Fed Buys $587 Billion In Bonds In Past Week, 2.7% Of GDP, Just As Foreign Central Banks Start To Liquidate

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Fed Buys $587 Billion In Bonds In Past Week, 2.7% Of GDP, Just As Foreign Central Banks Start To Liquidate

Having moved from "Not QE" (or QE4 as it was correctly called), to the $750BN QE5 which came and went with the blink of an eye, to the Fed's open-ended and unlimited QEnfinity in the span of one week, the full "shock and awe" of the Fed's money printer is now on full display, and in just the past week, from March 19 to Marc

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h 25, the Fed has purchased $587BN in securities ($375BN in TSYs, $212BN in MBS), or roughly 2.7% of the $21.4TN in US GDP.

This means that as of Wednesday close, when accounting for last week's repo operations, the Fed's balance sheet has increased by roughly $650BN, bringing it to just over $5.3 trillion, an increase of $1.2 trillion in the past two week, or roughly 5.6% of US GDP.

Some more scary statistics: if the Fed continues QE at the current pace of $625 billion per week, the Fed's balance sheet will hit $10 trillion by June, or just below 50% of US GDP. Even assuming the Fed eases back of the gas pedal, its balance sheet is almost certain to hit $7 trillion by June.

Which is hardly an accident: one look at the Treasury securities held in custody at the Fed shows that the past two weeks have seen a whopping $50BN in foreign central bank sales, a 1.7% drop which was the highest in six years since Russia pulled over $100BN in TSYs from the Fed at the start of the Crimean war in 2014.

As Bloomberg observes, the selling may have contributed to record volatility in the Treasury market and prompted the Fed’s intervention. More importantly, it also means that the biggest buyer of US Treasurys in the past decade, foreign official institutions (i.e., central banks and reserve managers) are now sellers, so now the U.S. government needs private investors to soak up the ever increasing debt issuance.

And since those are busy avoiding a deadly virus, it means that only the Fed now can fund the exploding US budget deficit... which is precisely what it is doing.

Ironically, it was back on Jan 28, just as the world was learning about the coronavirus pandemic that we showed the long-term trajectory of the Fed's balance sheet as calculated by the CBO...

... when we said when we said that "MMT will be launched after the next financial crisis, and which will see the Fed directly monetize US debt issuance from the Treasury until the dollar finally loses its reserve currency status."

We were right about the first part. Now we just have to wait for the second.

Tyler Durden

Wed, 03/25/2020 - 22:10

Foreign Central Banks Dump Treasuries For 17th Straight Month, Continue To Hoard More Gold

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Foreign Central Banks Dump Treasuries For 17th Straight Month, Continue To Hoard More Gold

For the first time since June, China added to its US Treasury holdings in January (the latest month from TIC data).

The total for China -- the second-largest holder of U.S. government debt after Japan - rose $8.7 billion in January to $1.08 trillion.

Source: Bloomberg

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The coming months’ data will help show if the virus’s blow to China’s economy is starting to pressure central bank officials to sell Treasuries to support the yuan, a step they’ve avoided over the past several years, preferring instead to manage the currency via the daily fixing, says Mark Sobel, former IMF and Treasury official and chair of the OMFIF.

If COVID-19 hit the yuan hard, he said, “China might intervene to cushion any decline.”

Japan remains the largest foreign holder with $1.21 trillion, as the value of its holdings rose $56.8 billion at the start of the year, the data showed.

Source: Bloomberg

Overall, Foreigners were net buyers of US assets excluding corporate debt

  • Foreign net buying of Treasuries at $25.6b

  • Foreign net buying of equities at $2b

  • Foreign net selling of corporate debt at $31.8b

  • Foreign net buying of agency debt at $32.3b

But foreign central banks dumped US Treasuries for the 17th straight month...

Source: Bloomberg

But, while reducing of exposure to US Treasuries continues worldwide, Central banks started out 2020 buying more gold.

Source: Bloomberg

On net, central banks added 21.5 tons of gold to their reserves in January, according to the latest data from the World Gold Council.

Central bank demand came in at 650.3 tons in 2019. That was the second-highest level of annual purchases for 50 years, just slightly below the 2018 net purchases of 656.2 tons. According to the WGC, 2018 marked the highest level of annual net central bank gold purchases since the suspension of dollar convertibility into gold in 1971, and the second-highest annual total on record.

The World Gold Council bases its data on information submitted to the International Monetary Fund.

Turkey was the leading gold-buyer in January. The Turks added 16.2 tons of gold to their reserves.

Russia continued to stockpile the yellow metal, adding another 8.1 tons to their hoard. Russia’s quest for gold has paid off in a big way. The Russian Central Bank’s gold reserves topped $100 billion in September 2019 thanks to continued buying and surging prices.

The Russians have been buying gold for the last several years in an effort to diversify away from the US dollar.  Russian gold reserves increased 274.3 tons in 2018, marking the fourth consecutive year of plus-200 ton growth. Meanwhile, the Russians sold off nearly all of its US Treasury holdings. According to Bank of America analysts,  the amount of US dollars in Russian reserves fell from 46% to 22% in 2018.

Mongolia and Kazakhstan both added 1 ton of gold to their reserves in January. The only other buyer was Greece at 0.1 tons.

There were two significant net-sellers – Uzbekistan (2.2t) and Qatar (1.6t).

The People’s Bank of China did not report any gold purchases for the fourth straight month  It’s not uncommon for China to go silent and then suddenly announce a large increase in reserves.

January’s net gold purchases represented a 57% decline year-on-year. World Gold Council analyst Krishan Gopaul said it was too early to determine what this could mean for 2020.

World Gold Council director of market intelligence Alistair Hewitt said there are two major factors driving central banks to buy gold – geopolitical instability and extraordinarily loose monetary policy.

Central banks are looking toward gold to balance some of that risk. We’ve also got negative rates and yields for a large number of sovereign bonds.”

“This recent trend shouldn’t be ignored. But nor should we also lose sight of the fact that central banks remain net purchasers, even if at a lower level than we have come to expect to in the last two years.”

Peter Schiff has talked about central bank gold-buying. He has noted that the US went off the gold standard in 1971, but he thinks the world is going to go back on it.

The days where the dollar is the reserve currency are numbered and we’re going back to basics. You know, everything old is new again. Gold was money in the past and it will be money again in the future, and central banks that are smart enough to read that writing on the wall are increasing their gold reserves now.”

Ron Paul made a similar point in an episode of the Liberty report. He said foreign central banks are increasingly gravitating to sound money like gold and ripping themselves away from the Fed’s dollar.

The central banks of the world are looking at gold again.”

Tyler Durden

Mon, 03/16/2020 - 16:12

'US Army Behind Covid-19 In Wuhan': China's Foreign Ministry Levels Bombastic Charge

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'US Army Behind Covid-19 In Wuhan': China's Foreign Ministry Levels Bombastic Charge

A truly bombshell and unprecedented accusation, underscoring that if Sino-US relations amid the broader crisis weren't already bad enough, they're about to crash much, much lower: China's Foreign Ministry spokesman tweets "it might be the US Army who brought the epidemic to Wuhan" — the widely acknowledged epicenter and origin point of the Covid-19 pande

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Such shock allegations have recently been swirling in foreign media, especially in Chinese, Iranian and Russian press; however, this is the first time such a high Beijing has leveled the charge — this after President Trump controversially referred to it as a "foreign virus". 

Foreign Ministry spokesman Zhao Lijian made the remarks on his official Twitter account Thursday, citing prior televised testimony by CDC Director Robert Redfield to the House Oversight Committee:

After for months the globe wrangled over "patient zero" and origin points in China, including scrutiny focused on the Chinese state-owned virology lab in Wuhan, which itself happened to be in the ground zero hot zone, it appears Beijing is now aggressively deflecting "blame" for the spread.

"Make public your data! US owe us an explanation!" [sic] Lijian demanded.

Foreign Ministry spokesman Zhao Lijian, file image.

He said: 

When did patient zero begin in US? How many people are infected? What are the names of the hospitals? It might be US army who brought the epidemic to Wuhan. Be transparent!

So it appears the official Chinese party line is now that the virus originated in the United States!

The charge appears rooted in the part of Redfield's testimony where he said early Covid-19 cases were mistaken for regular influenza.

Formerly as deputy chief of mission at China's embassy in Pakistan, Lijian actaully has a history of combative and bombastic statements on Twitter that many in the West have actually compared to Donald Trump's social media style of unfiltered accusations.

It'll be interesting to see if other top officials in Beijing and in the Communist Party double down on this tweets and affirm these "suspicions" and outlandish accusations leveled at Washington.

Tyler Durden

Thu, 03/12/2020 - 11:55

Americans' Vanishing Fear Of Foreign Trade

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Americans' Vanishing Fear Of Foreign Trade

Authored by Lydia Saad via Gallup

Story Highlights

  • Nearly four in five Americans now see trade as mainly an opportunity

  • Fewer than one in five consider trade an economic threat, an all-time low

  • New U.S.-Mexico-Canada Agreement on trade is favored by both parties

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More Americans than Gallup has seen in a quarter century view foreign trade positively, with 79% calling it "an opportunity for economic growth through increased U.S. exports."

Fewer than one in five (18%) -- down by about half from 34% in 2016, and the lowest Gallup has recorded -- now perceive trade as mainly a "threat to the economy from foreign imports." A high of 52% of Americans held this skeptical view of trade during the last recession.

While the percentage of Americans viewing trade as a threat has slipped three percentage points in the past year, the share viewing it positively has risen five points to 79%.

The latest results are from Gallup's 2020 World Affairs survey, conducted Feb. 3-16. Gallup has asked this question periodically since 1992, including annually since 2011.

Americans' perceptions of whether trade is more of a benefit or a hindrance have closely tracked the U.S. economy, particularly since the 2007-2009 recession. As that recession got underway, Americans were highly likely to view trade as a threat because of imports. But as the economy improved and unemployment declined to historical lows, so too have perceptions of trade as an economic threat.

Party Groups Largely Agree on Trade

Trade enjoys strong bipartisan support in the U.S. today, with roughly eight in 10 Democrats (82%) and Republicans (78%), in addition to 76% of independents, seeing it as more of an opportunity for growth than a threat from imports.

Today's views by party reflect marked increases in both Democrats' and Republicans' positive outlook on trade since their low points in 2008 and 2012, respectively.

NAFTA's Replacement Enjoys Broad Support

The new poll was conducted shortly after President Donald Trump signed the United States-Mexico-Canada Agreement (USMCA) -- his long-promised replacement for the North American Free Trade Agreement (NAFTA) -- after bipartisan approval of the bill in both houses of Congress over the prior month. Trump and his North American counterparts signed the initial agreement over a year ago, but its implementation has been held up as congressional Democrats negotiated with the Trump administration over environmental and labor provisions.

Americans' views of the USMCA closely mirror their opinions of trade overall. Eight in 10 say the agreement will be good for the U.S., while 13% predict it will be bad.

Reflective of the bipartisan nature of the USMCA's passage, the newly minted trade agreement receives high support from all party groups, including 88% of Republicans, 78% of independents and 73% of Democrats.

This reaction is similar to Americans' initial response to NAFTA after that agreement was proposed during Republican George Bush's presidency in 1991. At that time, 72% of U.S. adults thought it would be good for the U.S., including 71% of both Republicans and independents, and 73% of Democrats. It was only in later years that NAFTA became more controversial, as well as more closely associated with the Democrats, possibly in part due to Trump's declaring the agreement a "disaster" during his 2016 campaign.

