Erdogan Threatens To “Chop Off Heads Of Traitors” On Coup Anniversary

Turkey’s President Recep Erdogan on Saturday celebrated the one year anniversary of the “failed coup” that aimed to oust him from power on Saturday in typical fashion, by threatening to “chop off the heads” of traitors. Addressing hundreds of thousands of supporters gathered at the bridge over the Bosphorus in Istanbul that saw some of the fiercest fighting on the night of the July 15, 2016 attempted coup Erdogan said “first of all, we will chop off the heads of those traitors,” France24 reported, prompting cries from the crowds demanding that capital punishment should be restored in Turkey.

In response, the Turkish president vowed again to sign any bill passed by parliament to restore capital punishment in Turkey, a decision that would put an end to Ankara’s European Union membership ambitions. “We are a state governed by rule of law. If it comes to me after parliament, I will sign it,” he said.


Erdogan speaks in front of the Turkish Parliament in Ankara, on July 16, 2017

Or maybe not: also over the weekend, EU Commission chief Jean-Claude Juncker warned Ankara against reintroducing the death penalty, telling Bild am Sonntag that “one year after the attempted coup, Europe’s hand remains outstretched,” and “If Turkey were to introduce the death penalty, the Turkish government would finally slam the door to EU membership.”

Erdogan also said the suspects being tried on suspicion of involvement in the failed coup should wear uniform similar to the notorious orange jumpsuits used at Guantanamo. “I spoke to the prime minister and… when they appear in court, let’s make them appear in uniform suits like in Guantanamo,” Erdogan said. His statement came after one of the detainees reportedly showed up to court wearing a T-shirt with ‘Hero’ written on it last week.

Erdogan also slammed opposition (and not only) claims that the government had foreknowledge of the coup and let it play out to its own advantage in a so-called “controlled” putsch. “This is a shame, this is an immorality,” Erdogan said. “This is a disrespect, an insult to our people,” he added.

Meanwhile, in the biggest crackdown on civil liberties in recent history by a NATO member nation, over the past 12 months Ankara launched a massive crackdown on alleged coup supporters, as well as opposition figures and journalists; as a result over 50,000 people were arrested and more than 150,000 civil servants, police officers, and soldiers dismissed. In response, the “democratic” western press, and especially that of Europe, has largely given Erdogan a free pass knowing that the Turkish authoritarian holds to key to European stability, with over 2 million Syrian refugees “contained” within Turkey’s borders, who however can be released any time Erdogan finds himself especially displeased with his European colleagues. 

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Caitlyn Jenner Is Exploring A Senate Run

Earlier this week, Kid Rock announced that he’s exploring a senate bid in his home state of Michigan, energizing conservative activists who believe Rock – real name Robert James Ritchie – would easily defeat incumbent Democrat Debbie Stabenow and go on to become the first Republican to hold her seat since 1998.

But Rock isn’t the only celebrity who will be seeking a senate seat during the 2018 cycle: Olympic gold medalist and transgender activist Caitlyn Jenner has revealed during an interview with radio host John Catsimatidis that she has considered launching a run for Senate, and that she is in the process of determining her future in activism and politics, according to the Hill.

Jenner, a lifelong Republican, lives in California, where both Senate seats are controlled by Democrats. +

The term of Dianne Feinstein, the senior senator from California and, at 84, the longest-serving US senator, is up in 2018, and there’s speculation that she may not run again, given her age.

“The political side of it has always been very intriguing to me. Over the next six months or so, I gotta find out where I can do a better job. Can I do a better job from the outside? Kind of working the perimeter of the political scene, being open to talking to anybody? Or are you better from the inside, and we are in the process of determining that,” she said.

 

"Yeah but I would look for a senatorial run,” she continued.

Jenner told CNN's Don Lemon in April she would "seriously look at a run for office."

Jenner has been a supporter of President Trump, but hit Trump earlier this year over his decision to roll back Obama-era protections for transgender students.

“I have a message for President Trump from, well, one Republican to another. This is a disaster. And you can still fix it. You made a promise to protect the LGBTQ community. Call me," she said.

Jenner has seen public opinion turn decidedly against her after narrowly escaping criminal charges in a fatal February 2015 crash. She’s still facing several lawsuits that could complicate any run for office.

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The Way Chicago “Works”: Graft, Corruption, Political Connections, Bribes, Unions

Authored by Mike Shedlock via MishTalk.com,

Those who wish to understand how things work in Chicago need only read a single article that ties everything togetherTeamsters boss indicted on charges of extorting $100,000 from a local business.

A politically connected Teamsters union boss was indicted Wednesday on federal charges alleging he extorted $100,000 in cash from a local business.

 

John Coli Sr., considered one the union’s most powerful figures nationally, was charged with threatening work stoppages and other labor unrest unless he was given cash payoffs of $25,000 every three months by the undisclosed business.

 

The alleged extortion occurred when Coli was president of Teamsters Joint Council 25, a labor organization that represents more than 100,000 workers in the Chicago area and northwest Indiana.

 

Coli, 57, an early backer of Mayor Rahm Emanuel, was charged with one count of attempted extortion and five counts of demanding and accepting prohibited payment as a union official.

 

Coli could not be reached for comment, but a statement posted Wednesday on the Teamsters Local 727 website announced he planned to retire at the end of the month after 46 years in the union.

 

In the statement, Coli said he had decided it was time “to begin a new chapter” and that he wanted to spend more time with his family.

 

The Coli family has been active in politics for years and is well-known for spreading around union cash to various candidates. Coli and his relatives have also been accused in civil lawsuits in both state and federal court of running the union like a racket — accusations they have vehemently denied.

 

In a 2011 deposition stemming from one suit, Coli was asked under oath why so many of his relatives were allowed to control the union’s lucrative pension funds. “For the record, go f— yourself,” Coli answered, according to a transcript in court records.

