10% to 425.6k contracts 




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Listed At “Only” HK$1.94 Million, This Is What Hong Kong’s Cheapest “Home” Looks Like

First the good news: one can now buy an apartment in Hong Kong for the low, low price of under HK$2 million, or HK$1.94 million to be precise which amounts to a measly USD $250,000.

Hong Kong’s leading property developer and conglomerate, Cheung Kong Holdings (whose position in the Hong Kong financial pyramid is best described by its stock ticker: 0001) is selling a studio at Mont Vert in Tai Powhich is also the cheapest new home available for sale in Hong Kong, at HK$1.94 million, according to the price list Cheung Kong released on Thursday for the first batch of units at the development.

“New flats selling for less than HK$2 million are almost impossible to find in Hong Kong,” said Louis Chan Wing-kit, managing director of Centaline Property Agency’s residential department.

Now the bad news: the studio has an area of a whopping 194 square feet, which works out to HK$10,031 per sq ft or about USD$1,300 per square foot. And just in case this may seem like a cavernous McMansion to some, Cheung Kong is also selling an even smaller pad, one sized a tiny 177 sq ft. This particular unit did not have a sale price listed in the first batch.

The unit is about double the size of a prison cell.

It looks as follows:

 

But ignore the fact that the apartment is just double the size of a prison cell, according to SCMP: Justin Chiu Kwok-hung, an executive director at Cheung Kong, said he was told by property agents that prices at the project were about 30 per cent below transaction prices for other new flats in the area.

“The stunning low price is because of low land cost,” he said. “The site was converted from farmland for residential use. We also secured lower construction cost as the contract was awarded several years ago.”

For those who demand more “princely” estates, there are options: the first batch of the 1,071-unit project going on sale includes two-bedroom or three-bedroom flats, as well as 43 studio flats. Sellable area for the flats ranges from 194 to 945 square feet. Flats cost between HK$1.65 million and HK$8.70 million with maximum discounts of 15 percent.

Of the 260 units on offer, 43 are studio flats, 20 are two-bedroom units and 197 are three-bedroom units. They are priced at HK$8,961 to HK$11,162 per square foot, while the going rates for second-hand flats in the area are HK$8,310 to HK$10,334.

Don’t expect anything new however, most of those flats are more than 20 years old.

So act now to buy your own prison cell at the low, low price of a quarter million dollars. In fact, you have to buy it “sight unseen.”

Meanwhile, the Sales of First-hand Residential Properties Authority reminded potential buyers to look at the flat before signing the provisional purchase deal.

 

It came after the authority noticed that Cheung Kong was requiring potential buyers to sign a no-visit agreement, baring them from seeing the flat they want to buy before signing the provisional contract.

Best of all, all of this is coming to a housing bubble near you.




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How British Spies “Seed the Internet With False Info, Control YouTube Pageviews and Manipulate Online Polls”

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

Thanks to Edward Snowden, we now have proof about an incredible set of tools used by the British equivalent of the NSA, known as the GCHQ, or Government Communications Headquarters. These tools will essentially confirm every single conspiracy theory you could have ever imagined when it comes to propaganda on the Internet. It allows British intelligence officers to: “manipulate the results of online polls, artificially inflate pageview counts on web sites, ‘amplify’ sanctioned messages on YouTube, and censor video content judged to be ‘extremist.’”

Being the creative folks that they are, GCHQ even came up with code words to describe each “product.” These include, UNDERPASS (for poll manipulation), SILVERLORD (for censorship), GESTATOR (for the manipulation of YouTube views), PREDATORS FACE (for DDOS attacks), the list goes on…

Glenn Greenwald writes at The Intercept that:

The secretive British spy agency GCHQ has developed covert tools to seed the internet with false information, including the ability to manipulate the results of online polls, artificially inflate pageview counts on web sites, “amplif[y]” sanctioned messages on YouTube, and censor video content judged to be “extremist.” The capabilities, detailed in documents provided by NSA whistleblower Edward Snowden, even include an old standby for pre-adolescent prank callers everywhere: A way to connect two unsuspecting phone users together in a call.

