Friday, October 25, 2019

Report: Joe Biden as senator lobbied for Hunter's interests


Joe Biden twice used his position as a senior senator to boost his son Hunter's business interests, according to an investigation by the Washington Examiner.

The 2020 Democratic presidential candidate privately contacted the Department of Homeland Security and the Justice Department to discuss issues related to Hunter’s firm's lobbying clients, the Examiner said.

Joe Biden lately has faced scrutiny for his son's business dealings in Ukraine. Hunter Biden profited from a Ukrainian natural gas firm while his father was President Obama's point man for Ukraine policy. Joe Biden is on video boasting of threatening to withhold aid if the Ukrainian president didn't fire the prosecutor who was investigating Hunter Biden's firm. Joe Biden also backing policies that helped the Delaware-based credit card industry while Hunter was working for MBNA, headquartered in the state.

The Examiner reported government records show "strategic and highly-specific interventions that could have benefited his son to the tune of tens of thousands of dollars."

On Feb. 28, 2007, Biden reached out to the DHS to complain about proposed chemical security regulations. Eight weeks earlier, the Industrial Safety Training Council hired Hunter Biden’s firm to lobby DHS on the issue.

Hunter Biden was not registered as a lobbyist, but he was one of three senior partners of his company that ultimately was paid $200,000 for the work.

Tom Anderson of the watchdog National Legal and Policy Center told the Examiner that Joe Biden should have avoided any involvement on issues that his son's company was trying to influence.

"It's implausible Senator Biden did not know his son's firm was lobbying on this arcane issue," he said.

In 2007, Joe Biden also wrote to U.S. Attorney General Alberto Gonzales asking for a meeting with the Department of Justice to discuss expanding the federal fingerprint background check system.

"I write to request your assistance in implementing an expanded background check system for our nation's volunteer organizations," Biden wrote.

At the same same, one of Hunter's firm's lobbying clients, called SEARCH, was lobbying the federal government for a bigger fingerprint screening system.

Joe Biden eventually introduced a bill called the Child Protection Improvements Act, which created a national fingerprint background check system for volunteer groups that worked with children.

Oldaker, Biden & Belair then began lobbying for the bill on behalf of SEARCH, according to lobbying records.

Hunter Biden co-founded SEARCH but stepped away from the company after his father became a vice presidential candidate in 2008.


The post Report: Joe Biden as senator lobbied for Hunter's interests appeared first on WND.


WikiLeaks Releases New Documents Questioning Syria Chemical Attack Narrative

WikiLeaks Releases New Documents Questioning Syria Chemical Attack Narrative

A whistleblower with the Organization for the Prohibition of Chemical Weapons (OPCW), responsible for conducting an independent investigation into the alleged chemical attack in the Syrian town of Douma on April 7, 2018, has presented WikiLeaks with a body of evidence suggesting the chemical weapons watchdog agency manipulated and suppressed evidence

A prior official OPCW report of the investigation issued last March found "reasonable grounds" for believing a toxic chemical was used against civilians, likely chlorine. Long prior to any independent investigators reaching the site, however, Washington had launched major tomahawk airstrikes against Damascus in retribution for "Assad gassing his own people"

WikiLeks release: A statement from the panel tasked with investigating evidence from a OPCW whistleblower regarding the Douma alleged chemical attack in Syria, April 7, 2018. casts doubts on the accuracy of the OPCW final report.

— WikiLeaks (@wikileaks) October 23, 2019

WikiLeaks published documents based on evidence presented by the internal OPCW whistleblower to an expert review panel on Wednesday. “The panel was presented with evidence that casts doubt on the integrity of the OPCW,” WikiLeaks editor Kristinn Hrafnsson wrote.

An official WikiLeaks press release said as follows:

Kristinn Hrafnsson took part in the panel to review the testimony and documents from the OPCW whistleblower. He says: “The panel was presented with evidence that casts doubt on the integrity of the OPCW. Although the whistleblower was not ready to step forward and/or present documents to the public, WikiLeaks believes it is now of utmost interest for the public to see everything that was collected by the Fact Finding Mission on Douma and all scientific reports written in relation to the investigation.”

“Based on the whistleblower’s extensive presentation, including internal emails, text exchanges and suppressed draft reports, we are unanimous in expressing our alarm over unacceptable practices in the investigation of the alleged chemical attack in Douma,” the experts pointed out.

Panel sees evidence of "unacceptable practices" in OPCW during investigation into the alleged chemical attack in #Douma, Syria on April 7, 2018.

— WikiLeaks (@wikileaks) October 23, 2019

“We became convinced by the testimony that key information about chemical analyses, toxicology consultations, ballistics studies, and witness testimonies was suppressed, ostensibly to favor a preordained conclusion.”

The testimony further revealed “disquieting efforts to exclude some inspectors from the investigation whilst thwarting their attempts to raise legitimate concerns, highlight irregular practices or even to express their differing observations and assessments.”

The new information was enough to convince José Bustani, former director-general of the OPCW to conclude there is now "convincing evidence" of irregularities.

José Maurício Bustani, a Brazilian diplomat and the first director-general of the Organisation for the Prohibition of Chemical Weapons (OPCW).

According to a summary of the latest controversy to cast doubt on the dominant mainstream narrative related to Douma, Middle East analysis site Al-Bab noted Bustain harbored prior doubts:

Bustani was quoted as saying he had long held doubts about the alleged attack in Douma, on the outskirts of Damascus. "I could make no sense of what I was reading in the international press. Even official reports of investigations seemed incoherent at best."

WikiLeaks is calling on OPCW insiders to supply leaked documents relating to the Douma chemical weapons investigation in Syria.

— Brian Whitaker (@Brian_Whit) October 24, 2019

Some dissenting officials as well as countries like Russia have accused the international chemical watchdog body, which operations in coordination with the UN, of being politically compromised when it comes to Syria. 

Tyler Durden Thu, 10/24/2019 - 21:35


Thursday, October 24, 2019

Google Confirms 'Quantum Supremacy' - Completes 10,000 Year Calculation In 200 Seconds

Google has officially confirmed that they've achieved quantum supremacy. Unsurprisingly, IBM, the company that operates the supercomputer that Google claims to have beaten, and a key quantum computer competitor, is disputing Google’s claims.


