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Aujourd’hui — 20 septembre 2019Zero Hedge

'Rogue' Oil Trader Lost $320 Million On Wrong-Way Derivatives Bets, Mitsubishi Says

Par Tyler Durden
'Rogue' Oil Trader Lost $320 Million On Wrong-Way Derivatives Bets, Mitsubishi Says

A Singapore-based subsidiary of Japanese trading giant Mitsubishi recently booked a $320 million loss after several unauthorized derivatives trades went sour, the company revealed in a press release Friday morning. The bank blamed the losses on a 'rogue trader' who allegedly manipulated the subsidiary's risk-management system, allowing him to place massive derivatives bets on the price of oil and disguise them as hedges.

Though the bank didn't release the trader's name, according to the press release, he was fired earlier this week. The bank has since reported his actions to the local police.

The trader had allegedly been taking unauthorized derivatives positions since January, but he suffered heavy losses over the summer as oil prices fell. He reportedly occupied a relatively senior position, and was in charge of all transactions involving China for the subsidiary.

The bank launched an investigation into the traders' positions while he was out of office in the middle of August. It soon discovered the unauthorized positions, and decided to unwind them immediately (it's worth noting that the bank probably could have minimized losses if it had waited until Monday to unwind those positions, when prices spiked nearly 20% intraday).

Because the trader had manipulated the subsidiary's risk-management system, he was able to make it look like the derivative trades were associated with customer orders.

As the FT points out, Mitsubishi made a $5 billion net profit last year, so the trading loss is more of an embarrassment than a threat to the bank's survival.

But according to Bloomberg, the oil market has a long history of massive trading busts.

The incident is a reminder of the damage that a rogue trader can cause to a large financial institution, according to the FT. The Mitsubishi rogue trader will join a growing 'rogues gallery' that includes Société Générale's Jérôme Kerviel, JPM's "London Whale" (a.k.a. Bruno Iksil), and Barings' Nick Leeson.

* * *

Read Mitsubishi's announcement below:

Losses from Overseas Subsidiary’s Crude Oil Trading

This is to inform you that Mitsubishi Corporation (hereinafter “MC") can confirm that one of its subsidiaries based in Singapore has realized a previously unidentified loss from derivatives trading. Investigations are currently ongoing to determine all of the details, but what is known so far is outlined below.

MC recognizes the seriousness of this matter and shall be redoubling efforts throughout the entire MC Group to ensure that it does not happen again.

1. Situation at Present

Petro-Diamond Singapore (Pte) Ltd. (hereinafter “PDS"), a subsidiary of MC that engages in the trade of crude oil and petroleum products, has confirmed that it expects to book a loss of approximately 320 million USD from its trade of crude oil derivatives.

Although PDS has already closed the position in question and determined how much was lost on the underlying derivatives, we are now examining the total amount of losses.

2. Facts Determined Thus Far

An employee who was hired locally by PDS to handle its crude oil trade with China (hereinafter “the employee”) was discovered to have been repeatedly engaging in unauthorized derivatives transactions and disguising them to look like hedge transactions since January of this year. Because the employee was manipulating data in PDS’s risk-management system, the derivatives transactions appeared to be associated with actual transactions with PDS’s customers. Since July, the price of crude oil has been dropping, resulting in large losses from derivatives trading. PDS began investigating the employee’s transactions during his absence from work in the middle of August, and that is when the unauthorized transactions were discovered.

3. MC's and PDS’s Response

After recognizing that the transactions being investigated could result in a loss for PDS, MC and PDS immediately consulted with an outside lawyer and established an investigation team, including local outside experts, to gain an overall picture of the situation and identify the causes.

  • PDS quickly closed the derivatives position in question and determined the losses caused by the transactions which were not associated with any crude oil transactions with PDS’s customers. PDS also has since prevented the commencement of any similar transactions.
  • MC conducted internal investigation at PDS, which included inspections of PDS’s contracts, rules, risk-management system and internal controls. Based on its findings, MC has reconfirmed that PDS has sufficient internal controls in place, including a middle office responsible for risk management. MC also confirmed PDS already tightened its governance to ensure that any similar improprieties can be detected at a much earlier stage.
  • MC also performed investigations at its other MC group companies and MC’s in-house business departments engaged in derivatives trading to determine whether or not any similar improprieties have been taking place. These investigations confirmed that there are no such problems or risks at present.
  • PDS terminated the employment of the employee on September 18. In order to take a strong action in response to the violation of internal rules and laws committed by the employee, which has caused PDS this significant loss, PDS lodged a police complaint against the employee on September 19.

4. Impact on MC’s FY2019 Forecast

How the losses will impact MC’s forecast for FY2019 is under investigation and shall be announced if and when a performance review is necessary.
Further details with respect to the ongoing investigations shall be made accordingly.

Tyler Durden Fri, 09/20/2019 - 06:42
  • 20 septembre 2019 à 12:42

Trudeau Uninvited From NBC Talk Show Amid Backlash To 'Blackface' Scandal

Par Tyler Durden
Trudeau Uninvited From NBC Talk Show Amid Backlash To 'Blackface' Scandal

Prime Minister Justin Trudeau delivered his second apology in two days late Thursday following the emergence of more photos of him wearing blackface. And in a sign that the backlash to Trudeau's 'brownface' scandal is only beginning, the prime minister has been dis-invited from an American late-night show, the Independent reports.

Trudeau was scheduled to appear on YouTube star Lilly Singh's new show, but NBC confirmed that his scheduled appearance had been cancelled in the wake of the controversy. NBC added that it has no plans to invite him back to the show, "A Little Late with Lilly Singh," which is the first on the network to be presented by a woman of color.

Trudeau had filmed a pre-recorded "comedy clip" and wished Singh, a Canadian-Indian star, "good luck" on Twitter ahead of the show's first episode, which was filmed on Monday.

But on Wednesday, Time Magazine published a photo of a 29-year-old Trudeau in 'brownface' during an 'Arabian Nights'-themed party. Trudeau swiftly apologized, but more embarrassing photos of the prime minister emerged on Thursday. Trudeau has declined to say how many times he has worn blackface.

All of this is happening at the worst possible time for Trudeau, who launched his re-election campaign last week. Before the incident, his Liberal Party was polling neck-and-neck with their rival Conservatives.

Tyler Durden Fri, 09/20/2019 - 05:36
  • 20 septembre 2019 à 11:36

Increasing Odds Of A Bad Brexit Deal As LibDems Leap Ahead Of Labour

Par Tyler Durden
Increasing Odds Of A Bad Brexit Deal As LibDems Leap Ahead Of Labour

Authored by Mike Shedlock via MishTalk,

The latest UK polls place the Liberal Democrats ahead of labour. It's not all what it seems.

Lib Dem Leapfrog

Westminster Voting Intention

CON: 32% (=)
LDM: 23% (+4)
LAB: 21% (-2)
BXP: 14% (=)
GRN: 4% (-3)

Via @YouGov.
Changes w/ 9-10 Sep.

— Election Maps UK (@ElectionMapsUK) September 18, 2019

Caution Advised

This is just one poll.

It is in contrast to another recent poll.

I guess they didn’t care

— Matt Singh (@MattSingh_) September 14, 2019

Clear Position

Caution aside, the poll result is not exactly surprising.

Liberal Democrat leader Jo Swinson promises a clear position: Overturn Article 50 and stay in the EU.

In contrast, Labour Leader Jeremy Corbyn promises a referendum.

“I think the important thing is to put the offer before the people and they will make the choice.”

Jeremy Corbyn says that voters should decide in a referendum if the UK should remain in the EU or leave with a new deal.

— Channel 4 News (@Channel4News) September 18, 2019

Corbyn proposes a referendum in which voters decide to remain or let him negotiate a customs union.

Calculated Moves

This all seems like political madness, but it is a calculated move by both Corbyn and Swinson.

  1. Swinson wants an election before there is a result. If she can achieve that, Labour will get crushed by its wishy washy policy. But if there is a result before the election the platform of Remain is totally useless.

  2. On the other hand, Corbyn wants a result, any result, before there is an election.

  3. The problem for both Corbyn and Swinson is they do not want an election to be to the advantage of Boris Johnson.

Bad Deal Increasingly Likely

Corbyn may very well support a deal, any deal, just to prevent an election blowout.

I suspect he would even opt for Theresa May's inept deal, flat out as is.

Magic Increasingly Likely

A magic solution, despite all the protestations from the EU regarding the backstop seems increasingly likely.

It would solve a problem for Johnson (who by the way would be right about getting a deal), and it would give Labour a one-on-one go at Johnson.


Because any solution, no matter what, takes out both the Brexit Party and the Liberal Democrats.

Flies in the Ointment

One problem with what I just proposed is the EU is increasingly belligerent. And it's obvious to the UK.

Corbyn will of course grant a "free vote". He can hardly be for a people's choice and then not grant MPs the right to vote as they please. Labour might not go along.

Theresa May's deal has been defeated three times already.

But if MPs are hell bent on stopping "No Deal" to the point of getting any deal, no matter bad, then a bad deal will be the result.


  1. Labour wants to sidetrack the Liberal Democrats and vice versa.

  2. Corbyn does not really want a referendum. He would get killed by one.

  3. Swinson's claim that her number one priority is to stop No Deal is a lie. Her number one priority is to sink Labour.

  4. The cross section of the above points keeps no deal in play despite all sides claiming they want a deal.

Brexit Guaranteed

Brexit, by some definition, is pretty much guaranteed.

But as I have stated before, Remain is far better than a bad deal.

Later today, the UK supreme court will rule on prorogation. The resolution of the above points will have a far greater impact on a deal (or no deal) than the court decision.

Tyler Durden Fri, 09/20/2019 - 05:00
  • 20 septembre 2019 à 11:00

Top Tesla German Executive Leaves For Competitor

Par Tyler Durden
Top Tesla German Executive Leaves For Competitor

Tesla just lost another key executive to a competitor: this time in Germany. Longtime German boss Jochen Rudat has left the company, according to German newsmagazine Manager Magazin

There had been a "backlog of tensions" between Tesla CEO Elon Musk and the Rudat's European organization. Musk was reportedly interfering with the introduction of the Model 3 "increasingly" in Europe, according to a translated version of the article.

And, as we all well know by now, when an employee butts heads with Elon Musk for any reason, they usually don't wind up sticking around much longer.  

We can only imagine how frustrated Rudat, whose relatively prestigious resume includes BMW Group and Porsche, was probably getting as "genius" Musk micromanaged him and likely peppered him with every Ambien and red wine induced brain-fart he conjured up. 

Rudat has reportedly been on leave since July 2019 and his contract with Tesla is set to expire at the end of September. In October, he will be working for Tesla competitor Automobili Pininfarina and will be reporting to former Audi CEO Michael Perschke, who we are guessing likely has a better grasp not only on the industry, but also on reality in general, than Musk. 

Additionally, Twitter sleuths posted yesterday that Phillipp Hempel, formerly Tesla's head of Enterprise Sales DACH in Dusseldorf, Germany, had also updated his LinkedIn to reflect that he had left the company. 

Hempel had been with the company since 2013, according to his LinkedIn, when he started as a Sales Advisor. 


Philipp Hempel, Head of Enterprise Sales DACH is out at $TSLAQ. Based on the email @nextmove_de posted, we think this may be the guy that messed their order up?#TeslaInternDeparture@scot_work @Paul_M_Huettner @markbspiegel @TESLAcharts @BloodsportCap

— BrunoMoon (@TSLAchooo) September 17, 2019


Tyler Durden Fri, 09/20/2019 - 04:15
  • 20 septembre 2019 à 10:15

Next For Turkey? Nuclear Weapons!

Par Tyler Durden
Next For Turkey? Nuclear Weapons!

Authored by Burak Bekdil via The Gatestone Institute,

During the 17 years he has ruled NATO-member Turkey, the country's Islamist strongman, President Recep Tayyip Erdoğan, has rarely missed an opportunity stealthily to convert Mustafa Kemal Atatürk's secular, pro-Western establishment into a rogue state hostile to Western interests. Erdoğan now wants to make it a rogue state with nuclear weapons.

"They say we can't have nuclear-tipped missiles, though some have them. This, I can't accept," Erdoğan said in a September 4 speech, while conveniently forgetting that Turkey has signed the Nuclear Non-proliferation Treaty (NPT) in 1980. In other words, Turkey's elected leader publicly declares that he intends to breach an international treaty signed by his country. Turkey is also a signatory to the 1996 Comprehensive Nuclear-Test-Ban Treaty, which bans all nuclear detonations, for any purpose.

For several decades, Turkey, being a staunch NATO ally, was viewed as the trusted custodian of some of the U.S. nuclear arsenal. In the early 1960s, the U.S. started stockpiling nuclear warheads at the Turkish military's four main airbases (Ankara Mürted, Malatya Erhaç, Eskişehir and Balıkesir). If ordered, Turkish air force pilots were tasked with hitting designated Warsaw Pact targets.

Squadrons of jets designated for carrying nuclear bombs were kept at each airbase (first F-100s, followed by F-104s and finally by F-4s) on a round-the-clock basis. Each base housed a small U.S. military unit in charge of the nuclear stockpile. In addition, a Turkish-U.S. military base in Incirlik in southern Turkey kept nuclear warheads to be operated by U.S. military. "With that role Turkey significantly added to NATO's deterrence in Cold War years," said Yusuf Kanlı, a prominent columnist and president of the Ankara-based think tank, Sigma Turkey, in a private interview on September 9.

After the end of the Cold War, the nuclear weapons in Turkish possession (at the four airbases, except Incirlik) were gradually removed, while nuclear guardianship came to a halt. Presently, the nuclear warheads at Incirlik still remain at the disposal of the U.S. military under a special U.S.-Turkish treaty. That treaty makes Turkey the host of U.S. nuclear weapons. According to the usage protocol, however, both Washington and Ankara need to give consent to any use of the nuclear weapons deployed at Incirlik.

This is not, in fact, the first time Erdoğan has voiced an eagerness to make Turkey a nuclear-armed state. As early as 2008 -- when he was the poster child of naïve Western statesmen and intellectuals who believed he was a reformist democrat -- Erdoğan said:

"Countries that oppose Iran's nuclear weapons should not have nuclear weapons themselves."

Despite his use of the plural "countries," Erdoğan was apparently pointing his finger at the country he hates the most: Israel, not the United States.

In a 2010 speech, Erdoğan described Israel as "the principal threat to peace" in the Middle East. In that speech, he repeated his skepticism about whether Iran intended to use its nuclear-fuel program to build nuclear weapons, and said there was no such uncertainty concerning Israel's undeclared arsenal.

If Turkey overtly or covertly launched a nuclear weapons program -- as Erdoğan apparently wishes -- the move could well have a domino effect on the region. Turkey's regional adversaries would be alarmed, and Saudi Arabia, Egypt, Syria and Greece might be tempted to launch their own nuclear weapons programs. Erdoğan should not be allowed to possess nuclear weapons.

Tyler Durden Fri, 09/20/2019 - 03:30
  • 20 septembre 2019 à 09:30

OECD Slashes Global Growth Outlook, Warns Germany Already In Recession

Par Tyler Durden
OECD Slashes Global Growth Outlook, Warns Germany Already In Recession

In one of the most downbeat forecasts on the global economy that we've seen so far this year, the Paris-based organization of wealthy nations known as the OECD - the Organization for Economic Cooperation and Development - warned that the global economy is heading toward a recession, and that governments aren't doing enough in terms of fiscal stimulus to try and boost the economy.

"Escalating trade policy tensions are taking an increasing toll on confidence and investment, adding to policy uncertainty, weighing on risk sentiment in financial markets, and endangering future growth prospects," the OECD said.

The advocacy for fiscal stimulus follows reports that Germany is considering a "shadow budget" to bolster public investment as Europe's economy slides.

“Our fear is that we are entering an era where growth is stuck at a very low level," said OECD Chief Economist Laurence Boone said. "Governments should absolutely take advantage of low rates to invest in the future now so that this sluggish growth doesn’t become the new normal."

After cutting all of its forecasts from four months ago, the OECD now sees global growth slipping below 3% to 2.9%.

Of course, this pattern of cutting GDP forecasts is nothing new.


The OECD became the latest to warn about the global economy, after the Fed, the ECB and the PBOC have all eased policy to try and bolster growth in recent weeks. But the OECD is convinced that without government stimulus, the global economy is headed for a protracted downturn.

Manufacturing has born the brunt of the economic slowdown thanks to the tit-for-tat trade war between the US and China, while the services sector has proved unusually resilient so far. But the OECD warned that “persistent weakness” in industry will ultimately weigh on the labor market, dragging down household incomes and spending.

Not knowing whether the next Presidential tweet will ease or exacerbate tensions makes for an environment of extreme uncertainty, pushing businesses to turn cautious on investment and hiring, and households to switch from spending to saving.

“Trump’s brinkmanship on trade with China has left consumers, businesses and financial markets on edge."

The OECD said "collective effort is urgent,” and the effectiveness of monetary policy could be enhanced by "stronger fiscal and structural policy support."

According to CNBC, the OECD's lower forecast for the EU was largely due to the slowdown in the bloc's biggest economy, Germany, which was forecast to already be in a technical recession.

Of course, a report about global growth wouldn't be complete without some Brexit  fearmongering, and the OECD is no exception. If the UK leaves without a deal, as is widely expected across Europe, its economy will be 2% lower than otherwise in 2020-2021, even if the exit is relatively smooth.

It’s a point central bankers have made for months. Following the ECB’s latest monetary stimulus push, outgoing President Mario Draghi said it’s "high time" for fiscal policy to take charge, signaling there’s not much more the ECB can do. "The takeaway for the euro zone today is do not rely on monetary policy to do the job alone,” Boone said. “Start investing to do the structural reforms that need to be done for more sustainable growth, and do it now."

Tyler Durden Fri, 09/20/2019 - 02:45
  • 20 septembre 2019 à 08:45

Electric Cars Make Norway A Climate Champ – But It's All A Sham

Par Tyler Durden
Electric Cars Make Norway A Climate Champ – But It's All A Sham

Authored by Sarah Cowgill via Liberty Nation,

Norwegians may be taking the lead in “green” car sales, but they’re keeping their gas hogs, too...

When cornered by curious free-thinking types, political climate zealots often point to the beautiful, progressive country of Norway as the standard to achieve. And what a tremendous record they have in combating the fossil fuel spouting carbon emissions. In the past year, 49.8 % of all cars purchased in the country are electric vehicles (EVs) – not hybrid.

Norway, with a population of only five million people, is now the world’s third-largest electric car market.

And Norway smokes the countries one would expect to lead the charge. For instance, only 2.1% of new cars registered in the US last year were EVs and, scraping the bottom of the barrel, our climate justice warriors across the pond –  the European Union – are showing a depressing sales number of 0.9 %.

The Greenbacks In Green Politics

The real scoop is not all as favorable for eliminating fossil fuels as it is nuanced for public viewing.  It seems that the government in Oslo is re-appropriating billions of oil export dollars to offset weight, Co2 taxes, and fees of Tesla cars entering the country for purchase.  By comparison, the typical Audi entering Norway after government add-ons costs the consumer about $35,000.  The Tesla – a $75,000 vehicle – is selling for less.

A major part of this gig is that purchasers are elevated to near super special road warriors – buy an electric car and receive the benefits of lower road tax, zip through toll roads without tossing a kroner into the change basket, and land free parking spots on ferries – well, pretty much free parking everywhere.

Yet this $2 billion yearly “incentive” isn’t taking regular combustion engines off the roads.  Instead, folks with gas guzzlers are taking advantage of the government program to add a vehicle to their collection.  Two-thirds of purchasers haven’t unloaded their carbon belching climate destroyers – they are still on the roads.  As for Norwegians opting for the one-car garage, well, they stick to the good old-fashioned fossil fuel models.

Perhaps it’s due to the ironic fact that Norway is one of the world’s top oil exporters and the second-largest peddler of natural gas.


Denmark gave this economic boondoggle a whirl in 2015, and they sold remarkably well the first year.  Subsequent years, post freebies, sales withered rather dramatically.  In one year, EV purchases dropped more than 80% — but perhaps Norway has a better deal for their folks.

Proud Tesla owners in Norway are the talk of the green people everywhere.  Appearing so progressive, so environmentally conscience, so superior as they speed along in the bus lanes – yep, that’s part of the deal too – passing the commoner plugging along in his or her so 2018 model SUV.  Ah, saving the world is simply sublime, and we should all bow down to the nation setting the gold standard on saving the world.  Just don’t look too closely at that other rig still sitting in the garage of your everyday average climate hero.

Tyler Durden Fri, 09/20/2019 - 02:00
  • 20 septembre 2019 à 08:00

Martial Law Masquerading As Law And Order: The Police State's Language Of Force

Par Tyler Durden
Martial Law Masquerading As Law And Order: The Police State's Language Of Force

Authored by John Whitehead via The Rutherford Institute,

“Since when have we Americans been expected to bow submissively to authority and speak with awe and reverence to those who represent us? The constitutional theory is that we the people are the sovereigns, the state and federal officials only our agents. We who have the final word can speak softly or angrily. We can seek to challenge and annoy, as we need not stay docile and quiet.”

- Justice William O. Douglas, dissenting, Colten v. Kentucky, 407 U.S. 104 (1972)

Forget everything you’ve ever been taught about free speech in America.

It’s all a lie.

There can be no free speech for the citizenry when the government speaks in a language of force.

What is this language of force?

Militarized police. Riot squads. Camouflage gear. Black uniforms. Armored vehicles. Mass arrests. Pepper spray. Tear gas. Batons. Strip searches. Surveillance cameras. Kevlar vests. Drones. Lethal weapons. Less-than-lethal weapons unleashed with deadly force. Rubber bullets. Water cannons. Stun grenades. Arrests of journalists. Crowd control tactics. Intimidation tactics. Brutality.

This is not the language of freedom.

This is not even the language of law and order.

This is the language of force.

Unfortunately, this is how the government at all levels—federal, state and local—now responds to those who choose to exercise their First Amendment right to peacefully assemble in public and challenge the status quo.

This police overkill isn’t just happening in troubled hot spots such as Ferguson, Mo., and Baltimore, Md., where police brutality gave rise to civil unrest, which was met with a militarized show of force that caused the whole stew of discontent to bubble over into violence.

A decade earlier, the NYPD engaged in mass arrests of peaceful protesters, bystanders, legal observers and journalists who had gathered for the 2004 Republican National Convention. The protesters were subjected to blanket fingerprinting and detained for more than 24 hours at a “filthy, toxic pier that had been a bus depot.” That particular exercise in police intimidation tactics cost New York City taxpayers nearly $18 million for what would become the largest protest settlement in history.

Demonstrators, journalists and legal observers who had gathered in North Dakota to peacefully protest the Dakota Access Pipeline reported being pepper sprayed, beaten with batons, and strip searched by police.

In the college town of Charlottesville, Va., protesters who took to the streets to peacefully express their disapproval of a planned KKK rally were held at bay by implacable lines of gun-wielding riot police. Only after a motley crew of Klansmen had been safely escorted to and from the rally by black-garbed police did the assembled army of city, county and state police declare the public gathering unlawful and proceed to unleash canisters of tear gas on the few remaining protesters to force them to disperse.

More recently, this militarized exercise in intimidation—complete with an armored vehicle and an army of police drones—reared its ugly head in the small town of Dahlonega, Ga., where 600 state and local militarized police clad in full riot gear vastly outnumbered the 50 protesters and 150 counterprotesters who had gathered to voice their approval/disapproval of the Trump administration’s policies.

To be clear, this is the treatment being meted out to protesters across the political spectrum.

The police state does not discriminate.

As a USA Today article notes, “Federally arming police with weapons of war silences protesters across all justice movements… People demanding justice, demanding accountability or demanding basic human rights without resorting to violence, should not be greeted with machine guns and tanks. Peaceful protest is democracy in action. It is a forum for those who feel disempowered or disenfranchised. Protesters should not have to face intimidation by weapons of war.”

A militarized police response to protesters poses a danger to all those involved, protesters and police alike. In fact, militarization makes police more likely to turn to violence to solve problems.

As a study by researchers at Stanford University makes clear, “When law enforcement receives more military materials — weapons, vehicles and tools — it becomes … more likely to jump into high-risk situations. Militarization makes every problem — even a car of teenagers driving away from a party — look like a nail that should be hit with an AR-15 hammer.”

Even the color of a police officer’s uniform adds to the tension. As the Department of Justice reports, “Some research has suggested that the uniform color can influence the wearer—with black producing aggressive tendencies, tendencies that may produce unnecessary conflict between police and the very people they serve.”

You want to turn a peaceful protest into a riot?

Bring in the militarized police with their guns and black uniforms and warzone tactics and “comply or die” mindset. Ratchet up the tension across the board. Take what should be a healthy exercise in constitutional principles (free speech, assembly and protest) and turn it into a lesson in authoritarianism.

Mind you, those who respond with violence are playing into the government’s hands perfectly.

The government wants a reason to crack down and lock down and bring in its biggest guns.

They want us divided. They want us to turn on one another.

They want us powerless in the face of their artillery and armed forces.

They want us silent, servile and compliant.

