Tag: news

Authored by Tom Luongo,

NATO is obsolete.  Donald Trump made this argument back on the campaign trail.  This week, in his typically hyperbolic manner, he dressed down the organization for its hypocrisy over its mandate, which is to counter any aggression from Russia.

But, the potential threat of a Russian invasion of Europe is nil.  And, literally, everyone involved in this farce of a summit knows this.  So, Trump was right to call out the hypocrisy, but wrong about how to solve it.

Attacking Germany over the Nordstream 2 pipeline is nonsense.  Trade, especially energy trade, stitches economies and peoples together.  But to Trump energy is different.  Energy is a defense issue.

As such, it should be tightly controlled and only deployed to the benefit of those he approves of (or is allied with) against those he doesn’t (China).

And this is what is fundamentally wrong with geopolitically-dominant thinking.  Everything gets reduced to the metaphoric chess board.  People stop thinking about their individual needs and can only think in terms of nations and governments.

And it makes it easy for authoritarians like Trump, Vladimir Putin, Angela Merkel and all the rest to push the public’s buttons, openly stoking people’s in-group/out-group bias against their own best interest.

This is ultimately what allows for equally odious people like Donald Trump and Angela Merkel to achieve and maintain power.  NATO is obsolete because the thinking behind why it is necessary is obsolete.

It’s not Russian aggression that everyone has to be worried about, it is the aggression of those who have to this point mismanaged everything they were empowered to take care of in the first place, i.e. the very politicians at the meeting.

The US has subsidized European social welfare states by outsourcing their defense.  We, in turn, empowered a corporatocracy built around selling increasingly unnecessary weapons back to them under the false rubric of the evil Russians.

Trump’s position about NATO members not ‘paying their fair share’ is beside the point.  NATO’s budget would be far better spent contracting Russia to build the Nordstream 2 pipeline itself than bullying Italy into buying another tank it doesn’t need.

This is nothing more than him trying to turn an obsolete NATO into yet another Keynesian job creation program.

“Buy more of our over-priced, under-performing crap like the F-35 (a plane that should be considered treason by any rational metric of the term) so we can destroy even more precious capital while everyone goes broke issuing more debt to keep the party going a little while longer.”

In Trumpspeak however, this comes out as “Jobs.  Yuge jobs!”

It would be better in the end to just give the engineers rocks to throw at windows the assembly team builds.  At least there wouldn’t be the massive waste of raw materials.  Glass is recyclable after all, though not profitably.

His real complaint, however, is on an imbalance of trade between the US and Europe.  This is something he can’t fix without giving up the very source of the power he’s wielding with reckless abandon right now, the US dollar’s status as the world’s reserve currency.

Triffin’s paradox is real for the country that issues the currency that liquefies world trade.  And for that to occur, that country must run a trade deficit to issue more currency.  Dollars go out, goods come in.

The trade deficit is an accounting anomaly, and as Martin Armstrong consistently points out, can be manipulated by the interplay between it and the country’s current account.

The question isn’t the amount of money going out it is the value for that money in the goods received for it.  In that respect, the only economic respect that matters, the US gets paid handsomely.

The endless preening and virtue signaling by dead-ender politicians trying to justify their existence while mouthing the will of the lobbyists and rentier-class financiers who stand behind him is worse than nauseating.

It is culturally and psychologically destabilizing.  Resistance to change by the bureaucracy is on daily display on both sides of the pond.  From the Peter Strzok hearings to Theresa May’s betrayal of Brexit, none of these people want their ox gored while they continue to live at the expense of others for their benefit, not those they supposedly serve.

Trump has a real opportunity to quell his critics on the left and from libertarians like me to remake the way the business of geopolitics is done when he sits down with Putin next week.  His performance at the NATO summit was, as always with him, three steps forward and two steps back.

He’s needs an unfettered five-k jog in Helsinki.

And that means cutting through the nonsense, stopping the demagoguery and getting down to the real business of putting our own houses in order.  And that means for Trump, regardless of the agreements he gets from his European counterparts, to pull the US out of NATO, to tear down this alliance that is an albatross around the neck of everyone who lives under the weight of it.