Public Not Following USMCA News Story Closely

Americans' attention to news about the USMCA has been on the low side for news stories Gallup has measured since 1991. Twelve percent say they have followed it very closely and another 34% somewhat closely, while 28% say not too closely and 26% have not followed it at all. Republicans (56%) are more likely than Democrats (45%) and independents (39%) to have followed it at least somewhat closely.

The 46% of all Americans following news about the USMCA very or somewhat closely falls short of the 60% average attention score for nearly 230 news items in Gallup's trend. Support for the agreement is a bit higher among those following it closely (88%) than among those following it not too closely (79%) or not at all (67%).

Bottom Line

The large majority of Americans now see trade as mainly an opportunity for economic growth through increased exports rather than a threat from imports. Apart from continued low U.S. unemployment, which raises everyone's comfort level with trade, Republicans and Democrats likely have differing reasons to feel positively about what trade means for the country. Republicans may feel confident that trade is in better hands under Trump, while Democrats may feel that supporting trade is supporting the effectiveness of the trade deals put in place or championed by Trump's Democratic predecessors.

View complete question responses and trends.

Learn more about how the Gallup Poll Social Series works.

Tyler Durden

Fri, 02/28/2020 - 21:45

"They're Traumatized": Governments Ignore Plight Of Foreign Students Trapped In Wuhan

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"They're Traumatized": Governments Ignore Plight Of Foreign Students Trapped In Wuhan

Beijing wasn't thrilled last month when the US, UK, Japan, South Korea and a bevy of other developed nations demanded they be allowed to evacuate their citizens from virus-stricken Wuhan, instead of leaving them to survive or die of the plague or starvation as essentials run low in a city of 11 million on lockdown.

It accused foreign governments of being alarmi

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st and acting hysterical. Interestingly, many countries, mostly in Africa, that had large numbers of students and others either studying or working in the city, opted not to pursue to evacuation route, pledging to find some other way to meet their peoples' needs.

That was a month ago.

Now, many young African students are exasperated by their governments, which they claim have basically abandoned them either to avoid straining ties with Beijing, or simply because they can't risk introducing the virus to their impoverished and deeply unprepared health-care systems.

According to Reuters, one Ugandan student in Wuhan is living in a crowded dorm. With no money, she survives on one meal a day. The student's mother, who wakes up at 3 am Uganda time every day to talk with her daughter on WeChat, told Reuters that the young students have been "traumatized" by the experience.

"They are traumatised," said Namusisi, who wakes up at 3 a.m. every day to talk to her daughters over the Chinese messaging service WeChat. "They ask, has Uganda given up on us?"

Not a single sub-Saharan country has flown their citizens home from Wuhan. And neither has Pakistan, which relies on China's support in its eternal struggle against India, especially as tensions between the two have run especially high in recent years.

According to DW, there are around 1,300 Pakistani students currently in Hubei province, 800 of them in Wuhan, the province's capital, and epicenter of the virus, which has been under lockdown for weeks. Their families gathered in Islamabad on Thursday to demand the government do something to rescue their children.

A group of Pakistani students studying in Beijing were allowed to leave the country earlier this month. But for the students in Wuhan, the government is only in intermittent contact with them and their families. The consensus is that the students will be left to wait out the outbreak.

Not only are the students living in "constant fear" of catching the virus, they are also struggling against food shortages.

Some of the students told DW that they are living under the constant fear of catching the virus. Asif Sajjad, a student at Wuhan University, said that many of them are suffering from psychological stress.

"We have been confined to our rooms for weeks. If anyone coughs or sneezes, it sends a shiver down our spines to think the person may have caught the virus," he said.

"There are food shortages, and even if we go out on the balcony, we have to cover our face. We want to know why the government does not bring us back."

The Chinese government says it has taken adequate measures to protect foreign students in Wuhan and elsewhere in Hubei.

But one student complained that he didn't even have the "recommended" facemasks mandated by health officials in China amid a widespread shortage in China. He claimed the government could have at least helped him and students like him obtain supplies.

"In addition to that we have not been provided with the recommended masks, but only the simple masks," he said, adding that the proximity of hospitals to the campus was also a concern.

"It seems the Pakistani government is not concerned about us at all. Even poor countries like the Maldives have taken out their students but we are still stuck here living in constant fear."

After telling Reuters that she had gone to the Ugandan parliament seeking help, but come up empty handed, the Ugandan mother we mentioned above recounted the story about how she told her daughters to run and go shopping as soon as they told her about the quarantine.

When Margaret Ntale Namusisi’s three daughters called her in Uganda to say they were being quarantined at their university in Wuhan, China, because of the coronavirus outbreak, she sent money and told them: "Run very fast and do shopping."

At this point, there appears to be little their families can do. Their governments have kowtowed to Beijing, which has refused to publicly acknowledge that it isn't winning the fight against the virus, and that the outbreak should be cleared up by springtime, as President Trump once said.

But pretty soon, the biggest concern for these students won't just be evading the virus. It'll be about survival as food stocks run out and millions begin to starve.

At least, that would be the worst-case scenario...

Tyler Durden

Fri, 02/21/2020 - 19:05

EU Must Develop "Appetite For Power" In Trump Era, Urges Foreign Policy Chief

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EU Must Develop "Appetite For Power" In Trump Era, Urges Foreign Policy Chief

The European Union's foreign policy chief has issued a hugely provocative statement, urging the bloc to "develop an appetite for power" to better chart its own independent course and navigate various crises especially with Trump in the White House.

"European Union governments need to be willing to intervene in international crises or risk prolo

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nging paralysis in their foreign policy, the EU’s top diplomat said on Sunday," Reuters reports. The EU’s foreign policy chief Joseph Borrell made the statements at the Munich Security Conference, while underscoring he doesn't only mean military power. 

The EU's foreign policy chief Josep Borrell, file image

The comments appeared tailored to the Trump era and the potential for another four years of him in the White House, which has witnessed the US administration tear up the Europe-backed Iran nuclear deal (JCPOA), impose record tariffs on European goods, take drastic unilateral action on the question Israel-Palestine peace, pull out of the Paris climate accord, and 'meddle' in Europe's energy affairs. 

“Europe has to develop an appetite for power,” Borrell stressed. “We should be able to act... not everyday making comments, expressing concern,” he told leaders, lawmakers and diplomats gathered for the annual forum on international security policy.

Borrell called for the bloc to speak powerfully with one voice, as opposed failing time and again on building consensus, in order to boost its “soft power” in the face of Trump's “America First” policies. “When there is no unanimity (in the EU), the remaining majority have to act,” Borrell said. Borrell is former European parliament president and recently served as Spain's foreign minister.

One immediate pressing EU foreign policy question which the continent has remain paralyzed on is coordinating to implement and monitor an arms embargo on Libya. Despite new recent commitments of EU members to uphold a United Nation arms ban, it's lately been described as "a joke" due to Europe's practical inability to implement it in the Mediterranean. 

“The arms embargo has become a joke, we all really need to step up here,” UN Deputy Special Representative to Libya Stephanie Williams said this weekend in Munich. “It’s complicated because there are violations by land, sea and air, but it needs to be monitored and there needs to be accountability,” Williams added.

The EU has watched with increased alarm as the crises in both Idlib and Libya heats up, leaving the potential for a repeat of the migrant and refugee crisis of 2015 and 2016, when hundreds of thousands flooded Europe's shores in record numbers. 

Tyler Durden

Tue, 02/18/2020 - 02:45

Austrian foreign ministry: 'State actor' hack on government IT systems is over

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Russia denies claims from well-informed broadcaster that it was homegrown Turla malware baddies

Austria's foreign ministry has said a weeks-long cyber attack from a "state actor" against its systems has ended – amid local reports that pin the blame on a Russian hacking crew and its initial four-byte payload.…


Hungarian Foreign Minister Warns UN's Push For Mass Migration Threatens "Whole Of Humanity"

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Hungarian Foreign Minister Warns UN's Push For Mass Migration Threatens "Whole Of Humanity"

Authored by Paul Joseph Watson via Summit News,

Hungarian foreign minister Péter Szijjárt warns that the United Nations is spending money on facilitating a program of mass migration that threatens the “whole of humanity.”

Instead of spending money on counter-terrorism, the UN is funding progra

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ms that encourage people to leave their homelands and head to western countries, Szijjártó told a conference in Vienna on Tuesday.

This mass migration process poses “a very serious threat to the whole of humanity,” said Szijjártó.

We call on the UN to include in its budget counter-terrorism … and to spend less on migration,” the minister told the conference, which was organized by the UN.

Passed in 2018, the UN Compact on Migration is not legally binding, but governments are under international pressure to follow its mandates.

British MEP Janice Atkinson warned that the pact could lead to Europe being flooded with 59 million new migrants within the next 6 years.

Dutch MEP Marcel de Graaff also said that the pact would grease the skids for laws that would criminalize criticism of mass immigration as hate speech.

French generals who signed an open letter accusing President Macron of “treason” for committing France to the pact were later hit with disciplinary action.

While Britain and numerous other western countries signed the migration pact, the United States refused to do so.

A 2001 United Nations document entitled ‘Replacement Migration: Is It a Solution to Declining and Ageing Populations?’ outlined a plan to flood America and Europe with hundreds of millions of migrants in order to maintain population levels.

Under the most severe scenario, large numbers of migrants will be required to “maintain the potential support ratio” (of a population) at the highest level.

In the case of the United States, under the most extreme scenario, the report states, “It would be necessary to have 593 million immigrants from 1995 to 2050, an average of 10.8 million per year.”

“By 2050, out of a United States total population of 1.1 billion, 775 million, or 73 per cent, would be post 1995 immigrants or their descendants,” adds the report.

In Europe’s case, the document asserts that at least 159 million migrant workers will need to enter by 2025 in order, “to maintain the current balance of 4 to 5 workers for a pensioner.”

Under the worst case scenario, 1.4 billion migrants would be needed by 2050, an average of 25.2 million a year. This means that by 2050, Europe’s population would be 2.3 billion, of which 1.7 billion, almost three quarters, would be migrants or their descendents.

*  *  *

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Tyler Durden

Fri, 02/14/2020 - 02:00

Netflix Reveals It Removed These 9 Films At Foreign Government Requests

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Netflix Reveals It Removed These 9 Films At Foreign Government Requests

The world's top streaming service Netflix revealed in a new internal report it calls Environment Social Governance that it has taken down nine pieces of content around the world in response to written complaints and demands from governments

The 23-year old company began conforming to such controversial censorship requests after 2015, in order to better con

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form to various countries' laws and societal norms, according to Axios. It's the first such revelation of active censorship admitted by the company.

The majority of government requests for removal came from the religiously diverse but staunchly morally conservative island city-state of Singapore. Other movies or series were taken down at the request of New Zealand, Vietnam, Germany, Brazil and Saudi Arabia — the latter instance for politically embarrassing and sensitive jokes about crown prince Mohammed bin Salman. 

"Full Metal Jacket". Warner Bros. Taken off Netflix in Vietnam.

Netflix conformed, for example, to a Saudi government request last year for the 2019 removal of comedian Hasan Minhaj “Patriot Act" standup special, related to references to the state-sponsored murder of Jamal Khashoggi. Netflix CEO Reed Hastings had defended the controversial move by saying, “We’re not in the truth to power business, we’re in the entertainment business.”