 

“So I take it you’re refusing to answer that question?” the plaintiff’s attorney asked. “I think the answer speaks for itself,” the transcript quoted Coli as saying.

 

Coli backed Emanuel in his first run for mayor at a time when Emanuel, viewed as a centrist Democrat, had very little union backing.

 

The Teamsters contributed $35,000 to Emanuel’s 2011 campaign, including $15,000 for polling. The union stepped up even more to back the mayor’s bid for a second term, contributing $134,700, state campaign finance records show.

 

Once Emanuel was elected, a representative from the union was appointed to the mayoral transition team, and Coli was named to the exclusive group of campaign donors and community leaders in charge of planning the mayor’s first inaugural.

 

Two months after Emanuel first took office, the Chicago Tribune detailed how the newly elected mayor had demanded greater accountability and financial sacrifice from Chicago’s labor unions — except for the Teamsters.

 

In 2003, then-Gov. Rod Blagojevich appointed Coli to the Illinois Tollway board, only to have Coli quickly withdraw his name amid questions about $100,000 in Teamsters campaign contributions to Blagojevich and potential conflicts of interest.

 

Within a few months, Blagojevich quietly named Coli to two other state boards with less direct impact on Teamsters affairs, the Tribune reported.

 

In 2005, the Tribune reported the FBI was investigating whether the Coli-led Teamsters siphoned hundreds of thousands of dollars from a union benefit plan that provided dental care to Chicago-area undertakers and valets. That probe had been sparked by an internal union report raising concerns about payments from the plan going to organized crime figures.

 

No charges were ever filed.

Illinois Governors in Prison

Former governor Rod Blagojevich is now in prison for a 14-year sentence.

He was found guilty of 18 counts of corruption, including attempting to sell or trade an appointment to a vacant seat in the U.S. Senate.

He faces another eight years in prison after an appeals court upheld the sentence in April of this year.

No other state can match this claim: 4 OUT OF PREVIOUS 7 ILLINOIS GOVERNORS WENT TO PRISON

The way Chicago “works” is the same way Illinois “works”. Corrupt politicians get in bed with corrupt union leaders and screw the taxpayers and businesses as much as they can.

Sometimes they get caught.

Teamster boss Coli just got caught after all these years of extortion. His deals with Mayor Emanuel screwed Chicago taxpayers. Emanuel promised reforms and transparency but reforms and transparency stop once campaign donations are sufficient enough.

Coli said he is retiring to spend more time with “family”. Unless he gets off the hooks, that family must mean his mafia brothers and sisters in prison.

The City That Works

Chicago is nicknamed the “City that Works“.

I was wondering how it got that name. It took some doing, not by me but rather by the Straight Dope for the answer.

The April 5, 1971 issue of Newsweek featured Richard J. Daley on the cover, and inside, spread across two pages, a photo of Daley and his entourage marching eleven abreast on St. Patrick’s Day. Admittedly the headline below this read, “Chicago’s Daley: How to Run a City.” Adjacent to the headline, immediately beneath the photo, the text of the article read as follows:

 

This is not to suggest, reports Newsweek correspondent Frank Maier, that Daley’s Chicago enraptures every resident or inspires every visitor to leave his heart behind. But it is a demonstrable fact that Chicago is that most wondrous of exceptions — a major American city that actually works.”

 

The last bit was repeated in an editor’s note at the front of the magazine. Beyond a doubt this article was the vehicle by which “the city that [actually] works” entered common currency. The phrase began turning up in Chicago newspapers by 1972, first appeared in the Washington Post in 1974 and in the New York Times in 1975, and figured in the lead of obituaries nationwide following Daley’s death in 1976.

If by some chance you previously did not know how Chicago and the entire state “works”, now you do.

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How Finland Is Preparing For A Russian Invasion

In September, Russia will conduct its Zapad 2017 military exercise, the largest since the end of the Cold War, and one which is already sending shivers down the spine of NATO, which not only has “serious doubts Moscow is revealing the true extent of its military exercises”, but because the last time such a major training exercise took place was just before the Crimea “annexation.” One country, however, isn’t taking chances: Russia’s northern neighbor Finland, which as the WSJ reports, is “going underground.”

In something straight out of an H.G. Wells novel, Helsinki has built an entire subterranean city beneath Helsinki which forms a “crucial line of defense for the capital. Finnish soldiers routinely train here, with a mission to keep Finland’s government running and city residents safe in a network that features more than 124 miles of tunnels, passageways and shelters” the WSJ reports.

The “extensive underground network” has been adapted over recent decades with one thing in mind: to become an impregnable defensive redoubt which provides most of the amenities of regular, above the surface existence: blast doors seal entrances…

The entrance to the Katri Vala Park bomb shelter in Helsinki

… passageways are adapted so the military—with a regiment dedicated to controlling the tunnels—can contain enemy infiltrators; utility and subway tunnels provide arteries for communications; there is a constant water supply and even Wi-Fi. In fact, there is enough shelter space for all city’s more than 600,000 residents in the event of an attack or disaster.

While the underground fortress has long been in place, the upcoming Russian drills are shaping up as a focal point for some very nervous Finns: “The soldiers make sure we will have the advantage underground if they ever come to us wanting a fight,” a former Finnish Defense Ministry official told the WSJ.

Showing just how pervasive anti-Russian sentiment has become across Europe, the WSJ notes that “with thousands of Russian troops expected to mass at the border for the exercise, the Finns worry the training could be a screen for aggressive military moves.” Which is ironic because even as Russia’s war games take place on Finland’s border, NATO – of which Finland is not a member – has been aggressively stepping up its own presence in the Baltics, across the Gulf of Finland.

Still, that has not assuaged the local paranoia that the upcoming Russian drill could result in an outright invasion:

“More than looking at what will happen during the exercise, we’re more interested in what will happen afterward and make sure that the troops actually do leave,” said Jarno Limnell, a Finnish expert on cybersecurity and military science.