A Year After Khashoggi Murder, 'All Is Forgiven' As Wall Street Flocks To MbS' "Davos In The Desert"

When last year Saudi Crown Prince Mohammad bin Salman (MbS) hosted his second annual Future Investment Initiative, he was under international condemnation and scrutiny, and his invitation for major investment in modernizing the kingdom was immediately branded with pariah-status by global elites, gi


Wednesday, October 23, 2019

An American Citizen Was Detained While Trying to Pay a Customs Fee on a Gift for His Daughter


It was July of last year, and the man’s daughter was to be married soon. A box of celebratory gifts — clothing and perfume from family in the Middle East — arrived at Buffalo Niagara International Airport customs. The man had picked up similar shipments a handful of times before, enough to know the routine: The customs office calls to let him know his items have arrived, inspects the goods, and tells him to pay an import duty at an office just 13 miles away at the Peace Bridge, which connects the U.S. to Canada.

This time, however, when he arrived at the bridge office as instructed, carrying a handwritten note from the original customs office, the man, a U.S. citizen, was detained and searched by Customs and Border Protection, he said. His phones were seized and his car rifled through. His father and cousin, who had been waiting in the vehicle, were themselves detained, ordered into the office to answer questions about their national backgrounds.

The incident, as described by the man and his attorneys, illustrates just how ready officials are to conduct invasive searches at the border, where, in the name of national security, certain due process protections normally afforded Americans under the Fourth Amendment are not observed. It also calls into question whether the man, who is Muslim, was singled out because of his faith. The man, who asked not to be named because he fears retaliation and harrassment, was not flying or otherwise crossing the border that day and did not expect to be detained while merely trying to clear a package of gifts.

CBP did not respond to requests for comment.

Every citizen of the United States is constitutionally protected against unreasonable searches and seizures — but there are exceptions. Although the law demands that police interested in the contents of your car trunk or location of your iPhone first obtain a warrant, the rules change for Americans traveling through, say, an airport, or a road checkpoint along the Mexican border. This is known as the “border search exception” to the Fourth Amendment. In these instances, courts have ruled, law enforcement can conduct a “routine” search of you and your belongings, like emptying of your pockets or opening your bag at airport security, without a warrant or even cause for suspicion. Any search at the border considered “non-routine” — a strip search, for instance — requires some modicum of suspicion.

But routine or non-routine, the border search exception is grounded in traversal of the border itself, the rationale being that a government’s interest in who is attempting to enter the country (and what they’re carrying) is a reasonable one. “Searches made at the border, pursuant to the long-standing right of the sovereign to protect itself by stopping and examining persons and property crossing into this country, are reasonable simply by virtue of the fact that they occur at the border,” the Supreme Court ruled in a landmark 1977 border search case.

But CBP’s “authority isn’t a blank check to subject people to invasive border-type searches if they aren’t actually trying to cross the border,” New York Civil Liberties policy counsel Zach Ahmad told The Intercept. “It is incumbent on CBP to determine when someone is actually trying to enter or leave the country.”

The New York man — let’s call him John Doe — found himself on that July day stuck in this legal gray zone, where constitutional norms are suspended and Homeland Security asserts itself unflinchingly. He and one of the attorneys, Albert Fox Cahn, discussed the incident by phone in an interview with The Intercept.

Normally when paying the import duty at the airport, Doe could simply hand over the money and drive home. In the July incident, at the CBP cashier’s counter, Doe was asked where he’d come from. He showed his paperwork from the customs office just 12 miles away and explained that he hadn’t arrived from anywhere by plane; he was an American and a local, with no intention of crossing the border that day or any other that day.

He was asked for his identification in order to pay the small duty fee for his daughter’s gifts, and only then realized that he’d left his wallet at home. When he explained this, that he’d made an honest mistake and wanted only to pay the routine duty owed and depart, he was told that in fact he wasn’t permitted to leave. Doe asked if he could speak to a supervisor who might be familiar with his situation — a customs official at the airport had emailed ahead of his arrival — but was told to “go inside” a detention area and nothing further. He was led to an inspection room by himself. Doe was now detained.

He was asked for his identification in order to pay the small duty fee, and only then realized that he’d left his wallet at home. When he explained this, he was told that in fact he wasn’t permitted to leave.

After sitting alone in the detention room for about an hour, Doe was questioned further by a CBP officer. “Where are you from?” he was asked again. “Here,” he repeated. Doe was asked to empty the contents of his pockets and turn them inside out in front of the officers, who took his car keys and left to search the vehicle without his permission or presence. CBP was permitted to search the car, they said, because he’d driven it to their office.

Doe’s father and cousin, who’d been waiting in the car during what they thought would be a quick stop, were ordered inside to join their relative in the detention room and questioned about their nationality before being let go. Doe, alarmed by what was happening, attempted to contact his brother from his phone, only to be told he wasn’t permitted to use his phone at all, and that it would be now be confiscated. The CBP officer present pressed Doe on why he had two cellphones before ordering him to hand them both over; Doe said in an interview that he simply prefers having two phones and got a good deal on them. “That’s not criminal, to have two phones,” he said.

It’s unclear what exactly CBP did with Doe’s devices. All he and his lawyers know for certain, they told The Intercept, is that the agency had physical possession of them for roughly 45 minutes and that for part of that time, they were placed near a CBP computer, where Doe could see them.

Cellebrite, an Israeli firm that has sold forensic software to law enforcement agencies across the country — including CBP — has claimed the ability to pull data from a phone and onto an agent’s computer at speeds of up to 1 gigabyte per minute, meaning troves of emails, texts, photos, contacts, and other sensitive personal data could be exfiltrated in a relatively short amount of time.

