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Authored by Don Quijones via WolfStreet.com,

But the IMF has suggestions on how to win the War on Cash…

In January 2017 the European Commission announced it was exploring the option of imposing upper limits on cash payments, with a view to implementing cross-regional measures as soon as 2018. To give the proposal a veneer of respectability and accountability the Commission launched a public consultation on the issue. Now, the answers are in, but they are not what the Commission was expecting.

A staggering 95% of the respondents said they were opposed to a cash ceiling at EU level. Even more emphatic was the answer to the following question:

“How would the introduction of restrictions on payments in cash at EU level benefit you, or your business or your organisation (multiple replies are possible)?”

In the curious absence of an explicit “not at all” option, 99.18% chose to respond with “no answer.” In other words, less than 1% of the more than 30,000 people consulted could think of a single benefit of the EU unleashing cross-regional cash limits.

Granted, 37% of respondents were from Germany and 19% from Austria (56% in total), two countries that have a die-hard love for physical lucre. Even among millennials in Germany, two-thirds say they prefer paying in cash to electronic means, a much higher level than in almost any other advanced economy with the exception of Japan. Another 35% of the survey respondents were from France, a country that is not quite so enamored with cash and whose government has already imposed a maximum cash limit of €1,000.

By its very nature the survey almost certainly attracted a disproportionate number of arch-defenders of physical cash. As such, the responses it elicited are unlikely to be a perfect representation of how all Europeans would feel about the EU’s plans to introduce maximum cash limits. Nonetheless, the sheer strength of opposition should (but probably won’t) give the apparatchiks in Brussels pause for thought.

Respondents cited a number of objections to EU-wide cash restrictions, chief among them the convenience of using cash and the limited impact the measure would probably have on achieving its “stated” objectives of curbing terrorism, tax evasion, and money laundering. Of course, there are many other reasons to worry about living in a cashless (or “less cash”) society that were not offered as an option in the survey, including the vastly increased power it would give to political and monetary authorities as well as the near-impossibility of ever escaping from the clutches of the banking system or central banks’ monetary experiments.

The biggest cited concern for respondents was the threat the cash restrictions would pose to privacy and personal anonymity. A total of 87% of respondents viewed paying with cash as an essential personal freedom. The European Commission would beg to differ. In the small print accompanying the draft legislation it launched in January, it pointed out that privacy and anonymity do not constitute “fundamental” human rights.

Be that as it may, many Europeans still clearly have a soft spot for physical money. If the EU authorities push too hard, too fast in their war on cash, they could provoke a popular backlash. In Germany, trust in Europe’s financial institutions is already at a historic low, with only one in three Germans saying they have confidence in the ECB. The longer QE lasts, the more the number shrinks.

Bundesbank president Jens Weidmann has already warned that it would be “disastrous” if people started to believe cash would be abolished — an oblique reference to the risk of negative interest rates and the escalating war on cash triggering a run on cash. The IMF has also waded into the debate with a working paper full of sage advice for governments keen on “de-cashing” – as the IMF calls this procedure – their economies against the will of their citizenry (emphasis added):

The private-sector-led de-cashing seems preferable to the public-sector-led decashing. The former seems almost entirely benign (e.g., more use of mobile phones to pay for coffee), but still needs policy adaptation. The latter seems more questionable, and people may have valid objections to it. De-cashing of either kind leaves both individuals and states more vulnerable to disruptions, ranging from power outages to hacks to cyberwarfare. In any case, the tempting attempts to impose de-cashing by a decree should be avoided, given the popular personal attachment to cash.

 

A targeted outreach program is needed to alleviate suspicions related to de-cashing; in particular, that by de-cashing the authorities are trying to control all aspects of peoples’ lives, including their use of money, or push personal savings into banks.

It basically involves making it easier and cheaper for people to use electronic payment methods while subtly turning the screw on those who would prefer to continue using cash (for perfectly valid reasons, as the IMF itself admits), presumably by making it more difficult and expensive to do so. In many places it’s already happening.

But a surprisingly large number of people still appear to have a strong sense of attachment to physical money, particularly in Europe’s most important economy, Germany. And if the survey is any indication, they have little interest in changing those habits.

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Stockholm Syndrome is defined as “…a condition that causes hostages to develop a psychological alliance with their captors as a survival strategy during captivity.” While observers would expect kidnapping victims to fear and loathe the gang who imprison and threaten them, the reality is that some don’t.

There is a loose analogy between being held hostage and being an investor in a regime of irredeemable paper currency and zero interest rates. In both cases, the victim has little hope of escape and must seek to somehow survive under malevolent conditions.

Key behaviors in Stockholm Syndrome are positive feelings for their captors, a refusal to work with law enforcement afterwards, and even a belief in the terrorist’s humanity.

Key behaviors of investors today show eerie parallels: a desire to bid on dollars with their assets, a refusal to support the gold standard, and even a belief that the dollar is money. This last always shows when someone—even a gold bug—says gold is going up, or gold is the best performing currency, or gold has good returns.

These words up, performance, and returns indicate that the victim accepts the dollar as money, the dollar as the measure of value, the dollar as the unit of account. The victim seeks to view gold in terms of his captor’s paradigm. Much the way the kidnapping victim seeks to understand his capture and even geopolitics in terms of his captor’s world view.

Many victims are so thoroughly in thrall, that they scoff at the very idea of earning interest from a productive enterprise. They seek only the latest bubble, wherein they can make a profit: more dollars. Or, if not more dollars, at least more purchasing power. For years, they sought to do this in the gold and especially silver markets. Some gold bugs go even farther, and opposed a gold standard. Perhaps they don’t want sound money, they want gold to go up which means something external that gold can go up against.

We watched bemused, as a speaker at the Metal Writers Conference in Vancouver on May 29 told a standing-room-only crowd that bitcoin would hit $1 million (it went up after that, but is now down about 15% from that day). A 436X return would be nice, but of course the profits can only come from later speculators. There is an ugly little word for schemes in which profits come from those who buy in later. It is named for a gentleman who came from Italy, promoting his scheme in Boston.

We blame the game, not the player. It is important to emphasize this—don’t blame the players, blame the game—and we probably don’t do it enough. The fault lies not with those who bet on gold or bitcoin or anything else, nor even with those who regard betting as investing. The fault lies with the Fed and the other central banks who have the hubris to think they can centrally plan their way to prosperity. And the gun to force it on us, whether we agree or not. And the madness to cause the interest rate to fall for 36 years and counting (the Fed is not going to push the interest up much farther in this cycle, if they even dare one more hike). When freedom seems so remote as to be hopeless, it may be natural (we leave this to psychologists to say) to find a way to compromise, to get along to go along.