Then again, perhaps Finland does have reason to be concerned: after all it was the three-month-long “Winter War” against the Soviet Union in 1939-1940, which was started by Stalin on November 30, three months after the outbreak of World War II, that has shaped much of Finnish defensive planning.


A Finnish light artillery squad on patrol in January 1940

It was during this war that “in record cold temperatures, small groups of Finnish ski soldiers in winter camouflage picked off approaching Red Army soldiers in the forests. The Finns lost 10% of their territory to the Soviets, but maintained their sovereignty.”

Planning is still shaped by that experience—with an emphasis on survival and forcing the enemy into unfamiliar terrain—though it shifted, after the Cold War, to the tunnels.

Fast forward to 2017 when in March of this year, Finland carried outn extensive military exercise based on a recent, real-world scenario: the takeover of government buildings by foreign special forces, like the Russians who seized installations in Crimea during the 2014 Russia-Ukraine conflict.  And, as the WSJ adds, “some of those exercises took place in Helsinki’s underground labyrinth. The network connects shopping centers, subway tunnels, parking garages and pathways that accompany power and water lines. Tunnels also lead into passageways used only by the military and connect to an island used exclusively for the military regiment responsible for defending Helsinki.

While much of the underground “city” is dual use – and many of the tunnels remain a secret – most Helsinki residents descend on occasion to get around, particularly in winter; some shop, swim, or attend an underground church. One swimming complex beneath a shopping center can be transformed within hours to shelter 3,800 people.


Kamppi Metro Station in Helsinki, where subway stations in the city center have
been equipped to serve as shelters.

Showing just how engrained the “defensive” mentality is among the locals, Ilkka Vahaaho, an employee of the city of Helsinki’s real estate department said that “today if you build a new underground space, it must be capable of being transformed into a defense center within days.” The state of the art defense centers are connected to city power and water supplies, and some have advanced ventilation capable of filtering out radioactive particles.


The entrance to the Johanneksenpuisto bomb shelter in Helsinki

To be sure, government defense strategists say it is “highly unlikely that Russia would invade as it did in Crimea.” Furthermore, recently passed legislation allows Finland to ask other countries, including NATO members, for military assistance in case of attack. Nonetheless, Finnish authorities say their system of civilian-military defense councils assures that national defense is considered at all levels of civilian life. They say that the exercises underground and elsewhere “combine military and civilian organizations, including businesses and medical workers who practice responding to crises. “

That means preparing the whole population for the worst-case scenarios, said Janne Kuusela, the Defense Ministry’s policy director.

 

“The tunnel system we’ve built comes from our own lessons learned from the Second World War: You need to do what you can to keep your vital functions going even if you’re being heavily bombarded,” he said. “That’s why they’re there.”

And while nobody is realistically concerned about a full-blown military invasion, high-ranking officials say the country faces other, nonmilitary, threats from Russia: cyberattacks, information warfare and political and economic pressure, something referred to as “hybrid warfare.” And while there has been no actual evidence of that, Finnish authorities, echoding similar sentiments from other western nations, most notably the US, say they have seen “concerted efforts by pro-Russian nongovernmental groups, social media accounts and cyberattacks attempting to influence domestic politics” confirming – one would suppose – once again that Vladimir Putin is the greatest Machiavellian organizer of governmental overthrows among “democratic” nations, not to mention chaos and mayhem, around the globe armed with just a computer.

Like in the US and elsewhere, Moscow has scoffed publicly at accusations it uses such methods to influence politics abroad, and President Vladimir Putin has denied that the state is behind hacking attempts, which are merely attempts by “democratic” government to scapegoat foreign “adversaries” for domestic political instability. Ironically, there is little discourse in the current “democratic” press of the greatest political intervention machine known to man: the Central Intelligence Agency, whose offshore political exploits go back for decades.

In any case, Finland remains steadfast in its anti-Russian sentiment, and says it has faced Moscow’s use of pro-Russian activists, propaganda and political pressure on Finnish politicians since the Cold War.

As a result, this year 10 countries from NATO and the EU committed to establishing a research center focused on hybrid warfare, to open in Helsinki in September. “When Western Europe started talking about hybrid warfare and preparing to defend against it, we realized this is what we’ve already been doing for decades,” Kuusela, the defense ministry policy coordinator, told the WSJ.

Expect to hear much more about the Russian mega-drill in the coming months.

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Market Liquidity Conditions Are Still Loose As A Goose

Via Global Macro Monitor,

Since the Fed began raising interest rates in December 2015,  financial market liquidity conditions have loosened considerably.   Recall our post,  Orwellian Monetary Policy,  which we wrote in May.

“Tightening is Easing”

 

Since U.S. monetary policy began tightening in December 2015, the Fed has added liquidity to the financial system through interest payments to banks on excess reserves and has reduced its surplus to the Treasury adding to the fiscal deficit.  Thus the financial system has had an effective injection of central bank liquidity and a fiscal expansion during a period of monetary tighenting. – Global Macro Monitor

The current Fed policy effectively injects liquidity into the financial system through raising the IOER rate — printing money to make interest payments on reserves banks hold on deposit at the Fed.   This compares to the traditional monetary where the Fed drains reserves from the financial system to drive the Fed Funds rate higher.   We are years off to getting back to traditional monetary policy.  Maybe not in our lifetime.

Performance of Stocks, Bonds, and Emerging Markets 

No wonder then markets are going bonkers.   Take a look at the performance of a select list of indicators since the Fed began raising interest rates.

The S&P500 is at an all-time high, up over 20 percent since the Fed shifted to a tightening regime;  the 10-year Treasury yield is only up 5 bps;  the 10 minus 2’s yield curve is 32 bps flatter;  the dollar index is down -3.12 percent (we expect a big rally if any healthcare bill passes) ; the VIX is down over 50 percent and closing in on its December 22, 1993, all-time closing low of 9.31 and will probably take out its intraday all-time low of 8.89, set on December 27, 1993, sometime very soon.   The VIX has only traded below 9 one time.  See here for how the two VIX indices were concatenated or spliced tin 2003, merging the OEX VIX (VXO) with the SP500 VIX.