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According to most flow-tracking economists (and not their conventionally-trained peers) when one strips away the noise, there are just two things that matter for the global economy and asset prices: central bank liquidity injections, and Chinese credit creation. This is shown in the Citi charts below.

And since it is indeed the case that just these two variables matter, then the world is set for a very turbulent phase because while global central banks liquidity is set to reverse a decade of expansion, and enter contraction some time in Q3 as the great “liquidity supernova” begins draining liquidity for the first time since the financial crisis…

… the latest Chinese credit creation data released overnight, added significantly to the risk of a “sudden global economic stop” after the PBOC reported that in May, China’s broadest monetary aggregate, Total Social Financing, barely rebounded from a 2 year low, rising to RMB1.138TN –  missing expectations of a 1.4TN print, and confirming that Beijing’s shadow deleveraging campaign is accelerating and gaining even more traction, even if the threat of a global deflationary spillover is rising by the day.

A quick look at numbers reveals that there was not much of a surprise in traditional new RMB loans, which continued their rapid pace of growth, rising sharply from last month’s RMB1.150TN to RMB1.84TN, and well above consensus RMB1.535TN, growing 12.7% yoy in June, up from 12.6% last month

And yet even despite the 4th highest monthly increase in total new loans, Total Social Financing was still a disappointment, and for the second month in a row, was below the new loans print.

The reason is that while new loans – a core component of TSF – jumped, the drop in shadow bank was particularly sharp for the second month in a row: this has been the area where Beijing has been most focused in their deleveraging efforts as it’s the most opaque and riskiest segment of credit. And, as the chart below show, the aggregate off balance-sheet financing posted its biggest monthly drop on record in June

Meanwhile, the lass granular M2 reading also posted a growth slowdown, rising only 8.0% in June, down from May’s 8.3%, below consensus of 8.4%, and the lowest on record.

Commenting on the ongoing slowdown in China’s credit creation, Goldman said that the latest money and credit data highlighted the challenges the government is facing in loosening monetary policy.

Specifically, while the loosening policy intention should be clear judging from the RMB lending rebound and more net fiscal spending (June fiscal expenditure accelerated to around 7%yoy from 0.5%yoy in May), the effectiveness of the policy loosening is clearly questionable.

Meanwhile, commenting on the drag of non-loan TSF – which as noted above became even bigger than it was in May – Goldman said it was “clearly not the recent policy intention but a reflection of the earlier regulations on shadow banking activities.”

Here Goldman notes something curious: in recent weeks there has been a lack of emphasis on deleveraging in officials’ comments.

Whenever the word leverage is mentioned, the “de-“ prefix has been substituted by the word “stabilizing” or “controlling”. The news on the delayed release of detailed wealth management product rules by the banking regulator is another indirect indication of the policy bias to treat this issue flexibly, especially when the trade war is on.

And while that does not mean the government is taking an U turn on this and allowing shadow bank activities to bounce back to old levels, the large falls like what we saw in May and June is not what they want to see either, at last not until the trade dispute is resolved. “The difficulty the government faces is how to fine tune the behavior of financial institutions“, according to Goldman.

So what happens next?  Given this set of data and China’s muted CPI inflation, it is likely that there will be a combination of policies including

1. changing the policy tone to a more dovish one, especially at the Politburo Meeting to be held in late July,
2. potentially further increasing the amount of on balance sheet RMB loans (although it could be partially offset by banks’ capital constraint),
3. lower interest rates (July interbank rate fell from the level in recent months), and possibly cutting RRR further, and perhaps most crucially
4. window guide the behavior of financial institutions so the non-loan TSF activities at least become less of a drag.

But further loosening measures are affected by 3 key factors, which according to Goldman include

1. how hard activity data behave, which we will know on the 16th, in recent quarters the relationship between real and monetary variables has not been strong so it’s possible that activity data holds up despite being weak though downside risks are clearly high,
2. how the markets react, especially A share, which is not knowable in advance in the short term, and
3. how the trade war proceeds, which is not fully in China’s control and the 200 billion USD in additional proposed tariffs was likely a surprise judging from its reaction.