They certainly do not want us to remember that we have rights, let alone attempting to exercise those rights peaceably and lawfully.

And they definitely do not want us to engage in First Amendment activities that challenge the government’s power, reveal the government’s corruption, expose the government’s lies, and encourage the citizenry to push back against the government’s many injustices.

You know how one mayor characterized the tear gassing of protesters by riot police? He called it an “unfortunate event.”

Unfortunate, indeed.

You know what else is unfortunate?

It’s unfortunate that these overreaching, heavy-handed lessons in how to rule by force have become standard operating procedure for a government that communicates with its citizenry primarily through the language of brutality, intimidation and fear.

It’s unfortunate that “we the people” have become the proverbial nails to be hammered into submission by the government and its vast armies.

And it’s particularly unfortunate that government officials—especially police—seem to believe that anyone who wears a government uniform (soldier, police officer, prison guard) must be obeyed without question.

In other words, “we the people” are the servants in the government’s eyes rather than the masters.

The government’s rationale goes like this:

Do exactly what I say, and we’ll get along fine. Do not question me or talk back in any way. You do not have the right to object to anything I may say or ask you to do, or ask for clarification if my demands are unclear or contradictory. You must obey me under all circumstances without hesitation, no matter how arbitrary, unreasonable, discriminatory, or blatantly racist my commands may be. Anything other than immediate perfect servile compliance will be labeled as resisting arrest, and expose you to the possibility of a violent reaction from me. That reaction could cause you severe injury or even death. And I will suffer no consequences. It’s your choice: Comply, or die.

Indeed, as Officer Sunil Dutta of the Los Angeles Police Department advises:

If you don’t want to get shot, tased, pepper-sprayed, struck with a baton or thrown to the ground, just do what I tell you. Don’t argue with me, don’t call me names, don’t tell me that I can’t stop you, don’t say I’m a racist pig, don’t threaten that you’ll sue me and take away my badge. Don’t scream at me that you pay my salary, and don’t even think of aggressively walking towards me.

This is not the rhetoric of a government that is of the people, by the people, and for the people.

This is not the attitude of someone who understands, let alone respects, free speech.

And this is certainly not what I would call “community policing,” which is supposed to emphasize the importance of the relationship between the police and the community they serve.

Indeed, this is martial law masquerading as law and order.

Any police officer who tells you that he needs tanks, SWAT teams, and pepper spray to do his job shouldn’t be a police officer in a constitutional republic.

All that stuff in the First Amendment (about freedom of speech, religion, press, peaceful assembly and the right to petition the government for a redress of grievances) sounds great in theory. However, it amounts to little more than a hill of beans if you have to exercise those freedoms while facing down an army of police equipped with deadly weapons, surveillance devices, and a slew of laws that empower them to arrest and charge citizens with bogus “contempt of cop” charges (otherwise known as asserting your constitutional rights).

It doesn’t have to be this way.

There are other, far better models to follow.

For instance, back in 2011, the St. Louis police opted to employ a passive response to Occupy St. Louis activists. First, police gave the protesters nearly 36 hours’ notice to clear the area, as opposed to the 20 to 60 minutes’ notice other cities gave. Then, as journalist Brad Hicks reports, when the police finally showed up:

They didn’t show up in riot gear and helmets, they showed up in shirt sleeves with their faces showing. They not only didn’t show up with SWAT gear, they showed up with no unusual weapons at all, and what weapons they had all securely holstered. They politely woke everybody up. They politely helped everybody who was willing to remove their property from the park to do so. They then asked, out of the 75 to 100 people down there, how many people were volunteering for being-arrested duty? Given 33 hours to think about it, and 10 hours to sweat it over, only 27 volunteered. As the police already knew, those people’s legal advisers had advised them not to even passively resist, so those 27 people lined up to be peacefully arrested, and were escorted away by a handful of cops. The rest were advised to please continue to protest, over there on the sidewalk … and what happened next was the most absolutely brilliant piece of crowd control policing I have heard of in my entire lifetime. All of the cops who weren’t busy transporting and processing the voluntary arrestees lined up, blocking the stairs down into the plaza. They stood shoulder to shoulder. They kept calm and silent. They positioned the weapons on their belts out of sight. They crossed their hands low in front of them, in exactly the least provocative posture known to man. And they peacefully, silently, respectfully occupied the plaza, using exactly the same non-violent resistance techniques that the protesters themselves had been trained in.

As Forbes concluded, “This is a more humane, less costly, and ultimately more productive way to handle a protest. This is great proof that police can do it the old fashioned way - using their brains and common sense instead of tanks, SWAT teams, and pepper spray - and have better results.”

It can be done.

Police will not voluntarily give up their gadgets and war toys and combat tactics, however. Their training and inclination towards authoritarianism has become too ingrained.

If we are to have any hope of dismantling the police state, change must start locally, community by community. Citizens will have to demand that police de-escalate and de-militarize. And if the police don’t listen, contact your city councils and put the pressure on them.

Remember, they are supposed to work for us. They might not like hearing it—they certainly won’t like being reminded of it—but we pay their salaries with our hard-earned tax dollars.

“We the people” have got to stop accepting the lame excuses trotted out by police as justifications for their inexcusable behavior.

Either “we the people” believe in free speech or we don’t.

Either we live in a constitutional republic or a police state.

We have rights.

As Justice William O. Douglas advised in his dissent in Colten v. Kentucky, “we need not stay docile and quiet” in the face of authority.

The Constitution does not require Americans to be servile or even civil to government officials.

Neither does the Constitution require obedience (although it does insist on nonviolence).

This emphasis on nonviolence goes both ways. Somehow, the government keeps overlooking this important element in the equation.

There is nothing safe or secure or free about exercising your rights with a rifle pointed at you.

The police officer who has been trained to shoot first and ask questions later, oftentimes based only on their highly subjective “feeling” of being threatened, is just as much of a danger—if not more—as any violence that might erupt from a protest rally.

Compliance is no guarantee of safety.

Then again, as I point out in my book Battlefield America: The War on the American People, if we just cower before government agents and meekly obey, we may find ourselves following in the footsteps of those nations that eventually fell to tyranny.

The alternative involves standing up and speaking truth to power. Jesus Christ walked that road. So did Mahatma Gandhi, Martin Luther King Jr., and countless other freedom fighters whose actions changed the course of history.

Indeed, had Christ merely complied with the Roman police state, there would have been no crucifixion and no Christian religion. Had Gandhi meekly fallen in line with the British Empire’s dictates, the Indian people would never have won their independence.

Had Martin Luther King Jr. obeyed the laws of his day, there would have been no civil rights movement. And if the founding fathers had marched in lockstep with royal decrees, there would have been no American Revolution.

We must adopt a different mindset and follow a different path if we are to alter the outcome of these interactions with police.

The American dream was built on the idea that no one is above the law, that our rights are inalienable and cannot be taken away, and that our government and its appointed agents exist to serve us.

It may be that things are too far gone to save, but still we must try.

Tyler Durden Thu, 09/19/2019 - 23:45
  • 20 septembre 2019 à 05:45

Plastic Apocalypse: Alarming Levels Of Plastic Found In Children

Par Tyler Durden
Plastic Apocalypse: Alarming Levels Of Plastic Found In Children

In the last several months we have been one of the first to cover the plastic apocalypse.

New studies are being published that detail high levels of dangerous microplastics had been detected in some of the most remote regions of the world. Another study warned microplastics are turning up in human stool. Now there are new reports that show high levels of microplastics have been found in blood and urine samples of children. 

The study, conducted by the German Environment Ministry and the Robert Koch Institute, found an alarming 97% of blood and urine samples from 2,500 children tested between 2014 and 2017 had traces of microplastics. 

Der Spiegel, the German weekly magazine, published the findings over the weekend, which were part of a national study focused on "human biomonitoring" of 3 to 17-year-olds, found traces of 11 out of 15 plastic ingredients in the collected samples. 

"Our study clearly shows that plastic ingredients, which are rising in production, are also showing up more and more in the body. It is really worrying that the youngest children are most affected as the most sensitive group," Marike Kolossa-Gehring, one of the study's authors, told the magazine.

Researchers found perfluorooctanoic acid (PFOA), also used in cleaning products, waterproof clothing, food packaging, and cooking utensils, was present in the blood and urine samples. 

Half the plastics ever produced have been made in the last 15 years, & the substance is taking over Earth: Researchers just discovered microplastic in the remote Arctic:

That's bad, but it's just the tip of the iceberg.

— Tomthunkit™ (@TomthunkitsMind) September 17, 2019

PFOA has been described as a dangerous chemical that is toxic to the liver. The EU will outlaw the substance next year.

In at least 20% of the 2,500 children tested, microplastics were above safe government limits. Children from low-income regions were more susceptible to ingesting plastics than ones from the middle class and wealthy areas. 

"It can not be that every fourth child between the ages of three and five is so heavily burdened with chemicals that long-term damage cannot be reliably ruled out," said Hoffmann, adding that "the Federal Government must make every effort to protect people from harmful chemicals." 

Der Spiegel said the study hadn't been published, and the results were only made available by the government upon request by the Green Party.

Hoffmann said there's not enough research on how microplastics affect the body, and how exactly they're ingested. 

As far as environmental and health impacts of microplastics, these three studies could suggest a silent plastic apocalypse has infected Earth.


Tyler Durden Thu, 09/19/2019 - 23:25
  • 20 septembre 2019 à 05:25

Escobar: How The Houthis Overturned The Chessboard

Par Tyler Durden
Escobar: How The Houthis Overturned The Chessboard

Authored by Pepe Escobar via The Saker blog,

The Yemeni Shiite group’s spectacular attack on Abqaiq raises the distinct possibility of a push to drive the House of Saud from power

A Yemeni Shiite man holds his weapon and a flag with an Arabic inscription reading ‘Disgrace is far from us,’ as he takes part in a religious procession held by Houthi rebels to mark the first day of Ashura. Photo: Hani Al-Ansi/dpa

We are the Houthis and we’re coming to town. With the spectacular attack on Abqaiq, Yemen’s Houthis have overturned the geopolitical chessboard in Southwest Asia – going as far as introducing a whole new dimension: the distinct possibility of investing in a push to drive the House of Saud out of power.

Blowback is a bitch. Houthis – Zaidi Shiites from northern Yemen – and Wahhabis have been at each other’s throats for ages. This book is absolutely essential to understand the mind-boggling complexity of Houthi tribes; as a bonus, it places the turmoil in southern Arabian lands way beyond a mere Iran-Saudi proxy war.

Still, it’s always important to consider that Arab Shiites in the Eastern province – working in Saudi oil installations – have got to be natural allies of the Houthis fighting against Riyadh.

Houthi striking capability – from drone swarms to ballistic missile attacks – has been improving remarkably for the past year or so. It’s not by accident that the UAE saw which way the geopolitical and geoeconomic winds were blowing: Abu Dhabi withdrew from Crown Prince Mohammad bin Salman’s vicious war against Yemen and now is engaged in what it describes as a  “peace-first” strategy.

Even before Abqaiq, the Houthis had already engineered quite a few attacks against Saudi oil installations as well as Dubai and Abu Dhabi airports. In early July, Yemen’s Operations Command Center staged an exhibition in full regalia in Sana’a featuring their whole range of ballistic and winged missiles and drones.

The Saudi Ministry of Defense displays drones and parts from missiles used in the refinery attack.

The situation has now reached a point where there’s plenty of chatter across the Persian Gulf about a spectacular scenario: the Houthis investing in a mad dash across the Arabian desert to capture Mecca and Medina in conjunction with a mass Shiite uprising in the Eastern oil belt. That’s not far-fetched anymore. Stranger things have happened in the Middle East. After all, the Saudis can’t even win a bar brawl – that’s why they rely on mercenaries.

Orientalism strikes again

The US intel refrain that the Houthis are incapable of such a sophisticated attack betrays the worst strands of orientalism and white man’s burden/superiority complex.

The only missile parts shown by the Saudis so far come from a Yemeni Quds 1 cruise missile. According to Brigadier General Yahya Saree, spokesman for the Sana’a-based Yemeni Armed Forces, “the Quds system proved its great ability to hit its targets and to bypass enemy interceptor systems.”

This satellite overview handout image from the US government shows damage to oil/gas infrastructure from weekend drone attacks at Abqaiq.

Houthi armed forces duly claimed responsibility for Abqaiq: “This operation is one of the largest operations carried out by our forces in the depth of Saudi Arabia, and came after an accurate intelligence operation and advance monitoring and cooperation of honorable and free men within the Kingdom.”

Notice the key concept: “cooperation” from inside Saudi Arabia – which could include the whole spectrum from Yemenis to that Eastern province Shiites.

Even more relevant is the fact that massive American hardware deployed in Saudi Arabia inside out and outside in – satellites, AWACS, Patriot missiles, drones, battleships, jet fighters – didn’t see a thing, or certainly not in time. The sighting of three “loitering” drones by a Kuwaiti bird hunter arguably heading towards Saudi Arabia is being invoked as “evidence”. Cue to the embarrassing picture of a drone swarm – wherever it came from – flying undisturbed for hours over Saudi territory.

UN officials openly admit that now everything that matters is within the 1,500 km range of the Houthis’ new UAV-X drone: oil fields in Saudi Arabia, a still-under-construction nuclear power plant in the Emirates and Dubai’s mega-airport.

My conversations with sources in Tehran over the past two years have ascertained that the Houthis’ new drones and missiles are essentially copies of Iranian designs assembled in Yemen itself with crucial help from Hezbollah engineers.

US intel insists that 17 drones and cruise missiles were launched in combination from southern Iran. In theory, Patriot radar would have picked that up and knocked the drones/missiles from the sky. So far, absolutely no record of this trajectory has been revealed. Military experts generally agree that the radar on the Patriot missile is good, but its success rate is “disputed” – to say the least. What’s important, once again, is that the Houthis do have advanced offensive missiles. And their pinpoint accuracy at Abqaiq was uncanny.

This satellite overview handout image shows damage to oil/gas infrastructure from weekend drone attacks at Abqaiq in Saudi Arabia. Courtesy of Planet Labs Inc

For now, it appears that the winner of the US/UK-supported House of One Saudi war on the civilian Yemeni population, which started in March 2015 and generated a humanitarian crisis the UN regards as having been of biblical proportions, is certainly not the crown prince, widely known as MBS.

Listen to the general

Crude oil stabilization towers – several of them – at Abqaiq were specifically targeted, along with natural gas storage tanks. Persian Gulf energy sources have been telling me repairs and/or rebuilding could last months. Even Riyadh admitted as much.

Blindly blaming Iran, with no evidence, does not cut it. Tehran can count on swarms of top strategic thinkers. They do not need or want to blow up Southwest Asia, which is something they could do, by the way: Revolutionary Guards generals have already said many times on the record that they are ready for war.

Professor Mohammad Marandi from the University of Tehran, who has very close relations with the Foreign Ministry, is adamant: “It didn’t come from Iran. If it did, it would be very embarrassing for the Americans, showing they are unable to detect a large number of Iranian drones and missiles. That doesn’t make sense.”

Marandi additionally stresses, “Saudi air defenses are not equipped to defend the country from Yemen but from Iran. The Yemenis have been striking against the Saudis, they are getting better and better, developing drone and missile technology for four and a half years, and this was a very soft target.”

A soft – and unprotected – target: the US PAC-2 and PAC-3 systems in place are all oriented towards the east, in the direction of Iran. Neither Washington nor Riyadh knows for sure where the drone swarm/missiles really came from.

Readers should pay close attention to this groundbreaking interview with General Amir Ali Hajizadeh, the commander of the Islamic Revolutionary Guard Corps Aerospace Force. The interview, in Farsi (with English subtitles), was conducted by US-sanctioned Iranian intellectual Nader Talebzadeh and includes questions forwarded by my US analyst friends Phil Giraldi and Michael Maloof and myself.

Explaining Iranian self-sufficiency in its defense capabilities, Hajizadeh sounds like a very rational actor. The bottom line:

“Our view is that neither American politicians nor our officials want a war. If an incident like the one with the drone [the RQ-4N shot down by Iran in June] happens or a misunderstanding happens, and that develops into a larger war, that’s a different matter. Therefore we are always ready for a big war.”

In response to one of my questions, on what message the Revolutionary Guards want to convey, especially to the US, Hajizadeh does not mince his words: “In addition to the US bases in various regions like Afghanistan, Iraq, Kuwait, Emirates and Qatar, we have targeted all naval vessels up to a distance of 2,000 kilometers and we are constantly monitoring them. They think that if they go to a distance of 400 km, they are out of our firing range. Wherever they are, it only takes one spark, we hit their vessels, their airbases, their troops.”

Get your S-400s or else

On the energy front, Tehran has been playing a very precise game under pressure – selling loads of oil by turning off the transponders of their tankers as they leave Iran and transferring the oil at sea, tanker to tanker, at night, and relabeling their cargo as originating at other producers for a price. I have been checking this for weeks with my trusted Persian Gulf traders – and they all confirm it. Iran could go on doing it forever.

Of course, the Trump administration knows it. But the fact is they are looking the other way. To state it as concisely as possible: they are caught in a trap by the absolute folly of ditching the JCPOA, and they are looking for a face-saving way out. German Chancellor Angela Merkel has warned the administration in so many words: the US should return to the agreement it reneged on before it’s too late.

And now for the really hair-raising part.

The strike at Abqaiq shows that the entire Middle East production of over 18 million barrels of oil a day – including Kuwait, Qatar, United Arab Emirates and Saudi Arabia – can be easily knocked out. There is zero adequate defense against these drones and missiles.

Well, there’s always Russia.

Here’s what happened at the press conference after the Ankara summit this week on Syria, uniting Presidents Putin, Rouhani and Erdogan.

Question: Will Russia provide Saudi Arabia with any help or support in restoring its infrastructure?

President Putin: As for assisting Saudi Arabia, it is also written in the Quran that violence of any kind is illegitimate except when protecting one’s people. In order to protect them and the country, we are ready to provide the necessary assistance to Saudi Arabia. All the political leaders of Saudi Arabia have to do is take a wise decision, as Iran did by buying the S-300 missile system, and as President Recep Tayyip Erdogan did when he bought Russia’s latest S-400 Triumph anti-aircraft system. They would offer reliable protection for any Saudi infrastructure facilities.

President Hassan Rouhani: So do they need to buy the S-300 or the S-400?

President Vladimir Putin: It is up to them to decide [laughs].

In The Transformation of War, Martin van Creveld actually predicted that the whole industrial-military-security complex would come crumbling down when it was exposed that most of its weapons are useless against fourth-generation asymmetrical opponents. There’s no question the whole Global South is watching – and will have gotten the message.

Hybrid war, reloaded

Now we are entering a whole new dimension in asymmetric hybrid war.

In the – horrendous – event that Washington would decide to attack Iran, egged on by the usual neocon suspects, the Pentagon could never hope to hit and disable all the Iranian and/or Yemeni drones. The US could expect, for sure, all-out war. And then no ships would sail through the Strait of Hormuz. We all know the consequences of that.

Which brings us to The Big Surprise. The real reason there would be no ships traversing the Strait of Hormuz is that there would be no oil in the Gulf left to pump. The oil fields, having been bombed, would be burning.

So we’re back to the realistic bottom line, which has been stressed by not only Moscow and Beijing but also Paris and Berlin: US President Donald Trump gambled big time, and he lost. Now he must find a face-saving way out. If the War Party allows it.

Tyler Durden Thu, 09/19/2019 - 23:05
  • 20 septembre 2019 à 05:05

Guatemala: 'We're Not Just A Drug Trafficking Hub - We Produce Tons Of Cocaine Too!'

Par Tyler Durden
Guatemala: 'We're Not Just A Drug Trafficking Hub - We Produce Tons Of Cocaine Too!'

Guatemala Interior Minister Enrique Degenhart admitted this week that the country isn't just a transit point for drug traffickers - they are now a cocaine producing nation too, according to Reuters, which notes that production has almost exclusively been limited to Colombia, Peru and Bolivia. 

Degenhart's comments were prompted by the discovery of around 1.3 million cocoa plants in the country's tropical hillsides after the government gave emergency powers to the military in the eastern region of the country after the murder of three soldiers earlier this month. Authorities said the soldiers were ambushed by drug traffickers. 

The coca plants were found in remote stretches of the municipalities of Livingston on the Caribbean coast and El Estor, which sits on a lake popular with tourists and is where the soldiers were killed.

The plantations were located in a mountainous area, which took three hours to get to on foot,” police spokesman Jorge Aguilar told Reuters.

Aguilar said he did not know how much territory the plantations covered. Last year, Reuters reported that a one hectare “trial” plantation containing 75,000 coca plants had been found in Guatemala. -Reuters

Guatemalan authorities declined to state which criminal groups they believed were involved in the production. 

Since declaring the state of emergency, authorities have arrested 342 people and seized 57 motorcycles, 38 other vehicles and 52 firearms. Two cocaine processing labs were also destroyed according to a police statement. 

The country has long been a major transit route for cocaine and other drugs, as traffickers have bought significant influence over authorities at all levels of government. As such, Guatemala has had great difficulty controlling the traffickers despite the support of the United States. 

"Following the discovery of these narco-laboratories and the different fields with the coca plants, Guatemala now becomes a cocaine producer and that puts Guatemala in a totally different situation with respect to regional security," said Degenhart. 

The crops were discovered after authorities found small cocoa fields in the country - which were "apparent trials by drug trafficking cartels to explore reducing transportation costs and the risks of moving the product from distant Andean nations to the United States." 

Tyler Durden Thu, 09/19/2019 - 22:45
  • 20 septembre 2019 à 04:45

Chinese Scientists Have Allegedly Developed A Weapon For "Crowd Control"

Par Tyler Durden
Chinese Scientists Have Allegedly Developed A Weapon For "Crowd Control"

Authored by Mac Slavo via,

Chinese scientists are claiming that they’ve invented the world’s first sonic weapon to control people by causing bodily discomfort. The rifle-shaped instrument, which was jointly developed with military and law enforcement, is designed to disperse crowds using focused waves of low-frequency sound, the academy’s Technical Institute of Physics and Chemistry website said on Wednesday.

According to the South China Morning Post, the device’s “biological effect” would cause extreme discomfort, with vibrations in the eardrums, eyeballs, stomach, liver, and brain, scientists said. Studies dating to the 1940s found that low-frequency sound energy could cause dizziness, headaches, vomiting, bowel spasms, involuntary defecation, organ damage, and heart attacks. This all depends on frequency and exposure, but in Communist China, it really isn’t likely much thought will be given to the health of the slaves the government intends to use this on.

The Chinese government launched the sonic weapon program back in 2017 and its conclusion is likely to be related to the months of anti-government protests in Hong Kong, regardless of what the state-owned media is claiming.  That means the government intends to use the force and violence to control people protesting their use of force and violence.

Typically, sonic weapons are incredibly large and have to be mounted on vehicles. Until the Chinese developed this new device, which has no moving parts, they were also powered by electricity to drive a magnetic coil in order to generate energy. This meant they needed a large and stable source of power. But not anymore.

People demanding their freedom has compelled the masters to come up with more ways to continue the enslavement of others.

So far, there have not been reports of the Chinese government using this weapon on people.  That could all change soon as people slowly begin to realize the nature of government is to be violent and controlling and keep people from figuring out that they are slaves. It would likely take very little for the government to use this device against its own people.

Tyler Durden Thu, 09/19/2019 - 22:25
  • 20 septembre 2019 à 04:25

Grade-Rigging Scandal: Baltimore Students Missed 100+ Days Of School, Failed Classes, Still Graduated

Par Tyler Durden
Grade-Rigging Scandal: Baltimore Students Missed 100+ Days Of School, Failed Classes, Still Graduated

For the last several years, we have been covering the grade-changing scandal in Baltimore City Public Schools (BCPS). Administrators, teachers, and parents continue to come forward about the widespread fraud that allows children to graduate, even though they've missed school or failed classes. 

Project Baltimore, who has spearheaded the investigation into BCPS fraud, has uncovered another school where students missed more than 100 days of class or failed ten courses in three years, still graduated during the 2019 school year.

City Schools CEO Dr. Sonja Santelises accuses Project Baltimore of “sensationalism” and has “violated even the lowest standard of decency.” Fox45 requested an interview with Dr. Santelises concerning the allegations; we haven’t heard back.

— FOX Baltimore (@FOXBaltimore) September 17, 2019

The school in focus is called Joseph C. Briscoe, and it's a special needs school with just 79 students. The budget for the school is $4.3 million, which means on any given school year, the city spends $54,524 per pupil. By comparison, the Baltimore Polytechnic Institute, a top BCPS high school, spends about $7,000 per student.

"That should be the number one goal that they get the right education," a Briscoe teacher told Project Baltimore.

Project Baltimore said the teacher who has come forward about the fraud doesn't want to be identified because she fears BCPS will retaliate.

She said, Joseph C. Briscoe is a troubled school with at least 89% of its students were "chronically absent." The four-year graduation rate is at 5%, the teacher said students need help, but BCPS is making sure they are just pushed through.

"If they can't read and you're not giving them a type of trade or skill, and you're pushing them through the system, where will that leave them at once they graduate or get the certificate from the school, in life? Like how will they survive?"