As to us, we will go on working towards that day of freedom, a big part of which is helping people see the monetary system for what it is: the current implementation of the fifth plank proposed by Karl Marx. Another part is to pay interest on gold…

---

Last week, we said:

“Peak hype, peak desperation, all selling in the streets with little buying… we are not technicians and do not focus on sentiment… but this description sounds like the definition of capitulation.

…

Also, we would add something important. Even if this is a capitulation low, that does not necessarily a mean a moonshot to $5,000 or even $2,000. We don’t expect that, and won’t expect it without evidence of a much more serious shift in the fundamentals. We would expect a normal trading bounce within the range and perhaps a few bucks over $1,300.”

This week, the prices of the metals bounced somewhat, within the trading range. Gold closed last week at $1212, and this week at $1229. In silver, last week’s close was $15.56, and this’s week was $15.96.

Will the bounce continue? Have the fundamentals firmed up?

We will show graphs of the true measure of the fundamentals. But first charts of their prices and the gold-silver ratio.

Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. The ratio moved down this week.

In this graph, we show both bid and offer prices for the gold-silver ratio. If you were to sell gold on the bid and buy silver at the ask, that is the lower bid price. Conversely, if you sold silver on the bid and bought gold at the offer, that is the higher offer price.

For each metal, we will look at a graph of the basis and cobasis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide brief commentary. The dollar will be represented in green, the basis in blue and cobasis in red.

Here is the gold graph.

The dollar fell a bit this week (the mirror image of the rising price of gold). Now it is the dollar hostages who use gold as their preferred hostage-bargaining chip to feel a bit better. One ounce of this commodity now fetches 17 more of the kidnapper’s paper scrip than it did a week ago.

As the dollar fell, the cobasis fell (especially in farther-out contracts). The August cobasis is still above zero (i.e. temporary backwardation).

Our calculated gold fundamental price is not much changed, still above the market price by a goodly margin (chart here).

Now let’s look at silver.

As the dollar has dropped (i.e. silver trades for more gang-scrip than last week), the cobasis has come down. But it’s still higher than gold’s cobasis, and this is the September contract, a month further from expiry than the August gold contract.

Our calculated silver fundamental is rising again, also a healthy margin above the market price.

We thought it would be worth addressing the question: “is there a shortage in silver?” Let’s do it with a device that’s famously worth 1,000 words. This picture shows the term structure of the silver futures market.

What we see is what Sherlock Holmes observed that people heard in the night in the story Silver Blaze. There are no interesting features. Other than the temporary backwardation in the September contract, we see a rising basis and falling cobasis as we look out to December 2018. The rising basis looks a lot like the yield curve in the dollar, though slightly lower (6-month LIBOR is 1.5%).

If a real shortage developed in silver, the above curve would look quite different. And we would be publishing pictures of it.

 

Monetary Metals will be exhibiting at FreedomFest in Las Vegas in July. If you are an investor and would like a meeting there, please click here. Keith will be speaking, on the topic of what will the coming gold standard look like.

 

© 2017 Monetary Metals

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Trust in government serves as a vital driving force for a country's economic development, increases the effectiveness of governmental decisions, as well as leading to greater compliance with regulations and the tax system. As Statista's Niall McCarthy notes, the level of confidence in a country's government is generally determined by whether people think their government is reliable, if it can protect its citizens from risk and whether or not it is capable of effectively delivering public services.

The latest edition of the OECD's Government at a Glance report has found that confidence in government varies widely between countries.

You will find more statistics at Statista

Unsurprisingly, Greece has the lowest level of confidence in its government, unsurprising given the economic pain it has suffered since the onset of the financial crisis. In recent years, Greece has had to deal with multiple elections, bank shutdowns, defaulting, the introduction of capital controls and being on the frontline of the European migration crisis. That has all led to 13 percent of the Greek public having confidence in their government. South Korea also has a low level of confidence at 24 percent, most likely due to President Park Geun-hye's impeachment scandal.

In the United States, the White House is struggling to shake off allegations of Russian collusion and only 30 percent of the public have confidence in the government. The United Kingdom is also enduring turbulent times amid its Brexit negotiations and 41 percent of the public have faith in their government.

At the other end of the spectrum, 58 percent of people in Russia and Turkey trust their governments while India (the nation that just surprised the entire nation by making its banknotes illegal) has the highest confidence levels at 73 percent. Greatest Fools?

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Authored by Federico Pieraccini via The Strategic Culture Foundation,

The meeting between Trump and Putin at the G20 in Hamburg injects new hope into the complicated relationship between the United States and Russia. Only time can confirm whether there is any basis for this hope.

The most eagerly anticipated meeting of the year, that between Putin and Trump, lasted far more than the scheduled 20 minutes, extending past two hours. This is not too much of a surprise given the points of friction that needed to be discussed, the many outstanding issues in international relations, and the fact that this was the first official meeting between the two world leaders. The results achieved exceeded initial ambitions, and the personal chemistry between Putin and Trump seems to have been sufficient to reach an important agreement in Syria as well as to conduct discussions surrounding cyber security. Trump even asked Putin about the alleged Russian hacking in the US presidential election as a way of appeasing detractors back home. The statements of both presidents following their meeting underlined their positive intentions. Putin called Trump a very different person from the one portrayed in the media, mentioning that he was reflective and very attentive to details. Trump, for his part, praised the meeting with Putin, stating the importance of dialogue between nuclear-armed superpowers.

The most important agreement concerned a ceasefire in southern Syria along the border with Israel and Jordan. This is a very active area of fighting, and so the ceasefire obviates the possibility of dangerous confrontations between the United States and Russia, as well as between Syria and Israel, which could escalate out of control as seen when the US Air Force shot down a Syrian Su-22 jet as well an Iranian drone. Israel, from its position in the occupied Golan Heights, has repeatedly struck the Syrian Arab Army (SAA), in a desperate effort to halt its gains against al Qaeda and Daesh terrorists.

In their first meeting, within less than two hours, Putin and Trump came to an agreement on potentially the most volatile situation in the region, saving hundreds of civilian lives in the process. The agreement on Syria now has to run the gauntlet of the deep state and all the other interests arrayed against Trump. Just four days following a similar agreement reached in 2016 between Obama and Putin, everything was upended by the US Air Force bombing and killing nearly a hundred soldiers of the Syrian Arab Army in Deir ez-Zor, shredding the ceasefire agreement that had just been reached.

Trump is dealing with the same occult forces that sabotaged Obama’s ceasefire agreement. It is impossible to know how much strategic support the US deep state has for the ceasefire decision. Ever since the SAA reached the Iraqi border north of al-Tanf, the space available for the US and her allies to maneuver has been dramatically diminished. With al-Tanf isolated, Washington's ceasefire does not change or shift the already heavily altered balance of power in that area of Syria. For all these reasons, the ceasefire does not appear to be a concession by either party but merely a commonsense move to lessen the possibility of a direct confrontation between super-powers.