And while all these are all possible next steps by Beijing, what Goldman forgot to note is that with the Yuan more or less pegged to the dollar, as the Fed keeps hiking rates, Beijing will find itself on the bad end of an interest-rate differential, resulting in further Yuan declines, which – as recent history is a guide – can quickly mutate into a powerful capital flight, forcing Beijing to dump reserves to stabilize the currency, or alternatively, end the shadow easing process and hike rates.

But China’s economy aside, the bigger question remains how long until the market realizes that between central banks and China, there is virtually no new credit – and liquidity – creation. Judging by today’s push in the S&P500 above 2,800 it wont be today.

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President Trump issued his first public comment about the indictment of 12 Russian military officers “for conspiring to interfere with the 2016 presidential election” by blaming former President Obama and the “deep state” and asking, as many others have, where the DNC server, the so-called “Exhibit A” in the case against the Russian hackers – is currently.

On Saturday morning, Trump tweeted from Scotland that “The stories you heard about the 12 Russians yesterday took place during the Obama Administration, not the Trump Administration” and asked “why didn’t they do something about it, especially when it was reported that President Obama was informed by the FBI in September, before the Election?”

The stories you heard about the 12 Russians yesterday took place during the Obama Administration, not the Trump Administration. Why didn’t they do something about it, especially when it was reported that President Obama was informed by the FBI in September, before the Election?

— Donald J. Trump (@realDonaldTrump) July 14, 2018

On Friday afternoon, the DOJ announced the indictment of 12 Russian intel officials who are charged with hacking Democratic National Committee officials and dispersing the stolen documents online. However, as explicitly stated in the indictment, there was “no indication that any American was a knowing participant in this activity, and no indication that these efforts altered the vote count in any way”, something Trump has repeatedly noted.

Trump then went on to question “where is the DNC Server, and why didn’t the FBI take possession of it?” He suggested that the server could have been kept hidden by the “Deep State.”

….Where is the DNC Server, and why didn’t the FBI take possession of it? Deep State?

— Donald J. Trump (@realDonaldTrump) July 14, 2018

Trump has suggested in the past a conspiracy around the computer servers at the DNC that Russians hacked during the election. The FBI had not directly assessed the hacked server during the agency investigation, instead relying on information from a private security firm, with deep Ukrainian ties.

Separately, as part of his Saturday tweetstorm, Trump again attacked “the Fake News CNN” saying that he checked it “first time in a long time (they are dying in the ratings), to see if they covered my takedown yesterday of Jim Acosta (actually a nice guy). They didn’t! But they did say I already lost in my meeting with Putin. Fake News….”

So funny! I just checked out Fake News CNN, for the first time in a long time (they are dying in the ratings), to see if they covered my takedown yesterday of Jim Acosta (actually a nice guy). They didn’t! But they did say I already lost in my meeting with Putin. Fake News……

— Donald J. Trump (@realDonaldTrump) July 14, 2018

He then unveiled his latest nickname, that of CNN president Jeff Zucker, saying “Remember, it was Little Jeff Z and his people, who are told exactly what to say, who said I could not win the election in that “there was no way to 270” (over & over again) in the Electoral College. I got 306! They were sooooo wrong in their election coverage. Still hurting!”

….Remember, it was Little Jeff Z and his people, who are told exactly what to say, who said I could not win the election in that “there was no way to 270” (over & over again) in the Electoral College. I got 306! They were sooooo wrong in their election coverage. Still hurting!

— Donald J. Trump (@realDonaldTrump) July 14, 2018

Finally, in his first tweet about about the market in a long time, Trump once again took credit for the Dow hitting 25,000, as well as the current state of the fiscal-stimulus fueled economy, saying “Jobs are at an all time record – and that is before we fix some of the worst trade deals and conditions ever seen by any government. It is all happening!”

The Stock Market hit 25,000 yesterday. Jobs are at an all time record – and that is before we fix some of the worst trade deals and conditions ever seen by any government. It is all happening!