The teacher said six students graduated this year, one student was late 110 days his senior year and failed science. But his transcript shows he passed with a D-.

"The diploma is getting devalued," said the teacher who claims to have witnessed grades being changed. "So, the diploma value is not worth a lot."

Project Baltimore received a secret recording of a conversation from inside the school shortly before graduation this year. The transcript below shows how administrators altered the grades of one student so he could pass.

"He couldn't have any work because he wasn't here," says someone in the recording.

When it was explained the student never did extra work, the question is asked, "What can we do?"

The response was, "So, we have to do a grade change? Is the final grade in there right now?

"Yes," someone replies.

The teacher told Project Baltimore that the student who had their grade change didn't deserve the grade. His report card showed he failed ten classes in the last three years and missed an abnormal amount of days but still received a certificate of program completion. "Certificates are listed in Maryland law as an alternative to the traditional diploma. They don't count toward a school's graduation rates, but students can take part in the ceremony," said Project Baltimore. 

The student in focus said he missed 110 days of school his senior year out of 180 total days. When asked if he felt like he deserved to graduate, the student answered, "Not really."

He went on to state, "I understand what you're saying, but I'm actually happy. To be honest, I didn't think I was going to make it."

Project Baltimore requested an interview with BCPS administrators; instead, they received this statement: 

"We received your request for an interview about Joseph C. Briscoe Academy. Since then, we learned that a reporter from the station went to the homes of Joseph C. Briscoe alumni, intruding on their privacy. We understand the reporter has confidential student records and directly questioned the students. We are investigating how these records may have been received. We also disagree with the reporter's approach to this story. Given this context, we are denying your request for an interview at this time."

Project Baltimore is associated with WBFF 45, a Fox-affiliated television station licensed to Baltimore and serves as the flagship station of the Sinclair Broadcast Group, a pro-Trump, conservative company. Project Baltimore has been used by WBFF 45/Sinclair to expose fraud in the democrat controlled city. 

Tyler Durden Thu, 09/19/2019 - 22:05
  • 20 septembre 2019 à 04:05
Hier — 19 septembre 2019Zero Hedge

Instagram Now Banning Photos Of People At Gun Ranges, Claiming They Promote "Violence"

Par Tyler Durden
Instagram Now Banning Photos Of People At Gun Ranges, Claiming They Promote "Violence"

Authored by Paul Joseph Watson via Summit News,

Instagram is now blurring out images of women at gun ranges, saying the photos violate “violence or dangerous organization guidelines.”

Yes, really.

A picture was posted showing Kaitlin Bennett and Millie Weaver shooting firearms at a gun range.

Facebook-owned Instagram banned and removed the image, claiming it violated their policy on violence or dangerous organizations.

The image depicts two independent women at a shooting range legally and lawfully exercising their 2nd amendment rights.

In our new social credit score dystopia, that’s forbidden.

Recall that many on the left are attempting to have the NRA declared a “terrorist organization.”

Silicon Valley is now throwing its weight behind demonizing all gun owners as violent radicals.

Once the Commie-style social credit score is fully in place, photos like this will lead to real world punishments, like your bank account being taken away.

That’s our collective future.

*  *  *

My voice is being silenced by free speech-hating Silicon Valley behemoths who want me disappeared forever. It is CRUCIAL that you support me. Please sign up for the free newsletter here. Donate to me on SubscribeStar here. Support my sponsor – Turbo Force – a supercharged boost of clean energy without the comedown.

Tyler Durden Thu, 09/19/2019 - 13:49
  • 19 septembre 2019 à 19:49

Pelosi Unloads On Nadler; Tells Him To Drop 'Moby Dick'-Like Impeachment Obsession

Par Tyler Durden
Pelosi Unloads On Nadler; Tells Him To Drop 'Moby Dick'-Like Impeachment Obsession

House Speaker Nancy Pelosi blasted House Judiciary Committee Chairman Jerry Nadler last week over his 'Moby Dick'-like obsession with impeaching President Trump - days before Trump's 2016 campaign manager Corey Lewandowski wiped the floor with Congressional Democrats during a contentious five-hour hearing on Tuesday in front of Nadler's panel.

Pelosi's comments came during a closed-door Capitol Hill meeting of Democrats last week, where she complained that Judiciary Committee aides have advanced the impeachment push "far beyond where the House Democratic Caucus stands," according to Politico

"And you can feel free to leak this," Pelosi added, according to several people who were there. 

It was the latest sign of the widening schism between Pelosi and Judiciary Committee Chairman Jerry Nadler, two longtime allies who are increasingly in conflict over where to guide the party at one of its most critical moments.

Both Pelosi and Nadler, who have served in the House together for more than 25 years, insist their relationship remains strong. But their rift over impeachment is getting harder and harder to paper over amid Democrats’ flailing messaging on the topic and a growing divide in the caucus. -Politico

And while Pelosi aides told Politico that Nadler has coordinated with her office on investigations, legal strategy and messaging - and Pelosi has signed off on all the Judiciary Committee's court filings against Trump, the House Speaker has been expressing skepticism for months that a successful impeachment in the House would only lead to "exonerating" Trump on the campaign trail after the effort dies in the GOP-led Senate.

Pelosi has privately clashed with Nadler over his aggressive impeachment agenda, arguing the public does not support it and it does not have the 218 votes to pass on the House floor. So far, about 137 Democrats say they would vote to open an official impeachment inquiry.


The relationship between the two veteran lawmakers has become strained. While Pelosi has blocked the House from formally voting to open an impeachment inquiry, Nadler declared he is authorized to begin one even without a House vote. -Washington Examiner

"Am I concerned? The answer is yes!," Florida Democratic Rep. Donna Shalala told the Washington Examiner. "In my district, I’m not getting asked about impeachment. I’m being asked about healthcare, I’m being asked about the environment, and about infrastructure. It’s not like around the country they are thinking about impeachment. It’s a Washington phenomenon as far as I can tell."

Shalala and other Democrats now regularly express concern privately to House Speaker Nancy Pelosi that the wall-to-wall impeachment effort by House Democrats is blocking their legislative agenda from public view. How can they convince constituents they are working on lowering prescription drug prices, some Democratic lawmakers have complained, when the news cycle revolves primarily around Nadler’s weekly confrontational hearings related to impeachment?

Pelosi tells lawmakers to stay “on message” about the Democratic agenda, which includes a House-passed gun background check bill and will soon include a prescription drug measure Shalala is eager to advance. -Washington Examiner

"She’s doing what she can do," Shalala said of Pelosi. "She’s saying, 'Keep your eye on the ball.' That is what she is saying to us."

During Tuesday's 'impeachment' hearing, Corey Lewandowski beat Congressional Democrats like a red-headed stepchild - starting with his opening statement:

"Sadly, the country spent over three years and 40 million taxpayer dollars on these investigations," said Lewandowski. "It is now clear the investigation was populated by many Trump haters who had their own agenda — to try and take down a duly elected president of the United States," Lewandowski said in his opening statement - later adding "We, as a Nation, would be better served if elected officials like you concentrated your efforts to combat the true crises facing our country, as opposed to going down rabbit holes like this hearing."

"As for actual 'collusion,' or 'conspiracy,' there was none. What there has been, however, is harassment of the president from the day he won the election." 

"Corey Lewandowski was very precise," Rep. Matt Gaetz, a member of the House panel, told Fox News' Sean Hannity. "And House Democrats looked like a dog that had chased a car and then caught it and then did not know what to do about it."

Tyler Durden Fri, 09/20/2019 - 05:11
  • 20 septembre 2019 à 11:11

The Bolsheviks Even Want To Tax Your Toaster Oven...

Par Tyler Durden
The Bolsheviks Even Want To Tax Your Toaster Oven...

Authored by Simon Black via,

In a concept paper called “Treat Wealth Like Wages”, the ranking member of the US Senate Finance Committee laid out a plan late last week to radically overhaul the tax code in a way never before seen.

Just as you’d expect from the title, his central idea is to tax wealth; if you own just about anything, this Senator wants you to start paying an annual tithe to the federal government.

It’s sort of like how property tax works: you don’t actually -own- your own property. You’re just renting it from the government.

They charge you a tax each year– some percentage of the property’s value–  to use the land. And if you don’t pay your property taxes, they’ll come and take it from you.

Now they want to create a similar federal tax that applies to almost every major asset you own.

This includes CASH in your bank account. Financial assets like stocks and bonds. Private business and partnership interests. Your entire real estate portfolio. Collectible assets like art and fine wine.

Never mind that you’ve bought these assets with money that’s already been taxed. Now they want to tax it again, every year. And when you die they want to tax it again.

They even included Individual Retirement Accounts.

Hell, for that matter they even proposed taxing “household goods” beyond a certain threshold. So you could even pay tax on your toaster oven.

What I found really interesting about this proposal, though, is that the guy who authored it is NOT one of the 10,000 people running for President right now.

In fact, this US Senator (Ron Wyden from Oregon) isn’t even up for re-election until 2022, at which point he’ll likely retire.

We’d expect to hear about wealth taxes from all the Bolshevik presidential candidates who are seeking attention and headlines. Or from some firebrand Twitter Queen who hates rich people.

But Ron Wyden is neither of those. He’s a seasoned, 70-year old US Senator who created a detailed 33-page plan on why AND how to implement a wealth tax.

This shows that the idea is really catching fire.

The wealth tax, of course, joins a slew of other taxes and hikes that have been proposed by the motley gang of Bolsheviks.

Several candidates plan to drastically raise the Death Tax while slashing exemptions. Others want to raise the top income tax rate to 70%. Another wants to tax UNREALIZED (i.e. paper) gains on investments.

They always say, of course, that they only want to tax the wealthy. They might even mean it.

But take a look at the income tax itself as a great historical example.

When the income tax was first implemented in 1913, it was intended to affect only the wealthiest households in America. Plus, the base rate was just 1%, and the top rate was 7%.

It was only a few years later that the middle class got ensnared into paying taxes. And by 1922, there were FIFTY SIX different tax brackets, all the way up to 73%, with nearly everyone in America owing a ‘fair share’.

Point is, whatever they create to tax the rich almost always ends up affecting the middle class.

And this latest proposal shows that the idea of a wealth tax has a LOT of momentum.

It’s no longer some lofty sound byte. There are detailed plans and real support behind it… which means you might want to strongly consider your own options for a Plan B.

For some people, that might even mean picking up and moving. It’s not such a radical concept… people do it all the time, especially state-to-state.

Just a few days ago, Billionaire Carl Icahn he announced he was moving to Florida to save on New-York’s ever-increasing taxes.

He also said that his whole office is moving with him… and that anyone who doesn’t move won’t have a job anymore.

And a long list of billionaires has already taken advantage of Florida to take advantage of this including Paul Tudor Jones, David Tepper, Eddie Lampert, etc.

But for those who are willing to leave the mainland, there are even better places.

Sir John Templeton, one of the first-ever billionaire investors, moved to the Bahamas late in his career. And from his tax savings alone, he was able to increase his charitable donations by an ADDITIONAL $100 million per year.

Puerto Rico is one place that offers exceptional tax advantages; investment income and capital gains are taxed at 0%… and corporate tax is just 4%… all in a tropical paradise that’s a 2 hour flight from the US mainland.

US citizens don’t even need a passport to move here. Because Puerto Rico is a US territory, moving to PR is no different than moving from New York to Florida.

I’ve said it over and over again, but it’s worth repeating– these incentives won’t last forever.

That’s why I insist the time to start strongly considering them and taking action is NOW.

If you’re interested in learning more, you can read our in-depth report on Puerto Rico’s tax incentives.

Tyler Durden Thu, 09/19/2019 - 13:12
  • 19 septembre 2019 à 19:12

Lenders Raise Collateral Concerns Over WeWork CEO's $500 Million Personal Credit Line

Par Tyler Durden
Lenders Raise Collateral Concerns Over WeWork CEO's $500 Million Personal Credit Line

And the hits keep coming for the 'trillionaire-to-be' CEO of WeWork as Bloomberg reports that the lenders are looking to revise terms on Adam Neumann's massive personal credit line amid collateral concerns as the real estate company's valuation plummets.

Bloomberg details that Neumann arranged a credit line of as much as $500 million from JPMorgan Chase & Co., UBS Group AG and Credit Suisse Group AG secured by some of his shares in WeWork, according to the company’s regulatory filings.

As of July 31, he had drawn $380 million of the principal amount available, the filings show.

The last few weeks of farce as WeWork's prospective valuation has collapsed along with the chances of it IPOing anytime soon, has raised concerns that the collateral value of the shares pledged to cover Neumann's massive personal line of credit may not cover the additional risks that are now evident to the once greedy consortium who were just weeks ago willing to fall over each other to lend him cash.

Additionally the cost of debt on the company itself has soared to almost 700bps over Treasuries as the IPO has fallen apart...

Source: Bloomberg

Neumann’s lenders have the ability to make a margin call if the stock declines below specific prices, regulatory filings show, without indicating what impact -- if any -- estimated valuations might have. The credit line is scheduled to mature next September, but may be extended at the discretion of lenders.

And remember, the company is still burning $2 in cash for every $1 of revenue that it takes in.

Of course, none of this is a real problem for Neumann, as he intends to live forever after all.

Tyler Durden Thu, 09/19/2019 - 12:50
  • 19 septembre 2019 à 18:50

Altria Tumbles To 5 Year Low As Mystery Vaping Disease Cases Rise To 530

Par Tyler Durden
Altria Tumbles To 5 Year Low As Mystery Vaping Disease Cases Rise To 530

Altria stock, which already had a disappointing 2019, tumbled to fresh five year lows after the CDC announced during a Thursday briefing that 530 people have fallen ill from the mysterious vaping-related lung ailment that has raised alarms across the U.S., up from 380 "confirmed and probable cases" that the government reported last week. Worse, no less than seven people have already died from the mystery illness. Officials said they still hadn’t determined a cause of the ailment, and that there didn’t appear to be one product or substance involved in all instances. Cases have been identified in 38 states.

After hitting the market with a bang with the implicit endorsement of both regulators and established tobacco companies, vaping has found itself under fire from all sides, especially now that it was unveiled that vaping addicts tend to shift to traditional cigarettes, making vaping a wonderful "gateway" product for big tobacco... one which may now have served its purpose.

Vapers Are Quitting E-Cigarettes... And Switching To Regular Cigs Instead

— zerohedge (@zerohedge) September 17, 2019

"We are leaving no stone unturned," said Mitchell Zeller, director of the Center for Tobacco Products at the U.S. Food and Drug Administration.

The sudden and "unexpected" - because who could possibly anticipate adverse outcomes from inhaling heated water vapor infused with not only nicotine but countless unknown substances - surge of vaping illnesses, combined with an explosion of underage use of e-cigarettes, has forced public health officials to rapidly reassess what had been lax regulation of the fledgling industry.

As we reported previously, US doctors have now seen hundreds of cases where patients have shown up in the emergency room, suddenly stricken with dangerous respiratory damage. Their lungs looked like they’d been ravaged by a disease, or as if they’d been exposed to a noxious industrial chemical. What the cases all shared in common: they had all recently used vaping products.

As Bloomberg further notes, over the past several years, there have been a limited number of similar case reports, raising the question of whether there might have been other older incidents that were missed. But the severity and number of recent cases suggest that something has changed in the vaping devices that people are using, doctors say.

So why the big initial push into vaping?

Amusingly, the initial "hope" was that vaping could help curtail tobacco use, which leads to the more than 480,000 deaths a year in the U.S. Tobacco-related illnesses are the leading cause of preventable death in the world. But an explosion in the use of vaping products by teenagers - many of whom said that they had never smoked cigarettes - has led the FDA to call teenage vaping an epidemic. Furthermore, it now appears that vaping was nothing more than a gateway product to traditional cigs, and has now hooked an entire generation of young adults.

The use of e-cigarettes by 10th and 12th graders doubled in the past two years, according to data released this week by the National Institute on Drug Abuse, part of the National Institutes of Health. According to the survey, 1 in 4 high school seniors reported vaping nicotine in the month prior, and 1 in 5 sophomores reported the same.

“With this particular epidemic, as others have said, there are so many unknowns,” Patrice Harris, president of the American Medical Association, said Thursday in an interview. "This is the known: We know the dangers of nicotine and we do not want to get another generation of children addicted to nicotine."

And yet, that's precisely what America's regulators have achieved by telling kids for years that e-cigs are a safe alternative to cigarettes, only to now reverse and tell them don't smoke any more.

As to why was Altria stock slammed to fresh 5 year lows...

... the reason is e-cig maker Juul, and specifically Altria's $12.8 billion investment in the startup last year, which has been particularly popular with young users. Shares of Altria Group dropped after the updated case count. They were down 1.4% to $40.26 at 12:07 p.m. in New York.

Tyler Durden Thu, 09/19/2019 - 12:35
  • 19 septembre 2019 à 18:35

The Fed Will Restart QE In November: This Is How It Will Do It

Par Tyler Durden
The Fed Will Restart QE In November: This Is How It Will Do It

One of the reasons for the sharply hawkish response to yesterday's FOMC meeting - one which saw both the dollar and yields spike - is that as we pointed out yesterday morning, in the hours ahead of Powell's press conference, Wall Street consensus quickly shifted with many expecting the Fed to announce some form of permanent repo facility or restart of POMO (or QE for those who call a spade a spade) to push reserves back to a level where the funding market is stable. This, as we showed with the following chart, would require some $400 billion in new reserves for the FF-IOER spread to normalize.

To the disappointment of many, Powell did not do that, and instead, the FOMC realigned both interest on excess reserves (IOER) and the reverse repo (RRP) rate lower by 5bp, resulting in 30bp cuts to both rates. Powell also noted during his press conference that the Fed would use temporary open market operations (OMOs) “for the foreseeable future” to address pressures in funding markets.

However, and the reason why stocks shot up just before 3pm ET, is that that's when Powell added that “it’s possible that we’ll need to resume the organic growth of the balance sheet, earlier than we thought. ... We’ll be looking at this carefully in coming days and taking it up at the next meeting” in late October. Said otherwise, the Fed may not have announcer QE4 yesterday, but it will likely announce it in the very near future.

Sure enough, as Goldman wrote in its FOMC post-mortem, "we took this as a fairly strong hint and now expect the Fed to resume trend growth of its balance sheet in November with permanent OMOs. It is possible that the FOMC will take that opportunity to also reach a final decision on possibly shortening the maturity composition of its purchases, which it discussed at its May meeting."

So what will the Fed's restart of QE POMO (some analysts, such as Morgan Stanley's Matt Hornbach are very sensitive not to call the return of POMO as QE even though both are effectively the monetization of US Treasurys and the US budget deficit) look like?

In the chart below, Goldman summarizes its projections of the Fed’s future gross Treasury purchases. The blue bars show reinvestment of maturing UST, which occur via add-on Treasury auctions. The red bars show reinvestment of maturing MBS, which occur via the secondary market.

The grey bars are where things get fun as they show permanent OMOs to support trend growth of the Fed’s balance sheet, which will occur via intervention of the Fed's markets desk in the secondary market.

Here, similar to Bank of America, Goldman assumes a roughly $15bn/month rate of permanent OMOs, enough to support trend growth of the balance sheet plus some additional padding over the first two years to increase the size of thebalance sheet by $150bn, restoring the reserve buffer and eliminating the current need for temporary OMOs.

That strategy would result in balance sheet growth of roughly $180bn/year and net UST purchases by the Fed (the sum of the red and grey bars) of roughly $375bn/year over the next couple of years.

And so, in just two months QE... pardon the Fed's open market purchases of Treasurys, will return after a 5 years hiatus. Just don't call it QE, whatever you do.

Tyler Durden Thu, 09/19/2019 - 12:20
  • 19 septembre 2019 à 18:20

FedEx Pilot Arrested In China; Accused Of Illegally Transporting Ammunition

Par Tyler Durden
FedEx Pilot Arrested In China; Accused Of Illegally Transporting Ammunition

A FedEx pilot was arrested in the southern Chiense city of Guangzhou last week after flying deliveries throughout Asia from the Guangzhou airport, according to the Wall Street Journal

A FedEx Express airliner at Hong Kong International Airport. Chinese authorities detained a FedEx pilot at the company’s regional hub at China’s Guangzhou airport. PHOTO: ALEXANDER SHCHERBAK/ZUMA PRESS

Todd A. Hohn, a former US Air Force pilot, was waiting to catch a commercial flight on Cathay Dragon airlines to his home in Hong Kong on September 12 when he was detained by authorities and accused of carrying "nonmetallic pellets used in low-power replica air guns" in a checked bag. Chinese authorities say he was illegally transporting ammunition - and have launched a criminal investigation, according to the report. 

The detention comes as FedEx faces other investigations in China amid tense U.S.-China trade talks. Mr. Hohn was detained Sept. 12 by Chinese security officials who escorted him from a preboarding executive lounge, interviewed him at one of their facilities and retained his passport, cellphone and other communication devices, the people said.

Mr. Hohn was later moved to a hotel, and has been told he isn’t allowed to leave mainland China until the investigation concludes, the people familiar with the matter said. -Wall Street Journal

China has strict laws governing firearms, and the Journal notes that "it is potentially a criminal offense to possess airsoft guns, similar to BB pellet guns, which are sometimes sold by online retailers as toys," but that it is "unclear that carrying airsoft pellets alone would be considered a violation."

Reached briefly for comment at his hotel room on Thursday, Hohn referred all further questions to a family lawyer. 

According to a FedEx union website, Hohn was part of a group of 21 relatively new pilots who joined the company - having been welcomed by a union membership committee on June 20, 2017. Hohn stepped down as commander of the 97th Air Mobility Wing at Altus Air Force Base in Oklahoma that same month. 

In June, FedEx issued an apology after it misrouted packages from Huawei - including two which were sent to the company's Memphis hub instead of to China after the shipper changed its internal systems to comply with new restrictions from the US Commerce Department

Chinese officials launched an investigation after Huawei publicly complained. 

Chinese police have since opened two investigations into FedEx. Last month, the Chinese police said they were investigating FedEx over the discovery of a gun in a package sent from the U.S. to China. FedEx said the incident dated back to June, and that it had notified the authorities about the shipment at the time. -Wall Street Journal

The company issued a second apology in June after a Huawei smartphone being shipped to the United States from the UK was returned to its sender, a British journalist. 

And in early September, China's state-run Xinhua News Agency reported that it had launched yet another probe after FedEX was suspected of illegally shipping knives to Hong Kong. FedEx claims that the shipment never left its city of origin and was promptly handed over to authorities. 

How much this will further complicate trade negotiations is unclear, however it certainly qualifies as a 'global uncertainty' in a series of ever-escalating tensions between Beijing and Washington. 

Powell did say global uncertainties have to rise to cut rates more

— zerohedge (@zerohedge) September 19, 2019
Tyler Durden Thu, 09/19/2019 - 12:05
  • 19 septembre 2019 à 18:05

All In: Masayoshi Son Has Pledged 38% Of His SoftBank Stake For Loans From 19 Different Banks

Par Tyler Durden
All In: Masayoshi Son Has Pledged 38% Of His SoftBank Stake For Loans From 19 Different Banks

Japan's richest man, Masayoshi Son, may be setting himself up for one of the most epic ponzi unwinds in history, and his juggling act between his personal fortune, SoftBank and SoftBank's Vision Fund is starting to paint a picture of him as Elon Musk on steroids. 

Just like Musk, the SoftBank founder has pledged a whopping 38% of his stake in the bank as collateral for personal loans from 19 different banks, including Credit Suisse and Julius Baer, according to Bloomberg. This brings Son's pledged stake up 36% from the levels it was at to start the year and triples his pledged stake since June 2013. It also leaves him in extreme risk of an unprecedented margin call should Softbank stock tumble (which it won't do for now, as the company is engaged in a furious buyback campaign as it piles ponzi upon ponzi).

Incidentally, Son's pledged shares currently have a valuation of $9 billion.

Michael Puleo, assistant professor of finance at Fairfield University’s Dolan School of Business in Connecticut warned about the massive risk of a margin call: “It lets him monetize a large share of his wealth without foregoing influence over the firm. But there’s an elevation of crash risk. If the share price falls low enough, he could get a margin call and that could be pretty costly.”

By costly, he means Son would be wiped out, although considering Son should have been wiped out when the bursting of the first dot com bubble nearly ruined him, he certainly got some good mileage out of central bank generosity.

Needless to say, Son has huge exposure to SoftBank and to its $100 billion Vision Fund. Shares of SoftBank have been under pressure lately after WeWork's planned $47 billion IPO was postponed and the company was rumored to be assigned new valuations between $10 billion and $20 billion. 

SoftBank shares fell by 5% at one point this week, which knocked a cool $770 million off of Son's net worth. The stock is still up 27% this year, which is entirely the result of the company buying back 112 million shares of stock, valued at $5.5 billion, which it has been doing since February.

Son has also leveraged his stake in the Vision Fund, which will amplify his losses or gains depending on how the fund's portfolio of unicorns and unicorn-wannabes, like Uber, fare. WeWork's recent IPO blowup will undoubtedly impact the fund's 62% return that the Vision Fund reported through March. 

