Trump"s Jerusalem Tit-For-Tat: Orders Saudis To ‘Immediately’ End Yemen Blockade

In a brief statement issued Wednesday afternoon, President Trump called on Saudi leadership to completely lift the years long Saudi military blockade on war-torn Yemen. The unexpected announcement came on the same day President Trump delivered an extremely controversial televised address wherein he gave official US recognition of Jerusalem as the capital of Israel.

“I have directed officials in my administration to call the leadership of the Kingdom of Saudi Arabia to request that they completely allow food, fuel, water and medicine to reach the Yemeni people who desperately need it,” Trump said through a White House press release. “This must be done for humanitarian reasons immediately.”

Image via Vice News

Though it"s unclear exactly why the directive was suddenly issued after years of humanitarian catastrophe in Yemen, it is likely connected with the widespread shock and condemnation from world leaders which immediately followed in the wake of Trump"s speech formally recognizing Jerusalem as the Israeli capital. The Yemen directive was published by the Office of the Press Secretary only a matter of two hours later.

And while Trump cites "humanitarian reasons" for the urgent directive requesting the lifting of the siege, Saudi Arabia has enforced a military blockade on deeply impoverished Yemen since it began bombing the country in 2015. Furthermore, media and human rights groups began reporting on the de facto naval blockade of Yemen"s ports - which quickly left over 20 million Yemeni civilians facing a dire humanitarian crisis - soon after the war began in March of 2015. This occurred as the US and UK stationed military and intelligence officers in Saudi command and control centers in order to assist in targeting Yemeni Houthi rebel locations.

As early as June 2015, for example, a Guardian investigation found that the US and UK were enabling the crippling blockade, which has been widely acknowledged as a "humanitarian disaster". According to the report, "nearly 80% of the population are in urgent need of food, water and medical aid, in a humanitarian disaster that aid agencies say has been dramatically worsened by a naval blockade imposed by an Arab coalition with US and British backing."

While it"s clear that the lifting of the siege is a welcome step in the right direction for the millions of suffering Yemeni men, women, and children impacted, the White House decision in reality has nothing to do with humanitarian concerns, as the US itself has for the past two years been partnering with the Saudis in all its actions in Yemen (also including Bahrain, Kuwait, UAE, Egypt, Sudan, and with the UK as a huge supplier of weapons).

Saudi airstrikes on the impoverished country, which have killed many thousands of civilians - a shocking percentage of children among them according to the UN - and displaced tens of thousands, have further involved the use of American military hardware. Cholera has recently made a comeback amidst the appalling war-time conditions, and civilian infrastructure such as hospitals have been bombed by the coalition. Though likely falling short of the true number, as of November 5,295 civilians have been killed and another 8,873 injured in the war, according to figures provided by the UN.

And the coalition"s military campaign greatly intensified this week following former President Ali Abdullah Saleh’s death, which resulted in an uptick in the aerial pounding of Sanaa, which was overrun by Houthi rebels. 

So why is Trump belatedly citing "humanitarian reasons" now?

As Middle East analyst Hassan Hassan says, it appears that today"s statement on Yemen is no doubt connected with what many described as the strong and vehement reaction to the earlier Jerusalem recognition move by both King Salman and MBS. "This sounds like a tit-for-tat statement concerning the Jerusalem move. What happened suddenly for this administration to care about Yemenis, esp given recent news the Saudi-led Coalition lifted some of the blockade?" observed Hassan Hassan shortly after the release of the Yemen directive.

This sounds like a tit-for-tat statement re Jerusalem move. What happened suddenly for this administration to care about Yemenis, esp given recent news the Saudi-led Coalition lifted some of the blockade? pic.twitter.com/xrtBjqkeBa

— Hassan Hassan ?????? (@hxhassan) December 6, 2017

No doubt, Trump understands how he can leverage regional allies on the issue of human rights anytime they don"t fall in line with the US position - he knows where the skeletons are buried as the US has long been in the trenches with Saudi Arabia and other gulf allies during the region"s "regime change" wars in places like Libya and Syria. But this goes the other way too, as we previously predicted of the recent Qatari-Saudi diplomatic war which resulted in both sides accusing the other of human rights abuses and aiding terrorism in the region: "the United States itself will not be spared in this new open season of airing dirty laundry as old allies turn on each other."