— Donald J. Trump (@realDonaldTrump) July 14, 2018

As discussed previously, Trump’s market assessment remain a concern to some, because the higher the stock market goes, the more likely the president is to equate this with investor perceptions of his trade policy. As a result, it affords Trump leeway to unleash even harsher tariffs on China, something he has kept silent about in the past 4 days, enabling the latest market surge.

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House GOP members led by Freedom Caucus Chairman Mark Meadows (NC) have drawn up articles of impeachment against Deputy Attorney General Rod Rosenstein, according to Politico.

Conservative sources say they could file the impeachment document as soon as Monday, as Meadows and Freedom Caucus founder Jim Jordan (R-Ohio) look to build Republican support in the House. One source cautioned, however, that the timing was still fluid. –Politico

GOP legislators could also try to hold Rosenstein in contempt of Congress prior to actual impeachment. 

The knives have been out for Rosenstein for weeks, as Congressional investigators have repeatedly accused the DOJ of “slow walking” documents related to their investigations. Frustrated lawmakers have been given the runaround – while Rosenstein and the rest of the DOJ are hiding behind the argument that the materials requested by various Congressional oversight committees would potentially compromise ongoing investigations. 

In late June, Rosenstein along with FBI Director Christopher Wray clashed with House Republicans during a fiery hearing over an internal DOJ report criticizing the FBI’s handling of the Hillary Clinton email investigation by special agents who harbored extreme animus towards Donald Trump while expressing support for Clinton. Republicans on the panel grilled a defiant Rosenstein on the Trump-Russia investigation which has yet to prove any collusion between the Trump campaign and the Kremlin. 

“This country is being hurt by it. We are being divided,” Rep. Trey Gowdy (R-SC) said of Mueller’s investigation.  “Whatever you got,” Gowdy added, “Finish it the hell up because this country is being torn apart.”

Rosenstein pushed back – dodging responsibility for decisions made by subordinates while claiming that Mueller was moving “as expeditiously as possible,” and insisting that he was “not trying to hide anything.” 

“We are not in contempt of this Congress, and we are not going to be in contempt of this Congress,” Rosenstein told lawmakers.

Republicans, meanwhile, approved a resolution on the House floor demanding that the DOJ turn over thousands of requested documents by July 6. And while the DOJ did provide Congressional investigators with access to a trove of documents, House GOP said the document delivery was incomplete, according to Fox News. 

That didn’t impress Congressional GOP. 

“For over eight months, they have had the opportunity to choose transparency. But they’ve instead chosen to withhold information and impede any effort of Congress to conduct oversight,” said Representative Mark Meadows of North Carolina, a sponsor of Thursday’s House resolution who raised the possibility of impeachment this week. “If Rod Rosenstein and the Department of Justice have nothing to hide, they certainly haven’t acted like it.” –New York Times (6/28/18)

Rep. Meadows, meanwhile, fully admits that the document requests are related to efforts to quash the Mueller investigation. 

“Yes, when we get these documents, we believe that it will do away with this whole fiasco of what they call the Russian Trump collusion because there wasn’t any,” Meadows said on the House floor.

Meanwhile, following a long day of grilling FBI counterintelligence agent Peter Strzok, House Judiciary Committee Chairman Bob Goodlatte blamed Rosenstein for hindering Strzok’s ability to reveal the details of his work. 

“Rosenstein, who has oversight over the FBI and of the Mueller investigation is where the buck stops,” he said. “Congress has been blocked today from conducting its constitutional oversight duty.”

While Rosenstein’s appears to be close to the chopping block, whether or not he will actually be impeached is an entirely different matter.  

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A new, startling report from the Organisation for Economic Co-operation and Development (OECD) warns that positive employment trends are at risk of being derailed by “unprecedented wage stagnation” affecting low-paid workers.

The OECD Employment Outlook 2018 stated the employment rate in developed economies averaged 61.7 percent at the end of 2017, the highest level since the global financial crisis. The employment rate is expected to reach 62.1 percent by the end of this year and 62.5 percent by late 2019 — that is if trade wars and quantitative tightening do not trigger a global slowdown.