Emerging Markets Hot, Hot, Hot!

More impressive is the performance of the emerging markets.  Wasn’t Fed tightenings supposed to, and have historically,  wreaked  havoc on EM capital flows?   The JP Morgan EM Bond ETF (EMB) is up over 16 percent and the emerging market stock ETF (EEM) is up almost 40 percent!   The Mexican peso has rallied 20 percent since January 19, which is mainly due to the Trump slump in the polls.   Stunning, nonetheless.

 “John Bull can stand many things, but he cannot stand  2.0 , [-1.5 or 1.25]  percent”  – Bagehot

No great flop in commodities either with the CRB essentially flat since the Fed began raising interest rates.

Fed Has Lost Control 

The Fed has once again lost control of a big part of monetary policy.   Its ability to influence the risk taking incentives of the markets (see chart below).  This is not the first time,  but it has been exasperated by the structure of the new monetary policy,  of which we spoke about earlier.

No judgement, whatsoever,  on the policy makers.   They saved the system and kept many of us from living under freeways and have a very difficult job.   They now find themselves in a real dilemma, however,  with another major global asset bubble on their hands.

We believe this is why the Fed has quickened its pace to start shrinking their balance sheet.   Rather than being  forced to overshoot interest rates, which could adversely affect the economy,  the Fed will start draining reserves through balance sheet reduction hoping to introduce some risk aversion and sense back into the giddy global markets.

Real Interest Rates

Finally take a look at real interest rates.   The current level of the 10-year real Treasury yield,  calculated as the nominal yield less the 1-year lagged PCE deflator, is only at the 19th percentile on a monthly basis going back to the early 1960’s.   Our sense is rates are going to have to move much higher (200-300 bps)  and quantitative tightening is going to take some time to really break these markets and burst the global asset bubbles.

Asset bubbles don’t pop very easy,  until they do.

In economics, things take longer to happen than you think they will, and then they happen faster than you thought they could.”   – Rudiger Dornbusch

The first derivative trade, that is selling when the direction of policy changes,  is not going to cut it this time around.   Global interest rates are just too low and the flood of central bank liquidity is too high.

The bears are much too loud and adamant and the buy the dipper Algos are in control.   Until they aren’t.

Conclusion

Nevertheless,  assets are exteremly expensive,  monetary policy is moving in the wrong direction and the market is very vulnerable to a sharp selloff given a Black Swan event,  which we increasingly think may be some sort of geopolitical shock or a  humumgous populist backlash, for example,  as the wealth gap continues to widen.

Billionaire preppers.  Did you ever think you see the day?

…survivalism has expanded to more affluent quarters, taking root in Silicon Valley and New York City, among technology executives, hedge-fund managers, and others in their economic cohort. – New Yorker,  Jan 30, 2017

We are thinking October for a sigfinicant correction as the Fed should be on their way to getting smaller and China’s Party Congess should have concluded raising the risk of a market or policy shock in the Middle Kingdom.   But everyone is looking for the same.

It is tough and sometimes a career killer to watch a runaway market waiting for Godot  a market correction that doesn’t show up.   That keeps a “night sweat bid” in the market.   You know,  when your under allocated and the market keeps ramping and you awake in the middle of  the night in a cold sweat.    Night sweats and migraines.   We don’t miss those days.

Finally,  the path of least of resisitance seems to be  higher for risk assets, but as Ray Dalio says,

  … keep dancing but closer to the exit and with a sharp eye on the tea leaves. – Ray Dalio

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McCain and the Trump-Russia Dossier: What Did He Know, and When?

Did John McCain and a controversial D.C. lobbying group conspire to get the infamous “pee dossier” into the hands of the press?

A lawsuit making its way through court in the UK hopes to determine just what role the senator and his associates had in making the lurid dossier public.

New filings in the lawsuit, obtained by McClatchy, detail how David Kramer—employed by the nonprofit and purportedly non-political McCain Institute—acted as a representative of McCain in the Arizona senator’s dealings on sensitive intelligence measures. It also reveals that McCain was one of a just few people with whom the dossier’s author, ex-British spy Christopher Steele, shared a copy of his final findings. So how did they get from there to publication in Buzzfeed?

One possible—and intriguing—pathway lies with Orion Strategies, a group known for using the media and the McCain machinery to lobby on behalf of foreign governments. While the Steele suit doesn’t mention Orion, a closer look at the two-man lobbying shop showcases too-close-for-comfort ties to many principle players in the dossier’s leak and a long history of influencing McCain policy and press coverage when it comes to Russia-related issues.


By now we know the basics behind the dubious document: it was prepared by Steele in December, largely from work done between June and November 2016 for Fusion GPS, a D.C.-based political consulting firm. Fusion was paid first by anti-Trump Republicans and later by Hillary Clinton supporters to produce evidence of Trump’s alleged financial and political ties to Russia.

In January 2017, a leaked copy of the dossier was published by Buzzfeed, under the editorial direction of Ben Smith. Smith said the document was obtained by reporter Ken Bensinger and vociferously defended Buzzfeed’s decision to run a document which it called “not just unconfirmed” but also inclusive of “clear” errors. “This was a real story about a real document that was really being passed around between the very top officials of this country,” Smith said on Meet the Press.

It was McCain who gave the FBI the dossier, in December. It alleges the Trump campaign colluded with the Kremlin to “hack” the U.S. election. “The Russian regime had been behind the leak of embarrassing email messages emanating from the Democratic National Committee (DNC), to the Wikileaks platform,” and as a result Trump had agreed to “sideline Russian intervention in Ukraine as a campaign issue,” the dossier claimed.