So while Trump suddenly and conveniently puts Saudi Arabia in the hot seat using human rights as an excuse, we should expect that Saudi Arabia will itself eventually retaliate, likely through some kind of leak or media interview. 

Trump has already received an immense amount of push back over his decision to recognize Jerusalem as the Israeli capital by moving the US embassy there. The countries condemning the move include the UK, France, Germany, Canada, Russia, China, Turkey, Saudi Arabia, Qatar, UAE, Egypt, Jordan, as well as the EU and Arab League. 

As Trump finds he"s put himself in an isolated position over the Jerusalem move, and as he potentially lashes out further against US regional allies, things are about to get even more interesting in the Middle East.

WTI/RBOB Spike On OPEC Headlines After Bearish Inventory/Production Data

Update: WTI/RBOB was fading after DOE data but then Kuwait dropped the following meaningless headline: OPEC JMMC RECOMMENDS EXTENSION, DIDN"T FINALIZE DURATION. And the algos took over...

*  *  *

Last night"s API-reported surprise crude build sparked selling that not even Russia/Saudi jawboning could rescue, but DOE data showed the exact opposite with a big crude draw and even bigger gasoline draw. Added to a new record high in US crude production and RBOB is fading and WTI is not rallying.

As Bloomberg reports, the U.S. has proven at least one thing this year with its expansion of crude and products exports: we are becoming more energy independent than ever before.

Last week net imports of all crude and refined products dipped to a new record low.

That"s coupled with record-high gasoline exports, a truly spectacular sea change in our world"s oil flows.

API

• Crude +1.82mm (-2.95mm exp)


• Cushing -3.178mm - most since Sept 2009


• Gasoline -1.529mm (+1.2mm exp)


• Distillates +2.696mm (+200k exp) - biggest since July

DOE

• Crude -3.43mm (-2.95mm exp)


• Cushing -2.914mm - biggest draw since Sept 2009


• Gasoline +3.63mm (+1.2mm exp) - biggest build since July


• Distillates  (+200k exp) - biggest buils since Jan

DOE data showed the exact reverse of API with big surprise draw in crude and build in gasoline... Additionally Cushing saw the biggest destocking since Sept 2009 last week...

US crude production rose 24k b/d - to a new record high...

Gasoline exports hit a record high...

 

WTI was lower and RBOB higher heading into the DOE data but the trend reversed after on the surprise bearish product builds...

Saudi Coalition Crumbles In Yemen: Sudanese Mercenaries On Front Lines, Foreign Officers, Proxies In Revolt

Most Americans might be forgiven for having no clue what the war in Yemen actually looks like, especially as Western media has spent at least the first two years of the conflict completely ignoring the mass atrocities taking place while white-washing the Saudi coalition"s crimes. Unlike wars in Iraq, Libya, and Syria, which received near daily coverage as they were at their most intense, and in which many Americans could at least visualize the battlefield and the actors involved through endless photographs and video from on the ground, Yemen"s war has largely been a faceless and nameless conflict as far as major media is concerned.

Aside from mainstream media endlessly demonstrating its collective ignorance of Middle East dynamics, it is also no secret that the oil and gas monarchies allied to the West are rarely subject to media scrutiny or criticism, something lately demonstrated on an obscene and frighteningly absurd level with Thomas Friedman"s fawning and hagiographic interview with Saudi crown prince MBS published in the New York Times.

Saudi Arabia"s hired help in Yemen: Sudanese fighters headed to the front lines. Image souce: al-Arabiya

But any level of meticulous review of how the Saudi coalition (which heavily involves US assistance) is executing the war in Yemen would reveal a military and strategic disaster in the making. As Middle East Eye editor-in-chief David Hearst puts it, "All in all, the first military venture to be launched by the 32-year-old Saudi prince as defense minister is a tactical and strategic shambles."  