While the employment trend appears excellent on the surface, the report cautioned wage growth, which is expanding only half as fast as a decade ago, remains “remarkably more sluggish” than before the great financial crisis.

A slowdown in wage growth by country

The report stressed income inequality has widened to unprecedented levels, which has developed into major structural issues for OECD economies.

Wage stagnation affects low-paid workers much more than those at the top: real labor incomes of the top 1 percent of earners have increased much faster than those of poor and middle class in recent years, reinforcing a long-standing trend seen in the U.S. (below):

Income inequality, in One Simple Chart

“This trend of wageless growth in the face of a rise in employment highlights the structural changes in our economies that the global crisis has deepened, and it underlines the urgent need for countries to help workers, especially the low-skilled,” said OECD Secretary-General Ángel Gurría, launching the report in Paris. “Well-targeted policy measures and closer collaboration with social partners are needed to help workers adapt to and benefit from a rapidly evolving world of work, in order to achieve inclusive growth.”

Spending by the bottom 95 percent has at best returned to the levels reached a decade ago in 2007 (NYTimes 2016)

The Paris-based research group suggested that several factors are contributing to the deterioration in wage growth:

“Low inflation and the major productivity slowdown have contributed to wage stagnation, as well as a rise in low-paying jobs. The Outlook notes a significant worsening in the average earnings for part-time workers relative to full-time workers. Declining coverage of unemployment benefits in many countries and persisting long-term unemployment may also have contributed. Fewer than one-in-three jobseekers receive unemployment benefits on average across the OECD, and the longer-term downward trend of benefit coverage has continued in many countries since the crisis,” said the report.

In June, the OECD released a report titled “Inequalities in household wealth across OECD countries,” which examined the distribution of household wealth across 28 countries and it discovered that America is the number one in the world for financial inequality. About 10 percent of the American households own 79 percent of all the wealth in the country. While the poor and middle class, which is about 60 percent of American households — only owns 2.4 percent of the country’s wealth.

The role of income and financial inequality reminds us exactly why President Trump was elected. Both OECD reports stress that OECD countries are at severe levels of economic inequality. While President Trump has unleashed financial propaganda touting the “greatest economy ever,” we caution that quantitative tightening and trade wars could usher in a global slowdown. If and when the next recession comes, it could be financial inequality that contributes to the rise in civil conflict among OECD countries. Buckle up, the ride is about to get rough.

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Authored by Yanis Varoufakis via LiveMint.com,

Any objective assessment of the Eurogroup’s recent deal on Greek public debt would conclude that it condemns Greece to permanent debt bondage…

Europe’s establishment is luxuriating in two recent announcements that would have been momentous even if they were only partly accurate: the end of Greece’s debt crisis, and a Franco-German accord to redesign the eurozone. Unfortunately, both reports offer fresh proof of the European Union (EU) establishment’s remarkable talent for never missing an opportunity to miss an opportunity.

The two announcements did not come in the same week by accident. The Greek debt implosion, back in 2010, was the ugly symptom of the eurozone’s design flaws, which is why it triggered a domino effect across the continent. Greece’s continuing insolvency reflects the deep disagreements within the Franco-German axis concerning eurozone redesign. While three French presidents and the same German chancellor were failing to agree on the institutional changes that would render the eurozone sustainable, Greece was asked to bleed quietly.

In 2015, the Greeks staged a rebellion, which Europe’s establishment ruthlessly crushed. Neither Brexit nor the EU’s steady delegitimation in the eyes of European voters managed to convince the establishment to change its ways. French President Emmanuel Macron’s election seemed the last hope for the new Berlin-Paris accord needed to prevent a suffocating Italy from triggering the next – this time lethal – domino effect.

Under Macron, new, hopeful ideas were proposed: a common budget for the eurozone; a new safe debt instrument and quasi-federal tax-raising capacities; a common unemployment insurance fund; common bank deposit insurance and a common pot from which to recapitalize failing banks. Moreover, a new investment fund would mobilize idle savings across Europe, without adding to the fiscal stress of member states. A year later, with Italy on a collision course with the EU, the Meseberg Summit between German Chancellor Angela Merkel and Macron delivered an agreement on eurozone reform. A few days later, the Eurogroup of eurozone finance ministers delivered its own “solution” to the Greek debt crisis.