Robert Pozen, a senior lecturer with the MIT Sloan School of Management in Boston said: “There is a danger in companies where the founder calls all the shots regardless of whether there are loans. And when founders borrow a lot against their shares, they might be more tempted to make riskier decisions.”

As Josh Wolfe conveniently noted on Twitter this morning, the Vision Fund's track record and investor makeup has been anything but diversified. He wrote that of the $95 billion for the Vision Fund:

  • $25 billion came from SoftBank
  • $60 billion came from the Saudis and Abu Dhabi
  • $10 billion came from others (including $3 billion reportedly from Son himself)

He also noted that of the 80 investments the fund has made:

  • 5 had IPOs
  • 4 are below IPO price
  • Only 1 (Guardant Health) is up

And as if levering himself, levering SoftBank and levering the VisionFund wasn't enough, SoftBank's compensation also involves debt: Son loaned himself $3 billion to invest in the first Vision Fund, which further increases his risk if the entire clusterfuck begins to unwind. 

The loan was reportedly swapped for equity in the fund and will generate profits for Son only when deals make money. Conversely, they will generate losses for Son when deals don't work out. Vision Fund employees receive base salaries and bonuses, but also only get payouts when profits are booked. Meanwhile, SoftBank is also planning on lending as much as $20 billion to its employees to buy stakes in a second venture capital fund. Son is expected to account for half of the employee pool. 

Son, who saw a massive $70 billion wiped from his fortune during the dot-com crash, told shareholders at the company's June meeting that SoftBank's investment portfolio could grow 33-fold to $1.8 trillion over the next 20 years. 

We'll take the under.

As for how this epic ponzi scheme ends, while we were only joking two weeks ago, this assessment is looking increasingly feasible:

When is the BOJ's bailout of Softbank?

— zerohedge (@zerohedge) September 5, 2019
Tyler Durden Thu, 09/19/2019 - 11:50
  • 19 septembre 2019 à 17:50

"Birth Tourism" Boom: How Wealthy Pregnant Chinese Women Pay To Give Birth In US

Par Tyler Durden
"Birth Tourism" Boom: How Wealthy Pregnant Chinese Women Pay To Give Birth In US


A Chinese national pleaded guilty yesterday to federal criminal charges for running an Orange County-based “birth tourism” business that catered to wealthy pregnant clients and Chinese government officials, charging them tens of thousands of dollars to help them give birth in the United States so their children would get U.S. citizenship.

Dongyuan Li (李冬媛), 41, of Irvine, pleaded guilty to one count of conspiracy to commit immigration fraud and one count of visa fraud. Li was one of 19 defendants named in a series of indictments unsealed earlier this year. She is the first of the charged operators of birth tourism businesses to plead guilty. The remaining defendants either are pending trial or are fugitives.

Li admitted in her plea agreement that, from 2013 until March 2015, she operated a birth tourism company in Irvine and in China called 'You Win USA Vacation Services' Corp. You Win would assist pregnant foreign nationals – typically from China – to travel to and remain in the United States to give birth so their children would receive birthright U.S. citizenship, according to the plea agreement.

According to a January 2019 federal grand jury indictment against Li, You Win advertised that it had served more than 500 Chinese birth tourism customers seeking U.S. birthright citizenship for their children. The indictment details that Li used 20 apartments in Irvine, charged each customer between $40,000 and $80,000, and she received $3 million in international wire transfers from China in two years.

Some You Win customers coached by the company made false statements on their visa applications and to U.S. immigration officials, Li’s plea agreement states. Li also admitted that the customers were advised on how to pass the U.S. Consulate interview in China, including by falsely stating that they were going to stay in the United States for only two weeks, when in reality, they planned to stay for up to three months to give birth.

Li further admitted that her customers bypassed U.S. immigration controls by booking two flights – the first from China to Hawaii and the second from Hawaii to Los Angeles International Airport – because they thought it would be easier to clear U.S. Customs through Hawaii. Li’s customers also were coached how to trick U.S. Customs at ports of entry by concealing their pregnancies, according to the plea agreement.

In October 2013, Li made a $30,965 rent payment for Irvine apartments used in her birth tourism operation, and in November 2013, she made a $30,321 rent payment for those apartments, the plea agreement states.

As part of her plea agreement, Li agreed to forfeit more than $850,000, a Murrieta residence worth more than $500,000, as well as several Mercedes-Benz vehicles.

United States District Judge James V. Selna scheduled a Dec. 16 sentencing hearing, at which time Li will face a statutory maximum sentence of 15 years in federal prison.

This case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and IRS Criminal Investigation. The Irvine Police Department provided substantial assistance.

This case is being prosecuted by Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office.

Tyler Durden Thu, 09/19/2019 - 11:36
  • 19 septembre 2019 à 17:36

Trump Sues Manhattan D.A. In Response To Subpoenas

Par Tyler Durden
Trump Sues Manhattan D.A. In Response To Subpoenas

And now a plot twist: with Trump under relentless attack for the past three years to disclose his tax returns, on Thursday morning the president struck back, suing Manhattan District Attorney Cyrus Vance to block an attempt by New York state prosecutors to obtain eight years of the president’s tax returns in a probe of whether the Trump Organization falsified business records.   

"In response to the subpoenas issued by the New York County District Attorney, we have filed a lawsuit this morning in federal court on behalf of the President in order to address the significant constitutional issues at stake in this case," Trump attorney Jay Sekulow said in a statement, according to Bloomberg

The subpoena was issued by the Manhattan DA's office last month following the launch of a criminal investigation into hush-money payments made to porn star Stormy Daniels (real name Stephanie Clifford) by former Trump attorney Michael Cohen - who pleaded guilty last year to eight charges; seven of which were unrelated to the Trump campaign, and one for breaking federal campaign finance laws. He is currently serving a three-year prison sentence. 

Vance's office wants to determine whether Trump's accounting firm falsely accounted for Cohen's reimbursements as a legal expense

In New York, filing a false business record can be a crime.

But it becomes a felony only if prosecutors can prove that the false filing was made to commit or conceal another crime, such as tax violations or bank fraud. The tax returns and other documents sought from Mazars could shed light on whether any state laws were broken. Such subpoenas also routinely request related documents in connection with the returns. -New York Times

In July, Trump sued House Democrats, along with New York AG Letitia James and NY tax commissioner Michael Schmidt in an effort to block them from releasing his tax returns. 

In June, New York Gov. Andrew Cuomo signed the TRUST Act - which permits tax officials to turn over Trump's state tax returns to any or all of t hree congressional committees. In his July lawsuit, Trump alleged that the House Ways and Means Committee's invocation of the Trust act would "lack a legitimate legislative purpose," adding that the law violates the First Amendment since the state of New York "enacted it to discriminate and retaliate against President Trump for his speech and politics."

That said, while Trump and the Treasury Department have proven thus far successful in thwarting Democratic lawmakers' inquiries, it may not be as easy to fend off a subpoena in Manhattan

According to Trump's accounting firm Mazars, they will "will respect the legal process and fully comply with its legal obligations," adding that the company was legally prohibited from commenting on its work. 

If the Manhattan DA is able to obtain Trump's tax returns, the Times notes that "the documents would be covered by secrecy rules governing grand juries, meaning they would not become public unless they were used as evidence in a criminal case."

Tyler Durden Thu, 09/19/2019 - 11:15
  • 19 septembre 2019 à 17:15

Democrats Smell Blood After Whistleblower Says Trump Made Troubling 'Promise' To Foreign Leader

Par Tyler Durden
Democrats Smell Blood After Whistleblower Says Trump Made Troubling 'Promise' To Foreign Leader

Congressional Democrats led by Rep. Adam Schiff are salivating over an August 12 whistleblower complaint by an intelligence officer over a 'troubling promise' President Trump allegedly made to a foreign leader during a phone call. 

It is not clear which foreign leader Trump was speaking with, or what was promised, according to the Washington Post - however the complaint itself has given the president's opponents a brand new 'gotcha' to chase in their quest to bring Trump down. 

What's more, acting director of national intelligence Joseph Maguire has been refusing to share details about the phone call with lawmakers.

Intelligence Community Inspector General Michael Atkinson determined that the complaint was credible and troubling enough to be considered a matter of “urgent concern,” a legal threshold that requires notification of congressional oversight committees.

But acting director of national intelligence Joseph Maguire has refused to share details about Trump’s alleged transgression with lawmakers, touching off a legal and political dispute that has spilled into public view and prompted speculation that the spy chief is improperly protecting the president. -WaPo

And as NBC News reports, over the last several days "the secret whistleblower complaint has been the subject of an increasingly acrimonious standoff between the acting intelligence chief and Schiff, who has demanded Maguire's testimony and a copy of the complaint." 

Maguire has agreed to testify publicly next week, Schiff announced Wednesday, saying in a statement that the Inspector General "determined that this complaint is both credible and urgent," adding "The committee places the highest importance on the protection of whistleblowers and their complaints to Congress."

The matter burst into public view Friday, when Schiff disclosed that an unspecified whistleblower complaint had been filed with the inspector general of the intelligence community, but was being withheld from his committee. That independent watchdog deemed the matter an “urgent concern” that he was required by law to turn over to the congressional intelligence committees.

But Maguire, after consulting with the Justice Department, overruled him, according to a series of letters between a DNI lawyer and Schiff that have been made public. -NBC News

According to Schiff, withholding the information from the House Intelligence Committee he chairs is illegal - and has raised questions over a potential coverup

Piecing it together:

The Washington Post noted in their report that President Trump had conversations or interactions with "at least five foreign leaders in the preceding five weeks," including a call with Russian President Vladimir Putin on July 31. 

In fact, here's Trump's schedule since June 11, per the Post (which is absolutely creaming in their pencil-fit jeans over this story right now). 


June 11: Trump says he has received another “beautiful” letter from Kim. Trump also responds to news that Kim’s assassinated half brother was a CIA asset by saying he would tell Kim, “I wouldn’t let that happen under my auspices.”

June 18: Trump holds a call with Chinese President Xi Jinping about the ongoing U.S.-China trade war.

June 27-29: Trump attends the Group of 20 summit in Osaka, Japan. There, he holds bilateral meetings with foreign officials including Xi, Russian President Vladimir Putin, Saudi Crown Prince Mohammed bin Salman, Turkish President Tayyip Erdogan, German Chancellor Angela Merkel, Indian Prime Minister Narendra Modi, Australian Prime Minister Scott Morrison, Brazilian President Jair Bolsonaro and Japanese Prime Minister Shinzo Abe.

June 30: Trump meets with Kim in the demilitarized zone and briefly becomes the first sitting U.S. president to set foot on North Korean soil.

July 1: Trump holds a phone call with French President Emmanuel Macron, which covers topics including Iran, the G-20 and Trump’s meeting with Kim, according to a readout from the White House.

July 9: Trump meets with the emir of Qatar, Tamim Bin Hamad Al Thani

July 18: Trump meets with Netherlands Prime Minister Mark Rutte.

July 22: Trump meets with Pakistan Prime Minister Imran Khan.

July 28: Trump announces Director of National Intelligence Daniel Coats will resign in August.

July 31: Trump holds a phone call with Putin. The call is first reported by the Russians. The White House doesn’t confirm it till late that evening, saying Trump “expressed concern over the vast wildfires afflicting Siberia” and, “The leaders also discussed trade between the two countries.” The Russians, in a much more substantial readout, claim Trump and Putin also spoke about restoring full relations one day.

July 31: Trump meets with President Khaltmaagiin Battulga of Mongolia.

Aug. 2: The United States officially withdraws from the Intermediate-range Nuclear Forces (INF) Treaty with Russia, as had been previously announced.

Aug. 2: Trump announces a trade deal alongside European Union leaders Stavros Lambrinidis (the E.U. ambassador to the United States) and Jani Raappana (deputy head of mission for the Finnish presidency of the Council of the E.U.).

Aug. 8: After Trump’s pick of Rep. John Ratcliffe (R-Tex.) to replace Coats falls through, Trump announces Joseph Maguire would take on the role in an acting capacity. In doing so, he bypassed Sue Gordon, who had been Coats’s No. 2 at DNI and was a career intelligence official with bipartisan support. Gordon would also resign.

Aug. 9: A brief letter from Gordon to Trump is released. It makes her disappointment clear, “I offer this letter as an act of respect & patriotism, not preference,” she writes. “You should have your team.

Aug. 12: Whistleblower files complaint.

Sept. 13: House Intelligence Committee Chairman Adam B. Schiff (D-Calif.) subpoenas Maguire to compel him to disclose the whistleblower complaint. Schiff says the complaint was determined to be “credible” by Intelligence Community Inspector General Michael Atkinson, but doesn’t say much more.

Sept. 17: Maguire says he will not testify or hand over the whistleblower complaint. Schiff said Maguire told him he couldn’t “because he is being instructed not to, that this involved a higher authority, someone above.”

Sept. 18: The Post reports the complaint involves Trump’s communications with a foreign leader and some kind of “promise” that was made


Did Trump offer to do something after the 2020 election when he'd have more flexibility or something?

Tyler Durden Thu, 09/19/2019 - 10:24
  • 19 septembre 2019 à 16:24

Existing Home Sales Rise At Fastest Rate In Over 2 Years

Par Tyler Durden
Existing Home Sales Rise At Fastest Rate In Over 2 Years

On the heels of tumbling mortgage rates, existing home sales jumped 1.3% MoM in August (notably better than the expected 0.7% drop) pushing the annual rise to +2.6% - the biggest rise in sales since May 2017.

Source: Bloomberg

This is the highest level of existing home sales SAAR since March 2018.

Source: Bloomberg

And all this as the median home price rose 4.7% from last year to $278,200 as multi-family units led the rise in sales (+1.7% MoM) vs +1.2% MoM for single-family homes.

The question is - how sustainable is this improvement given the carnage in bond markets in September?

Source: Bloomberg

Tyler Durden Thu, 09/19/2019 - 10:08
  • 19 septembre 2019 à 16:08

Former Overstock CEO Byrne Dumps $90 Million Stock Gains Into Gold, Crypto "Out Of Reach Of Deep State"

Par Tyler Durden
Former Overstock CEO Byrne Dumps $90 Million Stock Gains Into Gold, Crypto "Out Of Reach Of Deep State"

After falling out of favor with shareholders over his company's poor stock performance, comments about the "deep state" and his alleged relationship with Russian honeypot Marina Butina, Overstock CEO Patrick Byrne announced his resignation weeks ago.

And now, it looks like Byrne has finally checked out completely: on Wednesday after hours, he filed a Form 4 showing that he had sold his entire ~$90 million stake in the company into the stock's recent squeeze as lending desks struggled to figure out how to handle the company's recently proposed "digital dividend".

His Form 4 showed that he sold about 4.8 million shares over the course of the past three trading sessions. His remaining 87,000 shares were given as a gift to an undisclosed recipient. 

Then, in a blog post on his site Deep Capture, Byrne blamed the SEC, who he called "the Deep State's pets", according to MarketWatch

The "digital dividend" that Byrne left in his wake to his shareholders could only be accessed through Overstock's blockchain based exchange and required the holder to retain the asset for 6 months. Many thought it was an attempt to squeeze shorts and, if it was, it worked. Overstock stock shot from about $15 on September 4 to a high of almost $30 on September 13 as shorts covered in an attempt to avoid having to deal with the dividend. 

But on Wednesday, Overstock had to walk back some of their plans, announcing that the dividend would be freely tradable upon its issue. The company suggested that the change was a reaction to “feedback we received from industry participants, investors and regulators.” The company also moved back the date of the distribution and promised to announce a new record date in 3 to 6 weeks.

On his blog, Byrne said that the pressure to change the digital dividend came from the "Deep State's pets":

“We heard over the weekend that starting last Friday, the Deep State’s pets at the SEC began leaking something to their clients JPMorgan, Morgan Stanley, and Goldman (and here as citizens I bet you thought we were their clients, right? lol). They leaked that they were going to Bazoomba our digital dividend. Once that started getting back to me, I realized this: Whenever I have had any question about whether the SEC would or would not do something totally outrageous in order to hurt our company to benefit their clients on Wall Street, they never let me down: they always did the evil thing.”

Byrne said the assertion that he sold his shares due to lack of confidence in the company was "wrong" and said he would be using his newfound riches to invest in gold, silver and two unnamed cryptocurrencies as a "hedge" against the economy failing. He also promised that if Overstock failed due to the broader economy failing, that he would use his gains from his hedges to recapitalize the company.

"...after paying tens of millions in taxes (after all, “We didn’t build that,” right?) by Friday the rest will be in investments that are counter-cyclical to the economy: Gold, silver, and two flavors of crypto. The gold and silver are stored outside of the United States, in Switzerland, and within two weeks, will be scattered in other locations that are even more outside of the reach of the Deep State, but are places that are safe for me.

The crypto is stored in the place where all crypto is stored: in mathematical mist, behind long keys held only in the memory of someone who is quite good at storing such things in memory (with paper backups in the hands of a priest I met 35 years ago who never sits foot in the West). "

These acts, Byrne continued, accomplish a critical obvjective: 

”You will have not just access to capital, you will have access to the friendliest capital imaginable: my own. I have to wait six months for it to be legal, but anytime after March 17, 2020 I can provide a capital injection if needed by buying back into Overstock. Please remember that as you watch the global chaos.”

Meanwhile, the SEC has had an ongoing investigation into Overstock's tZero blockchain subsidiary and its token security offering since February 2018. Overstock disclosed in May that the SEC had expanded its investigation to include certain public statements made by the company. 

Tyler Durden Thu, 09/19/2019 - 09:51
  • 19 septembre 2019 à 15:51

The Paradoxical Instability Of Fed-Induced 'Stability'

Par Tyler Durden
The Paradoxical Instability Of Fed-Induced 'Stability'

Authored by Lance Roberts via,

“Only those that risk going too far can possibly find out how far one can go.” – T.S. Eliot

Well, this certainly seems to be the path that the Federal Reserve, and global Central Banks, have decided take.

Yesterday, the Fed lowered interest rates by a quarter-point and maintained their “dovish” stance but suggested they are open to “allowing the balance sheet to grow.” While this isn’t anything more than just stopping Q.T. entirely, the markets took this as a sign that Q.E. is just around the corner.

That expectation is likely misguided as the Fed seems completely unconcerned of any recessionary impact in the near-term. However, such has always been the case, historically speaking, just before the onset of a recession. This is because the Fed, and economists in general, make predictions based on lagging data which is subject to large future revisions. Regardless, the outcome of the Fed’s monetary policies has always been, without exception, either poor, or disastrous.

“In the U.S., the Federal Reserve has been the catalyst behind every preceding financial event since they became ‘active,’ monetarily policy-wise, in the late 70’s. As shown in the chart below, when the Fed has lifted the short-term lending rates to a level higher than the 2-year rate, bad ‘stuff’ has historically followed.”

The idea of pushing limits to extremes also applies to stock market investors. As we pointed out on Tuesday, the risks of a liquidity-driven event have increased markedly in recent months. Yet, despite the apparent risk, investors have virtually “no fear.” (Bullish advances are supported by extremely low levels of volatility below the long-term average of 19.)

First, “record levels” of anything are records for a reason. It is where the point where previous limits were reached. Therefore, when a ‘record level’ is reached, it is NOT THE BEGINNING, but rather an indication of the MATURITY of a cycle. While the media has focused on employment, record stock market levels, etc. as a sign of an ongoing economic recovery, history suggests caution.”

In the “rush to be bullish” this a point often missed. When markets are hitting “record levels,” it is when investors get “the most bullish.” That is the case currently with retail investors “all in.”

Conversely, they are the most “bearish” at the lows.

It is just human nature.

“What we call the beginning is often the end. And to make an end is to make a beginning. The end is where we start from.” – T.S. Eliot

The point here is that “all things do come to an end.” The further from the “mean” something has gotten, the greater the reversion is going to be. The two charts below illustrate this point clearly.

Bull markets, with regularity, are almost entirely wiped out by the subsequent bear market.

Despite the best of intentions, market participants never act rationally.

Neither do consumers.

The Instability Of Stability

This is the problem facing the Fed.

Currently, investors have been led to believe that no matter what happens, the Fed can bail out the markets and keep the bull market going for a while longer. Or rather, as Dr. Irving Fisher once uttered:

“Stocks have reached a permanently high plateau.”

Interestingly, the Fed is dependent on both market participants, and consumers, believing in this idea. As we have noted previously, with the entirety of the financial ecosystem now more heavily levered than ever, due to the Fed’s profligate measures of suppressing interest rates and flooding the system with excessive levels of liquidity, the “instability of stability” is now the most significant risk.

The “stability/instability paradox” assumes that all players are rational and such rationality implies an avoidance of complete destruction. In other words, all players will act rationally, and no one will push “the big red button.”

The Fed is highly dependent on this assumption as it provides the “room” needed, after more than 10-years of the most unprecedented monetary policy program in U.S. history, to try and navigate the risks that have built up in the system.

Simply, the Fed is dependent on “everyone acting rationally.”

Unfortunately, that has never been the case.

The behavioral biases of individuals is one of the most serious risks facing the Fed. Throughout history, as noted above, the Fed’s actions have repeatedly led to negative outcomes despite the best of intentions.

  • In the early 70’s it was the “Nifty Fifty” stocks,

  • Then Mexican and Argentine bonds a few years after that

  • “Portfolio Insurance” was the “thing” in the mid -80’s

  • anything was a great investment in 1999

  • Real estate has been a boom/bust cycle roughly every other decade, but 2006 was a doozy

  • Today, it’s ETF’s and “Passive Investing,” and levered credit.

As noted Tuesday, the risk to this entire house of cards is a credit-related event.

Anyone wonder what might happen should passive funds become large net sellers of credit risk? In that event, these indiscriminate sellers will have to find highly discriminating buyers who–you guessed it–will be asking lots of questions. Liquidity for the passive universe–and thus the credit markets generally–may become very problematic indeed.

The recent actions by Central Banks certainly suggest risk has risen. Whether this was just an anomalous event, or an early warning, it is too soon to know for sure. However, if there is a liquidity issue, the risk to ‘uniformed investors’ is substantially higher than most realize. 

Risk concentration always seems rational at the beginning, and the initial successes of the trends it creates can be self-reinforcing. That is, until suddenly, and often without warning, it all goes “pear\-shaped.”

In November and December of last year, it was the uniformity of the price moves which revealed the fallacy “passive investing” as investors headed for the door all at the same time. While, that rout was quickly forgotten as markets stormed back to all-time highs, on “hopes” of Central Bank liquidity and “trade deals.”

The difference today, versus then, are the warning signs of deterioration in areas which pose a direct threat to everyone “acting rationally.” 

“While yields going to zero] certainly sounds implausible at the moment, just remember that all yields globally are relative. If global sovereign rates are zero or less, it is only a function of time until the U.S. follows suit. This is particularly the case if there is a liquidity crisis at some point.

It is worth noting that whenever Eurodollar positioning has become this extended previously, the equity markets have declined along with yields. Given the exceedingly rapid rise in the Eurodollar positioning, it certainly suggests that ‘something has broken in the system.’” 

Risk is clearly elevated as the Fed is cutting rates despite the “economic data” not supporting it. This is clearly meant to keep everyone acting rationally for now.

The problem comes when they don’t.

The Single Biggest Risk To Your Money

All of this underscores the single biggest risk to your investment portfolio.

In extremely long bull market cycles, investors become “willfully blind,” to the underlying inherent risks. Or rather, it is the “hubris” of investors they are now “smarter than the market.”

Yet, the list of concerns remains despite being completely ignored by investors and the mainstream media.

  • Growing economic ambiguities in the U.S. and abroad: peak autos, peak housing, peak GDP.

  • Political instability and a crucial election.

  • The failure of fiscal policy to ‘trickle down.’

  • An important pivot towards easing in global monetary policy.

  • Geopolitical risks from Trade Wars to Iran 

  • Inversions of yield curves

  • Deteriorating earnings and corporate profit margins.

  • Record levels of private and public debt.

  •  More than $3 trillion of covenant light and/or sub-prime corporate debt. (now larger and more pervasive than the size of the subprime mortgages outstanding in 2007)

For now, none of that matters as the Fed seems to have everything under control.

The more the market rises, the more reinforced the belief “this time is different” becomes.

Yes, our investment portfolios remain invested on the long-side for now. (Although we continue to carry slightly higher levels of cash and hedges.)

However, that will change, and rapidly so, at the first sign of the “instability of stability.” 

Unfortunately, by the time the Fed realizes what they have done, it has always been too late.

Tyler Durden Thu, 09/19/2019 - 09:31
  • 19 septembre 2019 à 15:31

Fed Funds Prints 2.25%, Breaching Target Range, As IOER Spread Explodes

Par Tyler Durden
Fed Funds Prints 2.25%, Breaching Target Range, As IOER Spread Explodes

With the Fed's repo operation oversubscribed for the second day in a row, as $9BN in liquidity requests remained unfulfilled by the $75BN operation, it is perhaps not a surprise that as the funding shortage persists, today's effective fed funds rate printed at 2.25%, which while down from 2.30% yesterday, was for the second day in a row above the top end of the range, in this case by 25bps above the top of the Fed's new rate corridor of 1.75% - 2.00% (when accounting for yesterday's 25bps rate cut).