The rules for how such device searches are supposed to be conducted in an era when the contents of your smartphone can contain more or less a full record of your existence are a muddle. Policies adopted by CBP’s organizational parent entity, the Department of Homeland Security, permit border agents to conduct a so-called basic search of your phone — confined to scrolling and tapping through its screen just as you would yourself — without any justification. A so-called advanced device search, using software that can break through security mechanisms like password locks and encryption and make permanent copies of data for later analysis, is permitted whenever “there is reasonable suspicion of activity in violation of the laws enforced or administered by CBP, or in which there is a national security concern.” These terms remain largely undefined, at least in public documents, and CBP Directive No. 3340-049A, the most recently published version of Homeland Security’s rules for rummaging through phones at the border, is rife with exceptions. For example, per the July 2018 directive, “Searches of electronic devices should be conducted in the presence of the individual whose information is being examined,” unless, that is, “there are national security, law enforcement, officer safety, or other operational considerations that make it inappropriate to permit the individual to remain present.”

Sophia Cope, a senior staff attorney with Electronic Frontier Foundation, told The Intercept that “searching a person already inside the U.S. stretches the Fourth Amendment’s border search exception beyond recognition,” adding that there is “nothing in CBP’s policy on border searches of electronic devices that authorizes such a search” like the one Doe experienced.

“Searching a person already inside the U.S. stretches the Fourth Amendment’s border search exception beyond recognition.”

After over an hour, Doe was released. At no point had he received an explanation for his detention, the search of his car, the questioning of his relatives, or the seizure of his phones, he said. During his detention, the only thing even resembling a rationale for his treatment was a comment that the handwritten note he’d brought from airport customs to the CBP facility was unusual, though no attempt seemed to have been made to contact customs to see that his story checked out. Days later, a friend recommended Doe contact the Council on American–Islamic Relations, where Cahn, a civil liberties and privacy attorney, took up his case, along with the New York law firm Stroock & Stroock & Lavan. Cahn, who later left CAIR to become executive director of the Urban Justice Center’s Surveillance Technology Oversight Project, told The Intercept that he and his client have yet to sue the government but hope Doe’s story will prompt others who have been subjected to border searches without even attempting to cross the border to come forward.

“We’ve seen a huge surge in complaints from the Muslim community describing an ongoing campaign of discriminatory searches by CBP all across the country,” said Cahn. “I find it hard to believe that it’s a complete coincidence that of all the American citizens entering that office on that day, the man who is singled out for a search happens to be a Muslim man of Middle Eastern descent,” he added. “I think we see a prolonged campaign to turn the border zone … into a constitutional free zone. There’s a systemic disregard for the law.” Cahn told The Intercept that he’s “flagged the matter for several high-profile DHS officials” and “repeatedly reached out out to the Office for Civil Rights and Civil Liberties” at DHS, but has never received any “substantive” reply or explanation for Doe’s detention. The DHS CRCL office referred a request for comment to the department’s media office, which did not respond.

There’s no anger in Doe’s voice when he talks about his detention but still traces of dismay and confusion. “Why? Why only me? Why this time? Too many questions came to my mind. I [did] not cross the border, I’m in the U.S. I hear a lot of things about U.S. customs sometime, especially as a Muslim. When they put me inside the room alone, I felt just like I’d been selected as a criminal, like I’ve done something wrong. If someone walked in and saw me in that room alone … it made me feel guilty. What have I done?”

The post An American Citizen Was Detained While Trying to Pay a Customs Fee on a Gift for His Daughter appeared first on The Intercept.


Demonstrating Quantum Supremacy

We’re marking a major milestone in quantum computing research that opens up new possibilities for this technology. Learn how the Google AI Quantum team demonstrated how a quantum computer can perform a task no classical computer can in an experiment called "quantum supremacy."Subscribe to our Chan


Intervention... In Extremis

The Fed has gone into full intervention mode. Not only into full intervention mode, but accelerated intervention mode. Not just a little “mid cycle adjustment” but full bore daily interventions to the tune of dozens of billions of dollars every single day.


Assange Is The Only One To Abide By The Law

On October 21 2019, Brexit became an entirely irrelevant issue. Or perhaps we should say it had already become that, but on that date it was exposed for all to see that it was.


Tuesday, October 22, 2019

The American Economy RIP


Guest Post by Paul Craig Roberts

“Permit me to issue and control the money of a nation, and I care not who makes its laws.”  —Mayer Anselm Rothschild, 1790

Thirty-eight years ago when I was in charge of United States domestic economic policy, the US Treasury and President Reagan believed that the purpose of economic policy was to serve the country, not Wall Street and the banks or the corporations or any of the various organized interest groups.  Our idea was that policy  could not be for this or that part of the economy.  It had to be for everyone.

This changed in the last year of the Reagan administration after I was gone.  The George H.W. Bush Republicans, who by then had taken over the Reagan administration, decided that economic policy had to serve the election of Bush as Reagan’s successor.  They created the “Plunge Protection Team,” consisting of the Treasury and the Federal Reserve.  Its purpose was to stand ready to intervene in financial markets and to support financial prices in the event of a stock market downturn for which the Bush Republicans had set themselves up to be blamed.

Reagan was elected because the post-war Keynesian demand management policy of pumping up consumer demand with money supply growth and easy credit, while maintaining high tax rates on work and investment, had broken down.  The result was the rising inflation and unemployment trade-offs known as stagflation.

The small handfull of Supply-side economists that existed understood that the high tax rates were restraining labor and investment inputs into the economy, because the after-tax rewards were low. A 50% tax rate on wages and salaries meant that when a person’s income reached the threshold of the 50% rate, he was working for half pay.  For the investor, the situation was worse.  At the 70% bracket, he was taking investment risks for 30% of his earnings.

Consequently, when the Federal Reserve pumped up consumer demand, the response from output was weak. When real output does not respond sufficiently to absorb the new money, prices rise instead of employment.  The solution was obvious, but not to the  Keynesians who had been running US economic policy since the Second World War.

The solution was to cut the tax rates in order to encourage a larger response of supply to demand.