In a decent universe, these two announcements would herald the end of a lost decade for Europe and the beginning of an era of rebuilding so that Europeans may face, together, the challenges posed by US President Donald Trump and the next economic downturn. Alas, that is not the universe we inhabit.

Even before the Meseberg Summit, Macron had diluted his proposals to the point of surrender. The common bank deposit insurance scheme and the recapitalization fund were pushed into an implausible future in which the eurozone periphery’s banks have to shed their bad loans before a proper banking union is forged. The common unemployment insurance scheme was not even discussed. A common debt instrument to underpin a eurozone budget amounting to 2-3% of eurozone aggregate income was unceremoniously consigned to the dustbin.

Naturally, Merkel offered just enough to allow Macron to disguise his humiliation as a personal triumph. In front of an ecstatic press corps, they hailed the decision to create a eurozone budget in name, when in reality it is nothing more than a credit line from the European Stability Mechanism (ESM, the bailout fund that gave Greece its loans in 2015). They also agreed to an insubstantial “rainy day” fund, to be financed by member states, and a fictional financial transactions and digital economy tax—a “compromise” that costs Merkel nothing, given that countries like the Netherlands and Ireland are likely to torpedo it.

As for bank recapitalization, Macron and Merkel touted an ESM-funded scheme. But with all ESM decisions subject to German parliamentary approval, the German Bundestag would have veto power over the recapitalization of, say, an Italian bank. Italy’s new government is unlikely to buy into this.

When bankers try to cover up bad loans on their books, they extend new loans to enable their insolvent borrowers to pretend to be servicing the original loan. When the new loan is exhausted, the client is allowed to suspend repayment for a few years, with interest accumulating. This keeps the net present value of their asset (the loan) constant while postponing the day of reckoning. Since 2010, Greece’s creditors have been practising this extend-and-pretend strategy. Instead of a courageous and therapeutic haircut, or the moderate gross domestic product-indexing solution, the Eurogroup’s recent decision, proclaimed as the “end of the Greek debt crisis”, boiled down to the apotheosis of this cynical practice.

Technically speaking, the central pillar of the new debt agreement is a decade-long postponement of payments totalling €96.6 billion that were due to begin in 2023. The Greek state has thus been offered easy repayments until 2033 in exchange for continuing harsh austerity ad infinitum; impossible annual debt repayments from 2033 to 2060; and a debt-to-national income ratio above 230% by 2060 if the next global recession puts the plan’s over-ambitious growth targets out of reach, as it surely will.

Any objective assessment of the Eurogroup’s recent deal on Greek public debt would conclude that it condemns Greece to permanent debt bondage. And an impartial observer of the Merkel-Macron Meseberg Summit would conclude that the eurozone remains as macroeconomically unsustainable as it was five years ago. And yet Europe’s establishment, oblivious to the Nationalist International preparing to devour the EU, is serving it appetizers. 

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Authored by Federico Pieraccini via The Strategic Culture Foundation,

The announced meeting between Trump and Putin has already produced a good result by revealing the hypocrisy of the media and politicians. The meeting has been branded as the greatest danger to humanity, according to the Western globalist elite, because of the danger that “peace could break out between Russia and the United States”.

Sometimes reality is stranger than fiction. The following so stretches credulity that sources will have to be cited and an exact quotations given to be believed.

A case in point is the following title: 

“Fears growing over the prospect of Trump ‘peace deal’ with Putin”. 

The Times does not here fear a military escalation in Ukraine, an armed clash in Syria, a false-flag poisoning in England, or a new Cold War. The Times does not fear a nuclear apocalypse, the end of humanity, the suffering of hundreds of millions of people.