 

The tools were created by GCHQ’s Joint Threat Research Intelligence Group (JTRIG), and constitute some of the most startling methods of propaganda and internet deception contained within the Snowden archive. Previously disclosed documents have detailed JTRIG’s use of “fake victim blog posts,” “false flag operations,” “honey traps” and psychological manipulation to target online activists, monitor visitors to WikiLeaks, and spy on YouTube and Facebook users.

 

GCHQ refused to provide any comment on the record beyond its standard boilerplate, in which it claims that it acts “in accordance with a strict legal and policy framework” and is subject to “rigorous oversight.” But both claims are questionable.

 

Several GCHQ memos published last fall by The Guardian revealed that the agency was eager to keep its activities secret not to protect national security, but because “our main concern is that references to agency practices (ie, the scale of interception and deletion) could lead to damaging public debate which might lead to legal challenges against the current regime.”

This last line is of crucial importance. The entire point of spying has nothing to do with terrorism, but as many of us have suspected, it is all about protecting and maintaining the status quo.

Oh, and just in case these products aren’t enough fascism for you, no need to fret. We learn that:

And JTRIG urges its GCHQ colleagues to think big when it comes to internet deception: “Don’t treat this like a catalogue. If you don’t see it here, it doesn’t mean we can’t build it.”

So next time you question the number of views on a certain video, or your website experiences a DDOS attack, there may be a intel officer at the other end of the line with a giant sign saying “fuck you mate.”

Full article here.




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Goldman Slams Abenomics; Questions “Validity Of BoJ’s Target”

While we have again and again explained why Abenomics is ultimately doomed as you simply cannot print your way to prosperity (a message The Fed appears to be discovering rapidly), when Goldman Sachs unleashes an Abenomics-bashing piece, one has to wonder just what options Abe has left as economic data starts to collapse (and approval ratings drop just as fast).

Via Goldman Sachs,

Corporate pricing bearish again on falling demand after post-tax hike

 

The April core CPI, the first reading after the VAT hike, came in at +1.5% (excluding the tax hike impact), an increase from +1.3% in March. Some market observers have pointed to a more bullish corporate stance on pricing as one of the reasons. We used the University of Tokyo Daily Price Index to examine how consumers have been reacting to this aggressive pricing and in turn how companies have adjusted their pricing approach.

 

Plotting the daily price and sales before and after this year’s tax hike (on April 1) and the previous tax hike (in April 1997), we see two interesting points: (1) corporate pricing is definitely more aggressive just after this year’s tax hike, and (2) a meaningful change can be seen in the price-sales relationship after this year’s hike. Statistically, a significant relationship between price and sales is not visible before this year’s tax hike, but a strong negative correlation is evident after the tax hike.


 

 

 

It is noteworthy that the sensitivity of sales in response to price changes after the April 2014 tax hike was more than double that after the April 1997 tax hike.

 

This implies that consumers have been forced to reduce spending in response to more aggressive corporate pricing. Seeing signs of a large falloff in consumption, companies lowered prices in mid-April as they searched for a new equilibrium. Ultimately, though, prices have not exceeded year-earlier levels even once since mid-June, indicating that companies are turning more bearish on pricing again.

 

There is no question that consumers have been compelled to cut spending after the tax hike as aggressive corporate pricing has exacerbated a large decline in real wages, despite successful spring wage negotiations. We think this situation is likely to persist barring major changes in the current wage environment, and hence we expect companies to maintain a passive and bearish pricing stance. We think this trend will affect CPI before long and continue even after the summer. We still question the validity of the BOJ’s 2% inflation scenario and will closely watch trends in the UTokyo’s index for the light it sheds on this.