The Bush Republicans and Reagan’s Budget Director, David Stockman, were unable to understand the Supply-side policy.  They could not get their minds out of demand-side economics.  In demand-side or Keynesian economics, the purpose of cutting marginal tax rates is to increase consumer spending.  As inflation was already a problem, the Bush Republicans and Federal Reserve Bank Chairman Paul Volcker thought that Reagan’s tax rate reductions would cause inflation to explode, driving up interest rates and collapsing the values of Wall Street’s stock and bond portfolios.  To restrain the expected inflation from Reagan’s Supply-side fiscal policy, Volcker  slammed on the monetary brakes and caused a recession before the tax rate reductions went into effect.  The deficits from Volcker’s recession were blamed on Reagan’s Supply-side policy. The appearance of the budget deficits convinced Bush Republicans that a stock market crash was in the cards. To prevent the expected crash from keeping Bush out of the White House, they set up the Plunge Protection Team to guarantee the price of financial assets.

The Team was not needed for that purpose.  The success of the Supply-side policy caused inflation to fall and real output to rise despite the budget deficits.  What the creation of the Plunge Protection Team did was to give the Federal Reserve enormous new powers.  The Federal Reserve can now intervene in all financial markets, not merely the bond market.  This intervention is never discussed in the financial press, a collection of presstitutes like the rest of the media.

Today central banks not only support bond prices by heavy purchases, they do the same thing in the equity market.  The Bank of Japan, for example, owns 77.5% of Japan’s ETF (Exchange Traded Fund) market, having bought nearly 23 trillion yen of the ETF market since 2013.

The Federal Reserve owns assets equal to 20% of US GDP. The European Central Bank owns assets equal to 40% of the euro-zone economy.  The Bank of Japan’s asset hoard now exceeds the Japanese economy in size.

With this background, we can now get on with the story.

For a decade we have had a stock market based on (1) the profits from lower labor costs by producing offshore the goods and services corporations sell to Americans, thereby destroying the American middle class and the tax base of cities and states, (2) the use of corporate profits for buying back the corporations’ stock, and by borrowing to buy back stock, thus decapitalizing the corporations in order to support stock prices, managerial bonuses and shareholder capital gains, and (3) Quantitative Easing (QE) which pumped trillions of dollars into US financial markets, thus pushing up the prices of financial assets.  If the money the Federal Reserve created in order to support the solvency of the “banks too big to fail” had gone into the economy, hyperinflation in consumer prices would have been the result.  Instead the money caused inflation in the prices of financial assets, and this is the explanation of why a small percentage of people—shareholders—have accumulated most of the gains in income and wealth.

The extraordinary increase in the inequality of incomes in the United States is the consequence of using economic policy to support the New York Banks, which has meant supporting the prices of the bad assets on their balance sheets.

In America today truth gets no respect from anyone whether right, left, liberal, conservative, Democrat, Republican.  The idiot Hillary has alleged that the only sane Democrat—Tulsi Gabbard— is a Russian agent!  It blows the mind.  And the presstitutes  treat the absurd allegation as if it is a fact.

Right-wing talk radio hosts Rush Limbaugh and Sean Hannity are just as unrealistic on pro-Trump subjects.  Both of them boast of the great American economy with 3.5% unemployment.

As I have explained so many times, the 3.5% unemployment rate results from not counting unemployment.  If you are unemployed, but have not searched for a job in the last 4 weeks, your unemployment is not considered to be a fact.  If you have looked for a job for a year without success and have become long-term discouraged, you are not even counted as being a member of the work force.  So how can you be unemployed?

Job growth is largely a fiction.  Increasingly jobs are not jobs.  They are gigs.  American companies hire through agencies and cycle people in and out as needed.  The jobs at which a person worked for decades with medical coverage and  a retirement pension are largely gone.

The monthly payroll jobs reports do not translate directly into employment.  Many of the jobs are part-time and two or more are held by the same person who struggles to make ends meet. As I have emphasized in my reports for the past two decades, the reported new jobs are in low-pay domestic service occupations–the kind of labor force India had decades ago.

In the Western world employment for white heterosexual males is hard to come by.  In the US the small hiring that takes place after jobs are offshored and filled by foreigners on work visas is geared toward women, people of color, and those claiming to be transgendered.

It seems to me that if a person, despite their obvious gender, can claim to be of the opposite gender, a person can claim to be whatever race he or she thinks, or pretends to think, that they are.  It is amazing that white males, who suffer discrimination in the corporate, government, and academic job market, are not claiming to be transgendered, transrace, transsexual-preference black lesbian women.

What American transnational corporations do is to produce wage and salary income, not for Americans, but for the offshore producers of the products that the American firms send back to the US to be sold to Americans who have lost their middle class jobs.  Americans are able to buy products devoid of their labor input only by the expansion of consumer debt.  The limit to debt is the amount that can be serviced.  And that limit has been reached.

Americans now have 7-year auto financing in which the outstanding payments exceed the value of the auto.  Trade-ins can only occur because the negative value of the car in relation to the amount owed is rolled into the new loan.  You can see where this leads.  It is like the Americans who can only make the minimum payment on their credit card balance, thus becoming more indebted monthly by the interest charges on the outstanding balance.

An economy such as America’s has nowhere to go but down.  Student debt prevents the formation of new households and marriages.  This affects real estate sales and home construction, home furnishing sales and appliance sales.

Officially the US has 3.5% unemployment but no real growth in median family income or retail sales.

The US has rigged inflation measures in order to prevent them from measuring inflation. The government’s inflation measures were “reformed” by the Boskin Commission.  Today if a price goes up in the control basket of goods, the item is thrown out and a lower quality item is substituted in its place, or else the price rise is said to be a “quality improvement” and not counted.  This way of measuring inflation makes it possible to have high inflation that does not show up in the inflation measures.

As inflation is under-reported, American GDP can be misrepresented as expanding.  This is because nominal GDP must be deflated for inflation.  The lower the inflation measure, the higher the real GDP.  Thus manipulated inflation measures enhance the perception that US real GDP is on the rise.

What America has is an economy stagnating in debt with a growing amount of consumer income diverted to the service of debt.  This is not Trump’s fault.  It is the fault of corporations moving middle class jobs offshore and filling many that remain in the US with lower paid foreigners on work visas. It is the fault of the Federal Reserve’s policy of saving the banks rather than the economy.  It is the fault of the policy of supporting aggregate demand by substituting consumer debt for the missing growth in consumer income.  This is a huge problem, and a president alone cannot correct it.