The military apparatus seems to be focused on the situation in northern Syria, with Raqqa and Syrian Democratic Forces (SDF) being the central pivot for the US to reach Deir ez-Zor and its associated oilfields. The US State Department, as well as the US military wing involved in Syria, hope to balkanize Syria, dismembering it in different regions and putting Raqqa under the control of a puppet authority in Damascus. However, such American hopes of imposing a Brennan-style governorate as in Iraq is forlorn, as Damascus is the only authority recognized on Syrian territory, and once Raqqa is filled with returning Syrian citizens, such American plans will fall apart. Moreover, the Baghdad authorities have already made clear on two occasions how reluctant they are to support Americans in their military operations. In the case of Mosul, they reiterated that the US deployment and involvement be minimal, while the Iraqi authorities have already announced that they want to place under their full control their border with Syria, in effect hobbling Washington’s plan to leave chaos and instability along the borders of the two countries. The US deep state finds in chaos the ideal way to channel conflict and foment instability. One of the most important objectives of the Syrian and Iraqi armies is therefore to isolate the borders and control the flow of human traffic from one country to the other, nixing in the process what has hitherto been a strategic advantage for Daesh and other terrorist organizations, where they have been free to cross borders with weapons and whatever else they please.

Trump and all the actors involved in this negotiation are finally able to make an agreement between Moscow and Washington stand. Unlike with previous agreements, the US in Syria is now in a worse situation than it was 12 months ago, having failed to achieve many of its strategic objectives. Cooperation with Turkey in northern Syria was wrecked following the liberation of Aleppo and the clear US support for the Kurds (SDF). Similarly, areas of deconfliction in Syria agreed to in Astana (between Iran, Russia and Turkey) have stopped the gains of terrorists in many active areas of the conflict, leading to zero chances of occupying more towns. Such efforts have been important bargaining chips during the various peace negotiations.

The crux of this strategy seems to be a focus on the only possible solution that meets the interests of the deep state’s military wing, related to the original plan to dismantle Syria once the removal of Assad failed. From a certain point of view, it may make sense to focus on the situation in the north of the country in Raqqa, the only area where the US still has some influence. This may be the contorted vision drawn up by contending factions of American deep state. Certainly from the point of view of Moscow, the strategy in Syria is a mix of diplomatic solutions, seeking to reach multiple ceasefire agreements with major players like Turkey and the United States, but never setting aside the war effort carried out by Russia, Iran and Syria.

The agreement between Putin and Trump will firstly benefit Syrian civilians as well as widening the opportunity for the SAA to liberate more towns and villages from the grip of terrorism. It is a long-awaited agreement and solution that is now met by the predominant wing of the US deep state. In the event of a failure of the agreement, Trump will be obligated to point out to the world the subversion of the Washington establishment and its deep state, which works to frustrate his agenda and replace it with its own terrible policies.

Moscow's confidence in deriving concrete benefits from this deal increases hour by hour, thanks to the truce continuing to hold. From the Russian point of view, any military sabotage would once again lay American intentions bare, regardless of Trump's subsequent moves. However, one thing that is certain is that in the case of sabotage, Trump will be faced with having to make a definitive choice.

• Either he will surrender to the deep state, returning the situation back to a state of hyper-conflict with a nuclear superpower; or
• he will confront and overcome the deep state, thereby enabling him to implement his electoral promises.

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Authored by Joseph Jankowski via PlanetFreeWill.com,

The debate over the role robots will play in the future of warfare is one that is taking place right now as the development of automated lethal technology is truly beginning to take shape. Predator drone style combat machines are just the tip of the iceberg for what is to come down the line of lethal weaponry and some are worried that when robots are calling the shots, things could get a little out of hand.

Recently there has been some debate at the U.N. about “killer robots,” with prominent scientists, researchers, and Human rights organizations all warning that this type of technology – lethal tech. that divorces the need for human control – could cause a slew of unintended consequence to the detriment of humanity.

A study conducted the University of British Columbia shows that this type of terminator-like weaponry isn’t sitting well with the general public, as an overwhelming majority of people, regardless of country or culture, want a complete ban placed upon any further development of these autonomous systems of war.

Despite the warnings of risk and concern, this is not stopping arms manufacturers from taking warfare into the twilight zone and bringing the futuristic battlefield scenario where A.I. robots and human are fighting with each other, side by side, closer to everyday reality.

Kalashnikov, the maker of the iconic AK-47, is one of those manufacturers bringing lethal automation and robotics into the present-day as it is currently building a range of products based on neural networks,’ including a fully automated combat module’ that can identify and shoot at its targets.

Defense One is reporting:

The maker of the famous AK-47 rifle is building “a range of products based on neural networks,” including a “fully automated combat module” that can identify and shoot at its targets. That’s what Kalashnikov spokeswoman Sofiya Ivanova told TASS, a Russian government information agency last week. It’s the latest illustration of how the U.S. and Russia differ as they develop artificial intelligence and robotics for warfare.

 

The Kalashnikov “combat module” will consist of a gun connected to a console that constantly crunches image data “to identify targets and make decisions,” Ivanova told TASS. A Kalashnikov photo that ran with the TASS piece showed a turret-mounted weapon that appeared to fire rounds of 25mm or so.

Defense One points out that in 2012 then-Deputy Defense Secretary Ash Carter signed a directive forbidding the U.S. to allow any robot or machine to take lethal action without the supervision of a human operator.

Then in 2015, then-Deputy Defense Secretary Bob Work said fully automated killing machines were un-American.

“I will make a hypothesis: that authoritarian regimes who believe people are weaknesses,” Work said, “that they cannot be trusted, they will naturally gravitate toward totally automated solutions. Why do I know that? Because that is exactly the way the Soviets conceived of their reconnaissance strike complex. It was going to be completely automated. We believe that the advantage we have as we start this competition is our people.”

According to Sergey Denisentsev, a visiting fellow at the Center For Strategic International Studies, Russian weapons makers see robotics and the artificial intelligence driving them as key to future sales to war makers.

“There is a need to look for new market niches such as electronic warfare systems, small submarines, and robots, but that will require strong promotional effort because a new technology sometimes finds it hard to find a buyer and to convince the buyer that he really needs it, ” Denisentsev said earlier this year.

With my previous reporting dealing with robotics and war, I always point out the incredible advances made by Softbank owned Boston Dynamics in the field of A.I., using it as an example of what future warfare could (or most likely will) look like it. And to be honest, it really is nightmarish.

The bottom line is war is a racket. Killing for political reasons is always disastrous. So the fact that governments are on the verge of possessing this terminator technology should send chills down everyone’s spine.