In another instance, a Brazilian court ordered Netflix to remove the comedy special "The First Temptation of Christ," after complaints from conservative Catholic groups over it's portraying Jesus as gay and other issues seen as sacrilegious. But the ruling was recently overturned by Brazil's Supreme Court. Singapore has, however, removed the film for its viewers. 

Also of note is that in 2017 Netflix complied with the removal of Stanley Kubrick's Full Metal Jacket at the request of the government of Vietnam. 

* * *

Here are all nine that were removed:

1) "The Bridge" - removed by New Zealand in 2015

"In 2015, we complied with a written demand from the New Zealand Film and Video Labeling Body to remove The Bridge from the service in New Zealand only. The film is classified as 'objectionable' in the country."

2) "Full Metal Jacked" - removed by Vietnam in 2017

"In 2017, we complied with a written demand from the Vietnamese Authority of Broadcasting and Electronic Information (ABEI) to remove 'Full Metal Jacket' from the service in Vietnam only." 

3) "Night of the Living Dead" - removed by Germany in 2017

New Line

"In 2017, we complied with a written demand from the German Commission for Youth Protection (KJM) to remove 'Night of the Living Dead' from the service in Germany only. A version of the film is banned in the country."

4, 5, & 6) "Cooking on High," "The Legend of 420," and "Disjointed" - removed by Singapore in 2018

"In 2018, we complied with a written demand from the Singapore Infocomm Media Development Authority (IMDA) to remove 'Cooking on High,' 'The Legend of 420,' and 'Disjointed' from the service in Singapore only."

7) "Patriot Act with Hasan Minhaj" episode titled "Saudi Arabia" - removed by Saudi government request in 2019

"In 2019, we complied with a written demand from the Saudi Communication and Information Technology Commission to remove one episode—'Saudi Arabia'—from the series 'Patriot Act with Hasan Minhaj' from the service in Saudi Arabia only."

8) "The Last Temptation of Christ" - removed by Singapore in 2019

"In 2019, we received a written demand from the Singapore Infocomm Media Development Authority (IMDA) to remove 'The Last Temptation of Christ' from the service in Singapore only. The film is banned in the country."

9) "The Last Hangover" - removed by Singapore in 2020


"In 2020, we complied with a written demand from the Singapore Infocomm Media Development Authority (IMDA) to remove 'The Last Hangover' from the service in Singapore only."

Tyler Durden

Fri, 02/07/2020 - 23:05




Bomb Hits Foreign Troops In Afghanistan 

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Bomb Hits Foreign Troops In Afghanistan 

Reuters has confirmed that a roadside bomb has hit a convoy of US troops on Saturday operating in Afghanistan's southern province of Kandahar. 

NATO spokesman and an Afghan government official said an assessment of the incident is underway, and there are no details on casualties. 

A senior Afghan military official said the Taliban have so far declared responsibility for the attack.

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r />

The attack took place in the Dand District, situated in the center of Kandahar, when a device of some sort hit armored vehicles carrying US troops. 

Taliban spokesman Qari Yousuf Ahmadi said the blast killed all soldiers in one vehicle. Reuters notes that the Taliban usually inflate causality reports when talking about the US, foreign, and Afghan troops.

With an assessment by the US military underway – there is still no word on causalities. There could be updates within the next 24 hours. 

The US has approximately 14,000 troops stationed in the country. 

Threats of a regional war between the US and Iran have certainly been elevated this month. Tehran has warned that US military bases in Afghanistan could become targets. This means the US-Iran conflict risks spilling over into Afghanistan, which could emerge as a new war theatre between the two countries if tensions increase. 

Tyler Durden

Sat, 01/11/2020 - 05:52


War Conflict


Nord Stream Sanctions: A Sad Coda To U.S. Foreign Policy

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Nord Stream Sanctions: A Sad Coda To U.S. Foreign Policy

Authored by Tom Luongo, via Gold, Goats, 'n Guns blog,

The U.S. crossed the Rubicon this week. And I’m not talking about the ridiculous impeachment of President Trump for doing his job.

I’m talking about passing the NDAA with provisions to sanction ‘from hell’ anyone associated with completion of the Nordstream 2 pipeline.

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ong>The U.S. is now openly dismissive as a matter of law any ally or partner who engages in economic activity it disapproves of.

We do this all the time with countries we consider rivals or who have committed ‘human rights abuses’ or contravened international laws or societal norms.

But this is about a simple commercial transaction. Yes, it has geopolitical implications, but those are secondary. No one will be harmed by Nord Stream 2. The real harm is to the U.S.’s ability to bring political pressure on European countries to adopt its anti-Russian policies.

This pipeline is, ultimately, none of the U.S.’s business. It is an energy project openly entered into by six companies in accordance with EU regulations (which, thanks to U.S. pressure, changed during its construction) to provide energy security to Germany.

Germany needs the pipeline, so does most of Europe through reselling the gas. The U.S. takes this step now in imperial fashion because everything else has failed.

It presupposes that Russia and Europe are enemies. They are not. And if Ted Cruz (R-Oil Country) wants to define their relationship for them in that way, then he should introduce a declaration of war on Russia and force a NATO resolution to that effect.

He’s not doing that. He’s simply creating an international incident and ensuring the breakup of NATO that much more quickly.

Seriously, are these people that brain dead?

I think so.

And that should tell you how important this issue is not only to Russia but to Germany and the EU.

Europe is willing to defy the U.S. on Nordstream to the point of forcing the U.S. to openly and nakedly destroy its reputation with European contractors and governments to stop one pipeline in a place where multiple gas pipelines will be needed for future growth.

This is the diplomatic equivalent of the nuclear option.

And the neocons in the Senate just pushed the button.

Europe understands what this is really about, the U.S. retaining its imperial position as the policy setter for all the world. If it can set energy policy for Europe then it can set everything else.

And it’s clear that the leadership in Europe is done with that status quo.

The Trump administration from the beginning has used NATO as an excuse to mask its real intentions towards Europe, which is continued domination of its policies.

Trump complains that the U.S. pays into NATO to protect Europe from Russia but then Europe buys its energy from Russia.

That’s unfair, Donald complains, like a little bitch, frankly, even though he right on the surface.

But if the recent NATO summit is any indication, Europe is no longer interested in NATO performing that function. French President Emmanuel Macron wants NATO re-purposed to fight global terror, a terrible idea.

NATO should just be ended.

But you’ll notice how Trump doesn’t talk about that anymore. He wants more billions pumped into NATO while the U.S. still sets its policies. This is not a boondoggle for the MIC as much as it’s a Sword of Damocles to hold over Europe’s head.

The U.S.’s involvement in should be ended immediately, the troops brought home and the billions of dollars spent here as opposed to occupying most of Europe to point missiles at a Russia wholly uninterested in imperial ambitions no less harboring any of them.

And Trump also knows this but thinks stopping Nordstream 2 is the price Europe has to pay him for this privilege. It’s insane.

The time has come for Europe to act independently from the U.S. As much as I despise the EU, to untangle it from the U.S. on energy policy is the means by which for it to then deal with its problems internally. It can’t do that while the U.S. is threatening it. Circling the wagons against the immediate threat, as it were.

And that means protecting its companies and citizens from the economic depredations of power-mad neoconservatives in the U.S. Senate like Ted Cruz and Lindsey Graham.

Allseas, the Swiss company laying the pipe for Nordstream 2, has halted construction for now, awaiting instructions from the U.S. Gazprom will likely step in to finish the job and Germany will green light any of the necessary permits to get the pipeline done.

Those people will be put out of work just in time for Christmas, turning thousands of people against the U.S. Commerce drives people together, politics drives them apart.

But, at the same time, the urgency to finish Nordstream 2 on time is wholly irrelevant now because Ukraine and Russia came to terms on a new five-year gas transit contract. This ensures Gazprom can meet its contractual deliveries to Europe that no one thought could be done on time.

But when the Nazi threat to Zelensky meeting with Merkel, Macron and Putin in Paris failed to materialize, a gas deal was on the horizon.

And, guess what? U.S. LNG will still not have the marginal lever over Europe’s energy policy because of that. Putin and Zelensky outmaneuvered Cruz, Graham and Trump on this.

Because that’s what this boils down to. By keeping Russian gas out of Europe, it was supposed to constrain not only Russia’s growth but also Europe’s. Because then the U.S. government can control who and how much energy can make it into European markets at critical junctures politically.

That was the Bolton Doctrine to National Security. And that doctrine brought nothing but misery to millions.

And if you look back over the past five years of U.S./EU relations you will see this gambit clearly for what it was, a way to continue European vassalage at the hands of the U.S. by forcing market share of U.S. providers into European markets.

Again, it gets back to Trump’s ideas about Energy Dominance and becoming the supplier of the marginal erg of energy to important economies around the world.

The smart play for the EU now that the gas transit deal is in place is to threaten counter-sanctions against the U.S. and bar all LNG shipments into Europe. Gas prices are at historic lows, gas supplies are overflowing thanks to fears of a deal not being in place.

So, a three to six month embargo of U.S. LNG into Europe to bleed off excess supply while Nordstream 2 is completed would be the right play politically.

But, in reality, they won’t need to, because the U.S. won’t be able to import much into Europe under current prices and market conditions. And once Nordstream 2 is complete, LNG sales to Europe should crater.

In the end, I guess it’s too bad for Ted Cruz that economics and basic human ingenuity are more powerful than legislatures. Because Nordstream 2 will be completed. Turkstream’s other trains into Europe will be built. Venezuela will continue rebuilding its energy sector with Russian and Chinese help.

There is no place for U.S. LNG in Europe outside of the Poles literally burning money virtue signaling their Russophobia.

Nordstream 2 was a response to the revolt in Ukraine, to replace any potential losses in market share to Europe. Now Russia will have what it had before passing through Ukraine along with Nordstream 2. By 2024 there will be at least two trains from Turkstream coming into Europe.

Iran will keep expanding exports, settling its oil and gas trade through Russian banks. And the U.S. will continue to fulminate and make itself even more irrelevant over time.

What men like Ted Cruz and Donald Trump refuse to understand is that when you go nuclear you can’t ever go back. If you threaten the nuclear option, there’s no fall back position.

And when those that you threaten with annihilation survive they are made all the stronger for passing through the eye of the needle.

Looking at Gazprom’s balance sheet right now, that’s my take.

*  *  *

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Tyler Durden

Sun, 12/22/2019 - 09:20

Elizabeth Warren's "Foreign Policy" - Is She Really As Ignorant As She Appears?

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Elizabeth Warren's "Foreign Policy" - Is She Really As Ignorant As She Appears?

Authored by Raul Ilargi Meijer via The Automatic Earth blog,

Ronald Reagan and Mikhail Gorbachev first met in Geneva in 1985, in a summit specifically designed to allow them to discuss diplomatic relations and the -nuclear- arms race. At the time, the Soviet Union had started to crumble, but it was still very much the Soviet Union. They

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met again in 1986 in Reykjavik, in a summit set up to continue these talks. There, they came close to an agreement to dismantle both countries’ nuclear arsenals.

They met once again in Washington in 1987. That was the year Reagan made his famous “Mr. Gorbachev, tear down this wall” speech about the Berlin wall. Then they held a next summit in 1988 in Moscow, where they finalized the Intermediate-Range Nuclear Forces Treaty (INF) after the US Senate’s ratification of the treaty in May 1988.