And if current battlefield trends continue, the likely outcome will be a protracted and humiliating Saudi coalition withdrawal with the spoils divided among Houthi and Saudi allied warlords, as well as others vying for power in Yemen"s tenuous political future. But what unsurprisingly unites most Yemenis at this point is shared hatred for the Saudi coalition bombs which rain down on civilian centers below. For this reason, Hearst concludes further of MBS" war: "The prince, praised in Western circles as a young reformer who will spearhead the push back against Iran, has succeeded in uniting Yemenis against him, a rare feat in a polarized world. He has indeed shot himself, repeatedly, in the foot."

So how has this come about, and how is the war going from a military and strategic perspective?

First, to quickly review, Saudi airstrikes on already impoverished Yemen, which have killed and maimed tens of thousands of civilians (thousands among those are children according to the UN) and displaced hundreds of thousands, have been enabled by both US intelligence and military hardware. Cholera has recently exploded amidst the appalling war-time conditions, and civilian infrastructure such as hospitals and schools have been bombed by the Saudis. After Shia Houthi rebels overran Yemen’s north in 2014, embattled President Abd-Rabbu Mansour Hadi vowed to “extract Yemen from the claws of Iran” something which he"s repeatedly affirmed, having been given international backing from allies in the West, and a major bombing campaign began on March 2015 under the name "Operation Decisive Storm" (in a cheap mirroring of prior US wars in Iraq, the first of which was "Desert Storm").

Saudi Arabia and its backers fear what they perceive as growing Iranian influence in the region, something grossly exaggerated, and seek to defend at all costs Yemeni forces loyal to President Hadi. The coalition includes Bahrain, Kuwait, UAE, Egypt, Sudan, and the US and UK, and the Saudi initiated war has also lately received behind the scenes political support from Israel, something recently confirmed by Israeli officials. Concerning the supposed Iran threat in Yemen, an emergency session of the Arab League recently doubled down on its shared commitment to wage war against Iranian interests after it blamed Tehran for a November 4 ballistic missile attack from Shia Houthi rebels against the Saudi capital, which Iran denies playing a role in.

But the Saudi coalition is now in shambles according to a new Middle East Eye investigation. The report highlights some surprising facts long ignored in mainstream media and which give insight into how the Saudi military campaign is likely to end in total failure as "more than two years into a disastrous war, the coalition of ground forces assembled by the Saudis is showing signs of crumbling."

The multi-national Saudi coalition is "showing signs of crumbling" while increasingly relying on mercenaries fighting on the ground in Yemen.

* * * * *

Below are 5 key takeaways from the full report.

1) Saudi coalition ground forces have a huge contingent of foreign fighters, namely Sudanese troops with UAE officers, suffering the brunt of the battle on the front lines.

Sudanese forces, which constitute the bulk of the 10,000 foreign fighters in the Saudi-led coalition, are suffering high casualty rates. A senior source close to the presidency in Khartoum told Middle East Eye that over 500 of their troops had now been killed in Yemen.

 

Only two months ago, the commander of the Sudanese Army"s rapid support force, Lieutenant General Mohammed Hamdan Hamidati, quoted a figure of 412 troops killed, including 14 officers to  the Sudanese newspaper Al Akhbar. "There is huge pressure to withdraw from this on-going fight," the Sudanese source told MEE. A force of up to 8,000 Sudanese troops are partly led by Emirati officers. They are deployed in southern Yemen as well as to the south and west of Taiz in al Makha.

2) Sudan"s President Omar al-Bashir has been dubbed "president of the mercenaries" for accepting over $2.2 billion from Saudi Arabia and Qatar in order to provide canon fodder for the Saudi ground war in Yemen in the form of thousands of young Sudanese troops, but he"s threatening revolt. To escape his untenable position, he is reportedly seeking help from Putin.

At home, Sudan"s President Omar al-Bashir is also having second thoughts. He remembers the lifeline he got when Riyadh deposited $1bn in Sudan"s Central Bank two years ago, followed by Qatar"s $1.22bn. But he hardly enjoys being known as "president of the mercenaries," and he has other relationships to consider.