It also claimed Trump had personally commissioned a “golden showers” show from Russian sex workers.

A federal investigation was reportedly underway before McCain handed over the dossier, but his copy was a more complete version than the one obtained earlier by U.S. intelligence agencies. McCain said he turned over the document out of civic duty.

“I received that information from a credible source and I thought the only thing for me to do would be to give to the FBI,” he told Fox News in January. Having it and doing nothing “would be a breach of my oath of office.”

Yet McCain’s well-known feud with Trump, his longtime advocacy against Russia, and a possible personal beef with the firm behind the dossier—Fusion was also paid by Russia to push for the repeal of sanctions authored by McCain as part of the Magnitsky Act—provide reason to suspect altruism may not have been McCain’s sole motive.

It was “late summer/August 2016” when Steele began briefing reporters on his research, according to a recent document filed by Steele and his company, Orbis Business Intelligence Limited, in response to the lawsuit Aleksei Gubarev filed against them. Gubarev, a Russian venture capitalist, claims he and his companies (Webzilla BV, Webzilla Limited, and XBT Holding S.A.) were falsely identified as part of the DNC hacking operation in the dossier authored by Steele and published by Buzzfeed.

Steele’s company first began working with Fusion back in 2010, according to what he told the court. In 2016, he began work on Fusion’s Trump opposition-research project, producing 16 memos for Fusion prior to the November election. Steele briefed reporters from select outlets (The New York Times, The Washington Post, CNN, The New Yorker, Yahoo, and Mother Jones) on the contents of the memos, but did not “provide any of the pre-election memoranda to media organizations or journalists, [nor] authorize anyone to do so.”

Steele also talked about his work with Sir Andrew Wood, a British ambassador to Russia from 1995-2000 and current fellow at the think tank Chatham House. It was Wood who tipped off McCain to the memos.

At McCain’s request, Wood arranged for Steele “to meet [David] Kramer, representative for Senator McCain, in order to show him the pre-election memoranda on a confidential basis,” according to court documents. Kramer is identified in them as “the Senior Director for Human Rights and Human Freedoms at Senator McCain’s Institute for International Leadership.”

There were “no grounds that led [Steele and Orbis] to suspect that Senator McCain and Mr. Kramer were not acting in their official capacities at any time up to or including the publication of the December memorandum to Mr. Kramer,” according to Steele’s court filing. Kramer was understood at all times to be an official representative of McCain.

Notably, Kramer is not a representative of McCain in McCain’s capacity as a U.S. senator. And McCain is (theoretically) not a representative of the non-profit and non-partisan McCain Institute where Kramer is employed. In fact, McCain has publicly attempted to distance himself from the Institute, which accepts large donations from his former campaign fundraisers, all sorts of interests before McCain’s senate committees, and foreign companies and regimes with extremely questionable human-rights records.

McCain even said last year that he has “nothing to do with” the McCain Institute, after being asked about a $1 million donation from the Saudis. And yet Kramer, the McCain Institute leader, allegedly went around brokering intelligence as an official representative of McCain the senator.


Only after the election—when Steele’s contract for the work with Fusion was through—did he compile the content of the memos, along with newly gleaned intel, into the so-called “pee dossier” that wound up in the hands of McCain and later Buzzfeed.

Steele’s lawyer told the court he compiled the dossier around Dec. 13 and only shared it with his business partner Christopher Burrows, an unnamed U.K. security official, Fusion, and David Kramer, “who was acting on behalf of Senator McCain.”

In an encrypted email to Fusion, Steele “explicitly stated that the memoranda were only to be provided to Mr. Kramer for the purpose of passing them on to Senator McCain,” according to Steele’s court filing. Steele “understood that the contents of the memoranda would be treated in the strictest confidence and would only be used by Senator McCain in his official capacity and for the sole purpose of analyzing, investigating, and verifying their contents to enable such action be taken as necessary for the purposes of protecting U.S. national security.”

It’s possible Fusion broke this confidentiality, though the firm’s long-term business relationship (and non-disclosure agreement) with Steele and its business relationship with the Russians would seem to advise against such a move. It’s also possible Steele is hiding something—he is the one facing charges related to release of the dossier—or that the British security official leaked the documents to the U.S. press through some unknown channel.

But while we’re considering all possibilities, let’s look at the link between Sen. McCain, the McCain Institute staff, and Buzzfeed: Randy Scheunemann and Orion Strategies. Scheunemann and Michael Mitchell, his partner in Orion, have a controversial history when it comes to their relationships with the Georgian government, other foreign entities, Sen. McCain, and the U.S. press.

Back in 2008, “while McCain’s presidential campaign was gearing up, Scheunemann played dual roles, advising the candidate on foreign policy and working as a lobbyist for Georgia,” as The Washington Post noted then. “Between Jan. 1, 2007, and May 15, 2008, the campaign paid Scheunemann nearly $70,000 to provide foreign policy advice. During the same period, the government of Georgia paid his firm $290,000 in lobbying fees.”

Orion has also lobbied on behalf of authorities in Montenegro, Latvia, Romania, Macedonia, Taiwan, and Japan.

McCain, meanwhile, sponsored measures supporting Georgia’s position on South Ossetia, supported giving Georgia a $10 million grant, and spoke in favor of Georgia’s inclusion in NATO and greater American intervention in Russia-Georgia conflict. He has advocated for things like a $6 billion arms package for Taiwan and, more recently, for Montenegro to join NATO—calling Sen. Ron Paul (R-Kentucky) a Putin puppet when he objected.

In 2011, Orion’s foreign-lobbying activities once again raised eyebrows after Ken Silverstein reported on the agency’s close ties to Eli Lake and a few other prominent foreign-policy journalists prone to positive coverage of Orion’s clients. “Orion seeks to create a media echo chamber on Georgia and Russia,” wrote Silverstein.