Furthermore, now that the Fed's Interest on Excess Reserves was cut by 30bps on Wednesday to 1.80%, it means that the effective Fed Funds rate is now a record 45bps above the IOER.

As a reminder, EFF should trade inside of, or at worst, on top of the IOER rate, confirming once again that the Fed's attempts to normalize the market plumbing are failing as the market demands a far more aggressive reserve injection, one in the form of POMO (i.e. QE).

Tyler Durden Thu, 09/19/2019 - 09:17
  • 19 septembre 2019 à 15:17

How Adam Neumann Hopes To 'Live Forever' As 'World's First Trillionaire'

Par Tyler Durden
How Adam Neumann Hopes To 'Live Forever' As 'World's First Trillionaire'

WSJ is back with another WeWork deep dive, this time, exploring the evolution of the man who has become perhaps the most pivotal player in the IPO saga: WeWork co-founder and CEO Adam Neumann.

In a piece published Thursday, WSJ explores how Neumann found success with WeWork almost by accident after trying a few other startup concepts that didn't work out.

Adam & Rebekah Neumann

One of the most ridiculous startup ideas that Neumann reportedly tried out was "Krawlers", baby clothes with built-in knee pads to make crawling more comfortable for tots. The company's tagline? "Just because they don't tell you, doesn't mean they don't hurt."

Raised in Israel on a kibbutz, Mr. Neumann moved to the U.S. when he was 22, where he attended Baruch College and tried to start businesses. One was a collapsible heel on women’s shoes that didn’t get off the ground. Working out of his Tribeca apartment, he started Krawlers, which sought to make baby clothes with knee pads to make crawling more comfortable. The slogan, he has said: "Just because they don’t tell you, doesn’t mean they don’t hurt." It never gained traction.

As WeWork's valuation has plunged over the past couple of weeks, from $47 billion to under $10 billion.

The story focused on Neumann and his outlandish behavior. Not only is WeWork rife with blatant self-dealing between Neumann and his company, the CEO's attitude and party-hard persona can be off-putting to some smaller investors. 

"This is not the way everybody behaves," said Dick Costolo, former CEO of Twitter Inc., who led the company through one of the larger tech IPOs of the past decade. "The degree of self-dealing in the S-1 is so egregious, and it comes at a time when you’ve got regulators and politicians and folks across the country looking out at Silicon Valley and wondering if there’s the appropriate level of self-awareness."

Given the prominence of the IPO, he added, "that is a big problem."

WSJ's story includes several laughable tidbits, including this:

They determined employees couldn’t expense meals with meat, but they could eat it in company offices, so long as the company didn’t pay. Former employees say they have since seen Mr. Neumann eat meat.

Neumann's wife, Rebekah Paltrow Neumann, is said to have a broad remit across the company. Not only is she chief brand officer, but she's also the head of WeGrow, the We Company's private preschool and elementary school that costs $42,000 a year.

But she's also allegedly incredibly impulsive.

Both Neumanns could be impulsive at times, former executives say. Ms. Neumann has ordered multiple employees fired after meeting them for just minutes, telling staff she didn’t like their energy. She and Mr. Neumann have sent maintenance and IT staff to their homes to fix various items.

WSJ makes Neumann look like a stoner who refuses to obey laws about not smoking during flight.

Mr. Neumann also enjoys marijuana, his friends and former executives say. As with the Israel trip, multiple people who have been on planes with him say he often smokes while airborne.

Much of this culture has been pared back as the company has matured. The summer camp was canceled this year.

A few years ago, the company ripped off its employees during a share buyback program.

In a 2015 investment round, Mr. Neumann sold tens of millions of dollars of shares. Soon after, the company launched a buyback program offering to purchase employees’ shares too. But the company gave employees a different arrangement, giving them a payout per share worth substantially less than what Mr. Neumann was paid, people familiar with the sale said. Mr. Neumann’s sale wasn’t publicized within the company.

We executives have said the buyback price couldn’t be higher for tax reasons. More recent stock sales have been more equitable.

Last year, WeWork hosted a 'summer camp' for all its employees in the UK. The company flew all of its employees to the event, where alcohol flowed liberally and the CEO posed for pictures with staff from around the world. But that's not all. Neumann has reportedly told his friends that his ambitions include becoming the prime minister of Israel, and the world's first trillionaire. He has also said he wants to be 'leader of the world', and that he hopes to live forever with his massive fortune.

He told at least one person directly that his ambitions included becoming Israel’s prime minister. More recently, he said that if he ran for anything, it would be president of the world, according to another person who spoke with him.

"The influence and impact that we are going to have on this Earth is going to be so big," he said last year at a "summer camp" southeast of London, where the company’s staff were all flown for a music festival-like event. One day, he proposed, the company could "solve the problem of children without parents," and from there go onto other causes such as eradicating world hunger.

Alcohol flowed in great quantities; bartenders handed out free rosé by the bottle. Employees from around the globe posed for photos with the CEO. Some seminars had a spiritual component, including one with holistic health expert Deepak Chopra, who advocates regular meditation and yoga.

Mr. Neumann has told several people over the past two years that a personal goal is to become the world’s first trillionaire.

With the IPO on hold, the bigger question for Neumann is: Can 'We' change? And can the co-founder start winning back investors' confidence and shirking his frat-boy reputation? Then again, he can make all the governance changes he wants - he can't change the fact that the company is still burning $2 in cash for every $1 of revenue that it takes in.

Tyler Durden Thu, 09/19/2019 - 09:11
  • 19 septembre 2019 à 15:11

A "Hawkish Cut"? Traders' Sleepless Nights Dominated By Indecision & Confusion

Par Tyler Durden
A "Hawkish Cut"? Traders' Sleepless Nights Dominated By Indecision & Confusion

Authored by Richard Breslow via Bloomberg,

Central Banks Remain Calm, Investors Not So Much

The avalanche of central bank meetings is rapidly winding down. We’ve had cuts, holds and a raise. The surprises have been minimal. Yet it didn’t prevent the inevitable knee-jerk reactions in the market. In truth, put together as a whole, we are no wiser nor better or worse off. I count that as a success. Especially because there was no projection of panic in any of the decisions. Despite on-going, and universal, expressions of concern for the global economy. Special hat tip to the SNB and Norges Bank.

The Fed is said to have orchestrated a “hawkish cut.” Not really.

Source: Bloomberg

[ZH: Stocks once again decouple from bonds, the dollar, and gold]

Keeping the expansion alive remains a top priority. And while the obvious differences of opinions within the board are interesting, the chairman said the most important thing of all: That where interest rates will be a year from now is just a forecast. You would think that wouldn’t have to be constantly repeated after the experiences of the last year.

Source: Bloomberg

Futures traders still expect a greater likelihood of another rate cut this year. At the end of the day, that will turn out to be the dominant dot for asset prices until proven otherwise. And we’ll see what data and events have to say going forward. Any short-term market movements in response to what was said and projected need to be taken cautiously. Which, to be fair, doesn’t necessarily make it any less real.

The ad hominem attacks on the chairman, by the way, have reached the farce stage. I’m sure it is unpleasant to be on the receiving end, but imagine the chagrin is lessening with every occurrence. They are becoming laugh lines. The timing of which is the type of thing that leads to office pools.

The funding squeeze that we have been experiencing has certainly not reflected well on the preparedness of the Fed. That fact could have longer repercussions than the actual rate spike. But if there is any silver-lining it is that the issue is now very much on the global radar screen.

The lingering problem, however, is that the issue still isn’t really understood by many market participants and has unnerved them. I even got a worried call from an analyst asking how he would know if any of the banks he covers might be in trouble. Assurances that there are short-term actions that can calm things down, while a longer-term fix is planned, seem to be falling on a lot of deaf ears. So it behooves the Fed to be very proactive.

Effects are still being expressed overnight in cross-currency basis trading as evidence of disappointment that a permanent solution wasn’t already presented by the Fed. “Just make it go away” seems to be the prevailing attitude. And as we approach year-end, it won’t be enough to tell traders “this too will pass”. Even if it will.

So far this week, trading has been much quieter than anyone would have expected given all the news. It’s hard to think this can last. Too many assets seem to be in play and trying to decide whether they will hold all sorts of important technical levels that are acting as magnets. Which isn’t a sign of lack of interest but of real indecision and confusion. This is the kind of market that causes a lot of traders to get bad nights’ sleep

Tyler Durden Thu, 09/19/2019 - 08:51
  • 19 septembre 2019 à 14:51

Liquidity Shortage Getting Worse: Fed's Repo Oversubcribed Even More As Funding Demand Jumps

Par Tyler Durden
Liquidity Shortage Getting Worse: Fed's Repo Oversubcribed Even More As Funding Demand Jumps

For those hoping that the dollar shortage and overnight funding crunch would ease on the third day after the G/C repo rate exploded as high as 10%, we have bad news: it has not.

As we warned earlier today, when we previewed the result of today's repo outcome, the only question would be whether the amount of bids submitted into today's operation would be higher or lower than yesterday's $80.05BN to get a sense of whether the funding pressure is easing. The answer: with $83.875BN in total bids submitted, not only was the $75BN operation oversubscribed again, but the total liquidity shortfall rose by almost $4 billion compared to Wednesday morning.

Furthermore, the fact that the operation was again oversubscribed means that once again there was one or more participants who did not get up to €9 billion in the critical liquidity they needed, and that the Fed will see a chorus of demands by everyone (because just like with the discount window "stigma", nobody will dare to be singled out as the party seeking repo funds) to either expand the size of its operations, implement a fixed operation and/or transition to permanent open market operations, i.e. QE, as Powell hinted he may do yesterday.

By comparison this is what yesterday's repo operation looked like:

Both of these are over 50% greater than the $53.15BN repo operation conducted on Tuesday.

What is immediately notable is that except for agency paper, there was a greater use of Treasury ($51.6N to $56.3BN) collateral, while Mortgage-backed dipped slightly ($27.8BN to $26.15BN). Additionally no agency paper was used as collateral in today's repo, down from Wednesday's $0.7BN.

We now await today's effective fed funds print to see if it will again print above the top of the new fed funds range (2.00%), and whether the overnight repo rate will reverse its earlier drop as it is becomes clear that the funding crisis is nowhere near over.

* * *


As the Fed pre-announced late on Wednesday, moments ago the New York Fed open markets desk started its daily overnight repo operation to provide liquidity to the financial system. It comes as funding markets appear to have settled down overnight, with the overnight general collateral repo rate opening at 2.25% before dropping as low as 1.95%-2.00% according to ICAP, while the SOFT rate dropping sharply from the mid-5% to 2.55%, which however remains quite elevated relative to the new Fed Funds range of 1.75%-2.00%

The market will be looking at the amount of repos tendered to the Fed and whether the operation will again be oversubscribed; as a reminder, on Tuesday the repo received $53BN in bids, which jumped 50% on Wednesday to just over $80BN, while the operation remains capped at $75BN. Should the total notional remain in this ballpark it will suggest that funding stress remains.

Tyler Durden Thu, 09/19/2019 - 08:25
  • 19 septembre 2019 à 14:25

Peter Schiff: Why The Fed Won't Be Able To Rescue The Economy This Time Around

Par Tyler Durden
Peter Schiff: Why The Fed Won't Be Able To Rescue The Economy This Time Around


Peter Schiff has been saying that the Federal Reserve is going to take interest rates back to zero and launch another round of quantitative easing in order to reinflate the bubble economy after the next crash. The central bank successfully pulled this off after the 2008 crisis. By dropping rates to zero and holding them there for nearly a decade, and running three rounds of QE, the Fed has reinflated the real estate bubble, blown up a bond bubble and pumped up the stock market. But Peter said it’s not going to work the next time around. Instead, Fed monetary policy will tank the dollar and lead to an inflationary recession.

So, why can’t the Fed pull off another rescue? Peter explained why he thinks it’s not possible during an interview on the Tom Woods Show.

Peter admitted he didn’t think the Fed could rescue the economy in 2008.

I underestimated the ability of the Fed to get away with quantitative easing and for the world to basically accept this and to enable this.”

So today, we have even bigger bubbles than we did in 2006-2007.

The question is — the Fed did it before, can it do it again? Peter said he wouldn’t bet on it.

I would not want to bet that is possible given the enormity of the problem now.”

Peter said you just have to consider the sheer amount of intervention that would be necessary to reinflate the bubbles once they pop the next time.

The next round of quantitative easing is going to have to be much, much bigger than the last one. They took the balance sheet up to four-and-a-half trillion last time. They might have to take it up to 10 or 20 trillion this time. They may have to do two or three hundred billion of QE every month as opposed to 85 billion. And when they were doing it before, we had a lot of support. The Chinese were big buyers. The Russians were big buyers. You know, I don’t see that kind of appetite for US debt anymore. I don’t think we’re going to have a whole lot of help from those other countries who are already trying to minimize their exposure to the dollar now. I don’t think they’re really going to step it up in order to enable QE4.”

The other issue is federal government budget deficits. In the years leading up to the 2008 crash, Bush was running $250 or $300 billion deficits per year. During the crisis, the deficits ran up to over $1 trillion. We are already running $1 trillion deficits now. If the economy crashes, we could be looking at $3 trillion or $4 trillion deficits.

Is there any way the Federal Reserve can monetize $3 or $4 trillion per year of government debt without the dollar falling and without igniting a bigger increase in inflation?”

Peter said he thinks the scale is simply too enormous.

If the Fed tried to inject enough stimulus into this economy to try to reflate an even bigger bubble than the ones we already have I just think the economy dies of an overdose. We overdose on stimulus and we destroy the dollar. And then we have massive inflation.”

That will put the Fed between a rock and a hard place. Does it allow inflation to run? Or does it take action to stop it?

But what would be required to stop it would be so politically damaging in the short-run that they may opt not to stop it, which is even worse. It just happens a little bit later.”

Peter and Tom cover a number of other subjects during the interview, including the trade war, Trump badgering the Fed, whether Peter’s predictions are a “broken clock,” and Peter’s investment strategy.

Tyler Durden Thu, 09/19/2019 - 08:10
  • 19 septembre 2019 à 14:10

US Futures, Bond Yields Drop As Traders Ask "Now What"

Par Tyler Durden
US Futures, Bond Yields Drop As Traders Ask "Now What"

S&P equity futures slipped, trading in a tight range around 3,000 despite gains in Europe which helped nudge the MSCI world index higher on Thursday, after the Fed's second interest rate cut and hint that QE4 is coming, while Japan and others kept their limited remaining powder dry. 

In the aftermath of the Fed's hawkish rate cut, we saw a barrage of central bank announcements, including:

  • The Bank of Japan maintained all policy settings as expected with rates kept at -0.10% and 10yr JGB yield target at around 0%, while it maintained forward guidance to keep current extremely low rates for extended period at least through Spring 2020. It also signalled it could add stimulus as early as next month but some traders had expected a move on Thursday after the Fed’s rate cut.
  • Brazil Central Bank cut the Selic Rate by 50bps to 5.50% as expected via unanimous decision, while it added that it sees inflation risks in both directions and reiterated the economic situation calls for stimulative rates.
  • SNB left rates unchanged at -0.75%, did not alter their assessment of the CHF from ‘highly valued’ and remain willing to intervene. SNB significantly cut their forecasts for both growth and inflation relating to 2019 and 2020. The bank also improved their tiering system for Swiss Banks. In reaction to the decision the CHF appreciated vs. EUR as some calls for a rate cut were unwound. Officials said the global low-rate environment has “become more entrenched and could persist for some time yet.” They will exempt 25 times min reserves from Nov. 1, up from 20 currently, and review the level monthly
  • The Bank of England concluded the trifecta of "unchangeds" by keeping rates on hold, while warning that uncertainty over Brexit could lead to disinflationary pressures so no need to hike.
  • Norway’s central bank stood out and broke further away from the pack, delivering its fourth interest-rate increase in a year in an effort to cool an economy stoked by oil investments. The bank hiked rates by 25bp to 1.5%, the bank have left their 2019 and 2020 rate paths unchanged and cut 2021 and 2022 path slightly. Bank’s assessment of the outlook and risk balance sees rates remainin unchanged in the period ahead, with Governor Olsen ascribing a 40% chance to a hike. In reaction to the hike the NOK strengthened against the EUR, before retracing to now being softer against the EUR on the implication that this is likely to be the last hike of the cycle.

Thursday’s barrage of monetary policy decisions came just as the OECD cut its world growth forecast to just 2.9% from 3.2%, now expecting the lowest growth in a decade, as intensifying trade conflicts take a toll on confidence and investment.

Looking at markets, Europe's Stoxx 600 index pushed higher, led by banks, as a new round of TLTRO loans kicked in despite disappointing uptake with just €3.4BN allotted in TLTRO3.

MSCI’s broadest index of Asia-Pacific shares had ended down 0.5% as a 1% fall in Hong Kong and 1.1% drop in India offset 0.4% gains on Japan’s Nikkei and from China’s bluechip stocks. Asia’s equity benchmark erased earlier gains and was little changed following three days of losses. Markets performances were mixed in the region. Japan was the best-performer Thursday, with the Topix rallying as much as 1.2% before paring some gains after the Bank of Japan’s decision to keep its monetary stimulus unchanged. Hong Kong’s Hang Seng Index fell for a fourth day, led by AIA Group Ltd. and Hang Seng Bank Ltd. Elsewhere, India stocks were set for a third day of losses this week, as slowing economic growth and a simmering shadow banking crisis gave little impetus for investors to buy riskier assets.

“Strains to the macro backdrop should ease in the coming months as other central banks (ECB, BoJ) edge toward renewed monetary easing,” Simon Ballard, a macro strategist at First Abu Dhabi Bank, wrote in a note. New dovish pressures may also come from “a particularly disorderly Brexit, further oil market disruptions or a sharp decline in market liquidity,” he said.

In contrast to Europe’s upward shuffle, U.S. stock futures were pointing to modest 0.1%-0.2% falls for Wall Street later. The S&P 500 had reversed losses and ended broadly flat on Wednesday after Fed chief Jerome Powell said he did not see an imminent recession or think the Fed will adopt negative rates. The Fed had cut interest rates to 1.75%-2.00% in a 7-3 vote but made a point of saying U.S. labour market remains strong.

With central banks now in the rearview mirror, traders will turn their attention to signs that last week’s show of goodwill between the U.S. and China is gaining momentum as trade deputies meet Thursday and Friday in Washington ahead of higher-level meetings in mid-October. Meanwhile, the geopolitical situation in the Middle East remains in turmoil after Saudi Arabia blamed Iran for last Saturday’s attack on its oil installations.

In this vein, China's Ambassador to US tweeted that it is extremely dangerous and irresponsible to base America’s policy on alarmism and label China as a strategic rival and adversary, while adding the decoupling of the two countries in trade and industrial development goes against globalization and suggested to decouple from China is to decouple from opportunities.

In rates, Treasuries advanced steady while European government bonds slipped. Two-year U.S. yields initially inched up to 1.75% before sliding, while Europe’s key 10-year German Bund yield was up around 2 basis points albeit still below highs hit last week and at a mind-boggling -0.49%. “This is not ‘QE4ever’ as we’ve heard it called,” analysts at RBC said of the Fed’s decision and signals. “We shouldn’t go too far in putting on QE-like trades”.

In FX trading, the Bloomberg Dollar Spot Index fell Thursday as the dollar weakened against most of its G-10 peers while Yen bulls took the currency as far as 107.79 to the U.S. dollar before it settled at 108.06 for a gain of 0.4% on the day. The move against the Aussie dollar had been as large as 1%. “There were large yen-buying orders before the BOJ, and that just carried through,” said Tohru Sasaki, head of Japan markets research at J.P. Morgan Securities in Tokyo.

The Norwegian krone also rallied after the Norges Bank hiked interest rates, but lost traction after a signal it was the last increase of the year. Elsewhere in the currency market, the Aussie fell 0.6% to $0.6790 after data showed the nation’s jobless rate rose slightly to 5.3% in August, bolstering expectations for the central bank to cut rates.

Among commodities, oil held gains amid contrasting reports about whether Saudi Arabia asked Iraq for crude to supply its domestic refineries. Gold advanced and Australia’s dollar slumped after the unemployment rate rose.

Today's data include jobless claims and existing home sales. Darden is among companies reporting earnings.

Market Snapshot

  • S&P 500 futures down 0.2% to 3,003.25
  • STOXX Europe 600 up 0.3% to 390.57
  • MXAP down 0.06% to 158.82
  • MXAPJ down 0.5% to 508.93
  • Nikkei up 0.4% to 22,044.45
  • Topix up 0.6% to 1,615.66
  • Hang Seng Index down 1.1% to 26,468.95
  • Shanghai Composite up 0.5% to 2,999.28
  • Sensex down 1.3% to 36,088.61
  • Australia S&P/ASX 200 up 0.5% to 6,717.48
  • Kospi up 0.5% to 2,080.35
  • Gold spot up 0.3% to $1,497.91
  • U.S. Dollar Index down 0.2% to 98.32
  • German 10Y yield rose 1.7 bps to -0.493%
  • Euro up 0.3% to $1.1061
  • Italian 10Y yield fell 4.5 bps to 0.536%
  • Spanish 10Y yield rose 0.9 bps to 0.237%
  • Brent futures up 0.8% to $64.12/bbl

Top Headline News

  • The Swiss National Bank offered banks some relief from negative interest rates, saying it would exempt more of their reserves from the cost of the policy. On Thursday, officials said the global low-rate environment has “become more entrenched and could persist for some time yet.” They will exempt 25 times min reserves from Nov. 1, up from 20 currently, and review the level monthly
  • Norway’s central bank broke further away from the pack, delivering its fourth interest-rate increase in a year in an effort to cool an economy stoked by oil investments
  • The Bank of Japan will review its assessment of prices and the economy at its October meeting, spurring speculation it may ease further then, but stopped short of following the Federal Reserve in adding to its monetary stimulus immediately
  • Should a traumatic no-deal Brexit force the Bank of England to slash interest rates in the months ahead, at least one investor will be laughing. Money-market traders have quietly accumulated more than 1 million derivative contracts that will pay off if the U.K. central bank cuts rates by 50 basis points by September next year
  • Brexit from afar is looking like a disaster about to happen. One European official, watching the situation up close, compared it to two cars driving at high speed toward each other with each expecting the other to swerve out of the way first

Asian equity markets traded mixed as the region digested the fallout from the FOMC. Nonetheless, most of the overnight markets began positively with broad gains seen in the ASX 200 (+0.6%) aside from metal miners after gold prices retreated post-FOMC, while Nikkei 225 (+0.4%) initially coat-tailed on the gains in USD/JPY but then pulled back from highs after a reversal in the currency. Elsewhere, Hang Seng (-1.0%) was subdued and Shanghai Comp. (+0.4%.) traded choppy despite a firm liquidity effort by the PBoC and the HKMA lowering rates by 25bps in lockstep with the Fed, with underperformance Hong Kong led by energy names and as real estate continued to suffer from the political unrest, which resulted to the cancellation of National Day fireworks and China upping its security from its capital to the border with Hong Kong. Finally, 10yr JGBs are higher in a continuation of this week’s rebound with prices only briefly pausing for the BoJ policy announcement which proved to be uneventful, as the central maintained all policy settings as widely expected.

Top Asian News

  • BOJ to Review Prices and Economy After Standing Pat for Now
  • Japan Banks Welcome BOJ Inaction, Warn Against Future Rate Cuts
  • Japan Delays Export of Key Chipmaking Material to South Korea
  • Indonesia Cuts Rate for Third Month in Row to Bolster Growth

Major European bourses are modestly higher (Euro Stoxx 50 +0.3%), as markets digest yesterday’s Fed rate cut and navigate a flurry of G10 central bank activity, which has already seen the SNB hold rates and Norges hike by 25bps in European hours, with BoE ahead. Periphery bourses are the slight out performers, seemingly unperturbed by recent developments on the political front in both Spain and Italy. Sectors are broadly in the green, apart from the more defensive utilities and consumer staples sectors. Leading the gains is financials, with higher yields post-FOMC providing support; indeed Lloyds-TSB Group (+2.4%), Deutsche Bank (+1.3%), Société Générale (+2.8%) and Credit Suisse (+1.7%) are the best performers in their respective bourses. Swiss banks were, however, unreactive to the SNB decision, in spite of their decision to raise the exemption threshold for the banking sector from the current 20x to 25x level on 1st November; although, CapEco make the point that SNB’s tiering system was already a more generous system when compared to that announced by the ECB last week, so the most recent tweaks might not make all that much difference. In terms of other individual movers; Next (-4.0%) sunk after the Co. reported results that underwhelmed some expectations; while, United Utilities (-1.5%) are under pressure after the Co. was downgraded at Jeffries. Finally, John Wood Group (+2.2%) caught a bid being upgraded to outperform at Credit Suisse this morning.