 

On Thursday, Bashir became the latest of a procession of Arab leaders to beat a path to Vladimir Putin"s door. He told the Russian president he needed protection from the US, was against confrontation with Iran, and supported the policy of keeping Syrian President Bashar al-Assad in power. This follows an incident at home, which was variously described as espionage and a coup attempt. Taha Osman Ahmed al-Hussein was dismissed as the director of the Office of the Sudanese President after he was discovered carrying a Saudi passport and a residency permit for the UAE. He was caught maintaining secret contact with both.

3) Saudi-backed Yemeni fighters are increasingly mutinying and fear local mass push back from Yemen"s civilian population due to the unpopular bombing campaign.

Mutiny is also stirring in the ranks of Yemenis who two and a half years ago cheered the Saudi pushback against the Houthis who were trying to take over the entire country.

 

The Saudi relationship with Islah, the largest group of Yemeni fighters in the ground force employed by the coalition, has at best been ambivalent. The Crown Prince Mohammed bin Salman"s closest partner in Yemen, Mohammed bin Zayed, Crown Prince of Abu Dhabi, is openly hostile to the Muslim Brotherhood-affiliated Yemeni party... They [Islahi leadership] are feeling the political price they are paying for supporting a campaign that turned in Yemeni eyes from liberation to occupation... Enough is enough. The regional Islahi leadership are now talking of starting direct negotiations with the Houthis, a senior Islah source told MEE.

4) Saudi proxy fighters are at war with each other: an Emirati-backed militia fighting under the Saudi coalition is assassinating other members of the Saudi coalition in what"s increasingly an internal coalition civil war. 

They are also paying a physical price. A number of Islahi sheikhs and scholars as well as Salafis who rejected Emirati leadership have been killed or targeted by assassination attempts. The list is growing: there have been assassinations of Khaled Ali al-Armani, a leader in the Islah Party, on 7 December 2016; Sheikh Abdullah Bin Amir Bin Ali Bin Abdaat al-Kathri, on 23 November 2017 in Hadhramaut; Abdelmajeed Batees (related to Saleh Batees) a leader in the Islah Party on 5 January 2017 in Hadhramaut; Mohammed Bin Lashgam, Deputy Director of Civil Status, on 17 January 2017; Khaled Ali al-Armani, a leader in the Islah Party, on 7 December 2016...

 

"The Emiratis do not conceal their hostility to Islah. Islahi sheikhs and scholars are being assassinated, and this is being co-ordinated by the pro-Emirati militia. In addition, the UAE is clearly enforcing the blockade of Taiz, and withholding support for our fighters in the city," the source said.

5) Oman is entering the fray, which will further fragment the Saudi coalition as rivalries for territorial control develop.

As if the balance of competing outside forces  in Yemen is not complicated enough, enter Oman. Oman, too, regards southern Yemen as its backyard. It is particularly worried about the takeover of a series of strategic ports and islands off Yemen by the Emiratis. A Qatari diplomatic source described this as the Emiratis" "seaborn empire," but the Omanis are upset by this too.

 

The Omanis are understood to be quietly contacting local Yemeni tribal leaders in south Yemen, some of them separatist forces, to organize a more "orchestrated response" to the militias paid for and controlled by Abu Dhabi.

Like the proxy war in Syria, it appears that Gulf/US plans have backfired, and we are perhaps in for a long Saudi coalition death spiral fueled by delusion and denial. Sadly, it is primarily Yemeni civilians and common people in the region that will continue to bear the brunt of suffering wrought by such evil and delusional stupidity.

Things Are Escalating Quickly

Authored by Mike Krieger via Liberty Blitzkrieg blog,

I didn’t spend all week writing about the gigantic tremors occurring in the Middle East because I thought it was fun. If I’m even remotely correct in my analysis, the entire world will be affected and shaped for decades to come by what’s about to go down in the region.

Rather than rehash what I already wrote, I suggest you take a read of the following if you missed them the first time around.

The U.S. and Saudi Arabia Are About to Make More Disastrous and Idiotic Mistakes – Part 1

The U.S. and Saudi Arabia Are About to Make More Disastrous and Idiotic Mistakes – Part 2

There’s been a major update since those posts were published. Namely, it appears the government of Lebanon has seen enough and is coming out with its side of the story. As I reported in Part 1, the Saudis immediately claimed Lebanon declared war on it following the obviously staged and forced resignation of Hariri via Saudi Arabia over the weekend. This appears to be a case of classic psychological projection, as in reality, Saudi Arabia appears to have declared war on Lebanon. It straight up kidnapped their Prime Minister.