Ben Smith—then at Politico, now editor-in-chief at Buzzfeed—rushed to Orion Strategies and Lake’s defense, mentioning Silverstein’s “pro-Russian source” for the story, who could have been “a Russian government employee or foreign agent paid to plant it.”

For a few years, Orion heads were in regular contact with Smith, Lake, and several other sympathetic D.C. journalists, including now-frequent McCain Institute guest Jamie Kirchick (who once wrote a whole pro-Scheunemann column without disclosing his relationship to Scheunemann). Orion took its media darlings on foreign trips, picked up bar tabs, and got them exclusive interviews with their clients, according to Orion’s Foreign Action Registration Act (FARA) filings.

Other frequent Orion contacts at this time included John McCain, David Kramer, and Kurt Volker—the McCain Institute Executive Director who was recently appointed to the State Department as an ambassador for Ukraine interests. During the first week of December 2010, for instance, Orion arranged an interview between Lake and a Georgian official, met with McCain about “Georgian defense requirements,” and met with Smith about Georgia and Wikileaks.

Most of these relationships continued throughout the 2016 presidential election. From June 5 through November 13, 2016, Scheunemann was in contact with Volker at least three times and Lake more than a dozen times, according to its public disclosures. In early 2016, Volker went on a “study trip” with Orion to Japan; Lake went on a similar trip in August. In April, Volker and Kramer were guests at an Orion dinner. Sometime in this period, Scheunemann personally donated $5,200 to the Friends of John McCain.

On October 16, 2016, Orion Strategies hosted Volker, Kramer, and Lake at a small dinner in Washington. The week after the election, Scheunemann met with Kirchick. In between these Orion-initiated gatherings, Scheunemann mingled with McCain, Kramer, Volker, Kirchick, Lake, Andrew Wood, and foreign intelligence officials at the likes of the Halifax International Security Forum—where Wood said he first spoke to McCain about Steele’s memos—and the McCain Institute’s conference in Tbilisi, Georgia, focused on the U.S. election and “the Russian threat.”

Should Kramer or McCain have wanted to get Steele’s December Trump-Russia dossier to sympathetic members of the media, it wouldn’t have had to look far to find them.

Asked whether Orion or Scheunemann played any role in Buzzfeed obtaining the dossier, Smith said Buzzfeed “would never comment on confidential sources in any way.”

But getting hung up on whether Orion directly brokered the dossier’s release to media may miss the larger picture, anyway. The close contact between a U.S. senator, leaders of an allegedly non-governmental (and tax-exempt) organization that bears his name, lobbyists for foreign governments (including Russia, on Fusion’s end, and Russia enemies like Georgia on Orion’s end), foreign intelligence agents, paid opposition-researchers, and influential U.S. media—going back at least a decade, and including ample activity surrounding the 2016 election—should raise eyebrows even under ordinary circumstances. And we are living in a time where top people the world over are trying to verify whether a reality-TV-star turned U.S. president compromised U.S. democracy over a tape of Russian ladies peeing on him.

So where does this leave us? Are the likes of McCain, Kramer, et al. simply fellow dupes in a Democrat-driven, foreign-op stoked ploy to influence the U.S. election with outlandish accusations? Or did they play a more active role in bringing this bombshell to the American public?

The Steele lawsuit may eventually provide more clarity. In the interim, as everyone focuses on Trump and his family’s shady shenanigans with Russia—none of which are necessarily diminished by anything here—we might also do well to apply the same scrutiny to just how and why the dossier details came to be and came to light.

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Can’t Afford A Shanghai Apartment? Try Sleeping In A “Shared Compartment”

Shanghai’s status as an emerging tech hub is bringing with it problems related to overcrowding experienced by US cities like San Francisco and certain parts of New York City – namely out-of-control rents and home prices.

But now, the cities’ mid-tier office drones, some of whom may not have enough cash saved to “commit” to an apartment, have a new low-cost housing alternative. They're called shared compartments, and they're are popping up in office buildings around Shanghai. Users pay to sleep in the compartments for a set amount of time. They’re given disposable bedding to make sleeping more comfortable, and the compartments are disinfected automatically by ultraviolet light after each use.

Photos of these compartments have been circulating on Chinese media:

People can enjoy a rest in the compartment by scanning the QR codes for payment.

A man experiences a shared compartment in Shanghai…

The inside of a shared compartment…

The disposable bedding…

They have been rising precipitously now for at least a decade, with an average 1,000 square foot apartment in Shanghai going for $725,000, or around five million yuan. Shanghai's average salary per month is 7,108 yuan ($1,135) or 85,300 yuan a year. That puts local property in Shanghai at about 50 times median salaries in the city, according to Forbes. By comparison, housing prices in New York City are 32 times salaries of average New Yorkers.

With those figures in mind, showering at the company gym doesn’t sound so bad.

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Goldman Is Troubled By The Fed’s Growing Warnings About High Asset Prices

With both the S&P, and global stock markets, closing last week at new all time highs, it is safe to say that any and all warnings about “froth“, and perhaps a bubble in the market, as Deutsche Bank characterized it last week have been ignored. And yet, as Goldman’s economist team writes over the weekend, the recent rise in warnings about “risk levels” and asset prices by Fed officials is concerning: “Fed officials have expressed greater concern about asset prices and financial stability risk recently, a change from their more relaxed view last fall. In particular, the minutes to the June FOMC meeting highlighted concern about high equity valuations and low volatility and drew a connection between potential overheating in the real economy and financial markets.

To underscore this point, here is a recap of recent Fed warnings about asset prices, which have increased significantly since the presidential election:

Janet Yellen, July 12, 2017

So in looking at asset prices and valuations, we try not to opine on whether they are correct or not correct. But as you asked what the potential spillovers or impacts on financial stability could be of asset price revaluations — my assessment of that is that as assets prices have moved up, we have not seen a substantial increase in borrowing based on those asset price movements. We have a financial system and banking system that is well capitalized and strong and I believe it is resilient.