H/T Nicholas West of ActivistPost.com

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New York City real estate, particularly the luxury market, is a popular refugee for world’s corrupt, self-dealing public servants and the crooked businessmen who bribe them. China cracked down on wealthy citizens seeking to stash their wealth in international real estate by adding several deterrents to its capital controls earlier this year (Among them, Chinese investors moving money out of the country must now sign a pledge saying it won’t be used to buy real estate, or investment securities). Shortly after, the New York real-estate – literally half a world away – was rattled by a crush of stalled deals.  

So, it’s unsurprising that the mystery behind the largest residential foreclosure auction in NYC history would have this kind of sordid backstory. Last month, we met Kola Aluko, a Nigerian oil magnate and the purported owner of One57’s Apartment 79, a $50 million apartment that will be sold next week in what appears to be the largest foreclosure auction in New York City history.

And now the US government has added a new twist: In a lawsuit filed Friday in Houston by the Justice Department’s Kleptocracy Asset Recovery Initiative, the Feds are seeking to recover $144 million in assets, including proceeds from a luxury condominium on Manhattan’s Billionaires’ Row in New York, which prosecutors claim were spoils from bribes paid for Nigerian oil contracts, according to Bloomberg.

The targets of the suit were none other than Aluko and another Nigerian businessman, Olajide Omokore. However, judging by the government’s price tag, Aluko’s assets – including the One57 condo and Aluko’s $80 million yacht, 213-feet (65 meters) luxury yacht the Galactica Star – appear to be the focus of the suit. In the past, Aluko would frequently rent out his yacht to his friends. In 2015, Jay-Z and Beyonce rented it for the bargain-basement price of $900,000 per week to sail around the Mediterrainean.

The Justice Department alleges that two Nigerian businessmen made corrupt payments to a Nigerian official who oversaw the country’s state-owned oil company in exchange for contracts, according to Bloomberg. The official used her influence to direct contracts to two of their shell companies — Atlantic Energy Drilling Concepts Nigeria Ltd. and Atlantic Energy Brass Development Ltd. — through a subsidiary of the Nigerian National Petroleum Corp, according to the complaint. The companies failed to abide by the terms the contracts, yet were permitted to sell more than $1.5 billion worth of Nigerian crude oil, the U.S. alleges. They then laundered the money through the US.

"Corrupt foreign officials and business executives should make no mistake: if illicit funds are within the reach of the United States, we will seek to forfeit them and to return them to the victims from whom they were stolen," Acting Assistant Attorney General Kenneth Blanco said in a statement.

The Justice Department’s recovery lawsuit comes just days before Aluko’s penthouse at One57, one of Manhattan’s most expensive buildings, is scheduled to be sold at a foreclosure auction forced by his mortgage lender, the Luxembourg-based Banque Havilland SA, which said in court filings earlier this year that he failed to pay back the full loan amount in September.

As we’ve previously noted, Aluko took out an 'unusually large' ($35.3 million) mortgage with an even more unusual term: one-year.

Aluko’s condo is a full-floor, 6,240-square-foot (580-square-meter) penthouse that was the eighth-priciest sold in the building located at 157 W. 57th Street, just across the street from Carnegie Hall, according to real estate data firm PropertyShark.

Now of course one lawsuit doesn’t necessarily prove that a market is infested with criminality, but the opaque nature of real-estate transactions, and the ease with which buyers and sellers can conceal their true identities behind LLCs, make buying real estate in a market like NYC an attractive option for any would-be money launderer.

And while one foreclosure certainly doesn’t signal that the market is collapsing, there are other more worrying trends in NYC luxury real estate. As we’ve previously noted, buildings like One57 are struggling with unsustainable vacancy rates. To wit: Nearly 40% of apartments in one comparable building remained on the market years after it had opened.

As Bloomberg points out, One57, along with a cluster of ultra-high end luxury buildings around Central Park collectively known as “Billionaire’s Row,” has become a symbol of New York’s luxury-development boom — and eventual slowdown. The tower, which broke ground in 2009, drew investors willing to pay large sums for lavish residences they rarely lived in, inspiring other developers to build similar offerings, creating an effective “Billionaires' Row” along West 57th Street. One57 still holds the record for the most-expensive residential sale in New York in December 2014 at $100.5 million.

The bribes were paid between 2011 and 2015 to Diezani Alison-Madueke, then Nigeria’s minister for petroleum resources, according to the complaint. The defendants are accused of spending millions to fund a lavish lifestyle for Alison-Madueke. They acquired real estate in London that was used by the minister and her family, and bought her more than $1 million of furniture and artwork from several stores in Houston, Texas, the complaint said.

We wonder: In what tony neigborhood is her apartment?
 

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Authored by Paul Roderick Gregory via Forbes.com,

According to an insider account, the Clinton team, put together the Russia Gate narrative within 24 hours of her defeat. The Clinton account explained that Russian hacking and election meddling caused her unexpected loss. Her opponent, Donald Trump, was a puppet of Putin. Trump, they said, “encourages espionage against our people.” The scurrilous Trump dossier, prepared by a London opposition research firm, Orbis, and paid for by unidentified Democrat donors, formed a key part of the Clinton narrative: Trump’s sexual and business escapades in Russia had made him a hostage of the Kremlin, ready to do its bidding. That was Hillary's way to say that Trump is really not President of the United States—a siren call adopted by the Democratic party and media.

Hillary and the Orbis Dossier

The most under-covered story of Russia Gate is the interconnection between the Clinton campaign, an unregistered foreign agent of Russia headquartered in DC (Fusion GPS), and the Christopher Steele Orbis dossier. This connection has raised the question of whether Kremlin prepared the dossier as part of a disinformation campaign to sow chaos in the US political system. If ordered and paid for by Hillary Clinton associates, Russia Gate is turned on its head as collusion between Clinton operatives (not Trump’s) and Russian intelligence. Russia Gate becomes Hillary Gate.

Neither the New York Times, Washington Post, nor CNN has covered this explosive story. Two op-eds have appeared in the Wall Street Journal  (Holman Jenkins and David Satter). The possible Russian-intelligence origins of the Steele dossier have been raised only in conservative publications, such as in The Federalist and National Review.

The Fusion story has been known since Senator Chuck Grassley (R-Iowa) sent a heavily-footnoted letter to the Justice Department on March 31, 2017 demanding for his Judiciary Committee all relevant documents on Fusion GPS, the company that managed the Steele dossier against then-candidate Donald Trump. Grassley writes to justify his demand for documents that: “The issue is of particular concern to the Committee given that when Fusion GPS reportedly was acting as an unregistered agent of Russian interests, it appears to have been simultaneously overseeing the creation of the unsubstantiated dossier of allegations of a conspiracy between the Trump campaign and the Russians.” (Emphasis added.)

Former FBI director, James Comey, refused to answer questions about Fusion and the Steele dossier in his May 3 testimony before the Senate Intelligence Committee. Comey responded to Lindsey Graham’s questions about Fusion GPS’s involvement “in preparing a dossier against Donald Trump that would be interfering in our election by the Russians?” with “I don’t want to say.” Perhaps he will be called on to answer in a forum where he cannot refuse to answer.