*  *  *

But the Progressives Told Us Abenomics Would Be Great for Japan

* * *

Apparently Goldman has shifted its perspective on the J-Curve recovery ever returning… as we suggested previously

On the terrible missing J-Curve (via Patrick Barron of the Ludwig von Mises Institute of Canada):

Perhaps I can shed some light on Japanese Prime Minister Abe’s missing J-curve; i.e., why Japan’s trade deficit seems to be increasing rather than decreasing after massive monetary intervention to reduce the purchasing power of the yen. Monetary debasement does NOT result in an economic recovery, because no nation can force another to pay for its recovery.

 

Monetary debasement transfers wealth within an economy by subsidizing exports at the expense of the entire economy, but this effect is delayed as the new money works it way from first receivers of the new money to later receivers. The BOJ gives more yen to buyers using dollars, euros, and other currencies, as the article states, but this is nothing more than a gift to foreigners that is funneled through exporters. Because exporters are the first receivers of the new money, they buy resources at existing prices and make large profits. As most have noted, exporters have seen a surge in their share prices, but this is exactly what one should expect when government taxes all to give to the few.

 

Eventually the monetary debasement raises all costs and this initial benefit to exporters vanishes. Then the country is left with a depleted capital base and a higher price level. What a great policy!

 

The good news is that Japan does know how to rebuild its economy. It did it the old-fashioned way seventy years ago–hard work and savings.

And the latest joke from Asian trading floors: “when asked what he thought of the recovery, Shinzo Abe responded “Depends!””




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The Electrical Grid May Well Be The Next War’s Battlefield

Submitted by Chris Martenson via Peak Prosperity,

We talk a lot about Peak Cheap Oil as the Achilles’ heel of the exponential monetary model, but the real threat to the quality of our daily lives would be a sustained loss of electrical power. Anything over a week without power for any modern nation would be a serious problem.

When the power goes out, everything just stops. For residential users, even a few hours begins to intrude heavily as melting freezers, dying cell phones, and the awkward realization that we don’t remember how to play board games nudge us out of our comfort zone.

However, those are just small inconveniences.

For industrial and other heavy users, the impact of even a relatively short outage can be expensive or even ghastly. Hospitals and people on life-assisting machinery are especially vulnerable. Without power, aluminum smelters face the prospect of the molten ore solidifying in the channels from which it must be laboriously removed before operations can be restarted.

Many types of nuclear power plants have to switch to back-up diesel generators to keep the cooling pumps running. And if those stop for any reason (like they run out of fuel), well, Fukushima gave us a sense of how bad things can get.

And of course banking stops, ATMs are useless, and gas stations cannot pump gas. Just ask the people of New Jersey in the aftermath of Hurricane Sandy.

A blackout of a few hours results in an inconvenience for everyone and something to talk about.

But one more than a day or two long? Things begin to get a bit tense; especially in cities, and doubly so if it happens in the hot mid-summer months.

Anything over a week and we start facing real, life-threatening issues. National Geographic ran a special presentation, American Blackout, in October 2013 — it presented a very good progression covering exactly what a timeline of serious grid disruption would look and feel like. I recommend the program for those interested.

 

Grid Threats

We’re exploring this risk because there are a number of developments that could knock out the power grid for a week or more. They include a coronal mass ejection (CME), a nuclear electromagnetic pulse (EMP) device, a cascading grid failure, and malicious hacking or electronic attacks.

It’s the cyber-electronic front that’s especially concerning these days, as we depend so vitally on so many systems that operate completely dependent on computer controls.

Many critical manufacturing and power generation systems are especially vulnerable to such attacks, as the Stuxnet virus showed in Iran where it is believed to have ruined thousands of delicate uranium enrichment centrifuges by overriding their commands and causing them to literally spin themselves to pieces.

As one Peak Prosperity member recently wrote:

My great fear is not supersonic missiles, it’s a combined-arms cyber attack plus (as necessary) kinetic assault on the power grid, with the “calling card” being left pointing to some convenient domestic extremist group scapegoat.