FOMC Minutes, July 5, 2017

…in the assessment of a few participants equity prices were high when judged against standard valuation measures…  Some participants suggested that increased risk tolerance among investors might be
contributing to elevated asset prices more broadly; a few participants expressed concern that subdued market volatility, coupled with a low equity premium, could lead to a buildup of risks to financial stability… Several participants expressed concern that a substantial and sustained unemployment undershooting might make the economy more likely to experience financial instability or could lead to a sharp rise in inflation that would require a rapid policy tightening that, in turn, could raise the risk of an economic downturn.

Janet Yellen, June 27, 2017

Asset valuations are somewhat rich if you use some traditional metrics like price earnings ratios, but I wouldn’t try to comment on appropriate valuations, and those ratios out to depend on long-term interest rates.

John Williams, June 27, 2017

The stock market seems to be running pretty much on fumes… so something that clearly is a risk to the U S economy, some correction there, is something that we have to be prepared for and to respond to if it does happen. The U S economy still is doing — I think on fundamentals — is doing quite well. So I’m not worried about some kind of late- ’90s, dot-corn bubble economy where a lot of the underpinnings were driven by the stock market.

Bill Dudley, June 23, 2017

Monetary policymakers need to take the evolution of financial conditions into consideration… For example. when financial conditions tighten sharply, this may mean that monetary policy may need to be tightened by less or even loosened. On the other hand, when financial conditions ease – as has been the case recently – this can provide additional impetus for the decision to continue to remove monetary policy accommodation.

Stanley Fischer, June 20, 2017

House prices are now high and rising in several countries, perhaps as a result of extended periods of low interest rates.

Janet Yellen, June 14, 2017

We’re not targeting financial conditions. We’re trying to set a path of the federal funds rate, but taking account of those factors and others that don’t show up in a financial conditions index.

Robert Kaplan, June 30, 2017

That’s not to say these imbalances won’t build and I am concerned that they may but if you ask me today I think right now it’s manageable, but I do think if there were some correction also in the markets. that could actually be a healthy thing.

Neel Kashkari, May 17, 2017

Monetary policy should be used only as a last resort to address asset prices, because the costs to the economy of such a policy response are potentially so large.

Eric Rosengren, May 8, 2017

While I am certainly not expecting such a scenario to occur, central bankers are charged with thinking about adverse risks to the economy. So current valuations in real estate are one such risk that I will continue to watch carefully.

Jerome Powell, January 7, 2017

With inflation under control. overheating has shown up in the form of financial excess. The current extended period of very low nominal rates calls for a high degree of vigilance against the buildup of risks to the stability of the financial system.

Perhaps their concern is due to the following Citi chart which we have discussed on numerous occasions, and which shows the “incredible” correlation between global central bank balance sheet size and market returns in recent years.

Or perhaps the Fed is not worried about stock prices at all, and while the recent commentary about asset valuations is notable, what the Fed is really concerned about is the recent pick up in the unemployment rate, something which as Bank of America noted last week, “there are no episodes in which unemployment rose a bit and remained stable at its natural employment rate. Rather, a recession has always followed.

Whatever the reason for this unexpected shift in rhetoric, here are some additional summary observations from Goldman, which while pointing out that such comments by Fed members are quite unorthodox, “Fed officials do appear more concerned about financial stability risks, and this could strengthen the case somewhat for tightening in the future.”

  • Traditionally, Fed officials have thought it wisest to respond to financial variables through their forecasted impact on inflation and employment. They have taken a more skeptical view of using the funds rate to lean against stretched valuations, though they have not closed that door entirely.
  • We find that the Fed has largely followed these principles in practice, responding primarily not to valuation levels but rather to something like our FCI growth impulse, an estimate of the impact of recent changes in financial conditions on the growth outlook. Currently, the FCI growth impulse points to a healthy boost over the coming year, strengthening the case for further tightening.
  • Leaving financial instability concerns out of the reaction function does not mean the policy stance has no role in reducing these risks. Our cross-country model of asset price busts shows that bust risk is substantially higher when the output gap is more positive, supporting the concern noted in the June minutes. This suggests that if the Fed is successful in containing overheating in the real economy, it can breathe at least a little easier about bubble risk.
  • To what degree might the FOMC view financial stability risk as an independent argument for higher rates? Research by Fed economists suggests that because credit growth has been only moderate, the optimal response of the funds rate to financial instability risk is very small. But this could cut both ways: the economy’s reduced dependence on debt relative to the last two cycles also implies less risk that moderate tightening will lead to a crash.
  • At this point, the FOMC does not need additional reasons for gradual further tightening, which a traditional reaction function based on the dual mandate suggests is already warranted. But Fed officials do appear more concerned about financial stability risks, and this could strengthen the case somewhat for tightening in the future.

The quandary would be promptly resolved, of course, if in the ongoing increasingly nebulous relationship between the Fed’s policy intentions and record high stock prices, which as Kevin Muir summarized simply as “stocks dare the Fed”, and are “about to make Dudley, Fischer and Yellen extremely nervous”, the Fed were to defy markets and unexpectedly hike rates once again, responding to the “dare”, and making it clear that the Fed is indeed focused first and foremost to threats to financial stability resulting from market “froth” and “bubbles“… which incidentally it itself has created.

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Bitcoin, Ethereum Plunge Accelerates As Scaling Deadline Looms

Yesterday it was Bitcoin, today it is Ethereum that is taking the brunt of selling pressure (down 20%) but the dumping of virtual currencies is evident across the entire crypto space with the biggest market cap coins tumbling to 2-month lows

Once again it is the so-called 'civil war' that is weighing on the entire virtual currency space as we noted previously, behind the conflict is an ideological split about bitcoin's rightful identity…

Bitcoin traded as low as $1830 early this morning to two-month lows… as one veteran of the cryptocurrency trading space told us, "shit's getting real, no one is sure what happens after August 1st , so traders are taking profits, squaring positions into the scaling deadline."