The role of Fusion GPS and one of its key associates, a former Soviet intelligence officer, must raise the question as to whether the Steele dossier, which was orchestrated by a suspected unregistered agent of Russia, was a plant by Russian intelligence to harm Donald Trump?

David Satter, one of our top experts on Russia and himself expelled by the Kremlin, writes:

Perhaps most important, Russian intelligence also acted to sabotage Mr. Trump. The ‘Trump dossier, full of unverified sexual and political allegations, was published in January by BuzzFeed, despite having all the hallmarks of Russian spy agency ‘creativity.’ The dossier was prepared by Christopher Steele, a former British intelligence officer. It employed standard Russian techniques of disinformation and manipulation.

Much of the credibility of the Orbis dossier hinges on Steele’s reputation as a former M15 intelligence agent. Satter writes, however, that “after the publication of the Trump dossier, Mr. Steele went into hiding, supposedly in fear for his life. On March 15, however, Michael Morell, the former acting CIA director, told NBC that Mr. Steele had paid the Russian intelligence sources who provided the information and never met with them directly. In other words, his sources were not only working for pay. Furthermore, Mr. Steele had no way to judge the veracity of their claims.”

If Steele disappeared for fear of his life, we must suspect that he feared murder by Russian agents. The only secret he might have had to warrant such a drastic Russian action would be knowledge that Russian intelligence prepared the dossier.

According to a Vanity Fair article, Fusion GPS was first funded by an anti-Trump Republican donor, but, after Trump’s nomination, Fusion and Steele were paid by Democratic donors whose identity remains secret. Writes Satter: “Perhaps the time has come to expand the investigation into Russia’s meddling to include Mrs. Clinton’s campaign as well.”

As someone who has read every word of the Steele Trump dossier and has studied the Soviet Union/Russia for almost a half century, I can say that the Steele dossier consists of raw intelligence from informants identified by capital letters, who claim (improbably) to have access to the highest levels of the Kremlin. The dossier was not, as the press reports, written by Steele. No matter how experienced (or gullible) Steele might be, there is no way for him to know whether his sources are clandestine Russian intelligence agents.

In Stalin's day, some of the most valued KGB (NKVD) agents were called "novelists," for their ability to conjure up fictional plots and improbable tales to use against their enemies. Some of Steele's sources claim detailed knowledge of the deepest Kremlin secrets, such as Putin's personal control of Clinton emails or negotiations with Putin's head of the national oil company. If they truly had such knowledge, why would they "sell" it to Steele? The most likely explanation is that the Steele dossier is the work of Russian intelligence "novelists" charged by the Kremlin with defaming Trump and adding chaos to the American political system.

Mueller’s Difficult Task

While leaks from within the investigation focus on possible obstruction of justice, Special Counsel Robert Mueller’s writ – to investigate Russian interference in the 2016 election – requires him to consider “matters” that Dems would prefer be left alone.

Special Counsel Mueller has been given a broad charge and no deadline — a formula for trouble. He is supposed to “investigate Russia’s intervention in the 2016 election.” Given the many accounts of Russian contacts of Trump campaign officials and hangers-on, Mueller must follow these leads, which apparently have lead nowhere over a nine month investigation as reported even by Trump unfriendly sources like CNN. Mueller, therefore, should not require much time to rule out coordination between the Trump campaign and Russia state actors. Mueller must be careful to avoid detours into loosely related issue by scalp-hunting investigators. Mueller also must shut down leaks from within his office, if he wishes his reports to be credible to the American people.

Mueller must also conduct an investigation which is perceived as fair to both sides. On the Clinton/Democratic side, there are a number of unanswered questions related to Russian electoral intervention. Among them is the question of whether the “wiped clean” Clinton e-mails are in Russian hands (as asserted by the Steele dossier), whether  the tarmac meeting of Bill Clinton and the Attorney General quashed the investigation of Hillary’s e-mails, and whether the  Clintons and Russian uranium interests engaged in quid pro quo and “pay to play” operations. 

The most important unanswered question is whether the Clinton campaign funded the Orbis Trump smear campaign and did they understand the campaign could be conducted by Russian intelligence?

Mueller must question Steele himself on his sources and some of the sources themselves, investigate whether they could be Russian intelligence agents, and determine the role of Clinton donors and campaign officials in the funding of the anti-Trump dossier.

The Fusion-Steele matter is explosive because it suggests that Russia’s most damaging intervention in the 2016 campaign may have been its creation of the Steele Dossier, remarkably paid for by the Clinton campaign! If so, the Clinton campaign (not Trump) was the prime sponsor of Russia’s intervention in the 2016 election.

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Following more dismal data from the US, hope for global growth remains in China and they did not disappoint. Despite slumping macro data, a major slowdown in real estate, and the nation's deleveraging efforts in the last three months, GDP beat, Retail Sales beat, Industrial Production surged, and even fixed asset investment was above expectations. The Yuan hasn't moved.

For the last three months, Chinese data has been disappointing, along with US, as the collapsing credit impulse leaks into reality…

But exports and consumer spending have been pillars for the economy over the second quarter, offsetting the curb on leverage, and tonight's data shows that none of that matters.. because the deleveraging economy beat across the board

• China GDP BEAT 6.9% (exp +6.8%, prior +6.9%)
• China Retail Sales BEAT 11.0% (exp +10.6%, prior +10.7%)
• China Fixed Asset Investment BEAT 8.6% (exp +8.5%, prior +8.6%)
• China Industrial Production BEAT 7.6% (exp +6.5%, prior +6.5%)

As the charts below show, more of the same well-managed data to show that all is well enough that hope remains…Strong growth again reflects an economy awash in credit, foretold in the latest new yuan loans (1.54 trillion yuan) and aggregate social financing (1.78 trillion yuan).

Enda Curran, Bloomberg's Chief Asia Economics Correspondent, notes that at first glance there's not a lot for the bears in these numbers given they appear strong across the board. The backdrop though continues to be one of cheap credit and mounting risks. That's an issue policy makers say they are aware of but for now, it seems like growth above all else is key.

Iris Pang, greater China economist at ING Bank in Hong Kong:

"Higher than expected GDP growth comes from strong industrial production. That said, the gap between FAI growth and industrial production growth tells the story that it is consumption and export driven growth."

We wonder how long before the lagged response to the credit impulse collapse hits GDP... (NOTE the weaker and weaker reactions in GDP to credit impulse surges)

 

The reaction in Yuan is underwhelming for now… (after its biggest weekly gain since March)

 

China's stock market ripped back higher (after an early plunge) ahead of China's data dump, and held those gains as the data hit (we wonder if someone got wind of the data a little early?).