Top European News

  • SNB Bows to Pressure From Banks for Relief From Negative Rate
  • Norway Delivers Rate Hike Most Economists Weren’t Expecting
  • U.K. Retail Sales Decline in August as Online Sales Fall
  • U.K. Report to Back Venture Capital Investments for Pensions

In FX, there were somewhat contrasting and perhaps even perverse moves in the Franc and Norwegian Krona given respective September policy decisions from the SNB and Norges Bank, as the former stood pat and latter delivered another 25 bp tightening having refrained from flagging this month specifically at the previous meeting in July. However, it seems that the devil was in the detail as a lower rate path and mainly external downside risks to the outlook implied no further normalisation, while the Bank’s Crown forecasts were also shaved from June’s levels and Governor Olsen subsequently assigned less than even odds to higher rates. Hence, having breached near term support at 9.8300, but stopping short of the 100 DMA (9.8080), Eur/Nok has rebounded towards pre-Norges Bank and intraday highs circa 9.9000 whereas Eur/Chf and Usd/Chf have extended post-SNB declines to almost 1.0950 and 0.9900 vs 1.1000+ and 0.9980+ at one stage. For its part, the SNB signalled unchanged rates for the forecast horizon and set even more generous exemption terms for Swiss banks in mitigation of NIRP that remains vital alongside direct currency intervention given that the Franc is still deemed highly valued.

  • JPY/EUR - The BoJ maintained current YYC parameters and guidance, as widely expected, but Governor Kuroda intimated that October’s policy deliberations could be more important as the impact of the global economic slowdown and Central Bank actions will be subject to closer scrutiny. However, the Yen has rebounded sharply from lows seen after the Fed’s ‘hawkish’ cut when Usd/Jpy rallied to around 108.45 and back above 108.00 as the DXY pares its gains to 98.275 vs 98.625 at the other extreme. Similarly, the single has regrouped and unwound its underperformance vs the Dollar to reclaim 1.1050 status, but the headline pair may now be stymied by hefty option expiries layered between 1.1000 and 1.1120-30 and totalling 8.3 bn.
  • GBP/CAD/NZD - All narrowly mixed against the Greenback, as the Pound continues to face stiff resistance around 1.2500 and failed to glean much direction from mixed UK retail sales data ahead of the BoE, or support via reports that written proposals to alter the WA have been sent to the EU. Elsewhere, the Loonie has bounced from just under 1.3300 with some traction from rebounding crude prices and the Kiwi is keeping tabs on the 0.6300 handle following firmer than expected NZ Q2 GDP data overnight.
  • AUD - The clear G10 laggard, as Aud/Usd loses grip of 0.6800 and Aud/Nzd recoils from 1.0800+ to lows of 1.0750 in wake of a worrying Aussie jobs report that ups the ante for RBA easing next month.
  • EM - In keeping with Sterling, the Rand has one eye on the SARB for any surprises, with Usd/Zar straddling 14.7000 and anticipating no change in rates, but looking for inspiration from the accompanying statements and guidance – for a more detailed preview of the event and BoE at noon please check out the Research Suite.

In commodities, crude markets initially took their cue from risk sentiment, but moved higher on a WSJ report that Saudi Arabia had reached out to Iraq for 20mln barrels of crude to plug gaps in its own production, potential indication the recent Saudi attacks are having an impact on their supply. Elsewhere on the geopolitical front; US Secretary of State Pompeo has called the Saudi attack “an act of war”, comments which seem to contrast somewhat with US President Trump’s decision yesterday to respond with tariffs rather than the military option. However, overnight US President did impress that “if the US has to do something it will without hesitation” but framed his decision not to strike Iran as a sign of strength. Elsewhere, Gold has firmed somewhat and has tested the USD 1500/oz handle at best, which it briefly lost yesterday post-FOMC. Meanwhile, Copper futures are uneventful just above potential support around the USD 2.6/lb level. Saudi Arabia reportedly reached out to Iraq for 20mln barrels of crude, WSJ reports citing sources; Aramco was seeking diesel, gasoline, and fuel oil for domestic use, and to preserve crude for exports

US Event Calendar

  • 8:30am: Current Account Balance, est. $127.4b deficit, prior $130.4b deficit
  • 8:30am: Philadelphia Fed Business Outlook, est. 10.5, prior 16.8
  • 8:30am: Initial Jobless Claims, est. 213,000, prior 204,000; Continuing Claims, est. 1.67m, prior 1.67m
  • 9:45am: Bloomberg Consumer Comfort, prior 63.2
  • 10am: Leading Index, est. -0.1%, prior 0.5%
  • 10am: Existing Home Sales, est. 5.38m, prior 5.42m; MoM, est. -0.74%, prior 2.5%

DB's Jim Reid concludes the overnight wrap

Thankfully there were a few less pages to read from the FOMC statement last night. As expected the fed funds rate was cut by 25bps albeit with a 7-3 split (two in favour of no change and one in favour of a 50bp cut) with the IOER cut by 30bps however the dots were the main talking point initially. Indeed, the signal is a somewhat divided committee. The median dot shows no further cuts in the remainder of 2019 or 2020. However, 7 of the 17 dots favour one more 25bp cut this year, albeit no-one expects more than a 25bp cut. There are also 8 dots in 2020 which favour a fed funds rate 25bps below where it is now. What is interesting however is that there are 5 dots which are 25bps above the current rate for this year and 7 above the current rate for 2020. In fact, one of those in 2020 is 50bps above the current rate. So, one way of summing that up is that the doves aren’t particularly dovish and there is a clear group of hawks on the committee. The sharp sell-off across rates immediately following the statement certainly reflected that.

As for the statement itself, there was very little change. The reference to “muted inflation pressures” was kept despite CPI strengthening in recent weeks while the only real change of note was the reference to household spending rising at a “strong pace”. The summary of economic projections was a wash with the exception of 2019 growth being upgraded to 2.2%. As for Powell’s press conference, unlike previous meetings there weren’t all that many talking points. The general feeling was that Powell was very considered and balanced in his responses with a broad aim of not wanting to guide the market. That was particularly the case when going out of the way not to repeat the mid-cycle adjustment language. Our economists summed it up by saying that Powell reinforced the message that the Fed that continues to see a favourable baseline outlook, albeit one buffeted by significant downside risks from weak global growth and trade policy uncertainty. They continue to expect 75bps more of rate cuts through Q1 next year with a possible announcement also of a resumption of balance sheet growth next month. See their summary note here .

In terms of what markets did, treasury yields had been falling for much of the day leading into the meeting but by the time Powell was finished speaking had pretty much reversed. That was particularly the case at the short-end where 2y yields ended +3.7bps higher at 1.762% having traded as low as 1.660% seconds before the statement and dot plot was released. With 10y yields (-0.5bps) not quite fully reversing, that meant the 2s10s curve, which was as ‘steep’ as 9.0bps, flattened to 3.0bps. This morning it’s trading at similar levels. There’s also just over 2 cuts still priced in by the end of this year.

Meanwhile equity markets were initially much weaker seemingly in reaction to the dots, however recovered as Powell spoke. The S&P 500 ended +0.03% - a rare albeit modest gain on a Fed meeting day - however did trade as low as -0.91% intraday while the NASDAQ ended -0.11%. The fact that Powell sounded fairly upbeat about the domestic economy, all things considered, but also hinted that the Fed will react to weaker data probably explained the turnaround for equities. Banks (+0.66%) notably outperformed, with the short-end rates selloff and Powell’s pushback on negative rates helping. Elsewhere the USD index rose +0.31%, HY credit were little changed and Gold fell -0.49%.

So, with the Fed out of the way the baton passed to the BoJ this morning where as expected there was no change in policy. However the BoJ did call for a re-examination – specifically of prices and the economy - at next month’s meeting, specifically noting that “recently, slowdowns in overseas economies have continued to be observed and their downside risks seem to be increasing, the Bank judges that it is becoming necessary to pay closer attention to the possibility that the momentum toward achieving the price stability target will be lost. Taking this situation into account, the Bank will reexamine economic and price developments at the next MPM”. That raises the possibility then of further easing. Kuroda’s press conference is due shortly.

The yen has strengthened +0.56% following the statement while 10yr JGBs are down -2.9bps to -0.225%. The Nikkei is up +0.54% but pared earlier gains while equity markets elsewhere in Asia are mixed with the Kospi (+0.38%) up, Shanghai Comp flat and Hang Seng down -1.24%. Elsewhere, futures on the S&P 500 are trading down -0.28%.

Just in case you were craving a bit more central bank action, completing the relay today we’ve also got policy meetings here in the UK, along with Switzerland, Norway and South Africa. For the BoE, the consensus is for no policy change – a view shared also by our economists. Our colleagues do expect the committee to highlight two things however. The first is a deteriorating external outlook and the second is the rise in domestic risks. Overall though it’s hard to see any major departures from the MPC’s August stance. Don’t expect much excitement at those other central bank meetings today either, with no policy changes expected.

Back to yesterday, where prior to the FOMC meeting, as planned the Fed injected more liquidity into the overnight repo market, totalling $75bn. That full take-up of the repo facility saw the overnight GC repo rates trade around 2.175% which is obviously a long way from the 10% levels seen on Tuesday. So funding stresses have alleviated although not quite to a stage where the Fed feels completely comfortable. Another operation is planned for today for up to $75bn.

Meanwhile, the other big mover and shaker this week – the oil complex – was weaker for much of the day before WTI and Brent closed down -2.07% and -1.47% respectively. That reflected the various talk out of Saudi Arabia that crude exports would continue as normal. President Trump also weighed in by saying that sanctions on Iran would be ramped up, specifically tweeting that “I have just instructed the Secretary of the Treasury to substantially increase sanctions on the country of Iran”. Late afternoon Bloomberg headlines also hit the screens suggesting that Saudi Arabia called the attacks on the weekend ‘unquestionably’ sponsored by Iran.

Away from markets and geopolitics, the data very much played second fiddle with strong housing market numbers in the US being the highlight. Indeed housing starts rose a better than expected +12.3% mom (vs. +5.0% expected) and building permits rose +7.7% mom (vs. -1.3% expected). The latter included a fairly notable gain in single-family permits which tend to be less volatile. Here in the Europe the final August core CPI reading for the Euro Area was unrevised at +0.9% yoy, however in the UK the August inflation data broadly disappointed with core CPI in particular falling four-tenths to +1.5% yoy (vs. +1.8% expected). However, with real income growth at healthy levels still, that data is food for thought for the BoE. For completeness the STOXX 600 ended +0.02% yesterday and 10y Bunds were -3.6bps lower ahead of the Fed.

To the day ahead now, where, as noted above, next up in the central bank policy meeting queue is the BoE, SNB, Norges Bank and SARB. Datawise we’ve also got August retail sales data for the UK while in the US this afternoon we’ve got the Q2 current account balance, September Philly Fed business outlook, weekly jobless claims, August leading index and August existing home sales. Away from that the OECD is due to publish its interim economic outlook, while over at the ECB we’re due to hear from Coeure and Lautenschlaeger.

Tyler Durden Thu, 09/19/2019 - 07:54
  • 19 septembre 2019 à 13:54
À partir d’avant-hierZero Hedge

Aramco Attacks An "Act Of War" By Iran: Pompeo After Arriving In Jeddah

Par Tyler Durden
Aramco Attacks An "Act Of War" By Iran: Pompeo After Arriving In Jeddah

What's the end game here? Secretary of State Mike Pompeo has just arrived in Jeddah for talks with Saudi leaders over a response to the weekend attacks on two of the kingdom's major oil facilities. 

After a prior press conference by the Saudi Defense Ministry where it for the first time assigned public blame on Iran for the attacks which initially knocked out half of the kingdom's daily oil output, saying the air attacks "unquestionably" had Iranian state sponsorship, Pompeo has announced the Aramco attacks constitute an "act of war" by Iran

#BREAKING: US Secretary of State Pompeo while in #SaudiArabia: #Aramco attacks an 'act of war' by #Iran

— Anna Ahronheim (@AAhronheim) September 18, 2019

And President Trump himself said Wednesday from the White House that it looks like Iran did it but that he still hopes to avoid war.

He announced via a statement on Twitter that, "I have just instructed the Secretary of the Treasury to substantially increase Sanctions on the country of Iran!" — in what appears an alternative to launching a military response. 

"I'm not looking to get into new conflict, but sometimes you have to," Trump told reporters Wednesday.

Pompeo's new "act of war" declaration indeed takes the potential for escalation right back to boiling point.

Pompeo is in Jedda where he's expected to meet with Saudi Crown Prince Mohammed bin Salman to evaluate a possible response, where the are expected to "coordinate efforts to counter Iranian aggression in the region," according to a State Department statement.

Meanwhile, if the 'military option' is being considered, it appears we could be in the beginning phases of an international coalition response. UK Prime Minister Boris Johnson announced he and Trump held a phone call to discuss the need for a "united diplomatic response from international partners" after the Aramco attacks. 

Wednesday's Saudi Def. Ministry press briefing showcasing missile and drone debris alleged "evidence" the Iranians were behind attack. 

The fact that Johnson's statement included the word "diplomatic" - along with Trump's emphasis on extending stronger sanctions - is a good sign however, that the White House is not prepping for war. 

Tyler Durden Wed, 09/18/2019 - 13:10
  • 18 septembre 2019 à 19:10

How Are Hedge Funds Positioned Ahead Of The Fed

Par Tyler Durden
How Are Hedge Funds Positioned Ahead Of The Fed

With just over an hour left until the Fed's latest announcement, traders are hunkering down ahead of what could be a very volatile market response


While there is certainly the possibility that the Fed will make some unexpected announcement following today's FOMC meeting, especially with consensus rapidly shifting to expect Powell to announce some form of "QE Lite", in the form of bond purchases, i.e., POMO, thus leaving the door open for significant disappointment if the Fed fails to address the repo market fireworks, a just as critical factor will be hedge fund positioning headed into today's announcement. After all, if there is anything last week's quant quake showed is just how painful the unwind of extremely crowded positions can be even without a clear catalyst.

So with that in mind, what is hedge fund positioning going into the Fed meeting?

Luckily, that is the topic of the latest note from Goldman's Prime desk, which makes the following observations:

  • Trading Flows: Posture remains bullish driven by continued long buys and recent short covers.
  • Leverage Ratios: Equity L/S Gross and Net are at multi-year highs (driven in part by recent price gains).
  • Regions: All regions net bought MTD, led by rotation back into US equities.
  • Sectors: HFs are positioning for continued rally in US Cyclicals, though Banks L/S ratio is still near a multi-year low.
  • Factors: Equity LS funds are less net long Momentum, and less net short the Value factors following recent price reversals.

What this shows is that while not at absolutely extreme levels, contrary to conventional wisdom, and Marko Kolanovic's repeated claim that hedge funds are underinvested, the 2 and 20 crowd is not only tilted bullish, but is quite bullish and with multi-year high net leverage across most sectors and regions (with bank stocks perhaps the only exception), with slightly less net long exposure in Momentum and less short in Value following the recent quantastrophe.

This means that should Powell be less dovish than consensus expects, and again recall consensus now expects Powell to go so far as launch bond buying/POMO/QE (lite), the risk of a substantial market disappointment if Powell says the wrong word, is quite acute.

Here are some additional observations on this topic in visual form:

Trading Flows: Posture remains bullish anchored by continued long buys and recent short covers

Leverage Ratios: Equity L/S Gross and Net at multi-year highs (driven in part by price gains)

Regional Flows: All regions net bought MTD, led by rotation back into US equities

Sector Flows: HFs are positioning for rally in US Cyclicals, though Banks L/S ratio is still near a multi-year low

Factor Exposures: Equity LS funds less net long Momentum, and less net short the Value factors following recent price reversals


Tyler Durden Wed, 09/18/2019 - 12:55
  • 18 septembre 2019 à 18:55

The New Ghost Ships

Par Tyler Durden
The New Ghost Ships

Authored by Danielle DiMartino Booth via,

  • California Mega-Port volumes are negative thus far this year, the longest stretch since the Industrial and Great Recessions; echoing the weakness, Cass Freight Shipment Volumes are down 4.5% versus last year

  • While the Bloomberg consensus calls for a modest export expansion in the third and fourth quarters of this year, freight volumes suggest otherwise; in August, ISM and IHS Markit export indices fell to levels not seen since 2009, corroborating the freight data

  • U.S. trade contracting by year-end is increasingly likely; the GM strike will exacerbate the pressure on transportation as the fallout pushes down the supply chain

We’d venture that the first thing that comes to mind when you hear “ghost ship” is the “Flying Dutchman,” the phantasmal ship that can never make port, doomed to sail the seas forever. But not all ghost ships are products of fiction. Real-life derelicts sprinkle history’s annals. One famous example was the Mary Celeste, an American merchant brigantine, discovered off the Azores Islands in the Atlantic on December 5, 1872, adrift and crewless. The Canadian brigantine Dei Gratia happened upon the abandoned and disheveled, but seaworthy ship, still under partial sail, and with her lifeboat missing. The Mary Celeste had departed New York City for Genoa, Italy on November 7. With her last log entry dated ten days before her discovery, she was still amply provisioned, her cargo of denatured alcohol intact, and the captain’s and crew’s personal belongings undisturbed. None of those who had been on board were ever seen or heard from again.

Today’s massive freighters are amply crewed and anything but ghostly, unless you count the missing cargo in their holds. Over this past weekend, one of QI’s Twitter followers generously shared a picture of such a rarely seen image – a container ship not loaded to capacity pulling into the Port of Los Angeles. It’s the middle of September, time to stock up for the holidays. And we’re seeing a drop-off in import volumes hitting U.S. shores?

This got us thinking about the monthly California Mega-Port container data from Los Angeles, Long Beach and Oakland that we have shared with you in the past. We don’t yet have September volumes on hand. We have to wait until the middle of October for that data to be released. August, however, speaks to a theme of contracting trade unfolding.

Thankfully, the California Mega-Ports release granular figures on both loaded and empty containers. Common sense says to focus on the former because loaded containers ferry goods and empty containers do not (duh). Examining the sum of those heading outbound and those coming inbound – exports plus imports – yields a proxy for total trade.

The red line above depicts this series, which has declined on a year-over-year basis every quarter this year, including the third quarter-to-date’s 0.3% dropRecent parallel losing streaks were last seen in the 2015-16 Industrial Recession and the Great Recession. (The 2001 Recession included just one year-over-year contraction.)

Cass Freight Shipment Volumes – the blue line – gauge broader trade flows and echo the weakness in port trafficWhat differentiates Cass is that it covers other modes of transportation beyond water via air, rail and truckAt -4.5% vs. last year, thus far in the third quarter, Cass is sending a relatively weaker signal.

For completeness, we included total U.S. trade (green line above), the ‘X’ and ‘M’ in net exports, but summed these Econ 101 metrics instead of taking the difference. Goods either come in or go out of the country. Freight flows don’t distinguish between the two, they include both. Through this year’s second quarter, total U.S. trade has decelerated to a 0.8% rate compared to 2018’s second quarter rate, the slowest expansion in three years.

Further validating the multiplying number of trends, export indices from both the Institute for Supply Management (ISM) and IHS Markit downshifted sharply in August to levels last seen in 2009. With this reality hiding in plain sight, you would think consensus expectations for exports would be equally bearish. Rather, the Bloomberg consensus of economists is calling for modest export expansion of 1.3% and 1.9%, quarter-over-quarter annualized, in 2019’s third and fourth quarters, respectively. Yes…we’re shaking our heads with you.

We concur with Cass which sees, “a growing risk that GDP will go negative by year’s end.” And we were there before GM’s unionized army of workers went on strike. We’ve already heard rumbles of layoffs spreading along the North American supply chain in response to planned production cuts that promised to deepen. A cynic might have chuckled at the headlines designed to shock of GM losing $50-100 million a day in profits for every day the strike lasts. With inventories continuing to rise, which we’ll cover in depth in next week’s Quill, GM will initially benefit from the forced idling of its production lines.

In the meantime, freight volumes will be depressed further as the strike takes hold and pushes down through to GM’s suppliers. That means there will be more negative prints to come from Cass, which reckons it takes two to three quarters for depressed freight to be reflected in broader economic data. It’s no optical illusion – the risk of an outright contraction in U.S. trade is squarely in our sights. We suggest that you be on the lookout for a growing number of ghost ships crossing the Pacific.

Tyler Durden Wed, 09/18/2019 - 12:40
  • 18 septembre 2019 à 18:40

This Week's Oil Futures Spike Is About To Hit Consumers At The Gas Pump

Par Tyler Durden
This Week's Oil Futures Spike Is About To Hit Consumers At The Gas Pump

The attack on a Saudi Arabia oil facility, now being blamed on Iran, that caused crude oil futures to spike more than 10% to start the week is likely going to start hitting consumers at the pump over the next couple of days, according to Bloomberg.

Despite retail gasoline futures jumping as much as 20 cents on the New York Mercantile Exchange early in the week, the average US retail gasoline gallon rose just 1 cent since Sunday. But the impact of futures rising will become more pronounced over the next day or two, according to Patrick DeHaan, senior petroleum analyst at GasBuddy.

The shift in prices at the pump will come after gasoline distributors adjust their prices to match gains in futures and regional spot markets, he says.

An increase of about 15 cents to 30 cents per gallon in the United States is going to be likely over the next several days while Saudi Arabia works to get production back up to speed.

Source: Bloomberg

Despite the huge move higher at the beginning of the week, where crude futures ran through the $63 mark, they have since pared gains and are trading at around $59 late in the day on Tuesday - still about 10% higher than prior to the weekend.

Source: Bloomberg

President Trump also said on Tuesday that it wasn’t going to be necessary to release oil from the Nation's Strategic Reserves:

“I don’t think we need to. Oil has not gone up very much,” Trump told reporters Tuesday aboard Air Force One as he traveled to California for a series of fundraisers. “There’s a lot of oil in the world.”

As Trump is likely well aware, any type of prolonged increase in gas prices could keep low and middle income voters from the polls during election time, according to Kevin Book, managing director of ClearView Energy Partners in Washington.

Book continued: “No voter has ever been happy about a price increase. They might not vote for the other party, but they might not get off the couch if they are pissed off.”

The potential for rising gas prices comes at a time during the year when winter grade gasoline, which is cheaper to make, usually sends prices lower. AAA had predicted $2 dollar gasoline in the US South this fall, where it is generally cheapest in the nation. 

DeHaan concluded: “Right now you are seeing the stations rushing to get those tanks full. And those who are not able to fill up will be confronted with having to pay extra later.”

Tyler Durden Wed, 09/18/2019 - 12:25
  • 18 septembre 2019 à 18:25

More Money Pumping Won't Make Us Richer

Par Tyler Durden
More Money Pumping Won't Make Us Richer

Authored by Frank Shostak via The Mises Institute,

Whenever a central bank introduces easy monetary policy, as a rule this leads to an economic boom - or economic prosperity. At least this is what most commentators hold. If this is however the case then it means that an easy monetary policy can grow an economy.

But loose monetary policies do not generate economic growth. These policies set in motion the diversion of real savings from wealth generators to the holders of the newly pumped money. Real savings, rather than supporting individuals that specialize in the enhancement and expansion of the infrastructure are consumed by various individuals that are employed in non-wealth generating activities.

Moreover, not all consumption is a good thing. The consumption of real savings by individuals engaged in the enhancements and the expansion of the infrastructure is productive consumption. Conversely, the consumption of real savings by individuals that are employed in non-wealth generating activities is non-productive consumption.

It is non-productive consumption that sets the foundation for the weakening of the existing infrastructure thereby weakening future economic growth. In contrast, productive consumption sets the foundation for a better infrastructure, which permits stronger future economic growth. Needless to say, productive consumption leads to the increase in individuals living standards while non-productive consumption results in the lowering of living standards.

Why then is loose monetary policy seen as a major contributor towards economic growth?

Given that economic growth is assessed by means of the gross domestic product (GDP) framework — which is nothing more than a monetary turnover — obviously then when the central bank embarks on monetary pumping (i.e., loose monetary policy) it strengthens the monetary turnover in the economy and thus GDP.

After deflating the monetary turnover by a dubious price deflator one obtains the so-called real GDP. By means of real GDP, economists and various other experts are supposedly in a position to ascertain the state of economic growth, or so it is held. (Note that the increase in the monetary turnover because of the increase in the money supply is regarded as reflecting economic growth). In such a framework, it is not surprising that central bank policies are an important factor in setting in motion an economic boom.

From this, economists and various other experts conclude that the central bank by being able to grow the economy can also make sure that the economy follows the correct growth path. (The growth path as outlined by policy makers of the central bank).

Whenever the economy deviates from the path outlined by central bank policy makers and the government, this will allow them the opportunity to intervene by either raising or slowing the pace of monetary pumping.

The economy in this way of thinking is depicted as a helpless creature that must be guided by the all-knowing bureaucrats all the time. The passivity of the creature called the economy is also reflected by the fact that the output generated must be distributed by the all-knowing bureaucrats. In fact, one gets the impression that bureaucrats supervise the entire production process and individuals are just submissive entities that have hardly anything to say here.

If loose monetary policies of the central bank are able to generate through the GDP statistic so-called economic growth, then this must mean that a tighter monetary stance sets an economic bust.

"Economic bust" is here associated with the liquidation of various non wealth-generating activities. That is, the economic bust results in the curtailment of non-productive consumption.