 

But Ethereum is getting battered today, down 20% overnight to 2-month lows…

 

While the main driver of this selloff is undoubtedly anxiety over the looming scaling deadline on August 1st, we note that, as CoinTelegraph reports, none other than the Albanian central bank has joined the chorus warning about the dangers to the public of virtual currencies… Bitcoin and other cryptocurrencies have been making headlines around the world, and with the recent sell-off this week, more is sure to be said. Central banks and governments continue to make statements regarding the dangers of digital currencies, or, conversely, extolling their benefits. The most recent bank to issue such a warning is the central bank of Albania. The bank issued a strong statement warning citizens that digital currencies were not under the direct purvey of the country’s banking sector regulations and that such vehicles carried extremely high levels of risk.

The Albanian authorities stated:

“We appeal to the Albanian public to be mature and responsible in the administration of savings or liquidity they possess. One should orient investments toward financial products and instruments offered by institutions licensed and supervised by the Bank of Albania and the Financial Supervisory Authority.”

The anonymity and decentralization provided by Bitcoin made nefarious activity not only possible, but probable, and the bank warned against the clear risks taken by those choosing to invest. Bitcoin enthusiasts would clearly point out that a centralized bank is the very essence of what Bitcoin is seeking to distance itself from, and so a less than glowing review would be expected.

While a general consensus points to the upcoming hard fork probability as the principal motivation for market uncertainty, mainstream media have been quick to sound the alarm about Bitcoin once again.

“Rival factions of computer whizzes who play key roles in Bitcoin’s upkeep are poised to adopt two competing software updates at the end of the month,” Bloomberg reported Friday, announcing Bitcoin could be “nearing a total meltdown.”

 

“That has raised the possibility that Bitcoin will split in two, an unprecedented event that would send shockwaves through the $41 bln market.”

As areminder, below is an outline of the main events that could unify or divide bitcoin:

By July 21: SegWit2x software is released and supporters begin using it.

July 21 to July 31: The community monitors how many miners deploy SegWit2x:

If more than 80 percent deploy it consistently, that should signal community-wide adoption of SegWit and the avoidance of a split, at least for now.

 

But if a majority do not deploy, expect anxiety within the community to grow as the focus shifts to the Aug. 1 deadline.

Aug. 1: UASF is deployed by its supporters, who begin checking if bitcoin transactions are compliant with SegWit.

If a majority of miners still do not deploy SegWit2x or otherwise accept SegWit, and if UASF supporters do not back down, then two versions of bitcoin’s blockchain could come into existence: a UASF-backed one where only SegWit transactions are recognized, and another where all trades — SegWit and non-SegWit — are recognized.

 

If a split occurs, bitcoin will likely begin existing on both blockchains in parallel, resulting in two versions of the cryptocurrency. Expect traders to quickly re-price the value of both, likely leading to massive volatility.

“It’s moderates versus extremists,” said Atlanta-based Stephen Pair, chief executive officer of BitPay, one of the world’s largest bitcoin wallets. “It depends on how much a person values the majority of people staying on one chain at least for a little while longer, versus splitting and allowing each pursuing their own vision for scaling.”

As a reminder, investing legend Michgael Novogratz recently noted, that he’s looking to add more ether if it falls between $200 and $150… and more bitcoin if it falls to $2,000.

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Haiti Official Who Exposed The Clinton Foundation Is Found Dead

Authored by Mac Slavo via SHTFplan.com,

The mainstream media’s silence over Klaus Eberwein’s death is deafening.

Eberwein was a former Haitian government official who was expected to expose the extent of Clinton Foundation corruption and malpractice next week.

He has been found dead in Miami at the age of 50.

The circumstances surrounding Eberwein’s death are also nothing less than unpalatable. According to Miami-Dade’s medical examiner records supervisor, the official cause of death is “gunshot to the head.“ Eberwein’s death has been registered as “suicide” by the government. But not long before his death, he acknowledged that his life was in danger because he was outspoken on the criminal activities of the Clinton Foundation. 

Eberwein was a fierce critic of the Clinton Foundation’s activities in the Caribbean island, where he served as director general of the government’s economic development agency, Fonds d’assistance économique et social, for three years. “The Clinton Foundation, they are criminals, they are thieves, they are liars, they are a disgrace,” Eberwein said at a protest outside the Clinton Foundation headquarters in Manhattan last year. Eberwein was due to appear on Tuesday before the Haitian Senate Ethics and Anti-Corruption Commission where he was widely expected to testify that the Clinton Foundation misappropriated Haiti earthquake donations from international donors. But this “suicide” gets even more disturbing…

Eberwein was only 50-years-old and reportedly told acquaintances he feared for his life because of his fierce criticism of the Clinton Foundation.  His close friends and business partners were taken aback by the idea he may have committed suicide. “It’s really shocking,” said friend Gilbert Bailly. “We grew up together; he was like family.”

During and after his government tenure, Eberwein faced allegations of fraud and corruption on how the agency he headed administered funds. Among the issues was FAES’ oversight of the shoddy construction of several schools built after Haiti’s devastating Jan. 12, 2010, earthquake.  But, according to Eberwein, it was the Clinton Foundation who was deeply in the wrong – and he intended to testify and prove it on Tuesday.

According to Eberwein, a paltry 0.6 percent of donations granted by international donors to the Clinton Foundation with the express purpose of directly assisting Haitians actually ended up in the hands of Haitian organizations. A further 9.6 percent ended up with the Haitian government. The remaining 89.8 percent – or $5.4 billion – was funneled to non-Haitian organizations. –WND

Eberwein was expected to testify against the Clinton Foundation in court and ends up committing suicide shortly before.  Where have we heard this before?

Untimely deaths seem to follow the Clinton’s around, and this one especially is probably something – considering since the mainstream media is silent about this death.

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