As a reminder, Japan is closed for a holiday so we are not getting the usual juice from BoJ shenanigans on any move.

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Via Knowledge@Wharton,

Robots that serve dinner, self-driving cars and drone-taxis could be fun and hugely profitable. But don’t hold your breath. They are likely much further off than the hype suggests.

A panel of experts at the recent 2017 Wharton Global Forum in Hong Kong outlined their views on the future for artificial intelligence (AI), robots, drones, other tech advances and how it all might affect employment in the future. The upshot was to deflate some of the hype, while noting the threats ahead posed to certain jobs.

Their comments came in a panel session titled, “Engineering the Future of Business,” with Wharton Dean Geoffrey Garrett moderating and speakers Pascale Fung, a professor of electronic and computer engineering at Hong Kong University of Science and Technology; Vijay Kumar, dean of engineering at the University of Pennsylvania, and Nicolas Aguzin, Asian-Pacific chairman and CEO for J.P.Morgan.

Kicking things off, Garrett asked: How big and disruptive is the self-driving car movement?

It turns out that so much of what appears in mainstream media about self-driving cars being just around the corner is very much overstated, said Kumar. Fully autonomous cars are many years away, in his view.

One of Kumar’s key points: Often there are two sides to high-tech advancements. One side gets a lot of media attention — advances in computing power, software and the like. Here, progress is quick — new apps, new companies and new products sprout up daily. However, the other, often-overlooked side deeply affects many projects — those where the virtual world must connect with the physical or mechanical world in new ways, noted Kumar, who is also a professor of mechanical engineering at Penn. Progress in that realm comes more slowly.

At some point, all of that software in autonomous cars meets a hard pavement. In that world, as with other robot applications, progress comes by moving from “data to information to knowledge.” A fundamental problem is that most observers do not realize just how vast an amount of data is needed to operate in the physical world — ever-increasing amounts, or, as Kumar calls it — “exponential” amounts. While it’s understood today that “big data” is important, the amounts required for many physical operations are far larger than “big data” implies. The limitations on acquiring such vast amounts of data severely throttle back the speed of advancement for many kinds of projects, he suggested.

In other words, many optimistic articles about autonomous vehicles overlook the fact that it will take many years to get enough data to make fully self-driving cars work at a large scale — not just a couple of years.

Getting enough data to be 90% accurate “is difficult enough,” noted Kumar. Some object-recognition software today “is 90% accurate, you go to Facebook, there are just so many faces — [but there is] 90% accuracy” in identification. Still, even at 90% “your computer-vision colleagues would tell you ‘that’s dumb’…. But to get from 90% accuracy to 99% accuracy requires a lot more data” — exponentially more data. “And then to get from 99% accuracy to 99.9% accuracy, guess what? That needs even more data.” He compares the exponentially rising data needs to a graph that resembles a hockey stick, with a sudden, sharply rising slope. The problem when it comes to autonomous vehicles, as other analysts have noted, is that 90% or even 99% accuracy is simply not good enough when human lives are at stake.

Exponentially More Data

“To have exponentially more data to get all of the … cases right, is extremely hard,” Kumar said. “And that’s why I think self-driving cars, which involve taking actions based on data, are extremely hard [to perfect]…. “Yes, it’s a great concept, and yes, we’re making major strides, but … to solve it to the point that we feel absolutely comfortable — it will take a long time.”

So why is one left with the impression from reading mainstream media that self-driving cars are just around the corner?

To explain his view of what is happening in the media, Kumar cited remarks by former Fed chairman Alan Greenspan, who famously said there was “irrational exuberance” in the stock market not long before the crash of the huge tech stock bubble in the early 2000s. Kumar suggested a similar kind of exaggeration is true for today for self-driving cars. “That’s where the irrational exuberance comes in. It’s a technology that is almost there, but it’s going to take a long time to finally assimilate.”

“To have electric power and motors and batteries to power drones that can lift people in the air — I think this is a pipe dream.”–Vijay Kumar

Garrett pointed out that Tesla head Elon Musk claims all of the technology to allow new cars to drive themselves already exists (though not necessarily without a human aboard to take over in an emergency) and that the main problem is “human acceptance of the technology.”

Kumar said he could not disagree more. “Elon Musk will also tell you that batteries are improving and getting better and better. Actually, it’s the same battery that existed five or 10 years ago.” What is different is that batteries have become smaller and less expensive, “because more of us are buying batteries. But fundamentally it’s the same thing.”

Progress has been slow elsewhere, too. In the “physical domain,” Kumar explained, not much has changed when it comes to energy and power, either. “You look at electric motors, it’s World War II technology. So, on the physical side we are not making the same progress we are on the information side. And guess what? In the U.S., 2% of all of electricity consumption is through data centers. If you really want that much more data, if you want to confront the hockey stick, you are going to burn a lot of power just getting the data centers to work. I think at some point it gets harder and harder and harder….”

Similar constraints apply to drone technology he said. “Here’s a simple fact. To fly a drone requires about 200 watts per kilo. So, if you want to lift a 75-kilo individual into the air, that’s a lot of power. Where are you going to get the batteries to do that?” The only power source with enough “power density” to lift such heavy payloads is fossil fuels. “You could get small jet turbines to power drones. But to have electric power and motors and batteries to power drones that can lift people in the air — I think this is a pipe dream.”

That is not to say one “can’t do interesting things with drones, but whatever you do — you have to think of payloads that are commensurate what you want to do.”

In other areas, like electric cars, progress is moving along smartly and Kumar says there is lots of potential. “The Chinese have shown that, they are leading the world. The number of electric cars in China on an annual basis that are being produced is three times that of the U.S…. I do think electric cars are here to stay, but I’m not so sure about drones using electric power.”

Picking up on Kumar’s theme, Fung, who also helps run the Human Language Technology Center at her university, outlined some of the limits of artificial intelligence (AI) in the foreseeable future, where again the hype often outruns reality. While AI may perform many impressive and valuable tasks, once again physical limitations remain almost fixed.

“… A deep-learning algorithm that than can do just speech recognition, which is translating what you are saying, has to be trained on millions of hours of data “and uses huge data farms,” Fung noted. And while a deep-learning network might have hundreds of thousands of neurons, the human brain has trillions. Humans, for the time being, are much more energy-efficient. They can work “all day on a tiny slice of pizza,” she joked.

“The jobs safest from robot replacement will be those at the top and the bottom, not those in the middle.”–Vijay Kumar

The Human Brain Conundrum

This led to the panelists to note a second underappreciated divide: the scope of projects that AI can currently master. Kumar pointed out that tasks like translation are relatively narrow. We have “figured out how to go from data to information to some extent, though … with deep learning it’s very hard even to do that. To go from information to knowledge? We have no clue. We don’t know how the human brain works…. It’s going to be a long time before we build machines with the kind of intelligence we associate with humans.”