Note that an important vehicle in setting the boom-bust cycle is the existence of the fractional reserve banking, which through the expansion of money out of thin air sets an economic boom while through the contraction of money out of thin air sets an economic bust.

Observe that in fractional reserve banking an expansion of money out of thin air emerges because of the ownerless lending. Consequently, when banks curtail the ownerless lending this leads to the contraction of money out of thin air.

Can Government Policies Grow the Economy?

While loose monetary policy, which results in an exchange of nothing for something, cannot cause economic growth, can the same be said about an increase in government outlays? Will this not result in a strengthening in economic growth?

Given that in the GDP framework one of the components is government outlays, obviously then once there is an increase in these outlays, all other things being equal, we will have an increase in the GDP and thus in so-called economic growth.

But if the government is not a wealth generating entity, how can an increase in government outlays grow the economy? Various individuals who are employed by the government expect compensation for their work. Note that the government can pay these individuals by taxing others who are still generating real wealth. By doing this, the government weakens the wealth-generating process and undermines prospects for economic growth. (We ignore here borrowings from foreigners).

Now, fiscal stimulus could “work” if the flow of real savings is large enough to fund government activities while still permitting a positive growth rate in the activities of the private sector. (Note that the overall increase in real economic activity is in this case erroneously attributed to the government's loose fiscal policy).

If, however, the flow of real savings is declining, then regardless of any increase in government outlays, overall real economic activity cannot be expanded. In this case the more the government spends (i.e., the more it takes from wealth generators) the more it weakens prospects for a recovery.

Thus when government by means of taxes diverts bread to its own activities the baker will have less bread at his disposal. Consequently, the baker will not be able to secure the services of the oven maker. As a result, it will not be possible to boost the production of bread, all other things being equal.

As the pace of government spending increases a situation could emerge that the baker will not have enough bread to even maintain the workability of the existing oven. (The baker will not have enough bread to pay for the services of a technician to maintain the existing oven). Consequently, his production of bread will actually decline.

Similarly, as a result of the increase in government outlays other wealth generators will have less real savings at their disposal. This in turn will hamper the production of their goods and services and in turn will retard and not promote overall real economic growth.

As one can see, the increase in government outlays will lead to the weakening in the process of wealth generation in general.

Many commentators are of the view that lowering of taxes could be an important catalyst for the strengthening of economic growth. This could be so if the government also curtails its outlays. It must be realized that as long as government outlays continue to grow no effective cut in taxes is possible. Remember that the expansion in government outlays implies an increase in the diversion of real savings from wealth generators to government. Hence, an effective cut in taxes can only emerge once the government curtails its outlays.

For instance, government announces that it will cut the income tax by 5% at the same time it outlays are planned to increase by 10%. What matters here is that the government will require to increase the diversion of real savings by 10% in order to support the increase in its activities.

It does not matter how the government is going to collect the required real savings – it can be by means of various forms of indirect taxes or by means of borrowings or by means of money pumping. The essence in all this is that once the government requires more real savings it will get it from the private wealth generating sector. Hence in this case rather than having a tax cut what we have here is an effective increase in the tax burden because of the increase in government outlays.


Neither loose monetary policy, nor big-spending fiscal policy can grow an economy. All that these policies can do is to redistribute a given pool of real savings from wealth generators towards non-wealth generating activities. Hence, we can conclude that both loose monetary and fiscal policies cannot set in motion an economic boom but rather an economic impoverishment.

Tyler Durden Wed, 09/18/2019 - 12:10
  • 18 septembre 2019 à 18:10

Trump Revokes California's Ability To Set Fuel Emissions Standards

Par Tyler Durden
Trump Revokes California's Ability To Set Fuel Emissions Standards

Update: California has predictably challenged the move, and has vowed to file a lawsuit, according to Bloomberg. Governor Gavin Newsom, meanwhile, said that the White House's action was motivated by oil companies. 


The Trump administration on Wednesday revoked an Obama-era waiver allowing California to set its own standards for automobile emissions, a move which President Trump claims will lead to "significantly more jobs" and safer, less costly vehicles. 

"The Trump Administration is revoking California’s Federal Waiver on emissions in order to produce far less expensive cars for the consumer, while at the same time making the cars substantially SAFER," Trump tweeted Wednesday morning, claiming that the move will result in "older, highly polluting cars" being replaced by "new, extremely environmentally friendly cars."

.... advantage, and also due to the fact that older, highly polluting cars, will be replaced by new, extremely environmentally friendly cars. There will be very little difference in emissions between the California Standard and the new U.S. Standard, but the cars will be....

— Donald J. Trump (@realDonaldTrump) September 18, 2019

....far safer and much less expensive. Many more cars will be produced under the new and uniform standard, meaning significantly more JOBS, JOBS, JOBS! Automakers should seize this opportunity because without this alternative to California, you will be out of business.

— Donald J. Trump (@realDonaldTrump) September 18, 2019

The 2013 waiver issued to the California Air Resources Board (CARB) by the EPA allowed the state to mandate stricter air quality standards than those imposed at the federal level, according to NPR, which notes that the announcement comes amid a DOJ investigation into a July deal between California and four automakers, which would hold them to higher emissions standards

The move comes after the Department of Justice earlier this month launched an antitrust investigation into a July deal between California and four automakers — Ford, Volkswagen, Honda and BMW — and is seen as a broader effort by the White House to roll back efforts to combat climate change.

In the agreement between the state and manufacturers on fuel economy standards, which the administration says may be illegal, the automakers pledged to produce passenger vehicles averaging 50 miles per gallon by model year 2026, which is in line with Corporate Average Fuel Economy (CAFE) standards set by the Obama administration. -NPR

Rolling back the Obama-era guidelines will freeze mileage standards at 37 mpg from 2020 to 2026. 

President Trump has directly attacked the July deal with California, saying an August tweet: "Henry Ford would be very disappointed if he saw his modern-day descendants wanting to build a much more expensive car, that is far less safe and doesn’t work as well, because execs don’t want to fight California regulators."

....that when this Administration’s alternative is no longer available, California will squeeze them to a point of business ruin. Only reason California is now talking to them is because the Feds are giving a far better alternative, which is much better for consumers!

— Donald J. Trump (@realDonaldTrump) August 21, 2019

The EPA has called California's agreement with the automakers as a "PR stunt," while spokesman Michael Abboud said on Tuesday that the deal "does nothing to further the one national standard that will provide certainty and relief for American consumers." Abboud says that California officials "continually refused" to work with the Trump administration to reach a "common sense solution." 

California Governor Gavin Newsom panned the move, saying in a statement that it "could have devastating consequences for our kids’ health and the air we breathe," according to NBC News

The Union of Concerned Scientists - a nonprofit advocacy group - said in an original statement that the Trump administration is engaged in a "witch hunt against California and carmakers." 

The debate over the current federal fuel economy standards dates back to well before the 2016 elections. While the auto industry reached a compromise early on with the Obama administration setting a target of 54.5 miles per gallon for 2025, the deal called for a “mid-term review” that would explore whether the target remained feasible. With the rapid shift from passenger cars to less fuel-efficient pickups and utility vehicles, a number of automakers began pressing for a rollback, a request the outgoing administration rejected.

Initially, some of those manufacturers supported the Trump administration’s plan to stage its own analysis. But the preliminary revision jointly revealed by the EPA and the National Highway Traffic Safety Administration last year went well beyond what was expected, and received little industry support. -NBC News

According to California Attorney General and trump foe Xavier Becerra, "While the White House clings to the past, automakers and American families embrace cleaner cars. The evidence is irrefutable: today's clean car standards are achievable, science-based, and a boon for hardworking American families and public health."

Tyler Durden Wed, 09/18/2019 - 11:56
  • 18 septembre 2019 à 17:56

Stunning Consensus Emerges: Fed May Announce Launch Of QE In Just A Few Hours

Par Tyler Durden
Stunning Consensus Emerges: Fed May Announce Launch Of QE In Just A Few Hours

It was back on August 6, in an article titled "Forget China, The Fed Has A Much Bigger Problem On Its Hands", where we explained why in response to the coming dollar funding shortage and liquidity crunch (we warned about this month's repo crash over a month ago), we first said that Fed will likely resume QE as soon as the fourth quarter. Needless to say, with the Fed having only just cut rates for the first time in over a decade just a week earlier, others looked at us funny, even though just two days later we got the clearest sign yet that the Fed was indeed contemplating QE when we described a very odd email we received from a Fed researcher in "When You Get An Email Like This From The Fed, It May Be Time To Panic."

In any event, virtually no 'serious' Wall Street analyst predicted that QE would be on traders lips in the immediate future, and certainly nobody predicted the coming "dollar funding storm", which we warned readers about just last Friday.

Fast forward to today when one analyst after another is scrambling to "predict" that today, with its repo operations woefully inadequate to calm the storm that has gripped the funding markets and the dollar shortage, the Fed may go so far as to expend its balance sheet by announcing the launch of permanent open market operations, i.e., the monetization of bonds.

Just please don't call it QE.

Let's start with Nomura's rates analyst Lewis Alexander, who overnight - just like every other STIR strategist - comments on the record fireworks in the repo market and writes that after a period a relative stability from early May through mid-August, reserves in the banking system have been declining in recent weeks, something we said would happen as we entered the fourth quarter as the Treasury scrambled to rebuild its cash balance.

As Nomura further notes for those who missed our justification for the recent sharp drop in reserves, "with the asset side of the Fed’s balance sheet fixed, the recent declines in reserves have been driven by increases in the Fed’s non-reserve liabilities, primarily the Treasury General Account (TGA), currency outstanding and deposits held by foreign official institutions." Additionally, the Japanese bank estimates that yesterday the Trasury's cash balance at the Fed went up by $60-100bn, due to the regular pattern of corporate tax payments, and concludes what is by now apparent to everyone "the decline in reserves driven by these increases in the Fed’s other liabilities had an outsized impact on funding markets."

Why does this matter? Because it all comes as the Fed is determining how far they should let reserves fall, among other key things, such as how far should the Fed let rates drop.

Some more details: Reserves reached $2.8tn in late 2014 when the Fed stopped expanding its balance sheet and they were $2.2tn when, in late 2017, the Fed decided to begin to let its assets gradually run off. By June of this year, when the Fed decided to end runoff, reserves had fallen to $1.5tn. While the debt limit was binding this year – from March through early August – the TGA was trending lower, and this tended to offset the impact of growth of the Fed’s other liabilities on the level of reserves. However, when the debt limit was raised in early August it was clear - and we noted so at the time - that the Treasury was going to increase its cash holdings relatively quickly, and as we noted over a month ago, they were expected to reach $350bn by end-September which was going to put significant downward pressure on reserves.

Meanwhile, pressures that have emerged in funding markets in recent days, and the Fed’s decision to conduct a short-term repo transaction today, suggest that the Fed may be reassessing the level of reserves that is consistent with good control of the nexus of short-term interest rates.

With all that said, and given recent events, Nomura now expects Chair Powell and the FOMC to say something about their plans for the balance sheet at the conclusion of this week’s FOMC meeting, where the bank sees four options:

  1. The FOMC and/or Chair Powell could simply state that the FOMC will conduct short-term repo transactions as needed to maintain short-term interest rates within a range that is consistent with the target range for the funds rate. This could be part of the FOMC statement or it could be part of Powell’s opening remarks at the post-meeting press conference.
  2. The FOMC could say they they will start to expand the Fed’s balance sheet as soon as practicable, in line with the growth of the Fed’s non-reserve liabilities. If the FOMC makes this decision it is likely to be included in the FOMC statement.
  3. The FOMC may again lower IOR relative to the top of the federal funds target range, in an effort to keep the fed funds rate well within the FOMC’s target range.
  4. The FOMC could announce they they are launching a new standing repo facility.

While Nomura generally rules out option four and sees option 1 as most likely, it is the bank's discussion of option two that is most relevant. This is what Alexander said on the topic:

The second option – announcing that they will start to expand the balance sheet in coming weeks – also seems likely. Operationally it would not be hard to implement. The New York Fed is already purchasing assets to offset the runoff of its existing Treasury and MBS securities. It would be relatively simple to expand the size of those purchases to take account of increases in other liabilities. The Treasury’s plans for their cash balance will likely continue to put downward pressure on reserves in coming weeks and we expect the level of reserves to reach $1.3tn by the end-September, or sooner. Moreover, the pressures that affected funding markets in the last few days may be an indication that reserves have fallen “enough.”

And so, at least one bank thinks it is "likely" the Fed may announce permanent open market operations, i.e., regularly scheduled bond purchases to inject market liquidity. Nomura is not the only one.

In his latest installment analyzing the impact of tumbling reserves, BofA's Mark Cabana, who was probably the most ahead of the Wall Street curve on this topic, also presents his personal views as to what caused the recent spike in repo, which he attributes to a substantial decline in reserves, and which serves to confirm that the amount of cash in the baking system is too limited, concluding that "the limited amount of reserves is the key driver of the funding pressures."

Cabana also points out that whereas before the crisis zero excess reserves were perfectly sufficient in a world where banks regularly used the Fed's discount window, that is no longer the state of play, largely due to regulatory and liquidity requirements, and as a result with funding pressures rising as reserves have declined to ~$1.35tn suggests that the market is on the upward sloping part of the reserve demand curve, below the minimum amount of reserves needed for an "abundant reserve regime."

The repo operations in the past two days - the first in a decade - bring us closer to the flat portion of the reserve demand curve, buy it is temporary: as shown in the chart below, there is a roughly $400BN reserve shortage to normalize the FF-IOER spread. 

With repo rates still high, it is also clear that the repo operation has not quelled repo pressures and the Fed will need to keep providing cash to the market to maintain an abundant quantity of reserves in the system.

Which brings us to Cabana's punchline: "Fed may announce outright purchases Wednesday."

Echoing Nomura, the BofA strategist predicts that at today's FOMC meeting, "we see risks the Fed indicates they intend to stabilize the level of reserves in the system. This is not our base case for now but we see substantial risks of such an action. Such a statement would imply that permanent balance sheet growth and outright purchases are necessary." Cabana believes that such a communication would likely be included in the Fed's "implementation note" and also likely be discussed by Chair Powell in his press conference.

How much "bond purchases" would the Fed announces? The answer is not far off the $400BN we extrapolated based on the chart above:

"The Fed will likely need to purchase $250bn in assets in the secondary market to return to an "abundant" reserve level plus a buffer, and will need to continue outright purchases of ~$150bn/yr to maintain this reserve level. Reserves declined ~$100bn at the start of the week and the banking system appears to have reached the upward sloping part of the demand curve with this drain.

There's more, literally.

As Cabana then adds, the Fed will also likely want to maintain a buffer above this "abundant" level. here, using variations in Fed liabilities since the start of 2019, BofA estimate this buffer to be around $150bn based on prior NY Fed analysis; in other words, "to offset Monday's reserve drain and add a buffer, the Fed's balance sheet needs to grow $250 bn."

Then, to maintain reserves at "abundant" levels, the Fed will need to continue outright purchases to meet growth in demand for their liabilities. This demand comes from:

  • Currency in circulation - which grows with GDP. Fed surveys show the median growth expectation at 4.9% per year.
  • Bank HQLA - reserves fulfill HQLA needs of banks and should growth with bank balance sheets.
  • Treasury cash balance - which is based on expected five day outflows and should grow with the deficit.
  • To meet this demand for their liabilities, we estimate the Fed will need to purchase ~$150bn in USTs per year.

In sum, and confirming what we said above, the Fed's purchases could be $400bn in the next year, according to BofA, which would be front-loaded with a $250bn purchase now, and annual run-rate of $150bn.

Oh, and for those wondering what the Fed will purchase, here is the answer:

We expect purchases will occur across the curve, to reflect the distribution of USTs outstanding (which is how they currently purchase) and most likely only in USTs. The Fed could front-load these purchases at the front end of the curve to exert a larger impact on repo, but may not want to deliberately steepen the curve and tighten financial conditions while lowering interest rates. Purchasing across the curve would also be consistent with how the Fed offset currency growth via "coupon passes" prior to the crisis. We acknowledge there is lots of uncertainty on this question.

Needless the say the market reaction would be instant, with "richening of yields across the curve, especially in the long end" if the Fed announces outright UST purchases as now appears to be consensus.

Finally, completing the trifecta of strategists expecting the Fed to launch QE open market purchases, is Morgan Stanley strategist Matt Hornbach, who said that "the Federal Reserve is likely to announce permanent open market operations in its communications Wednesday. "

Speaking in an interview on Bloomberg TV, the rates strategist said that this step would allow the Fed to address the funding market’s strains without stoking fears of a systemic problem or fueling talk of a recession. Echoing what Cabana said above, Hornbach agrees that "the buffer of reserves that the Fed was hoping to have in the system clearly isn’t there any more."

Ok... but won't a restart of QE trigger PTSD flashbacks to 2009 and the financial crisis, and telegraph to the world that the US is in a recession? Well, this is where semantic comes into play, because when is QE not QE? Or when is debt monetization not debt monetization? Or when is state financing not state financing? When it is something else. And here is where the magic of narratives come in.

As Hornbach writes, "POMOs will help the Fed avoid the implication that it’s restarting QE, which could raise suspicions of a bigger economic threat."

Wait, wait, wait... Isn't POMO, i.e. permanent open market operations precisely the way one implements QE? After all, even Cabana above admits the Fed will need to expand its balance sheet by up to $400BN in the very short term to normalize financial conditions? Apparently, to Morgan Stanley, the answer is no.

"When you start losing control of the target rate, you need to increase reserves in the system, but that’s not necessarily QE as we know it in a traditional sense. They’re going to do this via permanent open market operations."

Oh, so it's not QE... it's just what the central bank does when it implements QE. Thanks, Matt, I think we got it.

Watch his entire interview, and much more below.

Besides the staggering implications for capital markets from a return to QE, what all of the above means is that Wall Street now expects the Fed to not only cut rates, but to launch QE... pardon, start permanent open market operations (also known as QE). This also means that the bar is suddenly much lower for the Fed to disappoint consensus Wall Street, and trader, expectations because if Powell merely commits to a 25bps cut with no follow through, and says nothing about a standing repo facility and/or POMOs, the market will be extremely displeased, and the result will be not only a violent drop in risk assets, but a blow out in funding levels to new all time highs.

The combination of those two taking place at the same time could just be the catalyst that culminates in the next market crash, unless of course the Fed yields to Wall Street demands for even more liquidity, and stocks soar to new record highs on the back of rate cuts and QE at a time when the US economy is firing on all cylinders.

One final fringe benefit: president Trump will be very happy and Powell will keep his job for at least a few more months.

Tyler Durden Wed, 09/18/2019 - 11:34
  • 18 septembre 2019 à 17:34

Saudis Reveal 'Evidence' Attacks "Unquestionably Sponsored" By Iran With Drone & Missile Debris

Par Tyler Durden
Saudis Reveal 'Evidence' Attacks "Unquestionably Sponsored" By Iran With Drone & Missile Debris

Though it appears President Trump has already signaled that war with Iran has been averted for now, instead opting to kick the can further down the road with a just announced measure to "substantially increase" sanctions on the Islamic Republic, Saudi Arabia has unveiled the long awaited "evidence" of Iran's alleged involvement in the Aramco attacks

Wednesday's Saudi Defense Ministry press conference showcasing the "evidence" of Iran's involvement. 

On Wednesday the Saudi Defense Ministry held a press conference showing the debris gathered from the weapons used in the twin attacks on the Aramco facilities early Saturday, which Riyadh has indicated involved a mix of missiles and drones

Showcased among the debris can be seen what looks like a ballistic missile, among multiple smaller drones, including according to the statements:

  • 18 delta winged UAV + 7 cruise missiles fired 
  • direction of flight + range indicate attacks did not originate from Yemen, but from the north;
  • sophistication of weapons included GPS guidance giving high accuracy.

Laid out on the tables at the press event were what appeared to be sophisticated small unmanned aerial vehicles (UAVs), which a Saudi spokesman said "unquestionably" had Iranian state sponsorship. 

Meanwhile oil is rising sharply on news of the Saudi official allegations of Iran's "unquestionable" role in the devastating attacks:

The defense ministry spokesman further said the UAVs came from the north to the south, suggesting attack origins from Iranian soil, which contradicts accounts in a prior WSJ report which said no UAVs were spotted crossing the border. 

However, some analysts were quick to point out that the Saudi spokesman stopped short of any direct statements alleging the attacks originated from within Iran or that the IRGC Quds force was behind it. 

Remains of the missiles which #KSA says were used to attack an @Saudi_Aramco facility displayed during a news conference in Riyadh. (@REUTERS photo by Hamad I Mohammed)

— Steve Herman (@W7VOA) September 18, 2019

Notably, the Saudi spokesman said that Aramco attacks "could not have been launched from Yemen" but didn't name precisely where they were launched from.

Yemen's Houthis have been unwavering in their insistence that they conducted the attack with ten drones; however, if the cruise missile debris was in fact part of the attack this could contradict the claims of an exclusively Houthi operation. 

"sponsored" by Iran and "came from Iran" seem quite different

— Chris Hayes (@chrislhayes) September 18, 2019

If this is indeed the sum total of "evidence" of Iranian involvement, this whole crisis week of escalation could fizzle down to a low simmer instead of the massive bang that many were expecting in the gulf.

President Trump’s Administration has confronted the Iranian regime's and terrorist organizations aggression in an unprecedented way - we in KSA thank the President for his stance, we will continue to stand with the USA against the forces of evil and senseless aggression.

— Khalid bin Salman خالد بن سلمان (@kbsalsaud) September 18, 2019

Of course, the elephant in the room at the press conference remains the question of why the kingdom's advanced US-supplied anti air defenses were apparently incapable of intercepting the inbound projectiles and UAVs? 

Tyler Durden Wed, 09/18/2019 - 11:21
  • 18 septembre 2019 à 17:21

Ilhan Omar Deletes Old Tweet Revealing Her Father Has Same Name As Brother

Par Tyler Durden
Ilhan Omar Deletes Old Tweet Revealing Her Father Has Same Name As Brother

Authored by Rusty Weiss via The Mental Recession

Representative Ilhan Omar created a whirlwind of controversy when she deleted a tweet from 2013 that wished a Happy Father’s Day to a man named “Nur Said.”

“Happy Father’s Day to my aabo Nur Said, I am forever grateful to Allah for giving me the best father a …” the post reads, linking to a since-deleted Instagram post.

As reported at The Political Insider, Omar (D-MN) was reportedly engaged in civil marriage with a man many have speculated to be her brother, Ahmed Nur Said Elmi, from 2009 up until 2017.

In Somalia, a person’s name normally consists of a first name, followed by the father’s name and then the grandfather’s name.

The left-leaning Minneapolis Star-Tribune in June reported on documents that raised questions as to whether Omar married her own brother as a means to “skirt immigration laws.”

This tweet raises questions as to whether or not Ilhan’s real name is even Omar, and certainly lends some credence to the speculation. And Omar is most definitely concerned about its contents. She has since deleted it.

Judicial Watch President Tom Fitton asked, “Did Ilhan Omar delete MORE evidence she married her brother?

Here is archive

— Jon Levine (@LevineJonathan) September 17, 2019

Fortunately, the post has been archived and will forever be retained.

PJ Media reporter David Steinberg, in a post from October of 2018, indicated he had spoken to classmates of Ahmed Nur Said Elmi, and had discovered “Elmi’s father was identified as the same man Ilhan Omar has always publicly referred to as her own father: Nur Said Elmi Mohamed.”

Imam Tawhidi, who goes by the ‘Imam of Peace’ on social media, explained in a Twitter thread the nuances behind surname usage in “most Muslim countries.”

“Most Americans don’t know that in most Muslim countries, the surname is actually the father’s name,” Tawhidi wrote, prior to calling for Omar’s resignation.

Your father is Nur Said?
Not: Nur Omar Mohamed?

So you’re Ilhan Nur Said?

And you married Ahmed Nur Said,

You married your brother.

(Most Americans don’t know that in most Muslim countries, the surname is actually the father’s name)


Ilhan in 2013 👇🏽 BUSTED.

— Imam Mohamad Tawhidi (@Imamofpeace) September 17, 2019

‘Bint’ means ‘daughter of’. That’s usually not included in the official legal documents. What’s written is: Ilhan Nur Said. But spoken as: Ilhan Bint Nur Said.

‘Bint’ is an ARABIC word. Somalis don’t use ‘bint’.

If her dad is Nur Said, as she says.

Then she is: Ilhan Nur Said.

— Imam Mohamad Tawhidi (@Imamofpeace) September 17, 2019

The liberal media went apoplectic back in July when President Trump suggested he had heard stories about the potential immigration fraud perpetrated by Omar. Rather than actually investigate since then, they condemned him for bringing up such a wild conspiracy. 

“There’s a lot of talk about the fact that she was married to her brother,” Trump told reporters. “I know nothing about it. … I’m sure that somebody would be looking at that.”

But they didn’t, and now the story only moves along because somebody found an old tweet in Omar’s archives before she did. Will the media continue to whitewash this scandal as she seemingly is trying to do?

“The people who I love know who I am and what I care about,” Omar said following reports of an affair with a paid political consultant.

When will the mainstream media start asking questions about who she is and what she has done?