Assange in Court


I was deeply shaken while witnessing yesterday’s events in Westminster Magistrates Court. Every decision was railroaded through over the scarcely heard arguments and objections of Assange’s legal team, by a magistrate who barely pretended to be listening.

Before I get on to the blatant lack of fair process, the first thing I must note was Julian’s condition. I was badly shocked by just how much weight my friend has lost, by the speed his hair has receded and by the appearance of premature and vastly accelerated ageing. He has a pronounced limp I have never seen before. Since his arrest he has lost over 15 kg in weight.

But his physical appearance was not as shocking as his mental deterioration. When asked to give his name and date of birth, he struggled visibly over several seconds to recall both. I will come to the important content of his statement at the end of proceedings in due course, but his difficulty in making it was very evident; it was a real struggle for him to articulate the words and focus his train of thought.

Until yesterday I had always been quietly sceptical of those who claimed that Julian’s treatment amounted to torture – even of Nils Melzer, the UN Special Rapporteur on Torture – and sceptical of those who suggested he may be subject to debilitating drug treatments. But having attended the trials in Uzbekistan of several victims of extreme torture, and having worked with survivors from Sierra Leone and elsewhere, I can tell you that yesterday changed my mind entirely and Julian exhibited exactly the symptoms of a torture victim brought blinking into the light, particularly in terms of disorientation, confusion, and the real struggle to assert free will through the fog of learned helplessness.

I had been even more sceptical of those who claimed, as a senior member of his legal team did to me on Sunday night, that they were worried that Julian might not live to the end of the extradition process. I now find myself not only believing it, but haunted by the thought. Everybody in that court yesterday saw that one of the greatest journalists and most important dissidents of our times is being tortured to death by the state, before our eyes. To see my friend, the most articulate man, the fastest thinker, I have ever known, reduced to that shambling and incoherent wreck, was unbearable. Yet the agents of the state, particularly the callous magistrate Vanessa Baraitser, were not just prepared but eager to be a part of this bloodsport. She actually told him that if he were incapable of following proceedings, then his lawyers could explain what had happened to him later. The question of why a man who, by the very charges against him, was acknowledged to be highly intelligent and competent, had been reduced by the state to somebody incapable of following court proceedings, gave her not a millisecond of concern.

The charge against Julian is very specific; conspiring with Chelsea Manning to publish the Iraq War logs, the Afghanistan war logs and the State Department cables. The charges are nothing to do with Sweden, nothing to do with sex, and nothing to do with the 2016 US election; a simple clarification the mainstream media appears incapable of understanding.

The purpose of yesterday’s hearing was case management; to determine the timetable for the extradition proceedings. The key points at issue were that Julian’s defence was requesting more time to prepare their evidence; and arguing that political offences were specifically excluded from the extradition treaty. There should, they argued, therefore be a preliminary hearing to determine whether the extradition treaty applied at all.

The reasons given by Assange’s defence team for more time to prepare were both compelling and startling. They had very limited access to their client in jail and had not been permitted to hand him any documents about the case until one week ago. He had also only just been given limited computer access, and all his relevant records and materials had been seized from the Ecuadorean Embassy by the US Government; he had no access to his own materials for the purpose of preparing his defence.

Furthermore, the defence argued, they were in touch with the Spanish courts about a very important and relevant legal case in Madrid which would provide vital evidence. It showed that the CIA had been directly ordering spying on Julian in the Embassy through a Spanish company, UC Global, contracted to provide security there. Crucially this included spying on privileged conversations between Assange and his lawyers discussing his defence against these extradition proceedings, which had been in train in the USA since 2010. In any normal process, that fact would in itself be sufficient to have the extradition proceedings dismissed. Incidentally I learnt on Sunday that the Spanish material produced in court, which had been commissioned by the CIA, specifically includes high resolution video coverage of Julian and I discussing various matters.

The evidence to the Spanish court also included a CIA plot to kidnap Assange, which went to the US authorities’ attitude to lawfulness in his case and the treatment he might expect in the United States. Julian’s team explained that the Spanish legal process was happening now and the evidence from it would be extremely important, but it might not be finished and thus the evidence not fully validated and available in time for the current proposed timetable for the Assange extradition hearings.

For the prosecution, James Lewis QC stated that the government strongly opposed any delay being given for the defence to prepare, and strongly opposed any separate consideration of the question of whether the charge was a political offence excluded by the extradition treaty. Baraitser took her cue from Lewis and stated categorically that the date for the extradition hearing, 25 February, could not be changed. She was open to changes in dates for submission of evidence and responses before this, and called a ten minute recess for the prosecution and defence to agree these steps.

What happened next was very instructive. There were five representatives of the US government present (initially three, and two more arrived in the course of the hearing), seated at desks behind the lawyers in court. The prosecution lawyers immediately went into huddle with the US representatives, then went outside the courtroom with them, to decide how to respond on the dates.

After the recess the defence team stated they could not, in their professional opinion, adequately prepare if the hearing date were kept to February, but within Baraitser’s instruction to do so they nevertheless outlined a proposed timetable on delivery of evidence. In responding to this, Lewis’ junior counsel scurried to the back of the court to consult the Americans again while Lewis actually told the judge he was “taking instructions from those behind”. It is important to note that as he said this, it was not the UK Attorney-General’s office who were being consulted but the US Embassy. Lewis received his American instructions and agreed that the defence might have two months to prepare their evidence (they had said they needed an absolute minimum of three) but the February hearing date may not be moved. Baraitser gave a ruling agreeing everything Lewis had said.

At this stage it was unclear why we were sitting through this farce. The US government was dictating its instructions to Lewis, who was relaying those instructions to Baraitser, who was ruling them as her legal decision. The charade might as well have been cut and the US government simply sat on the bench to control the whole process. Nobody could sit there and believe they were in any part of a genuine legal process or that Baraitser was giving a moment’s consideration to the arguments of the defence. Her facial expressions on the few occasions she looked at the defence ranged from contempt through boredom to sarcasm. When she looked at Lewis she was attentive, open and warm.

The extradition is plainly being rushed through in accordance with a Washington dictated timetable. Apart from a desire to pre-empt the Spanish court providing evidence on CIA activity in sabotaging the defence, what makes the February date so important to the USA? I would welcome any thoughts.