Reagan’s successor George H.W. Bush met with Gorbachev first in December 1989 in Malta, and then the two met three times in 1990, among others in Washington where the Chemical Weapons Accord was signed, and in Paris where they signed the Treaty on Conventional Armed Forces in Europe. They met three more times in 1991, with one of their meetings, in Moscow, resulting in the signing of the Strategic Arms Reduction Treaty (START I).

One of the most interesting things agreed on during the Bush-Gorbachev meetings was that Russia would allow Germany to re-unite after the wall came down, in exchange for the promise that NATO would not try to expand eastward.

I’ve been re-researching this a bit because it feels like it’s high time that people should realize what US foreign policy was like not that long ago. Even as it involved Reagan and Bush sr., not exactly the peace-mongers of their times. The one thing that was clear to all parties involved is that it was crucial to keep meeting and talking. And talk they did. But look at us now. When was the last summit of a US president with Vladimir Putin?

This came to mind again when I read Elizabeth Warren’s piece in the Guardian today, which made me wonder if she’s for real, if she is really as ignorant as she appears to be when it comes to foreign policy, to Russia, to Trump and to NATO. It would seem that she is, and that makes her a hazard. Not that I see her as a serious candidate, mind you, but then again, I do not see any other one either.

In her article, which reads more than anything like some nostalgic longing for the good old times when she was young, just watch her get all warm and fuzzy over the success of NATO:

Donald Trump Has Destroyed American Leadership – I’ll Restore It

For seven decades, America’s strength, security and prosperity have been underpinned by our unmatched network of treaty alliances, cemented in shared democratic values and a recognition of our common security. But after three years of Donald Trump’s insults and antics, our alliances are under enormous strain. The damage done by the president’s hostility toward our closest partners was on full display at this week’s gathering of NATO leaders in London, which should have been an unequivocal celebration of the 70th anniversary of the most successful alliance in history.

The success of NATO was not inevitable, easy or obvious. It is a remarkable and hard-won accomplishment, and one based on a recognition that the United States does not become stronger by weakening our allies. But that is just what Trump has done, repeatedly and deliberately. He treats our partners as burdens while embracing autocrats from Moscow to Pyongyang. He has cast doubt on the US commitment to NATO at a moment when a resurgent Russia threatens our institutions and freedoms. He has blindsided our partners on the ground in Syria by ordering a precipitate and uncoordinated withdrawal.

[..] he has wrecked US credibility by unilaterally tearing up our international agreements on arms control, non-proliferation and climate change. This reckless disregard for the benefits of our alliances comes at a perilous moment, when we face common threats from powerful adversaries probing the weaknesses of our institutions and resolve. Longstanding allies in Asia are doubting our reliability and hedging their bets. Russia’s land grab in Ukraine has upended the post-1989 vision of a Europe “whole, free, and at peace”. The chaotic Brexit process has consumed our closest partners, while sluggish growth and rising xenophobia fuel extremist politics and threaten to fracture the European Union.

To start with that last point, no. That “post-1989 vision of a Europe “whole, free, and at peace” was destroyed by NATO’s eastward expansion, executed in spite of US, EU and NATO promises that it wouldn’t. Moreover, you can talk about a resurgent Russia, but the country has hardly recovered economically from the 1980’s and 90’s today, and it has no designs on countries to its west.

Just look at the military budgets of the respective countries, where Russia has maybe 10% of the expenditure of the US, let alone the rest of NATO, and you get the picture. Is Russia getting more bang for its buck, because it doesn’t have to maintain a long running Pentagon-Boeing/Raytheon link? Yes, it does. But a 10 to 1 difference is still way out there. It’s not as if they spend half of what the US does, they spend just 10%.

This is because not only Russia doesn’t have to satisfy the desires and needs of Pentagon-Boeing/Raytheon, it’s also because they have no desire to conquer any territory that is not at present Russian.

Russia “annexed” Crimea through fair elections, and it knew that “we” knew that it would never let go of its only warm water port, Sevastopol. When “We” tried to take it away regardless, it did the only thing it could do. And it did it very intelligently. As for Eastern Ukraine, everyone there is Russian, whether by blood or by passport. And there are a lot of strong ties between them and Russians in Russia proper.

If Putin would have volunteered to let these Donbass Russians be shot to bits by the Ukraine neo-nazis that helped the US and EU in the Maidan coup, he would have had either a civil war in Russia, or an all-out war in the Donbass, with perhaps millions of casualties. Putin did what he could to prevent both. Back to Warren:

A mounting list of global challenges demand US leadership and collective action. As president, I will recommit to our alliances – diplomatically, militarily and economically. I will take immediate action to rebuild our partnerships and renew American strategic and moral leadership, including by rejoining the Paris climate accord, the United Nations compact on migration, and reaffirming our rock-solid commitment to NATO’s Article 5 provisions.

But we must do more than repair what Trump has broken. Instead we need to update our alliances and our international efforts to tackle the great challenges of our age, from climate change and resurgent authoritarianism to dark money flows, a weakening international arms control regime and the worst human displacement crisis in modern history.

Wait, what exactly has Trump broken in the foreign policy field? There have been dozens at the very least who have called for NATO to be disbanded, Ron Paul et al, because its sole purpose was to counter the Soviet Union, which no longer exists. In fact, when Emmanuel Macron labeled NATO “brain-dead” last week, it was Trump who defended the alliance.

And sorry, Elizabeth, but to hold Trump responsible for “the worst human displacement crisis in modern history” is just not right. That started way before he arrived at the scene. Obama and Hillary carry the burden and blame for that, along with Bush jr. and Dick Cheney. They shot the crap out of Iraq, Lybia etc. Trump only dumped a few bombs in a desert. He didn’t invade any country, he didn’t go “We Came, We Saw, He Died”. That was not Trump.

And before we forget, the military aid for Ukraine Trump allegedly held back for a few weeks had been refused by Obama for years. I’ve been wondering for ages now why the Democrats are so eager to make things up while ignoring simple facts, but I think at least it’s time to start pointing out these issues.

This is not to make Trump look better in any sense, but to try and make people understand that he did not start this thing. Though yeah, I know, it’s like talking to a wall by now. The political divide has turned into such a broad and yawning one, you can’t not wonder how it could ever be broached.

But, you know, it might help if people like Elizabeth Warren don’t ONLY talk about Trump like he’s the antichrist, or a Putin tool, if they engage with him in conversation. But sadly, it feels like we’re past that point. Like if she would even try, and I don’t know if she would want to, her party would spit her out just for trying to build a single bridge. Like Tulsi Gabbard seems to have tried; and look at how the DNC treats her.

This means revitalizing our state department and charging our diplomats to develop creative solutions for ever more urgent challenges. It means working with like-minded partners to promote our shared interest in sustained, inclusive global economic growth and an international trade system that protects workers and the environment, not just corporate profits. And it means reducing wasteful defense spending and refocusing on the areas most critical to our security in years to come.

Well, apart from the fact that we’ve seen some of those diplomats in the Schiff hearings, and they seemed like the least likely people to develop anything “creative” -other than their opinions-, and the boondoggle of “sustained, inclusive global economic growth”, it’s probably best to forget about that entire paragraph. It’s nicer to Warren too.

Alliances are not charities, and it’s fair to ask our partners to do their share. I will build on what President Obama started by insisting on increased contributions to NATO operations and common investments in collective military capabilities. But I will also recognize the varied and significant ways that European states contribute to global security – deploying troops to shared missions, receiving refugees, and providing development assistance at some of the highest per capita rates in the world.

The problem appears to be that the partners don’t increase their contributions. Just this March, Germany refused to do just that. And if Berlin refuses, why would other countries spend more?

The next president must tackle our common problems using the lessons of common defense. Together, we can counter terrorism and proliferation. We can make common cause in constructing new norms and rules to govern cyberspace. We can dismantle the corruption, monopolies and inequality that limit opportunity around the world and take on the increasingly grave threats to our environment. We can and will protect ourselves and each other – our countries, our citizens and our democracies.

Now we’re getting into entirely nonsensical territory, with words and sentences designed only to make people feel good about things that have no substance whatsoever. Anyone can go there, anyone can do that.

In the meantime, the neverending investigations into Trump, Russia, Ukraine, taxes, have had one major effect: he hasn’t had a chance to have a summit with Putin. And that, to go back to how I started out this essay, is the worst idea out there. If Reagan and Bush sr. did those summits all the time, then why do we now think such summits are the work of the devil?

And yeah, we get it, we got it again last week from alleged law expert Pamela Karlan in the House, who let ‘er rip on the dangers Putin poses to all of humanity, and of course she would never trust Trump to hold any such summit because he’s Putin’s puppet.

What Pamela, and all the MSM, and the Dems, and the FBI/CIA, appear to refuse to see, though, is that Trump was democratically elected by the American people to be the only one who can have any such conversation. Karlan again talked about how Russia would attempt to attack American soil unless “we” keep them from doing that.

Now I can say that is absolute bollocks, and it is, but how many -potential- Democratic voters will recognize that at this point? They’ve been trained to believe it. That Russia wants one US presidential candidate over another, or one UK one, or fill in your country, and therefore they want to invade the US, UK, etc. In reality, Russia has plenty problems of its own, and it’s slowly trying to solve them.

The two countries need to start talking to each other again, and the sooner the better. That it will happen under Elizabeth Warren, however, is very unlikely. First because she has her mind made up about Russia, and second because the likelihood of her becoming president is very low. What do you think, is that a good thing?

If for some reason -who can tell- she would end up winning 11 months from now, do you think she’s likely to establish a peace treaty with Russia? You know, given what she wrote here? And if not, why would you vote for her? Don’t you want peace? Do you think antagonizing Putin forever is a good idea? While Russia continues to outperform America in arms development, and in just about any field? While Russia only wants peace?

Good questions, ain’t they, as we move into 2020?!

*  *  *

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Tyler Durden

Mon, 12/09/2019 - 12:00


War Conflict


Sea-Change For Canada Foreign Policy As Freeland Replaced By Pro-Chinese Politico

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Sea-Change For Canada Foreign Policy As Freeland Replaced By Pro-Chinese Politico

Authored by Matthew Ehret via The Strategic Culture Foundation,

In Chrystia Freeland’s 2012 book Plutocrats, Canada’s leading Rhodes Scholar laid out a surprisingly clear analysis of the two camps of elites who she explained would, by their very nature, battle for control of the newly emerging system as the old paradigm collapsed.

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In her book and article series, she described the “practical populist politician” which has tended to be adherent to business interests and personal gain during past decades vs the new breed of “technocrat” which has an enlightened non-practical (ie: Malthusian) worldview, willing to make monetary sacrifices for the “greater good”.

She further defined the “good Plutocrats” vs “bad Plutocrats”.

Good Plutocrats included the likes of George Soros, Warren Buffet, Bill Gates and Jeff Bezos who made their billions under the free-for-all epoch of globalization, but who were willing to adapt to the new rules of the post-globalization game. This was a game which she defined in an absurd 2013 TED Talk as a “green New Deal” of global regulation under a de-carbonized (and depopulated) green economy.

For those “bad plutocrats” unwilling to play by the new rules (ie: the Trumps, Putins or any industrialist who refused to commit seppuku on the altar of Gaia), they would simply go extinct. This threat was re-packaged by Canada’s “other” globalist puppet Mark Carney, who recently said “If some companies and industries fail to adjust to this new world, they will fail to exist.”