Here’s some of what we learned from Reuters:

Lebanon believes Saad al-Hariri is held in Saudi Arabia, from where he resigned as prime minister, two top Lebanese government officials said, amid a deepening crisis pushing Lebanon onto the frontlines of a power struggle between Saudi Arabia and Iran.

 

A third source, a senior politician close to Saudi-allied Hariri, said Saudi Arabia had ordered him to resign and put him under house arrest. A fourth source familiar with the situation said Saudi Arabia was controlling and limiting his movement.

 

In a televised statement indicating deep concern at Hariri’s situation, his Future Movement political party said his return home was necessary to uphold the Lebanese system, describing him as prime minister and a national leader.

 

Hariri’s exit fueled wide speculation that the Sunni Muslim politician, long an ally of Riyadh, was coerced into stepping down by Saudi Arabia as it seeks to hit back against Iran and its Lebanese Shi‘ite ally Hezbollah.

 

“Keeping Hariri with restricted freedom in Riyadh is an attack on Lebanese sovereignty. Our dignity is his dignity. We will work with (foreign) states to return him to Beirut,” said the senior Lebanese official, speaking on condition of anonymity because the government had yet to declare this position.

 

Hariri aides had until Thursday denied he was under house arrest but took a dramatically different tone after a meeting of the Future Movement convened at Hariri’s Beirut residence on Thursday.

 

A statement read by former prime minister Fouad Siniora said his return was “necessary to recover respect for Lebanon’s internal and external balance, and in the framework of full respect for Lebanese legitimacy”.

 

Saudi Arabia this week lumped Lebanon together with Hezbollah as parties that are hostile to it, breaking with a long-established policy that has drawn a line between them and raising concerns of further Saudi measures.

 

The senior Lebanese politician close to Hariri said: “When he went (to Saudi Arabia) he was asked to stay there and ordered to resign. They ordered him to read his resignation statement and he has been held under house arrest since.”

 

Two U.S. officials said the Saudis, led by Crown Prince Mohammed, had “encouraged” Hariri to leave office.

While Lebanese officials were initially quiet, there seems to be an emerging consensus across the various political factions that the Saudis kidnapped Hariri and that such an action is unacceptable. While the Saudis are clearly trying to cause chaos in Lebanon, it seems Lebanese leadership, as well as the people on the street, have no interest in civil strife and renewed violence given all that’s happened to them in recent decades. This puts further pressure on the Saudis, as it seems the latest geopolitical scheme by clown prince Mohamed bin Salman is failing, just like his prior disastrous moves in Yemen and Qatar. The question now is whether or not MBS will figure out a way to escalate his provocation of Lebanon? If so, how will the U.S., Europe and the rest of the region respond?

It seems some sort of escalation is coming given that both Saudi Arabia and Kuwait have called for their citizens to evaluate Lebanon. From Haaretz:

Saudi Arabia has warned its citizens against travelling to Lebanon and asked those who in the country to leave as soon as possible, the kingdom’s official news agency quoted an official source in the Foreign Ministry as saying.

 

“Due to the circumstances in the Lebanese Republic, the kingdom asks its citizens who are visiting or residing” in the country to leave it as soon as possible, the source added.

Circumstances it created, of course.

The Foreign Ministry of Kuwait ordered its citizens to leave Lebanon immediately as well.

Switching gears, while things continue to bubble in an extremely dangerous direction overseas, the corporate media and U.S government have been busy at work here at home in a desperate attempt to regain control of the narrative and silence patriotic whistleblowers.

Let’s start with the corporate media’s recent shameless and degenerate attempt to smear William Binney.

I’ve discussed Mr. Binney over the years. Before it was decided that his character needed assassination, here’s how NPR described him back in 2014:

Bill Binney worked at the National Security Agency nearly three decades as one of its leading crypto-mathematicians. He then became one of its leading whistleblowers.