 

The FERC (Federal Energy Regulatory Commission) released a report that suggested the US power grid could be knocked out for “weeks if not months” by taking out only 9 substations using a coordinated kinetic attack.

 

Given that one substation was actually assaulted by persons unknown last year:

 

In last April’s attack at PG&E Corp.’s Metcalf substation, gunmen shot 17 large transformers over 19 minutes before fleeing in advance of police. The state grid operator was able to avoid any blackouts.

 

The Metcalf substation sits near a freeway outside San Jose, Calif. Some experts worry that substations farther from cities could face longer attacks because of their distance from police. Many sites aren’t staffed and are protected by little more than chain-link fences and cameras.

 

So this power station assault actually happened. This whole thing isn’t just someone’s crazy dream.

 

(Source)

You can be certain that such concerns are very high on the list of things that the NSA worries about, and which it feels justify the use of whatever electronic eavesdropping may be necessary to guard against.

A widespread loss of the electrical grid for even one week would be devastating for a number of reasons. First the fuel refining, manufacturing, distribution and delivery systems would cease to function. After emergency generators are used to move and distribute what processed fuel is in the system, are only remaining fuel will be that brought into the country from other regions of the world.

Within a very short time, perhaps just days or hours of what is perceived to be a sustained loss of electrical power, the fuel system will be placed under emergency triage rationing — with hospitals, nuclear generation plants, the military, police and other emergency services consuming 100% of what’s available. Sorry, none for you.

With every additional day that the electricity is out the damage to the afflicted nation mounts.  Food, fuel, and water, become scarce and sanitation problems rapidly  accumulate.

Here’s the thing: cyber penetrations and outright kinetic attacks on US power grid elements have already happened. Given the extreme disruption that would result from any successful future attacks, you should have some personal preparations in place.

Our Woeful Grid

The US power grid, as a whole, is anything but modern and robust. Huge swaths of it were built decades ago. It remains largely a centralized generation and distribution system, one in which the failure of a remarkably few ‘nodes’ would be catastrophic.

It’s millions of miles of lines, utility poles, towers, substations and generating stations. Here’s a good, short description:

Today [2003], the US electric power grid serves about 125 million residential customers, 17.6 million commercial customers, and 775,000 industrial customers. These various categories of customers account, respectively, for about 37%, 36%, and 27% of electricity consumption annually.

 

Electricity is produced at large power plants typically located in remote areas and delivered into high-voltage transmission lines that transport it across long distances to regional and neighborhood substations, where the voltage is stepped down to a current that can be used in homes and offices and fed into a local distribution grid.

 

Between 1949 and 1973, electricity use in the United States grew at an average annual rate of 8.3%, and the system was able to meet that demand with only sporadic difficulty. Even with rising prices after 1973, electricity use grew at an average annual rate of 2.5% in the years from 1973 to 2006. The growth rate projected for the next 20 years is comparatively flat.

 

The electric grid encompasses both transmission and distribution (T&D) power grids. The transmission system spans more than 160,000 miles (257,000) of high-voltage transmission lines and connects over 750 GW of electricity-generating capacity with local and regional demand centers across the nation. In addition, the electricity distribution system, which consists of smaller, lower-voltage distribution lines that deliver power from substations and transformers to customers, encompasses 6 million miles (9.6 million) of wire and cable spread across roughly 500,000 circuits and linked to the national transmission system by about 60,000 substations.

 

(Source) http://ift.tt/1yEzPPI…

The substations circled in green in the image above are the most vulnerable points in the system.

The alternative to this mass of interconnected wires would be a decentralized, smart grid involving a very large number of small generating ‘stations’ where thousands of failures would be required to cause a sustained loss of power for millions.

But currently?

The loss of just nine critical substations could mean a catastrophic loss of power for up to 18 months. What the country would look like after that, and whether such an insult could be recovered from is an open question.