Baraitser dismissed the defence’s request for a separate prior hearing to consider whether the extradition treaty applied at all, without bothering to give any reason why (possibly she had not properly memorised what Lewis had been instructing her to agree with). Yet this is Article 4 of the UK/US Extradition Treaty 2007 in full:

On the face of it, what Assange is accused of is the very definition of a political offence – if this is not, then what is? It is not covered by any of the exceptions from that listed. There is every reason to consider whether this charge is excluded by the extradition treaty, and to do so before the long and very costly process of considering all the evidence should the treaty apply. But Baraitser simply dismissed the argument out of hand.

Just in case anybody was left in any doubt as to what was happening here, Lewis then stood up and suggested that the defence should not be allowed to waste the court’s time with a lot of arguments. All arguments for the substantive hearing should be given in writing in advance and a “guillotine should be applied” (his exact words) to arguments and witnesses in court, perhaps of five hours for the defence. The defence had suggested they would need more than the scheduled five days to present their case. Lewis countered that the entire hearing should be over in two days. Baraitser said this was not procedurally the correct moment to agree this but she will consider it once she had received the evidence bundles.

(SPOILER: Baraitser is going to do as Lewis instructs and cut the substantive hearing short).

Baraitser then capped it all by saying the February hearing will be held, not at the comparatively open and accessible Westminster Magistrates Court where we were, but at Belmarsh Magistrates Court, the grim high security facility used for preliminary legal processing of terrorists, attached to the maximum security prison where Assange is being held. There are only six seats for the public in even the largest court at Belmarsh, and the object is plainly to evade public scrutiny and make sure that Baraitser is not exposed in pulic again again to a genuine account of her proceedings, like this one you are reading. I will probably be unable to get in to the substantive hearing at Belmarsh.

Plainly the authorities were disconcerted by the hundreds of good people who had turned up to support Julian. They hope that far fewer will get to the much less accessible Belmarsh. I am fairly certain (and recall I had a long career as a diplomat) that the two extra American government officials who arrived halfway through proceedings were armed security personnel, brought in because of alarm at the number of protestors around a hearing in which were present senior US officials. The move to Belmarsh may be an American initiative.

Assange’s defence team objected strenuously to the move to Belmarsh, in particular on the grounds that there are no conference rooms available there to consult their client and they have very inadequate access to him in the jail. Baraitser dismissed their objection offhand and with a very definite smirk.

Finally, Baraitser turned to Julian and ordered him to stand, and asked him if he had understood the proceedings. He replied in the negative, said that he could not think, and gave every appearance of disorientation. The he seemed to find an inner strength, drew himself up a little, and said:

I do not understand how this process is equitable. This superpower had 10 years to prepare for this case and I can’t even access my writings. It is very difficult, where I am, to do anything. These people have unlimited resources.

The effort then seemed to become too much, his voice dropped and he became increasingly confused and incoherent. He spoke of whistleblowers and publishers being labeled enemies of the people, then spoke about his children’s DNA being stolen and of being spied on in his meetings with his psychologist. I am not suggesting at all that Julian was wrong about these points, but he could not properly frame nor articulate them. He was plainly not himself, very ill and it was just horribly painful to watch. Baraitser showed neither sympathy nor the least concern. She tartly observed that if he could not understand what had happened, his lawyers could explain it to him, and she swept out of court.

The whole experience was profoundly upsetting. It was very plain that there was no genuine process of legal consideration happening here. What we had was a naked demonstration of the power of the state, and a naked dictation of proceedings by the Americans. Julian was in a box behind bulletproof glass, and I and the thirty odd other members of the public who had squeezed in were in a different box behind more bulletproof glass. I do not know if he could see me or his other friends in the court, or if he was capable of recognising anybody. He gave no indication that he did.

In Belmarsh he is kept in complete isolation for 23 hours a day. He is permitted 45 minutes exercise. If he has to be moved, they clear the corridors before he walks down them and they lock all cell doors to ensure he has no contact with any other prisoner outside the short and strictly supervised exercise period. There is no possible justification for this inhuman regime, used on major terrorists, being imposed on a publisher who is a remand prisoner.

I have been both cataloguing and protesting for years the increasingly authoritarian powers of the UK state, but that the most gross abuse could be so open and undisguised is still a shock. The campaign of demonisation and dehumanisation against Julian, based on government and media lie after government and media lie, has led to a situation where he can be slowly killed in public sight, and arraigned on a charge of publishing the truth about government wrongdoing, while receiving no assistance from “liberal” society.

Unless Julian is released shortly he will be destroyed. If the state can do this, then who is next?


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The post Assange in Court appeared first on Craig Murray.


Monday, October 21, 2019

Are The Rating Agencies Complicit In Another Massive Scandal: A WSJ Investigation Leads To Shocking Questions

Are The Rating Agencies Complicit In Another Massive Scandal: A WSJ Investigation Leads To Shocking Questions

Over the past two years, a key event many bears have cited as a potential catalyst for the next market crash, is the systematic downgrade of billions of lowest-rated investment grade bonds to junk as a result of debt leverage creeping ever high, coupled with the inevitable slowdown of the economy, which would lead to an avalanche of "fallen angels" - newly downgraded junk bonds which institutional managers have to sell as a result of limitations on their mandate, in the process sending prices across the corporate sector sharply lower.

As we discussed in July, the scope of this potential problem is massive, with the the lowest-rated, BBB sector now nearly 60% of all investment grade bonds, and more than double the size of the entire junk bond market in the US, and 3.4x bigger than the European junk bond universe.

Yet after waiting patiently for years for the inevitable downgrade avalanche which would unleash a zombie army of fallen angels and potentially spark the next crash, with the occasional exception of a few notable downgrades such as PG&E and Ford, this wholesale event has failed to materialize so far, something which the bulls have frequently paraded as an indication that the economy is far stronger than the bears suggest.

But is it? And instead of the economy being stronger, are we just reliving the past where rating agencies pretended everything was ok until the very end, only to admit they were wrong all along, and then slash their rating retrospectively, too late however as the next financial crisis is already raging.