Of course, when Freeland formulated these threats in 2011, China’s Belt and Road had not yet existed, nor had the Russia-China alliance which together are now challenging the regime-change driven world order in remarkably successful strides. The thought that nationalism could possibly make a comeback in the west was as unthinkable as the failure of free trade deals like NAFTA or the TPP.

As of November 18, 2019, Freeland has found herself cut down a notch by the “plutocrats” that she has worked so assiduously to destroy since becoming Canada’s Foreign Minister in 2017 when she ousted a Foreign Minister (Stephane Dion) who had called for a renewed cooperation with Russia on space, counter-terrorism and arctic development with Sergei Lavrov. Freeland’s unrepentant support for Ukrainian Nazis and NATO encirclement of Russia resulted in a total alienation of Russia. Her alienation of China was so successful that the Chinese government removed their ambassador in the summer of 2019. Freeland’s work in organizing the failed coup in Venezuela and supporting the MI6-Soros White Helmets in Syria became so well known that she became known as the Canadian queen of regime change.

Other pro-Chinese “bad plutocratic” companies which have been targeted for destruction under Freeland’s watch have included the beleaguered construction giant Aecon Inc. who’s board voted in favor of being sold to China in March 2018 in order to play a role in Belt and Road Projects (a decision vetoed by the Federal Government in May 2018), as well as Quebec-based SNC Lavalin which has had major deals with both Russia and China on nuclear power and major infrastructure projects and which now faces being shut down in Canada for having bribed politicians in Libya when it built Qadaffi’s Great Manmade River (destroyed by NATO in 2011).

Former Liberal Minister of Infrastructure from Shawinigan Quebec, Francois-Philippe Champagne has taken over Freeland’s portfolio and with him it appears a new pro-Eurasian policy may be emerging in Canada much more conducive to the long term survival (and strategic relevance) of Canada. This shift has already been noted by China which has responded by sending a new Ambassador to Ottawa, while a new Canadian Ambassador with a long history of working towards positive Chinese relations in the private sector (Dominic Barton) has just begun working in Beijing. Barton was the first Ambassador to China since “old guard” politician John McCallum was fired in January 2019 for defending Huawei’s Meng Wanzhou to a group of Chinese journalists.

In opposition to the cacophonic voice of Freeland, Champagne had spoken positively of China in 2017 saying:

“In a world of uncertainty, of unpredictability, of questioning about the rules that have been established to govern our trading relationship, Canada, and I would say China, stand out as [a] beacon of stability, predictability, a rule-based system, a very inclusive society.”

Champagne is a long-standing protégé of former Prime Minister Jean Chretien and world travelled businessman who has worked in the European nuclear sector and has promoted industrial development with China for years. Jean Chretien, who campaigned for Champagne’s recent re-election, represents everything Freeland hates: A “practical” old school politician who recognizes that World War III and alienating Eurasian nations who are shaping the future is bad for business. In 2014, Chretien was given the “Friend of Russia” award and has played a major role in the private sector working with Quebec-based Power Corporation which runs the Canada-China Business Council (CCBC) and has brokered major contracts throughout China since ending his term as PM in 2003. Chretien is also the father in-law of current CCBC chair Paul Desmarais Jr. who is the heir to the PowerCorp dynasty. While these are not groups that in any way exemplify morality, they are practical industrialists who know depopulation and world war are bad for business and would prefer to adapt to a China-led BRI system over a “green technocratic dictatorship”.

Since December 2018, Chretien has attacked Freeland’s decision to support Meng Wanzhou’s extradiction to the USA, and has volunteered to lead a delegation to China in order to smooth tensions.

So while the “bad plutocrats” appear to have taken an important step forward though the debris of the recent near failure of the Liberal Party which narrowly kept a minority government after the October 21 Federal Elections, the ideologically driven technocrats led by Queen Freeland shouldn’t be discounted, as her new position as Deputy Prime Minister puts her in a position to possibly take control of Canada as 2nd in command of a highly fragmented nation which is now hearing renewed calls for separation in Alberta, and Quebec.

Tyler Durden

Sun, 12/01/2019 - 21:30




After Unveiling 'NotQE', Fed Eases Liquidity Rules For Foreign Banks (Rescues Deutsche)

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After Unveiling 'NotQE', Fed Eases Liquidity Rules For Foreign Banks (Rescues Deutsche)

Having cracked down on Deutsche Bank in the past, The Fed appears to be playing good-regulator/bad-regulator as The FT reports that Deutsche is expected to benefit most from an imminent change in The Fed's liquidity rules.

Specifically, US banking regulators have dropped an idea to subject local branches of foreign

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banks to tough new liquidity rules (forcing US branches of foreign banks to hold a minimum level of liquid assets to protect them from a cash crunch).

As The FT further details, people familiar with his thinking say Randal Quarles, the vice-chair for banking supervision at the Fed, accepts the banks’ argument that any liquidity rules on bank branches should only be imposed in conjunction with foreign regulators.

“Without some international agreement, we could have the situation where each country is trying to grab whatever isn’t nailed down if there is another scare.”

And Deutsche Bank benefits most (or rescued from major liquidity needs) since it has by far the largest assets in US branches...

Why would The Fed do this?

Simple, it cannot afford another Lehman-like move (or even the fear of one)...

Source: Bloomberg

Tyler Durden

Fri, 10/11/2019 - 04:15


Business Finance


Russia Responds: All Foreign Troops "With Illegal Presence" Should Leave Syria

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Russia Responds: All Foreign Troops "With Illegal Presence" Should Leave Syria

Russia's response to the White House's late Sunday shock announcement saying “Turkey will soon be moving forward with its long-planned operation into Northern Syria” has been relatively muted.

Though Trump reportedly told Erdogan the US won't back the operation in a 'last minute' weekend phone call, it still appears a tacit US green light, considering American forces

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have now moved away from the Turkish border with northern Syria and are in a “wait and see” position.

While a Kremlin spokesman said in reaction that all foreign military forces ‘with illegal presence’ should leave Syria, and that "Syria’s territorial integrity must be preserved," a looming American exit from the theater no doubt has Russian officials breathing a sigh of relief in terms of their number one defined priority — preserving and defending the Assad government

US-Turkey patrol in northern Syria in September, via AFP/Getty.

Russia has proven it can deal with Erdogan's expansionist policies, but not the United States' presence in Syria. Over the past years going back to 2015 US and Russian forces have on multiple occasions been on the brink of directly clashing, igniting a possible WWIII scenario. 

Kremlin spokesman Dmitry Peskov reiterated on Monday that Russia and Turkey see eye to eye on preserving Syria's territorial integrity: “We hope that our Turkish colleagues would stick to this position in all situations,” he said.

The White House announcement, followed with Trump's 'end the forever wars' themed tweets, and 'imminent' Turkish incursion east of the Euphrates, gave Moscow the opportunity to restate its original priorities following its 2015 Syria intervention. 

"The Russian Federation had remained uninvolved in the conflict inside Syria until Syria’s enemies began engaging the resources of terrorist units to fight the legitimate government of the country," Deputy Defense Minister, Colonel-General Alexander Fomin said to Russia's TASS. 

"About 90% of the Syrian population currently live on the territories under the control of the official Damascus," he added, reaffirming the mission scope will not go beyond assisting the Syrian government to root out terrorism. 

Thus we can presume the Russian military will remain on the sidelines in terms of developments in northern Syria, other than encouraging Syria's Kurds to continue negotiations with Assad, while also waiting for a full and final American exit. 

From the perspective of Damascus, this will hasten the powerful local Kurdish political blocs in northeast Syrian, namely the PYD/TEV-DEM (The Democratic Union Party and Movement for a Democratic Society, respectively), of necessity seeking the protection of Damascus via a major deal with "the devil we know"

However, the Syrian Kurdish parties are no longer negotiating from a position of strength, and will have little choice but the cede much of their prior autonomy to the Syrian state once protective US forces finally exit.

Of course, the future fate of Syria's key oil and gas fields  the vast majority of which are located precisely in current Syrian Kurdish/US-backed SDF zones — will be an interesting question. Damascus may ultimately lose a major chunk of its sovereign territory along the northern border to the Turks for a long time to come, but may regain its domestic energy resources once again. 

But if past Trump administration unpredictability on Syria is any sign, the entire situation could be reversed just as quickly as this week's events have been initiated.

On Monday morning the president tweeted of his decision-making on Syria, "The endless and ridiculous wars are ENDING! We will be focused on the big picture, knowing we can always go back & BLAST!"

Tyler Durden

Mon, 10/07/2019 - 12:53




IMF Estimates $15 Trillion Of World's Foreign Direct Investments Are "Phantom Capital"

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IMF Estimates $15 Trillion Of World's Foreign Direct Investments Are "Phantom Capital"

A new study published by the International Monetary Fund has found that $15 trillion of the world's foreign direct investments are "phantom capital" - a term used to describe capital that is designed to minimize tax bills of multinational firms. 

This total makes up 40% of the world's foreign direct investments, and is the equivalent to the co

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mbined GDP of China and Germany, according to Bloomberg. 

These types of investments have risen about 10% over the past decade despite global efforts to curb tax avoidance, according to the IMF study. The capital makes its way through corporate shells that generally have no operations or real business activity. 

The study stated:

“FDI (foreign direct investment) is often an important driver for genuine international economic integration, stimulating growth and job creation and boosting productivity. But phantom capital is financial and tax engineering that blurs traditional FDI statistics and makes it difficult to understand genuine economic integration.”

It continued:

"Luxembourg, a country of 600,000 people, hosts as much FDI as the U.S. and much more than China. FDI of this size hardly reflects brick-and-mortar investments in the minuscule Luxembourg economy, whose $4 trillion in FDI comes to $6.6 million a person. Unsurprisingly, an economy’s exposure to phantom FDI increases with the corporate tax rate."

About half of the world's "phantom capital" is hosted by Luxembourg and the Netherlands, with just 10 economies globally holding more than 85% of such investments. 

The study concluded that "international cooperation" was vital to solving the issue: "Indeed, this year the IMF put forward various alternatives for a revised international tax architecture, ranging from minimum taxes to allocation of taxing rights to destination economies. No matter which road policymakers choose, one fact remains clear: international cooperation is the key to dealing with taxation in today’s globalized economic environment."

The full IMF study can be found here. 

Tyler Durden

Sat, 09/14/2019 - 07:35


Business Finance


Beijing Has "Proof" Of Foreign Intervention In HK Unrest, Summons German Ambassador

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Beijing Has "Proof" Of Foreign Intervention In HK Unrest, Summons German Ambassador

China has summoned Germany's Ambassador in Beijing to its foreign ministry, saying it has "sufficient proof" that foreign forces intervened in Hong Kong, Reuters reports. 

This comes just after German foreign minister Heiko Maas held a controversial meeting and photo op with pro-democracy activist Joshua Wong in Berlin on Monday.

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Wong has emerged as among the most visible virulently anti-Beijing representatives of popular protests and unrest which have gripped Hong Kong streets for months over the anti-extradition bill.

Joshua Wong meeting with German foreign minister Heiko Maas this week, via Reuters/DW.com

Beijing promptly slammed the meeting as "disrespectful," also given Wong was hosted in German parliament as part of the meeting arranged by Bild newspaper to showcase "human rights activists around the world". 