U.S. Risks National Blackout From Small-Scale Attack

 

The U.S. could suffer a coast-to-coast blackout if saboteurs knocked out just nine of the country’s 55,000 electric-transmission substations on a scorching summer day, according to a previously unreported federal analysis.

 

The study by the Federal Energy Regulatory Commission concluded that coordinated attacks in each of the nation’s three separate electric systems could cause the entire power network to collapse, people familiar with the research said.

 

A small number of the country’s substations play an outsize role in keeping power flowing across large regions. The FERC analysis indicates that knocking out nine of those key substations could plunge the country into darkness for weeks, if not months.

 

A memo prepared at FERC in late June for Mr. Wellinghoff before he briefed senior officials made several urgent points. “Destroy nine interconnection substations and a transformer manufacturer and the entire United States grid would be down for at least 18 months, probably longer,” said the memo, which was reviewed by the Journal. That lengthy outage is possible for several reasons, including that only a handful of U.S. factoriesbuild transformers.

 

(Source)

The Us grid consists of three big regions, and is designed in such a way that the failure of just a few critical components would drag the whole thing down.

Again, that insult could be a deliberate attack, an EMP device, a CME, or even a squirrel on the wrong transformer on a hot day that leads to a cascading series of failures.

These vulnerabilities could be addressed, but the main point of this report is to note that over the years since they’ve been identified they mostly have not been addressed.

Does all of this seem too unlikely to worry about? Well, you might want to consider that we only recently learned that a massive CME narrowly missed the earth in 2012, the exact sort of threat we covered in great detail in a past podcast with a NASA scientist:

Carrington-class CME Narrowly Misses Earth

May 2, 2014

 

The close shave happened almost two years ago. On July 23, 2012, a plasma cloud or “CME” rocketed away from the sun as fast as 3000 km/s, more than four times faster than a typical eruption. The storm tore through Earth orbit, but fortunately Earth wasn’t there. Instead it hit the STEREO-A spacecraft. Researchers have been analyzing the data ever since, and they have concluded that the storm was one of the strongest in recorded history. “It might have been stronger than the Carrington Event itself,” says Baker.

 

The Carrington Event of Sept. 1859 was a series of powerful CMEs that hit Earth head-on, sparking Northern Lights as far south as Tahiti. Intense geomagnetic storms caused global telegraph lines to spark, setting fire to some telegraph offices and disabling the ‘Victorian Internet.” A similar storm today could have a catastrophic effect on modern power grids and telecommunication networks.

 

(Source)

How much did this storm miss us by? About one week. If the earth had been just 7/365 (1.9%) further along in its path, an entire hemisphere would have gotten shellacked. And, oh by the way, do any of you recall hearing of any warnings from NASA or other government bodies in 2012 that such a blast was headed our way and how closely it missed us by?

Me neither. So perhaps we shouldn’t count on getting an official warning in the future either.

Conclusion (Part 1)

The main conclusion here is that you should be at least moderately prepared for a sustained electricity outage, at least to the same degree that you carry fire insurance on your property. Both are remote — but catastrophic — events where a little advance preparation can go a long way.

In Part 2: Reducing Your Risk To A Grid-Down Event we reveal the vulnerabilities mostly likely to cause prolonged outages of the national power grid: cyber attacks. The current system in the US has a disconcerting number of failure points that can — and are, the data shows — being targeted by malicious agents. 

More important, we lay out the specific steps concerned individuals should take at the home level to have backup support and protection should the grid go down. The cost of such preparation is very low compared to the huge magnitude of this low-probability, but highly disruptive, risk.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)




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Where The Real Inflation Is

Despite being dismissed as “noise”, inflation is here and it’s rising. As the following chart shows, if you eat, drive, use electricity, or live in a house, you are paying dramatically more this year than you did last year. On the bright side, if you wear clothes or use electronics, prices have dropped (but remember deflation is bad…). How much longer can the Fed pull the wool over the eyes of the people?

 

 

Chart: Goldman Sachs




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