Not long ago, Kumar noted, IBM’s supercomputer Watson could not even play tic tac toe with a five-year-old. Now it beats humans at Jeopardy!. But that speedy progress can blind us to the fact that computers today can best handle only narrow tasks or “point solutions. When you look at generalizing across the many things that humans do — that’s very hard to do.”

Still, the stage is being set for bigger things down the road. To date, getting those narrow tasks that have been automated have required humans to “learn how to communicate with machines,” and not always successfully, as frustration with call centers and often Apple’s Siri suggests, noted Fung.

Today, the effort is to reverse the teacher and pupil relationship so that, instead, machines begin to learn to communicate with humans. The “research and development, and application of AI algorithms and machines that will work for us,” cater to us, is underway, Fung said. “They will understand our meaning, our emotion, our personality, our affect and all that.” The goal is for AI to account for the “different layers” of human-to-human communication.

“We look at each other, we engage each other’s emotion and intent,” said Fung, who is among the leaders worldwide in efforts to make machines communicate better with humans. “We use body language. It’s not just words. “That’s why we prefer face-to-face meetings, and we prefer even Skype to just talking on the phone.”

Fung referenced an article she wrote for Scientific American, about the need to teach robots to understand and mimic human emotion. “Basically, it is making machines that understand our feelings and intent, more than just what we say, and respond to us in a more human way.”

Such “affective computing” means machines will ultimately show “affect recognition” picked up from our voices, texts, facial expressions and body language. Future “human-robot communication must have that layer of communication.” But capturing intent as well as emotion is an extremely difficult challenge, Fung added. “Natural language is very hard to understand by machines — and by humans. We often misunderstand each other.”

So where might all this lead when it comes to the future of jobs?

Machines Are Still ‘Dumb’

“In the near future, no one needs to worry because machines are pretty dumb….” Kumar said. As an example, Fung explained that she could make a robot today capable of doing some simple household chores, but, “it’s still cheaper for me to do it, or to teach my kids or my husband to do it. So, for the near future there are tons of jobs where it would be too expensive to replace them with machines. Fifty to 100 years from now, that’s likely to change, just as today’s world is different from 50 years ago.”

But even as new tech arrives it is not always clear what the effect will be ultimately. For example, after the banking industry first introduced automatic teller machines [ATMs], instead of having fewer tellers “we had more tellers,” noted Aguzin. ATMs made it “cheaper to have a branch, and then we had more branches, and therefore we had more tellers in the end.”

“With blockchain technology, eventually the cost of doing a transaction will be ‘like sending an email, like zero.’ Imagine applying that to trade finance.”–Nicolas Aguzin

On the other hand, introducing blockchain technology as a ledger system into banking will likely eliminate the need for a third-party to double-check the accounting. Anything requiring reconciliation can be done instantly, with no need for confirmation, Aguzin added. Eventually the cost of doing a transaction will be “like sending an email, it will be like zero … without any possibility of confusion, there’s no cost. Imagine if you apply that to trade finance, etc.”

Already, Aguzin’s bank is about to automate 1.7 million processes this year currently being done manually. “And those are not the lowest-level, manual types of jobs — it’s somewhere in the middle.” In an early foray in affective computing, his bank is working on software that will be able to sense what a client is feeling and their purpose when they call in for service. “It’s not perfect yet, but you can get a pretty good sense of how they are feeling, whether they want to complain or are they just going to check a balance? Are they going to do x, y — so you save a lot of time.”

Still, said he remains confident that new jobs will be created in the wake of new technologies, as was the case following ATMs. His view about the future of jobs and automation is not as “catastrophic” as some analysts’. “I am a bit concerned about the speed of change, which may cause us to be careful, but … there will be new things coming out. I tend to have a bit more positive view of the future.”

Fung reminded the audience that that even in fintech, progress will be throttled by the available data. “In certain areas, you have a lot of data, in others you don’t.” Financial executives have told Fung that they have huge databases, but in her experience, it often is not nearly large enough to accomplish many of their goals.

Kumar concedes that today we are creating more jobs for robots than humans, a cause for concern for the future of jobs for humans. But he also calls himself a “pathological optimist” on the jobs issue. AI and robotics will work best in “applications where they work with humans.” Echoing Fung, he added that “it’s going to take a long time before we build machines with the kind of intelligence associated with humans. When it comes to going from “information to knowledge, we have no clue. We don’t know how the human brain works.”

Security at the Top — and Bottom

Picking up on Fung’s point that many lower-skill level jobs likely will be preserved, Kumar added that the jobs most likely to be eliminated could surprise people. “What is the one thing that computers are really good at? They are good at taking exams. So, this expectation of, oh, I got a 4.0 from this very well-known university, I will have a job in the future — this is not true.” At the same time, for robots “cleaning up a room after your three-year old is just very, very hard. Serving dinner is very, very hard. Cleaning up after dinner is even harder. I think those jobs are secure.”

The panel’s consensus: The jobs safest from robot replacement will be those at the top and the bottom, not those in the middle.

What about many years down the road, when robots become advanced enough and cheap enough to take over more and more human activities. What’s to become of human work?

“You will still want to read a novel written by a human even though it’s no different from a novel written by a machine someday. You still appreciate that human touch.”–Pascale Fung

For one thing, Fung said, there will be a lot more AI engineers “and people who have to regulate machines, maintain machines, and somehow design them until the machines can reproduce themselves.”

But also, many jobs will begin to adapt to the new world. Suppose, for example, at some point in the distant future many restaurants have robot servers and waiters. People will “pay a lot more money to go to a restaurant where the chef is a human and the waiter is a human,” Fung said “So human labor would then become very valuable.”

She added that many people might “become artists and chefs, and performing artists, because you still want to listen to a concert performed by humans, don’t you, rather than just robots playing a concerto for you. And you will still want to read a novel written by a human even though it’s no different from a novel written by a machine someday. You still appreciate that human touch.”

What’s more, creativity already is becoming increasingly important, Fung notes. So, it’s not whether AI engineers or business people will be calling the shots in the future. “It’s really creative people versus non-creative people. There is more and more demand for creative people.” Already, it appears more difficult for engineering students “to compete with the best compared to the old days.”

In the past, for engineers, a good academic record guaranteed a good job. Today, tech companies interview applicants in “so many different areas,” Fung added. They look beyond technical skills. They look for creativity. “I think the engineers have to learn more non-engineering skills, and then the non-engineers will be learning more of the engineering skills, including scientific thinking, including some coding….”

Kumar agrees. Today, all Penn engineering students take business courses. “The idea of a well-rounded graduate, the idea of liberal education today, I think includes engineering and includes business, right? The thing I worry about is what happens to the anthropologist, the English majors, the history majors … I think those disciplines will come under a lot of pressure.”