"It is extremely wrong for German media and politicians to attempt to tap into the anti-China separatist wave," said Chinese Foreign Ministry spokeswoman Hua Chunying in response to Wong's high profile meeting. "It is disrespectful of China's sovereignty and an interference in China's internal affairs."

“There are certain German media and politicians who seek attention and stage political shows by taking advantage of anti-Chinese separatists,” China's foreign ministry continued. The ministry also noted Chancellor Angela Merkel had long been on record as supporting Hong Kong's 'one country, two systems' status. 

It's unclear at this point the nature of Beijing's "proof" of German intervention in Hong Kong's affairs. If substantial state media will likely publish it; however, the German ambassador's being summoned could be a mere continuation of Chinese anger over Wong's trip to Berlin. 

Wong had also previously come under scrutiny in Chinese state media for meeting with a US diplomatic official based out of the American consulate in Hong Kong. The woman he met with was identified as Julie Eadeh, chief of the US consulate in Hong Kong's political unit - which Chinese media figures had denounced as a "subversion expert"

The US official's secret meeting with key anti-Beijing protest leaders at a downtown HK hotel was only revealed by photographs showing the group talking in the lobby. Chinese officials cited the photograph as proof of a US "hidden hand" fueling the summer of tense anti-Beijing protests. 

Interestingly, Wong was also photographed at the Bild newspaper event in Germany this week standing beside the head of the 'White Helmets' group in Syria, Raed Al Saleh.

A storm of criticism was unleashed on social media and in some international reports, specifically Russian media, given it is well documented that the White Helmets have received millions in funding by the US and UK governments

Beijing and other as critics of Joshua Wong have alleged he's being used as a foreign agent to do the West's bidding in Hong Kong. 

Tyler Durden

Wed, 09/11/2019 - 11:05




China Vows To 'Crush' Pro-Democracy Separatists; Hong Kong Warns Against Foreign Influence

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China Vows To 'Crush' Pro-Democracy Separatists; Hong Kong Warns Against Foreign Influence

Beijing warned on Monday that Hong Kong is an inseparable part of China and any form of secessionism "will be crushed," after pro-democracy demonstrators begged US President Trump to intervene in the ongoing anti-government movement now in its 14th week. 

According to the China Daily newspaper, Sunday's pro-democracy rally proves that fo

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reigners have been behind the protests, and warned that participants should "stop trying the patience of the central government," reports Reuters.

Chinese officials have accused foreign forces of trying to hurt Beijing by creating chaos in Hong Kong over a hugely unpopular extradition bill that would have allowed suspects to be tried in Communist Party-controlled courts.

Anger over the bill grew into sometimes violent protests calling for more freedoms for Hong Kong, which returned to Chinese rule in 1997 under a “one country, two systems” formula. -Reuters

Hong Kong leader Carrie Lam, meanwhile, warned the United States and other countries that it was "totally unacceptable" for the United States or anyone else to intervene in the situation

"The Hong Kong government completely disagrees and expresses deep regret that foreign parliaments are interfering in our internal affairs through legislation," Lam said during her weekly news conference, adding "We will never allow them to be stakeholders in Hong Kong's internal affairs."

Protesters on Sunday expressed support for the Hong Kong Human Rights and Democracy Act of 2019 introduced by US Rep. Christopher Smith (R-NJ) in June. The bill calls on the US government to protect the rights of Hong Kong protesters, including an assessment of whether "sensitive dual-use items subject to the export control laws of the United States are being used to develop the "social credit" system of China." 

"Democrats and Republicans continue to stand united with the people of Hong Kong in demanding the hopeful, free and democratic future that is their right," said US House Speaker Nancy Pelosi last week in a show of bipartisan support for Smith's bill. 

According to Lam, approximately 1,400 Kong Kong companies benefit from Washington's relationship with the city and that "any particular provisions applied to Hong Kong by the Americans are not exclusively for the benefit of Hong Kong," according to CNN. The passage of the US bill would undoubtedly harm the city's economy, which has already taken a hit due to the protests. 

On Tuesday, she called for the public to stop resorting to violence, saying "Escalation and continuation of violence cannot solve the issues faced by our society now. It will only deepen the conflict, contradiction, splits, and even hatred in society." 

"To mend the society and to bring back peace, we are very willing to engage people directly in a dialogue." 

The Hong Kong protests began with opposition to a controversial extradition bill which would allow suspects to be taken to mainland China for trial in PRC-controlled courts. It has since evolved into a general anti-government / pro-democracy movement which shows no signs of abating. 

Tyler Durden

Tue, 09/10/2019 - 13:50




Iran's Military Seizes Another Foreign Vessel In Persian Gulf, Detains Crew

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Iran's Military Seizes Another Foreign Vessel In Persian Gulf, Detains Crew

In yet more confirmation that the White House's "maximum pressure" campaign has given way to Iran's own more intense and aggressive summer of 'counter-pressure' in the gulf, Iran's military Saturday has seized a small foreign vessel and its crew, the semi-official ISNA news agency confirms. 

The vessel is being described in international reports as a tug

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boat Iran has accused of smuggling nearly 284,000 liters of diesel. Iranian forces have arrested and detained its 12 Filipino crew members, but it's as yet unknown what flag the boat was flying. 

The petrol confiscated is said to be worth 233.71 billion rials ($20.2 million), according to the ISNA report. 

Illustrative file image.

Iran has now detained three commercial vessels in the vital Strait of Hormuz over the past three months, among them the still captured British-flagged oil tanker Stena Impero.

According to Fox the US Navy's 5th Fleet said it was aware of the incident but didn't comment further, while the Philippines' Department of Foreign Affairs said it's also investigating the report. 

Iran has been waging an ongoing crackdown on rampant fuel smuggling in the gulf amid its energy woes due to crippling US-led sanctions. Large scale smuggling to outside countries has arisen due to state subsidies making Iranian fuel among the world's cheapest.

"Gasoline sales hit a record high of $72 million last week on the Iran Energy Exchange (IRENEX) for exports to neighboring countries," Reuters reported. 

State media has recently estimated that 10 million liters of fuel are smuggled out of Iran on a daily basis. 

Tyler Durden

Sat, 09/07/2019 - 14:15




Michael Hudson: U.S. Economic Warfare And Likely Foreign Defenses

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Authored by Michael Hudson via Counterpunch.org,

Today’s world is at war on many fronts. The rules of international law and order put in place toward the end of World War II are being broken by U.S. foreign policy escalating its confrontation with countries that refrain from giving its companies control of their economic surpluses. Countries that do not give the United States control of their oil and financial sectors or privatize their key sectors are being isolated by the United States imposing trade sanctions and unilateral tariffs

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ong> giving special advantages to U.S. producers in violation of free trade agreements with European, Asian and other countries.

This global fracture has an increasingly military cast. U.S. officials justify tariffs and import quotas illegal under WTO rules on “national security” grounds, claiming that the United States can do whatever it wants as the world’s “exceptional” nation. U.S. officials explain that this means that their nation is not obliged to adhere to international agreements or even to its own treaties and promises. This allegedly sovereign right to ignore on its international agreements was made explicit after Bill Clinton and his Secretary of State Madeline Albright broke the promise by President George Bush and Secretary of State James Baker that NATO would not expand eastward after 1991. (“You didn’t get it in writing,” was the U.S. response to the verbal agreements that were made.)

Likewise, the Trump administration repudiated the multilateral Iranian nuclear agreement signed by the Obama administration, and is escalating warfare with its proxy armies in the Near East. U.S. politicians are waging a New Cold War against Russia, China, Iran, and oil-exporting countries that the United States is seeking to isolate if cannot control their governments, central bank and foreign diplomacy.

* Keynote Paper delivered at the 14th Forum of the World Association for Political Economy, July 21, 2019.

The international framework that originally seemed equitable was pro-U.S. from the outset. In 1945 this was seen as a natural result of the fact that the U.S. economy was the least war-damaged and held by far most of the world’s monetary gold. Still, the postwar trade and financial framework was ostensibly set up on fair and equitable international principles. Other countries were expected to recover and grow, creating diplomatic, financial and trade parity with each other.

But the past decade has seen U.S. diplomacy become one-sided in turning the International Monetary Fund (IMF), World Bank, SWIFT bank-clearing system and world trade into an asymmetrically exploitative system. This unilateral U.S.-centered array of institutions is coming to be widely seen not only as unfair, but as blocking the progress of other countries whose growth and prosperity is seen by U.S. foreign policy as a threat to unilateral U.S. hegemony. What began as an ostensibly international order to promote peaceful prosperity has turned increasingly into an extension of U.S. nationalism, predatory rent-extraction and a more dangerous military confrontation.

Deterioration of international diplomacy into a more nakedly explicit pro-U.S. financial, trade and military aggression was implicit in the way in which economic diplomacy was shaped when the United Nations, IMF and World Bank were shaped mainly by U.S. economic strategists. Their economic belligerence is driving countries to withdraw from the global financial and trade order that has been turned into a New Cold War vehicle to impose unilateral U.S. hegemony. Nationalistic reactions are consolidating into new economic and political alliances from Europe to Asia.

We are still mired in the Oil War that escalated in 2003 with the invasion of Iraq, which quickly spread to Libya and Syria. American foreign policy has long been based largely on control of oil. This has led the United States to oppose the Paris accords to stem global warming. Its aim is to give U.S. officials the power to impose energy sanctions forcing other countries to “freeze in the dark” if they do not follow U.S. leadership.

To expand its oil monopoly, America is pressuring Europe to oppose the Nordstream II gas pipeline from Russia, claiming that this would make Germany and other countries dependent on Russia instead of on U.S. liquified natural gas (LNG). Likewise, American oil diplomacy has imposed unilateral sanctions against Iranian oil exports, until such time as a regime change opens up that country’s oil reserves to U.S., French, British and other allied oil majors.

U.S. control of dollarized money and credit is critical to this hegemony. As Congressman Brad Sherman of Los Angeles told a House Financial Services Committee hearing on May 9, 2019: “An awful lot of our international power comes from the fact that the U.S. dollar is the standard unit of international finance and transactions. Clearing through the New York Fed is critical for major oil and other transactions. It is the announced purpose of the supporters of cryptocurrency to take that power away from us, to put us in a position where the most significant sanctions we have against Iran, for example, would become irrelevant.”

The U.S. aim is to keep the dollar as the transactions currency for world trade, savings, central bank reserves and international lending. This monopoly status enables the U.S. Treasury and State Department to disrupt the financial payments system and trade for countries with which the United States is at economic or outright military war.

Russian President Vladimir Putin quickly responded by describing how “the degeneration of the universalist globalization model [is] turning into a parody, a caricature of itself, where common international rules are replaced with the laws… of one country.” That is the trajectory on which this deterioration of formerly open international trade and finance is now moving. It has been building up for a decade. On June 5, 2009, then-Russian President Dmitry Medvedev cited this same disruptive U.S. dynamic at work in the wake of the U.S. junk mortgage and bank fraud crisis.

Those whose job it was to forecast events … were not ready for the depth of the crisis and turned out to be too rigid, unwieldy and slow in their response. The international financial organisations – and I think we need to state this up front and not try to hide it – were not up to their responsibilities, as has been said quite unambiguously at a number of major international events such as the two recent G20 summits of the world’s largest economies.