No, one of the most authoritative and respected broadsheets in the world is fearful of the prospect of peace! The Times is afraid that the heads of two nuclear-armed superpowers are able to talk to each other. The Times fears that Putin and Trump will be able to come to some kind of agreement that can help avert the danger of a global catastrophe. These are the times in which we live. And this is the type of media we deal with. The problem with The Times is that it forms public opinion in the worst possible way, confusing, deceiving, and disorienting its readers. It is not by accident the world in which we live is increasingly divorced from logic and rationality.

Even if the outcome of this meeting does not see any substantial progress, the most important thing to be achieved will be the dialogue between the two leaders and the opening of negotiation channels for both sides.

In The Times article, it is assumed that Trump and Putin want to reach an agreement regarding Europe. The insinuation is that Putin is manipulating Trump in order to destabilize Europe. For years now we have been inundated with such fabrications by the media on behalf of their editors and shareholders, all part of the deep state conglomerate. Facts have in fact proven that Putin has always desired a strong and united Europe, looking to integrate Europe into the Eurasian dream. Putin and Xi Jinping would like to see a European Union more resistant to American pressure and able to gain greater independence. The combination of mass migration and sanctions against Russia and Iran, which end up hurting Europeans, opens the way for alternative parties that are not necessarily willing to Washington’s marching orders.

Trump’s focus for the meeting will be to convince Putin to put even more pressure on Europe and Iran, perhaps in exchange for the recognition of Crimea and the ending of sanctions. For Putin and for Russia it is a strategic issue. While sanctions are bad, the top priority for Moscow remains the alliance with Iran, the need to further strengthen relations with European countries, and to defeat terrorism in Syria. Perhaps only a revision of the ABM treaty and the withdrawal of these weapons from Europe would be an interesting offer for Putin. However, reality shows us that the ABM treaty is a pillar of Washington’s military-industrial complex, and that it is also Eastern European countries that want such offensive and defensive systems in their own countries, seeing them as a deterrents against Russia. Are they victims of their own propaganda, or are billions of dollars pouring into their pockets? Either way, it does not really matter. The most important point for Moscow will be the withdrawal of the Aegis Ashore ABM systems as well as military ships with the same Aegis system. But this is not something that Trump will be able to negotiate with his military leaders. For the military-industrial complex, the ABM system, thanks to maintenance, innovation and direct or indirect commissions, is a gravy train that too many interests intend to keep riding.

From the Kremlin’s point of view, the removal of sanctions remains necessary for the restoration of normal relations with the West. But this would be difficult to achieve, given that Moscow would have little to offer Washington in exchange. The strategists at the Pentagon demand a withdrawal from Syria, an end to support for Donbass, and a cessation of relations with Iran. There is simply too much divergence to reach a common position. Moreover, Europe’s sanctions against Russia benefit Washington, as they hurt the Europeans and thereby undermine what is a major trading competitor to the US. The US withdrawal from the Joint Comprehensive Plan of Action (JCPOA) can be looked at in the same light, blocking US allies from doing business with Iran.

Putin will keep faith with his commitments to Syria and with his allies, unwilling to betray his word even for the recognition of Crimea. On the other hand, as already mentioned, the priority remains the removal of the ABM; and while Crimea is already under the control of the Russian Federation, Syria remains an unstable territory that risks propelling Islamist terrorism to Russia’s soft underbelly in the Caucasus. For Moscow, involvement in Syria has always been a matter of national security, and this certainly remains the same now, even with Donald Trump’s unrealistic offers.

It should be kept in mind that Putin is aiming for a medium- to long-term strategy in the Middle East, where Iran, Syria and the entire Shiite arc serves to counter Saudi and Israeli aggression and hegemony. This strange alliance has emerged as the only way to deter war and dial down the heat in the region, because the crazy actions from Netanyahu or Mohammad bin Salman are deterred by a strong Iranian military. Preventing a confrontation between Iran and Saudis/Israelis also means not making Tehran appear weak or isolated. Such considerations seem beyond the strategists in Washington, let alone in Tel Aviv or Riyadh.

While it is difficult to achieve a positive outcome from the meeting between Trump and Putin, it is important that there is a meeting in the first place, contrary to what The Times thinks. The media and the conglomerate of power that revolves around the US deep state fear diplomacy in particular. The same narrative that was proclaimed weeks before and after the meeting between Trump and Kim Jong-un is being repeated with regard to Trump’s meeting with Putin.