Well, according to a must-read expose by the WSJ, it appears that we are indeed doomed to repeat the mistakes of the past, because as the Journal's Gunjan Banerji and Cezary Podkul observe, what was supposed to be a 2015 downgrade has dragged on for over 4 years... while the rating agencies appear to be purposefully looking elsewhere.

To wit:

In August, bond-ratings firms Moody’s and S&P Global predicted that Newell Brands would soon reduce its heavy debt load, allowing it to keep its coveted investment-grade bond rating.

They made the same prediction in 2018. And in 2017. And in 2016. And in 2015, when the company announced a big merger that quadrupled its debt. Yet bond ratings for the maker of Rubbermaid containers and Sharpie markers haven’t budged.

Those asking "why not" are correct, and not just because the rating agencies appear to be delaying a moment of reckoning, clearly aware of the shitstorm they would trigger if they downgraded every soon to be "fallen angel" - just like in 2007 with their ridiculous CDO assessments, the raters have made glaring mistakes, which when correct, have still failed to prompt the agencies into action:

When S&P and Moody’s made their upbeat projections in 2018, they made an error that understated Newell’s indebtedness, according to a Wall Street Journal review of the rating firms’ calculations. They have since fixed their numbers, but still rate Newell investment-grade. Investors have been less forgiving, selling off the bonds and driving up their yield.

The raters' response: "Moody’s and S&P didn’t dispute revising their calculations, but said the changes didn’t affect their ratings."

Naturally, it's not just Newell: amid an epic corporate borrowing spree that sent total non-financial corporate debt to a record $10 trillion...

... sending it to the highest percentage of GDP on record...

... ratings firms have given leeway to other giant borrowers like Kraft Heinz, Campbell, and of course, IBM, which recently almost doubled its debt load to fund the purchase of Red Hat, allowing their balance sheets to swell.

"It’s pretty eye-popping if you’ve been doing this for 20-plus years, to see how much more leverage a number of these companies can incur with the same credit rating," said Greg Haendel, a portfolio manager at Tortoise in Los Angeles overseeing about $1 billion in corporate bonds. “There’s definitely some ratings inflation."

To veterans it may be "eye-popping" but to everyone else, it's a surprise, so here it is visualized: the average Investment Grade company has seen its net leverage rise from roughly 2x to over 3x in the past decade, while leverage for the average BBB name has risen by more than 50% from just over 2x to 3.3x in the same time period.

The relentless increase in leverage should not come as a surprise: years of near-zero interest rates (or negative in the case of Europe) have fueled a record boom in borrowing, driving debt owed by U.S. companies (ex banks) to nearly $10 trillion—up about 60% from pre-crisis levels, with a majority of the proceeds then used by companies to repurchase their own stock and lift the company stock price to likewise nosebleed levels. It is certainly not a surprise then, that leverage hit an all time high in Q2 of this year, according to JPMorgan.

The record debt increase has sparked one of "the most divisive debates on Wall Street" as the WSJ puts it: Will higher debt loads cause big losses when the economy turns? Or have low interest rates made the borrowing more manageable? And, as noted above, will the sudden collapse of "fallen angels" when rating agencies can no longer kick the can, unleash the next financial crisis?

In their own defense, Moody’s and S&P say their ratings are "accurate" because companies like Newell have solid, global brands and generate sufficient cash flow to pay off the bonds. “We take rating actions where appropriate in line with our methodologies,” said Tom Mowat, analytical manager at S&P Global Ratings. The ratings firms also say their grades have accurately predicted defaults, which is their main purpose.

What Mowat is really saying, is that since central banks have forced bond investors into anything that offers even a modest yield, the fact that yields on the companies in question have fallen is confirmation the rating agency is right.

That, of course, is bullshit: what is really happening is unprecedented herding of the investing community, and even though there is a tsunami of capital chasing even the most modest return, events such as PG&E still happen which reprice bonds from par to a fraction of their value overnight as the folly of "investment grade" fundamentals is laid bare for all to see.

There is another, unspoken reason why S&P and Moody's have dreaded downgrading names such Newell, Kraft and Campbell Soup, all of which are triple-B rated, the lowest category for bonds considered investment-grade, which is what countless vanilla funds are only allowed to hold: a mass downgrade to high yield, or junk, would result in forced liquidation and an unprecedented repricing of the junk bond market, not to mention raising the newly downgraded companies' borrowing costs.

Amid the debt issuance spree of the past decade, the triple-B rating has exploded in the last decade, with debt outstanding more than tripling to $3.7 trillion, more than double the size of the entire US junk bond universe. Should a substantial fraction of these companies be downgraded, it would result in an unprecedented shockwave. These days, more than 50% of all investment-grade bonds are rated triple-B, up from 38% in September 2009.

To be sure, some investors still remember what happened when they put their trust in rating agencies, and despite their BBB-rating, over $100 billion worth of bonds already trade with yields like junk despite their triple-B-minus ratings, despite the flood of cash into investment-grade debt.

Which brings us to the real reason why rating agencies are loath to downgrade most of these "pre-fallen angles" to their true, junk status: such a move would validate what is arguably one of the most bearish catalyst of the past few years, potentially triggering the next market crash. Which, of course, makes the raters even more unwilling to rate these credits at fair value, because the longer they delay admitting reality, the greater the price to pay will be in the end. Which leaves them paralyzed, and pretending that a 3.5x leverage now for a BBB-rated company is the same as a 2.0x levereage at the start of the decade.

Meanwhile, investors and analysts have told the SEC that they are concerned about the buildup of triple-B debt. Here are some examples from the WSJ:

Last October, Adam Richmond, Morgan Stanley’s then head of U.S. credit strategy, testified at an SEC hearing that if leverage were the sole criteria for ratings, many triple-B rated companies wouldn’t qualify for such high grades. He warned that “downgrade activity could be heavy” once the economy inevitably weakens. The firm’s analysts wrote in a September report that investment-grade companies “have not de-levered significantly and are still getting credit for assumed earnings growth, integration of acquisitions, and other ‘plans’ to delever.”

JPMorgan raised similar concerns in a report it submitted to a bond-investor advisory committee at the SEC. In February, the committee created a new group to examine credit ratings and potentially recommend new regulations to boost oversight of the industry, according to people familiar with the group

So far, regulators like rating agencies, have decided to simply stick their head in the sand, and hope that this, too, shall pass. It won't.