Tyler Durden Wed, 09/18/2019 - 11:05
  • 18 septembre 2019 à 17:05

Russia Detains Over 160 N.Korean Sailors After Attack On Border Patrol Boat

Par Tyler Durden
Russia Detains Over 160 N.Korean Sailors After Attack On Border Patrol Boat

It's the second major Russia-North Korea incident on the high seas in as many months: on Tuesday a clash between North Korean fishermen and Russian border patrol ships in the Sea of Japan ended in an exchange of fire and 161 North Koreans held captive

The North Korean vessels, described as poachers given they were said to be fishing in Russian economic territory, were halted by Russian border patrol, after which one of the North Korean boats opened fire on the Russians, which wounded at least three border patrol guards.

Image source: TASS

In total Russian officials reported two schooners and 11 motorboats from North Korea were spotted violating Russia’s Exclusive Economic Zone. Following the nearly deadly exchange of fire the Russians detained all the vessels and a reported 161 crew members, some of them wounded. This after initial reports cited up to 80 North Koreans detained. 

Russia promptly summoned the North Korean Charge d’Affaires to the Foreign Ministry over the incident, demanding an explanation of the egregious and blatant violation of its territorial waters. 

Russia's Tass news agency cited a Federal Security Service (FSB) statement on Tuesday saying the "crew of a North Korean vessel [with over 45 people onboard] carried out an armed attack on the members of a monitoring group of the border guards' ship" in the Sea of Japan resulting in "three servicemen received various injuries," according to the report.

The Russian Pacific Fleet is based out of Peter the Great Bay, the largest in the Sea of Japan, and its port city of Vladivostok, home to Russia's major Far East region/Pacific naval base since the 18th century.

A prior incident occurred in late July, but involving the opposite scenario: at that time 15 Russian nationals along with two South Koreans were detained by the DPRK after their fishing vessel drifted into North Korean waters. 

Though Moscow and Pyongyang currently enjoy positive trade and diplomatic relations, a 2016 incident also involving a North Korean vessel drifting into Russian waters did turn deadly and ranks as the most serious encounter of recent years

That prior incident involved a packed North Korean commercial fishing vessel (reports at the time indicated 48 crew) allegedly "acting aggressively" and attempting to flee when boarded by Russian border patrol guards in the Sea of Japan. One Russian border patrol officer and nine North Korean fishermen were injured after the Russians opened fire as the crew resisted, with one North Korean later dying in the hospital. 

No doubt Pyongyang has this prior incident front and center in its mind as it will likely seek to negotiate the release of its some 160 citizens newly detained this week. 

Tyler Durden Wed, 09/18/2019 - 10:45
  • 18 septembre 2019 à 16:45

EU's Growing Trade Deficit With China Bodes Poorly For The Future

Par Tyler Durden
EU's Growing Trade Deficit With China Bodes Poorly For The Future

Via Bruce Wilds' Advancing Time blog,

While we read a great deal about the huge trade deficit America runs with China it is important to understand we are not the only one. Other countries also have this problem.

Europe as a whole runs a solid trade deficit with China. In some ways, this is balanced by the EU having a surplus with America. Still, in many ways, a growing trade deficit with China bodes poorly for the EU as they look down the road.

Europe Runs A Solid Trade Deficit With China (click to enlarge)

Reuters reports the European Union’s trade surplus in goods with the United States and its deficit with China both increased in the first seven months of 2019. Eurostat, the EU statistics office, reported the European Union’s surplus with the United States grew to 100.8 billion dollars in Jan-July 2019 from 88.6 billion in the same period of 2018. During that time the EU’s trade deficit with China expanded to 120.9 billion dollars from 109.2. This comes at a time that trade figures are adding extra strain to global tensions.

The Items These Countries Trade (click to enlarge)

This brings up the importance of what countries buy and sell to each other. If a county's exports are not centered around products where they have a core advantage over time they can see them erode. I contend part of the problem the EU has going forward is that much of the EU is simply uncompetitive. This means unless it takes strong action to halt the importation of cheap Chinese consumer goods it will be flooded with them in coming years. Since Europe does not sell China much in the way of "raw goods" it has little to balance this trade.

Simply put, the EU and the companies that call it home lag in both innovation and technology. The most innovative companies based on the number of patents they received in 2017 were IBM, Samsung Electronics, Canon, Intel, LG, Qualcomm, Google, and Microsoft, in that order. Note how European companies are absent from this list. Adding to their lack of industrial leadership is the matter of over-regulation that stifles EU companies from moving forward. When it comes to low-cost production they are also beaten by China and other Asian countries. This has caused Brussels to join Washington in complaining that China wants free trade but does not play fair.

The auto industry is just one example of the EU losing its ability to compete. A recent article titled, "European Carmakers Face Perfect Storm" delves into how European carmakers are facing what could turn out to be a major crisis. It is being created by EU regulators which are driving automakers to cut emissions at great cost. The EU has been enforcing emission caps on cars but beginning next year they will be reduced further to 95 grams of CO per km. This means a slew of electric vehicles will be rolled out but there are no guarantees that people will want to buy those cars. These cars will be much more expensive to build, estimates are each one will cost over $10,000 more to produce, so just because many people claim they are a greener alternative does not guarantee a market for them.

Click Here To View C919 Article

In future years the EU is expected to continue slipping further behind in many areas. Politico reports that Washington is preparing to announce tariffs on billions of goods from the European Union.  This follows a decision by the WTO which has just ruled in favor of the US in a case against Airbus. This ends a multi-year transatlantic dispute between the world's two largest aircraft manufacturers over whether Airbus had benefited from illegal state subsidies. Unfortunately, for both America and the EU the Chinese state-owned aviation manufacturer Commercial Aircraft Corp of China (COMAC), has been busy developing the C919, which is seen as China's answer to the Boeing 737 and Airbus 320.

The C-919 hits right at the core market of both companies. COMAC is yet to release the price tag of the jet, but a report by China National Radio predicted that it would likely to be sold for around $43 million. This is much cheaper than a Boeing 737 or an Airbus 320 which each cost around $80 million $100 million respectively. It does not take a rocket scientist to calculate how rapidly China can ramp up production.

This is just the sort of thing that dooms the EU into an unwinnable position. The EU will be hard hit if America is successful in trimming its existing deficit with the region while its deficit with China widens.

Tyler Durden Wed, 09/18/2019 - 05:00
  • 18 septembre 2019 à 11:00

Brexit: The Endgame?

Par Tyler Durden
Brexit: The Endgame?

With parliament suspended and the UK's EU withdrawal process in enforced stasis, the next major stop on the Brexit road map is the EU summit in Brussels on 17 and 18 October. As we have become accustomed, no one knows what will happen now.

This flowchart though, based on analysis by The Independent's John Rentoul, runs through the most likely scenarios, starting first with the question of whether the meeting bears fruit in the form of a new Brexit deal.

As Statista's Martin Armstrong explains, the quickest, but let's face it, most unlikely outcome, would be a new deal which gets approved by parliament, leading to the UK leaving the EU on the current Article 50 deadline of 31 October.

Going further down the Brexit rabbit hole, we could also see Boris Johnson refusing to request an extension and resigning, the Queen appointing Jeremy Corbyn to sort the mess out, only for a vote of no confidence motion to pass, placing the Father of the House, Ken Clarke, in temporary charge, leading to an Article 50 extension, a general election, and a possible second referendum in 2020.

Take a deep breath...

Infographic: Brexit: Endgame? | Statista

You will find more infographics at Statista

Tyler Durden Wed, 09/18/2019 - 04:15
  • 18 septembre 2019 à 10:15

Erdogan Wants To Create 'Refugee City' After Threatening To Flood Europe With 1M Syrians

Par Tyler Durden
Erdogan Wants To Create 'Refugee City' After Threatening To Flood Europe With 1M Syrians


Turkish President Recep Tayyip Erdogan announced after the first meeting at the Ankara peace talks that his country will not allow terrorists to appear in the area created on the border with Syria; instead, he has proposed to turn it into a refugee city.

“For the refugees there (on the Syrian border), it is necessary to create a city for them to participate in agriculture. I explained to my colleagues that it is necessary to build infrastructure for them,” Erdogan said.

Syrian refugees in Turkey. Image source: The New York Times

"It is necessary to prevent the formation of a terrorist corridor,” the Turkish president said after talks with Russian President Vladimir Putin and Iranian President Hassan Rouhani in Ankara on Monday.

The Turkish capital Ankara on Monday hosted the tripartite summit of the guarantors of the Astana process (Russia, Turkey and Iran) on the Syrian settlement.

During the meeting on Monday, the three presidents agreed to establish a constitutional committee to resolve future political disputes.

With refugees from Syria used in a negotiating tug-of-war between Turkey and the EU, the Balkan region might have to carry the brunt of any large numbers of people on the move trying to reach safety in Western Europe:

— Balkan Insight (@BalkanInsight) September 17, 2019

Furthermore, the three presidents discussed the future of the Idlib Governorate, but no official agreement was made to resolve their differences.

* * *

Syrian refugees in a Turkish camp. Image source: AP

Erdogan's "refugee city" idea comes after earlier this month he issued a 'with us or against us' ultimatum to the world, promising that if he couldn't have his Syria 'safe zone' (read: land grab to ethnically cleanse Syrian Kurds), he would flood Europe with one million refugees in response: 

You either support us to have a safe zone in Syria, or we will have to open the gates. Either you support us or no one should feel sorry. We would like to host 1 million refugees in the safe zone,” he said at the time

It remains unclear, however, whether the so-called refugee city would be on Turkish soil or "newly acquired" Syrian territory occupied by the Turkish Army. Mostly likely in Erdogan's mind it would be the former. 

Tyler Durden Wed, 09/18/2019 - 03:30
  • 18 septembre 2019 à 09:30

Russia Will Be The First To Deploy Hypersonic Missiles On Submarines

Par Tyler Durden
Russia Will Be The First To Deploy Hypersonic Missiles On Submarines

As far as hypersonic development, the Russian Navy is far outpacing the US Navy. Russia is expected to be the first country to deploy hypersonic cruise missiles on submarines, reported Forbes

Earlier this year Russian sources told Forbes that submarine-launched hypersonic missile tests would be conducted in 2020.

The missile in focus is called 3M22 Zircon, a scramjet-powered maneuvering anti-ship hypersonic cruise missile that will be launched from the latest nuclear-powered cruise missile submarine called the K-561 Kazan. 

Zircon is a winged hypersonic cruise missile that can travel at Mach 8 to Mach 9 (6,090 to 6,851 mph). The missile's range is estimated at 620 miles, can already be launched from aircraft, ships, ground-based launch systems, and soon to be submarines. 

Forbes said the Russian Navy is going through an unprecedented transformation, ever since it started launching cruise missiles from submarines into Syria. Before that, Russia developed its cruise missiles, fired from submarines, for anti-ship operations. 

"For much of the Cold War, the missiles carried by Russian submarines were focused on hitting ships at sea, particularly the US Navy's formidable aircraft carriers. It was not until the conflict in Syria that Russia began using submarine launched cruise missiles in a similar way to the US Navy's Tomahawk missile; as a long-range surgical strike weapon." 

The Tomahawk Land Attack Missile is primarily launched from submarines and ships by the US Navy and Royal Navy. It flies at Mach 0.75 (575 mph) with a range 1,550 miles. 

Russia's new missile is so advanced that upon it being deployed by submarines, it would create a significant power shift away from the US Navy. The shift in power would add a new layer of deterrence for Russia that would have the US Navy very concerned, that is because the US Navy doesn't have any countermeasures against hypersonic weapons. 

A submarine-launched missile test of the Zircon could pave the way for deployment in the near term. 

Forbes said by 2030 Russia could have at least eight submarines armed with Zircon missiles, and 17 by 2040. 

And in a bizarre report earlier this month, President Vladimir Putin revealed he was ready to sell the US some of Russia's hypersonic missiles, if President Trump was willing to return to serious strategic arms talks after the US-backed out of the Intermediate-Range Nuclear Forces Treaty (INF). 

Last year Russia's defense ministry touted a range of experimental weapons it said could counter and evade any US anti-aircraft defense measures, including a nuclear-powered missile that could traverse the globe endlessly. 

For a glimpse of a land-based launch of a Russian hypersonic missile, Russia-24 published a video from the Ministry of Defence of the Russian Federation that shows a successful launch of a new hypersonic interceptor missile.

На полигоне Сары-Шаган (Республики Казахстан) боевым расчетом войск противовоздушной и противоракетной обороны ВКС успешно проведен очередной испытательный пуск новой ракеты российской системы противоракетной обороны (ПРО)#Минобороны #ВКС #ПРО #Казахстан #СарыШаган

— Минобороны России (@mod_russia) June 4, 2019

So the question we ask: Is Russia winning the hypersonic development race?

Tyler Durden Wed, 09/18/2019 - 02:45
  • 18 septembre 2019 à 08:45

Will The Bank Of England Join The Loose-Money Bandwagon?

Par Tyler Durden
Will The Bank Of England Join The Loose-Money Bandwagon?

Authored by Ben Lord via,

As the year of the 325th anniversary of the Bank of England’s foundation, and as the month of one of the Bank’s more important rate-setting decisions since 2008, September provides a congruous occasion on which to reflect on the history of the BoE and consider what the future holds for it. Founded in 1694 as a private bank to the government, it was in 1998 that the BoE was granted independence from the government in setting monetary policy.

Now the UK faces perhaps its greatest political uncertainty in a generation, it is worth asking the question: to what extent will this independence continue?

We have already seen the effect of populist leaders on central banks that are ostensibly independent. The obvious case is that of the US, but there are other examples to be found of central banks facing political pressure to keep monetary policy easy, from Turkish President Erdogan’s sacking of the then central bank governor, to the ECB’s reaction to persistently low growth in Europe. Even if Trump doesn’t control the Fed directly, he certainly controls the market, which in turn has forced the hand of the central bank and led to the Fed cutting rates with the economy in expansion. And with ever more monetary sweets to choose from in the jar, which politician could resist raiding the cupboard and giving their economy a sugar high of rate cuts, QE and lending?

Pressure on the Fed is likely only to increase as the 2020 elections approach: if President Trump is able to engineer further cuts, and then get the markets soaring with a trade deal and promises of tax cuts just in time for elections, we might begin to agree he is – in his words – “a very stable genius”.

For now the UK seems to have escaped the global disinflation which started in Japan and is now being seen in Europe. That fits the BoE’s line, which is that they plan to hike rates, irrespective of the outcome of Brexit. Mark Carney has even warned investors that they are underestimating how much interest rates could rise. Does the market believe him? It’s certainly not our base case: the strategy of hawkish language to prep the market for rate hikes evidently didn’t work for Jerome Powell. If the UK does leave the European Union on 31st October without a deal, UK growth is likely to suffer – if the BoE’s goal is financial stability, it would be hard to justify a rate hold, let alone hike. So far the BoE’s forecasts are based on the assumption of an orderly Brexit, but they have made no public change to this in light of the ever-growing likelihood of a hard exit.

Some investors argue that a lower sterling (inevitable in the event of a ‘no deal’ Brexit, and also likely if the BoE engages in quantitative easing) would lead to considerable imported inflation due to increased export demand. This would justify a hawkish policy response. Here, however, a direct parallel may be drawn with that which we have witnessed in the US this year. The data in the US (strong wages, low unemployment, a solid consumer) may well justify a continued hiking cycle, but with a nervous market which has been placated by the promise of monetary easing, would a rate hike really help economic stability? The Fed evidently asked themselves this question and didn’t think so. Unlike in the US, rate cuts are not priced in by the UK market so far: currently, the implied probability of no change at the next MPC meeting is close to 100%, while in the US the implied probability of another cut in September’s FOMC meeting is close to 100%. But in the event of a ‘no deal’ Brexit in a month’s time, market expectations going forward may well be very different.

There are other uncertainties which will follow Brexit. Many now expect a general election to take place shortly after 31st October. Would a Corbyn-led government follow a similar nationalization of governmental institutions as of infrastructure? It would certainly increase fiscal spend, leading to considerable debt issuance and downward pressure on gilt prices from increased supply. And given that higher interest rates promote the interests of asset-owners/lenders over borrowers, it is likely that such a government would seek to lower the cost of borrowing in any way possible.

And which rate should be thought of as “neutral” anyway? The 2% CPI target which the BoE follows has been changed in the past. In a post-Brexit world of potentially dampened growth prospects, it may be that this already fairly arbitrary number faces pressure. With low inflation and growth around the world, we would argue that it is fiscal policy which should concern itself with growth, and monetary with inflation.

For now the Bank of England continues to plough its lone furrow of hawkishness. But as the clock ticks down to 31st October and a hard Brexit seems ever more likely, it may be hard for the new BoE governor to avoid joining the loose money bandwagon.

Tyler Durden Wed, 09/18/2019 - 02:00
  • 18 septembre 2019 à 08:00

Democratic Donor And 'Dangerous Sexual Predator' Ed Buck Arrested After Third Man Overdoses In LA Apartment

Par Tyler Durden
Democratic Donor And 'Dangerous Sexual Predator' Ed Buck Arrested After Third Man Overdoses In LA Apartment

Democratic political activist and noted donor Ed Buck was arrested Tuesday night at his West Hollywood apartment where two men died of meth overdoses and a third, 37-year-old man, overdosed last week. The arrest came hours after President Trump was in the area for a fundraising blitz

Ed Buck and current House Intelligence Committee Chairman Rep. Adam Schiff (D-CA)

Buck has been charged with one felony count each of battery causing serious injury, administering methamphetamine and maintaining a drug house

Video of Ed Buck's arrest #SDLive #GreatAwakeningWorldwide 3 men have died in his residence in last few years-WTF is he a serial killer?

— Truth Nut ⭐️⭐️⭐️ (@martel_al) September 18, 2019

Prosecutors have accused Buck of injecting the latest victim with two large doses of methamphetamine at his apartment on September 11, causing the man to overdose according to the indictment. After Buck refused to help the man and thwarted his attempts to get help, the man was able to flee the apartment and call 911 from a nearby gas station from which he was taken to a local hospital for treatment. 

Notably, the Daily Mail documented a young black man with a bandage on his arm visiting Buck's apartment on September 11. 

Hundreds of photographs of men in compromising positions were found in Buck's apartment according to court records. 

Screenshots of Damar Love (friend of Gemmel Moore)and Ed Buck allegedly at Buck's home., summer of 2017 via Weho Times

and have characterized him as a "violent, dangerous sexual predator," who uses drugs, money and shelter to lure black men struggling with addiction and homelessness into his home where he "manipulates them into participating in his sexual fetishes," according to KTLA. Accordingly, his bail has been requested at $4 million by prosecutors, who argued that he is a threat to the community. 

In a photo obtained by, Buck smokes meth with a painfully thin, drug-addicted homeless young black man in his apartment - a partner he had found on the street and offered $300 to carry out his bizarre 'fetish' requests. Buck ordered the man to wear dirty white long johns and black leather 'f***ing boots'

The 65-year-old gay rights activist was notably given a pass after the first two men died in his apartment in what were ruled accidents. 

The first man, 26-year-old Gemmel Moore, died on July 27, 2017. Prosecutors cited insufficient evidence in declining to press charges against Buck in connection with Moore’s death, which was ruled an accidental methamphetamine overdose.

A second man, 55-year-old Timothy Dean, died of methamphetamine and alcohol toxicity on Jan. 7. Dean’s autopsy report said he died at least 15 minutes before anyone called 911. That death was also ruled accidental. -KTLA

"The full scope of his consistent malicious behavior is unknown," said prosecutors, adding "It is only a matter of time before another one of these vulnerable young men dies of an overdose."

Read more on Buck's alleged behavior here.

Buck has been a prominent figure in Democratic circles, associating with and donating to the likes of Democrats Ted Lieu, the Clintons, Adam Schiff and former California Governor Jerry Brown.

Ed Buck with Democrats Ted Lieu, Clinton, Adam Schiff and former California Gov Brown.

— Kambree Kawahine Koa (@KamVTV) September 18, 2019

@RepAdamSchiff & Ed Buck just hangin' out

— - simply balance - (@Synergist_Exp) September 18, 2019
Los Angeles Mayor Eric Garcetti, Deputy Mayor Szabo and Ed Buck

If convicted, Buck faces a maximum possible sentence of five years and eight months in state prison according to KTLA.  

Criminal Complaint Against Longtime Democratic Donor Ed Buck...

— Andrew Blankstein (@anblanx) September 18, 2019
Tyler Durden Wed, 09/18/2019 - 01:23
  • 18 septembre 2019 à 07:23

The Magnitskiy Myth Exploded

Par Tyler Durden
The Magnitskiy Myth Exploded

Authored by Craig Murray,

The conscientious judges of the European Court of Human Rights published a judgement a fortnight ago which utterly exploded the version of events promulgated by Western governments and media in the case of the late Mr Magnitskiy.

Yet I can find no truthful report of the judgement in the mainstream media at all.

The myth is that Magnitskiy was an honest rights campaigner and accountant who discovered corruption by Russian officials and threatened to expose it, and was consequently imprisoned on false charges and then tortured and killed. A campaign over his death was led by his former business partner, hedge fund manager Bill Browder, who wanted massive compensation for Russian assets allegedly swindled from their venture. The campaign led to the passing of the Magnitskiy Act in the United States, providing powers for sanctioning individuals responsible for human rights abuses, and also led to matching sanctions being developed by the EU.

However the European Court of Human Rights has found, in judging a case brought against Russia by the Magnitskiy family, that the very essence of this story is untrue.

They find that there was credible evidence that Magnitskiy was indeed engaged in tax fraud, in conspiracy with Browder, and he was rightfully charged. The ECHR also found there was credible evidence that Magnitskiy was indeed a flight risk so he was rightfully detained. And most crucially of all, they find that there was credible evidence of tax fraud by Magnitskiy and action by the authorities “years” before he started to make counter-accusations of corruption against officials investigating his case.

This judgement utterly explodes the accepted narrative, and does it very succinctly:

The applicants argued that Mr Magnitskiy’s arrest had not been based on a reasonable suspicion of a
crime and that the authorities had lacked impartiality as they had actually wanted to force him to
retract his allegations of corruption by State officials. The Government argued that there had been
ample evidence of tax evasion and that Mr Magnitskiy had been a flight risk.

The Court reiterated the general principles on arbitrary detention, which could arise if the
authorities had complied with the letter of the law but had acted with bad faith or deception. It
found no such elements in this case: the enquiry into alleged tax evasion which had led to
Mr Magnitskiy’s arrest had begun long before he had complained of fraud by officials.
The decision
to arrest him had only been made after investigators had learned that he had previously applied for
a UK visa, had booked tickets to Kyiv, and had not been residing at his registered address.

Furthermore, the evidence against him, including witness testimony, had been enough to satisfy an
objective observer that he might have committed the offence in question
. The list of reasons given
by the domestic court to justify his subsequent detention had been specific and sufficiently detailed.

The Court thus rejected the applicants’ complaint about Mr Magnitskiy’s arrest and subsequent
detention as being manifestly ill-founded.

“Manifestly ill founded”.

The mainstream media ran reams of reporting about the Magnitskiy case at the time of the passing of the Magnitskiy Act. I am offering a bottle of Lagavulin to anybody who can find me an honest and fair MSM report of this judgement reflecting that the whole story was built on lies.

Magnitskiy did not uncover corruption then get arrested on false charges of tax evasion. He was arrested on credible charges of tax evasion, and subsequently started alleging corruption. That does not mean his accusations were unfounded. It does however cast his arrest in a very different light.

Where the Court did find in favour of Magnitskiy’s family is that he had been deprived of sufficient medical attention and subject to brutality while in jail. I have no doubt this is true. Conditions in Russian jails are a disgrace, as is the entire Russian criminal justice system. There are few fair trials and conviction rates remain well over 90% – the judges assume that if you are being prosecuted, the state wants you locked up, and they comply. This is one of many areas where the Putin era will be seen in retrospect as lacking in meaningful and needed domestic reform. Sadly what happened to Magnitskiy on remand was not special mistreatment. It is what happens in Russian prisons. The Court also found subsequent Magnitskiy’s conviction for tax evasion was unsafe, but only on the (excellent) grounds that it was wrong to convict him posthumously.

The first use of the Magnitsky Act was to sanction those subject to Browder’s vendetta in his attempts to regain control of vast fortunes in Russian assets. But you may be surprised to hear I do not object to the legislation, which in principle is a good thing – although the chances of Western governments bringing sanctions to bear on the worst human rights abusers are of course minimal. Do not expect it to be used against Saudi Arabia, Bahrain or Israel any time soon.

*  *  *

Unlike his adversaries including the Integrity Initiative, the 77th Brigade, Bellingcat, the Atlantic Council and hundreds of other warmongering propaganda operations, Craig's blog has no source of state, corporate or institutional finance whatsoever. It runs entirely on voluntary subscriptions from its readers – many of whom do not necessarily agree with the every article, but welcome the alternative voice, insider information and debate. Subscriptions to keep Craig's blog going are gratefully received.

Tyler Durden Tue, 09/17/2019 - 23:45
  • 18 septembre 2019 à 05:45