Washington bases its power on force, both economic and military. But this power also rests on the posture assumed and image projected. The United States and its deep state considers negotiating with opponents to be wrong and counterproductive. They consider dialogue to be synonymous with weakness, and any concession is interpreted as surrender. This is the result of 70 years of American exceptionalism and 30 years of Unipolarity, has allowed the US the ability to decide unilaterally the fate of others.

Today, in a multipolar world, the dynamics are different and therefore more complex. You cannot always employ a zero-sum mentality, as The Times does. The rest of the world recognizes that a dialogue between Putin and Trump is something positive, but we must not forget that, as in Korea, if diplomacy does not bring significant progress, then the hawks surrounding Trump will again be in the ascendant. The tasks for Rouhani, Putin and Kim Jong-un are complex and quite different from each other, but they share in common the belief that dialogue is the only way to avoid a catastrophic war. But apparently, peace is not the best possible result for everyone.

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Meet the Air Force’s $1200 cup of coffee — or more precisely the $1220 coffee cup which keeps breaking, after which the military simply buys more and more cups.  

The Air Force’s $1,220 reheating coffee cup. Image source: US Air Force

Some outlets which have reported on the insanely pricey self reheating coffee mug commonly used aboard aerial refueling tankers have presented it as merely a human interest and innovative tech story as the US military is considering cheaper designs using 3-D printers.

However, we doubt American taxpayers will see it that way, as the public has had to foot the bill to the tune of nearly $56,000 over the past three years just to replace the cup’s handle. 

If it sounds too absurd to be true a new Air Force Times report begins as follows:

When a mobility airman drops a cup of coffee aboard an aircraft, the Air Force can be out $1,220.

Since 2016, the replacement cost for some of the service’s coffee mugs, which can reheat coffee and tea on air refueling tankers, has gone up more than $500 per cup, forcing the service to dish out $32,000 this year for just 25 cups, military.com recently reported.

The 60th Aerial Port Squadron at Travis Air Force Base recently revealed that it has spent nearly $56,000 to replace broken hot cups over the past three years. The culprit, they say, is a faulty plastic handle known to break on impact. Each time a handle breaks, the Air Force is forced to order a whole new cup, as replacement parts are no longer made.

So the Air Force charged taxpayers $32,000 this year alone for cups with solid gold handles “faulty plastic handles” so that pilots can ensure their tea and Folgers get adequately reheated.

And we’re not so sure — to use the Air Force Times’ language — that faulty handles are “forcing the service”  to have to do anything, much less we can’t figure out how the military is “forced to” shell out tens of thousands for coffee cups.

According to Air Mobility Command officials, the 60th Aerial Port Squadron purchased 10 hot cups for $9,630 in 2016. The price for each cup surged from $693 to $1,220 in 2018, resulting in a cost of $32,000 for 25 cups — a price jump of $527 per cup, the release said. — Military.com

But it is true that the cups have to withstand use in pressurized areas on aircraft such as cargo planes, and must endure turbulence while flying through inclement weather. Still, as Popular Mechanics concludes in what sounds like an ironic understatement, “A self-heating coffee cup is a nice morale-builder for air crews, but it comes at a price.”

Meanwhile in the same report we learn about “$10,000 toilet seat covers” which when combined with $1200 coffee cups “just adds up” — in the words of one government spending watchdog group. 

Spokesman for the Project On Government Oversight, Dan Grazier, notes that this kind of obscene excess is hardly new for the Department of Defense, explaining to the Air Force Times, “the root of the problem is intellectual property rights. When the Pentagon makes deals with defense contractors, it rarely demands data rights, allowing contractors to charge heavily for repair and replacement on the systems down the road.”

Once locked into a fat government contract, the suppliers take the DoD to the bank for all they can manage, apparently. 

The Air Force is currently seeking alternate ways to replace the faulty handles on the $1200 cups, reportedly considering 3-D printed replacement handles at an estimated cost of 50 cents. 

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