Furthermore, we have had confirmation that our pre-crisis analysis of global economic trends and the global economic system were correct. The artificially maintained uni-polar system and preservation of monopolies in key global economic sectors are root causes of the crisis. One big centre of consumption, financed by a growing deficit, and thus growing debts, one formerly strong reserve currency, and one dominant system of assessing assets and risks – these are all factors that led to an overall drop in the quality of regulation and the economic justification of assessments made, including assessments of macroeconomic policy. As a result, there was no avoiding a global crisis.

That crisis is what is now causing today’s break in global trade and payments.

Warfare on many fronts, with Dollarization being the main arena

Dissolution of the Soviet Union 1991 did not bring the disarmament that was widely expected. U.S. leadership celebrated the Soviet demise as signaling the end of foreign opposition to U.S.-sponsored neoliberalism and even as the End of History. NATO expanded to encircle Russia and sponsored “color revolutions” from Georgia to Ukraine, while carving up former Yugoslavia into small statelets. American diplomacy created a foreign legion of Wahabi fundamentalists from Afghanistan to Iran, Iraq, Syria and Libya in support of Saudi Arabian extremism and Israeli expansionism.

The United States is waging war for control of oil against Venezuela, where a military coup failed a few years ago, as did the 2018-19 stunt to recognize an unelected pro-American puppet regime. The Honduran coup under President Obama was more successful in overthrowing an elected president advocating land reform, continuing the tradition dating back to 1954 when the CIA overthrew Guatemala’s Arbenz regime.

U.S. officials bear a special hatred for countries that they have injured, ranging from Guatemala in 1954 to Iran, whose regime it overthrew to install the Shah as military dictator. Claiming to promote “democracy,” U.S. diplomacy has redefined the word to mean pro-American, and opposing land reform, national ownership of raw materials and public subsidy of foreign agriculture or industry as an “undemocratic” attack on “free markets,” meaning markets controlled by U.S. financial interests and absentee owners of land, natural resources and banks.

A major byproduct of warfare has always been refugees, and today’s wave fleeing ISIS, Al Qaeda and other U.S.-backed Near Eastern proxies is flooding Europe. A similar wave is fleeing the dictatorial regimes backed by the United States from Honduras, Ecuador, Colombia and neighboring countries. The refugee crisis has become a major factor leading to the resurgence of nationalist parties throughout Europe and for the white nationalism of Donald Trump in the United States.

Dollarization as the vehicle for U.S. nationalism

The Dollar Standard – U.S. Treasury debt to foreigners held by the world’s central banks – has replaced the gold-exchange standard for the world’s central bank reserves to settle payments imbalances among themselves. This has enabled the United States to uniquely run balance-of-payments deficits for nearly seventy years, despite the fact that these Treasury IOUs have little visible likelihood of being repaid except under arrangements where U.S. rent-seeking and outright financial tribute from other enables it to liquidate its official foreign debt.

The United States is the only nation that can run sustained balance-of-payments deficits without having to sell off its assets or raise interest rates to borrow foreign money. No other national economy in the world can could afford foreign military expenditures on any major scale without losing its exchange value. Without the Treasury-bill standard, the United States would be in this same position along with other nations. That is why Russia, China and other powers that U.S. strategists deem to be strategic rivals and enemies are looking to restore gold’s role as the preferred asset to settle payments imbalances.

The U.S. response is to impose regime change on countries that prefer gold or other foreign currencies to dollars for their exchange reserves. A case in point is the overthrow of Libya’s Omar Kaddafi after he sought to base his nation’s international reserves on gold. His liquidation stands as a military warning to other countries.

Thanks to the fact that payments-surplus economies invest their dollar inflows in U.S. Treasury bonds, the U.S. balance-of-payments deficit finances its domestic budget deficit. This foreign central-bank recycling of U.S. overseas military spending into purchases of U.S. Treasury securities gives the United States a free ride, financing its budget – also mainly military in character – so that it can taxing its own citizens.

Trump is forcing other countries to create an alternative to the Dollar Standard

The fact that Donald Trump’s economic policies are proving ineffective in restoring American manufacturing is creating rising nationalist pressure to exploit foreigners by arbitrary tariffs without regard for international law, and to impose trade sanctions and diplomatic meddling to disrupt regimes that pursue policies that U.S. diplomats do not like.

There is a parallel here with Rome in the late 1st century BC. It stripped its provinces to pay for its military deficit, the grain dole and land redistribution at the expense of Italian cities and Asia Minor. This created foreign opposition to drive Rome out. The U.S. economy is similar to Rome’s: extractive rather than productive, based mainly on land rents and money-interest. As the domestic market is impoverished, U.S. politicians are seeking to take from abroad what no longer is being produced at home.

What is so ironic – and so self-defeating of America’s free global ride – is that Trump’s simplistic aim of lowering the dollar’s exchange rate to make U.S. exports more price-competitive. He imagines commodity trade to be the entire balance of payments, as if there were no military spending, not to mention lending and investment. To lower the dollar’s exchange rate, he is demanding that China’s central bank and those of other countries stop supporting the dollar by recycling the dollars they receive for their exports into holdings of U.S. Treasury securities.

This tunnel vision leaves out of account the fact that the trade balance is not simply a matter of comparative international price levels. The United States has dissipated its supply of spare manufacturing capacity and local suppliers of parts and materials, while much of its industrial engineering and skilled manufacturing labor has retired. An immense shortfall must be filled by new capital investment, education and public infrastructure, whose charges are far above those of other economics.

Trump’s infrastructure ideology is a Public-Private Partnership characterized by high-cost financialization demanding high monopoly rents to cover its interest charges, stock dividends and management fees. This neoliberal policy raises the cost of living for the U.S. labor force, making it uncompetitive. The United States is unable to produce more at any price right now, because its has spent the past half-century dismantling its infrastructure, closing down its part suppliers and outsourcing its industrial technology.

The United States has privatized and financialized infrastructure and basic needs such as public health and medical care, education and transportation that other countries have kept in their public domain to make their economies more cost-efficient by providing essential services at subsidized prices or freely. The United States also has led the practice of debt pyramiding, from housing to corporate finance. This financial engineering and wealth creation by inflating debt-financed real estate and stock market bubbles has made the United States a high-cost economy that cannot compete successfully with well-managed mixed economies.

Unable to recover dominance in manufacturing, the United States is concentrating on rent-extracting sectors that it hopes monopolize, headed by information technology and military production. On the industrial front, it threatens disrupt China and other mixed economies by imposing trade and financial sanctions.

The great gamble is whether these other countries will defend themselves by joining in alliances enabling them to bypass the U.S. economy. American strategists imagine their country to be the world’s essential economy, without whose market other countries must suffer depression. The Trump Administration thinks that There Is No Alternative (TINA) for other countries except for their own financial systems to rely on U.S. dollar credit.

To protect themselves from U.S. sanctions, countries would have to avoid using the dollar, and hence U.S. banks. This would require creation of a non-dollarized financial system for use among themselves, including their own alternative to the SWIFT bank clearing system. Table 1 lists some possible related defenses against U.S. nationalistic diplomacy.

As noted above, what also is ironic in President Trump’s accusation of China and other countries of artificially manipulating their exchange rate against the dollar (by recycling their trade and payments surpluses into Treasury securities to hold down their currency’s dollar valuation) involves dismantling the Treasury-bill standard. The main way that foreign economies have stabilized their exchange rate since 1971 has indeed been to recycle their dollar inflows into U.S. Treasury securities. Letting their currency’s value rise would threaten their export competitiveness against their rivals, although not necessarily benefit the United States.

Ending this practice leaves countries with the main way to protect their currencies from rising against the dollar is to reduce dollar inflows by blocking U.S. lending to domestic borrowers. They may levy floating tariffs proportioned to the dollar’s declining value. The U.S. has a long history since the 1920s of raising its tariffs against currencies that are depreciating: the American Selling Price (ASP) system. Other countries can impose their own floating tariffs against U.S. goods.

Trade dependency as an aim of the World Bank, IMF and US AID

The world today faces a problem much like what it faced on the eve of World War II. Like Germany then, the United States now poses the main threat of war, and equally destructive neoliberal economic regimes imposing austerity, economic shrinkage and depopulation. U.S. diplomats are threatening to destroy regimes and entire economies that seek to remain independent of this system, by trade and financial sanctions backed by direct military force.

Dedollarization will require creation of multilateral alternatives to U.S. “front” institutions such as the World Bank, IMF and other agencies in which the United States holds veto power to block any alternative policies deemed not to let it “win.” U.S. trade policy through the World Bank and U.S. foreign aid agencies aims at promoting dependency on U.S. food exports and other key commodities, while hiring U.S. engineering firms to build up export infrastructure to subsidize U.S. and other natural-resource investors. The financing is mainly in dollars, providing risk-free bonds to U.S. and other financial institutions. The resulting commercial and financial “interdependency” has led to a situation in which a sudden interruption of supply would disrupt foreign economies by causing a breakdown in their chain of payments and production. The effect is to lock client countries into dependency on the U.S. economy and its diplomacy, euphemized as “promoting growth and development.”

U.S. neoliberal policy via the IMF imposes austerity and opposes debt writedowns. Its economic model pretends that debtor countries can pay any volume of dollar debt simply by reducing wages to squeeze more income out of the labor force to pay foreign creditors. This ignores the fact that solving the domestic “budget problem” by taxing local revenue still faces the “transfer problem” of converting it into dollars or other hard currencies in which most international debt is denominated. The result is that the IMF’s “stabilization” programs actually destabilize and impoverish countries forced into following its advice.

IMF loans support pro-U.S. regimes such as Ukraine, and subsidize capital flight by supporting local currencies long enough to enable U.S. client oligarchies to flee their currencies at a pre-devaluation exchange rate for the dollar. When the local currency finally is allowed to collapse, debtor countries are advised to impose anti-labor austerity. This globalizes the class war of capital against labor while keeping debtor countries on a short U.S. financial leash.

U.S. diplomacy is capped by trade sanctions to disrupt economies that break away from U.S. aims. Sanctions are a form of economic sabotage, as lethal as outright military warfare in establishing U.S. control over foreign economies. The threat is to impoverish civilian populations, in the belief that this will lead them to replace their governments with pro-American regimes promising to restore prosperity by selling off their domestic infrastructure to U.S. and other multinational investors.

There are alternatives, on many fronts

Militarily, today’s leading alternative to NATO expansionism is the Shanghai Cooperation Organization (SCO), along with Europe following France’s example under Charles de Gaulle and withdrawing. After all, there is no real threat of military invasion today in Europe. No nation can occupy another without an enormous military draft and such heavy personnel losses that domestic protests would unseat the government waging such a war. The U.S. anti-war movement in the 1960s signaled the end of the military draft, not only in the United States but in nearly all democratic countries. (Israel, Switzerland, Brazil and North Korea are exceptions.)

The enormous spending on armaments for a kind of war unlikely to be fought is not really military, but simply to provide profits to the military industrial complex. The arms are not really to be used. They are simply to be bought, and ultimately scrapped. The danger, of course, is that these not-for-use arms actually might be used, if only to create a need for new profitable production.

Likewise, foreign holdings of dollars are not really to be spent on purchases of U.S. exports or investments. They are like fine-wine collectibles, for saving rather than for drinking. The alternative to such dollarized holdings is to create a mutual use of national currencies, and a domestic bank-clearing payments system as an alternative to SWIFT. Russia, China, Iran and Venezuela already are said to be developing a crypto-currency payments to circumvent U.S. sanctions and hence financial control.