Meanwhile, as Moody's and S&P desperately scramble to defend their reputation before their criminal inactivity is seen as the catalyst for the next crash, arguing that cash flow has actually improved in recent year (spoiler alert: it hasn't), even the IMF's new head, Kristalina Georgieva, said last month that $19 trillion of corporate debt would be at risk of default, nearly 40% of total debt in eight major economies. “This is above the levels seen during the financial crisis,” she said.

But wait, it gets better. Instead of downgrading companies on the cusp of being junk-rated, last year S&P actually upgraded Kraft, one of the biggest corporate borrowers, saying cost savings would help push leverage below four times annual earnings by late 2019. Then, in June, following the company's humiliating earnings restatement which embarrassed even crony capitalism market wizard, Warren Buffett, S&P had no choice but to downgrade Kraft ... but it still kept Kraft at the lowest rung of investment-grade, giving it another two years to meet the target. In September, S&P estimated leverage was in the “high-4x area.” Since then, Kraft's leverage has risen even more.

“How long do you give management the benefit of the doubt?” said Lon Erickson, a portfolio manager at Thornburg Investment Management, who oversees $7 billion in corporate debt, including some Kraft bonds.

Here we'll paraphrase Lon, and ask: how long will this Kabuki farce, in which everyone knows that the rating agencies are desperate not to be blamed for the next crisis - for not doing their job again - and thus will never downgrade trillions in BBB-rated bonds to junk, continue?

Apparently the answer is "for a long time." Another example:wWhen Keurig Green Mountain merged with Dr Pepper Snapple Group in 2018, Moody’s said it could downgrade the combined company if leverage didn’t fall to about four times earnings by January 2020. This year, Moody’s said four times annual earnings by the end of 2020 was fine.

“If it’s a strike, it’s a strike. If it’s a ball, it’s a ball,” said Joe Pimbley, a former Moody’s analyst and principal of Maxwell Consulting. “Call it as you see it.”

If only his former co-workers would do that. Instead, they are doing what they did in the run up to the last financial crisis - lying.

The ratings firms say they question companies’ debt reduction plans. “By nature we are a pretty skeptical bunch. We like to poke holes in stories,” said Peter Abdill, who oversees Moody’s ratings for consumer products companies.

No, you are not a skeptical bunch. You are a bunch of pathological liars and hoping that by the time the system comes crashing down, you will have quit long ago, making your criminal inactivity someone else's problem. Meanwhile, the rating agencies are engaging in what appears to be borderline criminal behavior, only when pressed, they will simply say "it was a mistake." Take the example of Newell:

One company that has been given significant leeway by ratings firms is consumer goods giant Newell Brands, which makes everything from Elmer’s glue to Yankee Candles. While food companies like Kraft and Campbell produce steady earnings in good and bad economies, Newell is more cyclical, meaning it is more likely to run into trouble during a downturn. When Newell said it would acquire rival Jarden Corp. for about $20 billion in December 2015, S&P and Moody’s analysts said Newell could keep its low investment-grade rating because debt would fall from more than five times projected earnings to under four times by December 2017.

Newell had tens of millions of dollars riding on that decision. A provision tucked into an $8 billion acquisition bond sale in March 2016 said Newell would owe its investors as much as $160 million more in annual interest costs if it got downgraded into junk territory.

As an aside, the provision highlights the conflict faced by the ratings firms. While investors use rating firms’ research, it is the companies that issue bonds who pay for the ratings. And while Moody’s and S&P say they don’t allow the conflict, or bond provisions like these, to influence their rating decisions, it's beyond obvious that there is no objectivity left when rating BBB-rated companies:

But we digress, back to the story of Newell:

In 2018, under pressure from activist investors, Newell announced plans to sell about a third of its businesses and buy back more than 40% of its shares, moves that could slow down deleveraging. Moody’s and S&P confirmed the company’s rating and predicted its leverage would fall to less than four times earnings by the end of 2018.

This past February, Newell announced that its debt was 3.5 times earnings at the end of 2018. But Newell failed to account for lost earnings from businesses it sold when it calculated the figure. Investors were skeptical, said James Dunn of CreditSights, an independent credit research firm. He estimated Newell’s actual debt load to be 5.3 times projected earnings.

Of course, Moody’s and S&P’s leverage estimates mirrored Newell’s erroneous approach, the WSJ said after reviewing their calculations. Moody’s estimated Newell’s year-end leverage at 3.8 times in a Nov. 2018 report. S&P put it at 3.9 times in a July 2018 note. Worse, Moody’s also overstated Newell’s earnings by double-counting amortization when calculating EBITDA.

Adjusting for the errors, Moody’s estimate of Newell’s leverage should have been closer to 6x earnings, the Journal found. Instead, Moody's currently has it below 4.0x!  For those confused, leverage around 6x EBITDA would - in a normal world - make the company a Jefferies special: somewhere in the B2/B category.

Having been caught in a flagrant mistake, earlier this month, Moody’s updated its calculation of Newell’s year-end 2018 leverage to six times earnings, versus a revised estimate of 5.5 times it published in August that took various asset sales into account. However, it sees that number drifting as low as 3.8x by 2022. S&P raised its number to 5.4 times earnings, citing “normalized” figures that also took into account Newell’s asset sales.

End result? The company is still investment grade. An S&P spokesman said in an email that “our analysis speaks for itself."

It does indeed, and when the next crisis hits, everyone will remember precisely what your "analysis" spoke.

Tyler Durden Mon, 10/21/2019 - 17:32


Everyone Is a Russian Asset

America laughed at Hillary Clinton’s remarks about Tulsi Gabbard, but her ideas fit perfectly in the intellectual mainstream


Assange Case


I am trying to write a report of what I saw in Westminster Magistrate’s Court today, but my hands keep shaking with rage, frustration and sadness to the point I can’t type, and my heart keeps going into atrial fibrillation. I have got myself a cheese sandwich and bottle of Irn Bru and still hope to finish it this evening.

The post Assange Case appeared first on Craig Murray.