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Just over a month ago, we expressed amazement at just how sophisticated, efficient and pervasive the ‘Russian hacking’ community had become after CNN reported – citing unnamed government officials of course – that they had managed to hack into a Qatari News Agency and post a ‘fake’ news story all in an attempt to drive a wedge between the U.S., Qatar and some of it’s Gulf Arab neighbors, one which culminated – at least according to the CNN narrative – with the Qatari crisis in which an alliance of Arab states led by Saudi Arabia isolated and blockaded the nat gas rich nation.

The CNN headline made it quite clear: ignore the Arab conflict and please focus on the only thing that matters these days: Russia. Just in case it is somehow lost, we will have it here for posterity.

Think about that for a minute: set aside the logistics of the actual hacking event itself and consider just how good the Russians had to be to know exactly what news story needed to be planted inside the Qatari news agency to provoke an immediate severing of diplomatic ties by numerous Arab neighboring states: it truly was amazing how it all played out exactly the way the Russians planned. The conclusion: those wily ‘Russian hackers’ are certainly not a bunch of amateurs, would come in useful as the Russian hacking narrative just refused to go away.

And while that may sound like a joke, at least to CNN it wasn’t.  Here are the details, as they were previously reported by CNN:

The FBI recently sent a team of investigators to Doha to help the Qatari government investigate the alleged hacking incident, Qatari and US government officials say.

 

Intelligence gathered by the US security agencies indicates that Russian hackers were behind the intrusion first reported by the Qatari government two weeks ago, US officials say. Qatar hosts one of the largest US military bases in the region.

 

The alleged involvement of Russian hackers intensifies concerns by US intelligence and law enforcement agencies that Russia continues to try some of the same cyber-hacking measures on US allies that intelligence agencies believe it used to meddle in the 2016 elections.

 

The Russian goal appears to be to cause rifts among the US and its allies. In recent months, suspected Russian cyber activities, including the use of fake news stories, have turned up amid elections in France, Germany and other countries.

As it turns out, it’s somewhat ironic that CNN accused Russia of spreading “fake news stories” that “have turned up amid elections in France, Germany and other countries” because, as CNN’s ideological twins over at the WaPo blasted moments ago, it wasn’t Russia at all (now that the hacking narrative has found a renewed vigor in the US, courtesy of the leaked Trump Jr. emails) but – wait for it – the UAE, i.e. not Russia.  Compare the CNN headline above from June 6 with what the WaPo has just published:

Here is the “latest” official narrative, at least according to the “U.S. intelligence and other officials who spoke on the condition of anonymity to discuss the sensitive matter” quoted by WaPo, who may or may not be the same ones who planted the original fake news at CNN:

The United Arab Emirates orchestrated the hacking of Qatari government news and social media sites in order to post incendiary false quotes attributed to Qatar’s emir, Sheikh Tamim Bin Hamad al-Thani, in late May that sparked the ongoing upheaval between Qatar and its neighbors, according to U.S. intelligence officials.

 

Officials became aware last week that newly analyzed information gathered by U.S. intelligence agencies confirmed that on May 23, senior members of the UAE government discussed the plan and its implementation. The officials said it remains unclear whether the UAE carried out the hacks itself or contracted to have them done. The false reports said that the emir, among other things, had called Iran an “Islamic power” and praised Hamas.

But… wait: didn’t US intelligence agencies just one month ago say it was all Russia’s fault? Looks like it took just one month for the CIA to change its mind. We wonder if and when it will the same to its “conclusion” confirmed by 17 4 intelligence agencies that Russia also hacked the DNC and John Podesta (although we won’t be holding our breath for that particular narrative shift). Back to the WaPo:

The hacks and posting took place on May 24, shortly after President Trump completed a lengthy counterterrorism meeting with Persian Gulf leaders in neighboring Saudi Arabia and declared them unified.  Citing the emir’s reported comments, the Saudis, the UAE, Bahrain and Egypt immediately banned all Qatari media. They then broke relations with Qatar and declared a trade and diplomatic boycott, sending the region into a political and diplomatic tailspin that Secretary of State Rex Tillerson has warned could undermine U.S. counterterrorism efforts against the Islamic State.

Then again, this may be just another fishing expedition (or better yet, clickbait) by the WaPo. Naturally, the Emirates denied everything:

In a statement released in Washington by its ambassador, Yousef al-Otaiba, the UAE said the Post story was “false.” “The UAE had no role whatsoever in the alleged hacking described in the article,” the statement said. “What is true is Qatar’s behavior. Funding, supporting, and enabling extremists from the Taliban to Hamas and Qadafi. Inciting violence, encouraging radicalization, and undermining the stability of its neighbors.”

Maybe he meant to say Saudi Arabia, but there’s just too many fake news in one place at this point to even keep track. Meanwhile, according to the WaPo even more subsequent hacks provided the detail needed to get to the bottom of the original hack:

The revelations come as emails purportedly hacked from Otaiba’s private account have circulated to journalists over the past several months. That hack has been claimed by an apparently pro-Qatari organization calling itself GlobalLeaks. Many of the emails highlight the UAE’s determination over the years to rally Washington thinkers and policymakers to its side on the issues at the center of its dispute with Qatar.

This confirms what we reported last month, when we said that Qatar – which has repeatedly charged that its sites were hacked, but has yet to release the results of its own investigation – accused the Arab states behind the embargo for also being behind the hack. Today’s WaPo report appears to confirm this:

Intelligence officials said their working theory since the Qatar hacks has been that Saudi Arabia, the UAE, Egypt, or some combination of those countries were involved. It remains unclear whether the others also participated in the plan.

Meanwhile, nobody is willing to say anything on the record, of course: “The Office of the Director of National Intelligence declined to comment, as did the CIA. The FBI, which Qatar has said was helping in its investigation, also declined to comment.” Which is understandable: they are all busy going through any and all Trump emails intercepted by the NSA, looking for a smoking gun.

CNN’s fake news aside, what the WaPo report confirms, assuming it is accurate of course, is that the Arab states engaged in a “false flag” operation against Qatar, to provide them the justification for escalating the confrontation between Saudi Arabia and Qatar to its current crisis level, and potentially beyond: to war, considering Rex Tillerson’s attempts to mediate a resolution in his “shuttle diplomacy” tour in the Gulf over the past week proved to be a disaster.

That said, authenticity of the latest WaPo “report” is itself suspect. We look forward to another denial in several months which confirms what most likely actually happened: the NSA and CIA were those responsible for the Qatar “hacking”, an event which has launched a destabilizing sequence of events in the middle east, and which according to many may culminate with war in the region, the ideal outcome for both the “Deep State” and the Military-Industrial/Neocon complex.

As for CNN, we are “confident” they will be issuing a retraction to their original “fake news” report any… minute… now…

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