In the World Trade Organization, the United States has tried to claim that any industry receiving public infrastructure or credit subsidy deserves tariff retaliation in order to force privatization. In response to WTO rulings that U.S. tariffs are illegally imposed, the United States “has blocked all new appointments to the seven-member appellate body in protest, leaving it in danger of collapse because it may not have enough judges to allow it to hear new cases.”[5] In the U.S. view, only privatized trade financed by private rather than public banks is “fair” trade.

An alternative to the WTO (or removal of its veto privilege given to the U.S. bloc) is needed to cope with U.S. neoliberal ideology and, most recently, the U.S. travesty claiming “national security” exemption to free-trade treaties, impose tariffs on steel, aluminum, and on European countries that circumvent sanctions on Iran or threaten to buy oil from Russia via the Nordstream II pipeline instead of high-cost liquified “freedom gas” from the United States.

In the realm of development lending, China’s bank along with its Belt and Road initiative is an incipient alternative to the World Bank, whose main role has been to promote foreign dependency on U.S. suppliers. The IMF for its part now functions as an extension of the U.S. Department of Defense to subsidize client regimes such as Ukraine while financially isolating countries not subservient to U.S. diplomacy.

To save debt-strapped economies suffering Greek-style austerity, the world needs to replace neoliberal economic theory with an analytic logic for debt writedowns based on the ability to pay. The guiding principle of the needed development-oriented logic of international law should be that no nation should be obliged to pay foreign creditors by having to sell of the public domain and rent-extraction rights to foreign creditors. The defining character of nationhood should be the fiscal right to tax natural resource rents and financial returns, and to create its own monetary system.

The United States refuses to join the International Criminal Court. To be effective, it needs enforcement power for its judgments and penalties, capped by the ability to bring charges of war crimes in the tradition of the Nuremberg tribunal. U.S. to such a court, combined with its military buildup now threatening World War III, suggests a new alignment of countries akin to the Non-Aligned Nations movement of the 1950s and 1960s. Non-aligned in this case means freedom from U.S. diplomatic control or threats.

Such institutions require a more realistic economic theory and philosophy of operations to replace the neoliberal logic for anti-government privatization, anti-labor austerity, and opposition to domestic budget deficits and debt writedowns. Today’s neoliberal doctrine counts financial late fees and rising housing prices as adding to “real output” (GDP), but deems public investment as deadweight spending, not a contribution to output. The aim of such logic is to convince governments to pay their foreign creditors by selling off their public infrastructure and other assets in the public domain.

Just as the “capacity to pay” principle was the foundation stone of the Bank for International Settlements in 1931, a similar basis is needed to measure today’s ability to pay debts and hence to write down bad loans that have been made without a corresponding ability of debtors to pay. Without such an institution and body of analysis, the IMF’s neoliberal principle of imposing economic depression and falling living standards to pay U.S. and other foreign creditors will impose global poverty.

The above proposals provide an alternative to the U.S. “exceptionalist” refusal to join any international organization that has a say over its affairs. Other countries must be willing to turn the tables and isolate U.S. banks, U.S. exporters, and to avoid using U.S. dollars and routing payments via U.S. banks. To protect their ability to create a countervailing power requires an international court and its sponsoring organization.


The first existential objective is to avoid the current threat of war by winding down U.S. military interference in foreign countries and removing U.S. military bases as relics of neocolonialism. Their danger to world peace and prosperity threatens a reversion to the pre-World War II colonialism, ruling by client elites along lines similar to the 2014 Ukrainian coup by neo-Nazi groups sponsored by the U.S. State Department and National Endowment for Democracy. Such control recalls the dictators that U.S. diplomacy established throughout Latin America in the 1950s. Today’s ethnic terrorism by U.S.-sponsored Wahabi-Saudi Islam recalls the behavior of Nazi Germany in the 1940s.

Global warming is the second major existentialist threat. Blocking attempts to reverse it is a bedrock of American foreign policy, because it is based on control of oil. So the military, refugee and global warming threats are interconnected.

The U.S. military poses the greatest immediate danger. Today’s warfare is fundamentally changed from what it used to be. Prior to the 1970s, nations conquering others had to invade and occupy them with armies recruited by a military draft. But no democracy in today’s world can revive such a draft without triggering widespread refusal to fight, voting the government out of power. The only way the United States – or other countries – can fight other nations is to bomb them. And as noted above, economic sanctions have as destructive an effect on civilian populations in countries deemed to be U.S. adversaries as overt warfare. The United States can sponsor political coups (as in Honduras and Pinochet’s Chile), but cannot occupy. It is unwilling to rebuild, to say nothing of taking responsibility for the waves of refugees that our bombing and sanctions are causing from Latin America to the Near East.

U.S. ideologues view their nation’s coercive military expansion and political subversion and neoliberal economic policy of privatization and financialization as an irreversible victory signaling the End of History. To the rest of the world it is a threat to human survival.

The American promise is that the victory of neoliberalism is the End of History, offering prosperity to the entire world. But beneath the rhetoric of free choice and free markets is the reality of corruption, subversion, coercion, debt peonage and neofeudalism. The reality is the creation and subsidy of polarized economies bifurcated between a privileged rentier class and its clients, eir debtors and renters. America is to be permitted to monopolize trade in oil and food grains, and high-technology rent-yielding monopolies, living off its dependent customers. Unlike medieval serfdom, people subject to this End of History scenario can choose to live wherever they want. But wherever they live, they must take on a lifetime of debt to obtain access to a home of their own, and rely on U.S.-sponsored control of their basic needs, money and credit by adhering to U.S. financial planning of their economies. This dystopian scenario confirms Rosa Luxemburg’s recognition that the ultimate choice facing nations in today’s world is between socialism and barbarism.


Warring Libyan Factions Build Armies Of Foreign Agents In Washington

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Authored by Reid Champlin via OpenSecrets.org

The Libyan civil war rages well into its eighth year as warlord Khalifa Haftar lays siege to Tripoli, the nation’s capital and seat of the United Nations-backed government. 

Haftar’s attack has escalated the violence that has plagued the country since the downfall of longtime dictator Muammar Gaddafi in the 2011 Arab Spring. Haftar’s Libyan National Army, which controls over two-thirds of the nation’s territory, stands accused of dozens of war crimes, including a deadly airstrike on a Tripoli migrant

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detention center, as many nations around the world shift allegiancestoward the warlord and away from the U.N.-backed government.

Almost 5,000 miles away in Washington, the battle rages on a different front: Both the Libyan government and the rebels have inked multi-million dollar deals with prominent D.C. lobbyists as they aim to win the backing of American policymakers.

Rebel leader Khalifa Haftar attending the Conference for Libya in Palermo, Italy. Image source: Tullio Puglia/Getty Images

Left scrambling after Haftar’s attack, Mercury Public Affairs and Prime Policy Group added at least 17 foreign agents to foreign influence operations for the Libyan government since early May. The hires include former Rep. John Tanner (D-Tenn.), a longtime stalwart on the House Foreign Affairs Committee and vice chairman of Prime Policy Group, and Edward Cox, former senior policy advisor to retired Sen. Orrin Hatch (R-Utah). 

The government agreed to pay Mercury $2 million annually in retaining their services. Prime Policy Group, on the other hand, says it made a verbal agreement to work on a pro-bono basis.

“A unified, democratic Libya is in the best interest of Libyans and furthers the security goals of the United States,” the organization said in a press release.

Haftar’s Libyan National Army has contracted five foreign agents and operatives at Linden Government Solutions, a Texas firm headed by former Bush administration official Stephen Payne. The arrangement, first reported by the AP, will officially include meetings with U.S. officials, “international coalition building and general public relations.”

Payne has an extensive history with the troubled North African nation. He visited in 2011 with former Rep. Curt Weldon (R-Penn.) before the fall of Gaddafi, helping to negotiate the release of three imprisoned journalists. At the same time, he was bankrolling Weldon’s visit in hopes the former congressman could convince Gaddafi to step down. Payne has close ties to three of Gaddafi’s sons.

The one-year deal with Linden is worth about $2 million. While not explicitly mentioned in the contract, both parties may have an interest in Libyan’s abundant oil, as Payne and legal counsel Brian Ettinger have deep ties in international energy markets and Haftar recently gained control of El Sharara, Libya’s largest oil field.

The Obama administration fervently backed the Government of National Accord, saying America’s partnership with the government “is in America’s national security interest in our fight against ISIL.” While the U.S. and other major powers have nominally pledged support for Tripoli’s Government of National Accord for years, Haftar’s military success has made many reconsider where their allegiances lie

The Trump administration appears to be divided on which side to support, with the president reportedly praising the warlord for his victories against Islamist groups and encouraging the Libyan National Army’s march on Tripoli in an April phone call. National Security Advisor John Bolton also encouraged Haftar’s attack, according to diplomatic sources.

The White House’s support for Haftar clashes with the State Department’s official position, which is still in favor of the Libyan government. On April 7, Secretary of State Mike Pompeo condemned Haftar’s attack and urged both sides to pursue a diplomatic solution.

“We have made clear that we oppose the military offensive by Khalifa Haftar’s forces and urge the immediate halt to these military operations against the Libyan capital,” Pompeo said in a statement at the time.  

But in mid-April, the U.S. refused to support a U.N. Security Council resolution calling for a nationwide ceasefire, joining Russia, a Haftar ally, in defeating the resolution. The U.S. did not provide a reason for the refusal.

Trump’s sudden favor for Haftar was reportedly the result of intense pressure from Saudi Crown Prince Mohammed Bin Salman and Egyptian President Abdel Fattah Al Sisi. Saudi Arabia and Egypt, alongside the United Arab Emirates and Russia, are backing Haftar and the Libyan National Army.

France has also covertly supported Haftar, with news breaking Wednesday that anti-tank missiles recovered at a Libyan National Army base belong to French special forces working in the region. The nation has significant oil investments in Libya that are now under the control of Haftar.

Haftar has been a power player in Libya since 1969, when, as a young army officer, he took part in Gaddafi’s coup against the Libyan monarchy.  He was named one of Gaddafi’s top military advisers shortly thereafter.

Haftar turned against Gaddafi after the dictator disavowed his sanctioned military excursion into neighboring Chad. He joined the CIA-backed opposition group National Front for the Salvation of Libya before fleeing the country following a failed coup attempt in 1996.

Haftar spent the next 20 years living in northern Virginia, with some suspecting that his proximity to the CIA, which organized numerous assassination attempts against Gaddafi, indicated an ongoing relationship. He continues to hold American citizenship.

Haftar returned to Libya in 2014 and quietly formed an army to oppose the Islamist militias scattered throughout the war-torn nation, gaining the support of the newly-formed Libyan House of Representatives. 

In 2015, he became commander of the Libyan National Army, which later split into two factions: one in support of the House of Representatives government based in the eastern city of Tobruk and the other, the Libyan Army, in support of the U.N.-backed Government of National Accord.

Haftar’s forces played a major role in weakening ISIL and other extremists, retaking the major cities of Benghazi in 2017 and Derna in 2018. Now, Haftar’s forces are aiming at sweeping the Government of National Accord out of power for good by taking Tripoli.

More than 1,000 people have died since Haftar launched the Tripoli offensive in April. The U.N. Security Council has reiterated its calls for a diplomatic solution amidst the escalating violence.


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