 

Now 70 and on crutches, both legs lost to diabetes, Binney recalls the July morning seven years ago when a dozen gun-wielding FBI agents burst through the front door of his home, at the end of a cul-de-sac a 10-minute drive from NSA headquarters in Fort Meade, Md.

 

“I first knew that they were in there when they were pointing a gun at me as I was coming out of the shower,” Binney says.

 

When I ask him why the agents were there, he replies: “Well, it was to keep us quiet.”

 

For Binney, the decision to quit the NSA and become a whistleblower began a few weeks after the terrorist attacks of Sept. 11, 2001, when he says he discovered the spy agency had begun using software he’d created to scoop up information on Americans — all without a court order.

 

“I had to get out of there, because they were using the program I built to do domestic spying, and I didn’t want any part of it, I didn’t want to be associated with it,” he says. “I look at it as basically treason. They were subverting the Constitution.”

It’s no wonder the out of control, unconstitutional U.S. surveillance state doesn’t like Mr. Binney, but what the media did to him over the past week is clownishly evil and intentional. It started when The Intercept reported that CIA director Mike Pompeo had meet with Binney at Trump’s request to discuss a memo he signed along with other members of Veteran Intelligence Professionals for Sanity (VIPS) claiming the DNC email breach was the result of a leak and not a hack. Fellow celebrated whistleblower Thomas Drake and other members of VIPS disagreed and refused to sign the memo, making it controversial. That said, Binney’s credentials should not be called into question.

As The Intercept itself noted in its article:

Binney’s adherence to a widely disputed theory about the DNC email theft that is favorable to Trump marks a new twist for a retired government employee who has become an outspoken critic of the intelligence community to which he once belonged. Binney grew up in Pennsylvania, majored in math at Penn State, and joined the Army in 1965. He was assigned to the U.S. Army Security Agency, learning communications traffic analysis and, in 1967, was assigned to NSA headquarters. In 1970, he joined the NSA as a civilian and remained at the agency for the rest of his career. He rose through the ranks to become the agency’s technical director for world geopolitical and military analysis and took over the NSA’s Signals Intelligence Automation Research Center, a kind of skunkworks to test out new ideas.

 

Drake and Binney both emerged from the government’s draconian leak investigation as prominent whistleblowers. Their fame grew after former NSA contractor Edward Snowden went public in 2013 and provided the press with access to a trove of NSA documents about the agency’s mass surveillance programs. Binney was featured in “Citizenfour,” the Oscar-winning 2014 documentary about Snowden directed by Laura Poitras; he was also the subject of a 2015 documentary titled “A Good American.” (Poitras co-founded The Intercept following Snowden’s 2013 disclosures.)

Rather than rationally question whether or not Pompeo should’ve met with Binney about the memo, corporate media had a complete hyperbolic meltdown, proceeding to smear and slander Binney with lack of hesitation you’d expect from state media in totalitarian regimes. Here are just a few examples:

CNN

MSNBC

Tweet from NBC

Conspiracy theorist says President Trump pushed meeting with CIA chief https://t.co/J0OVWvUmq6 pic.twitter.com/ZL9vQFBJwg

— NBC News (@NBCNews) November 7, 2017

The clownish smears above are very important in two respects. First, NBC and CNN both know exactly who William Binney is and know that he’s the furthest thing in the world from a “hack.” Therefore, this is a deliberate and intentional attack on him. It’s straight up character assassination.

The fact that these so-called impartial news organizations, the same ones that constantly decry the “fake news” of others, would stoop to this tells you everything you need to know. Corporate media giants are as biased and agenda driven as any blog or state-sponsored media outlet on earth, possibly more so. These outlets feel so threatened by anyone going against the narrative they want to push, they no longer debate facts and offer clear cut analysis. Rather, they’ve decide to fully embrace the most base propaganda tactics imaginable. All this does is further expose how shady as useless these media outlets are to anyone capable of even a modicum of free thought.

While that’s a good thing, it brings us to another uncomfortable realization. These media outlets aren’t even attempting to convince people with a functioning brain any longer. As I noted on Twitter the other day:

We"ve fully entered the moment when corporate media isn"t even talking to people with more than two brain cells.
It"s just messaging to keep the very ignorant in line.

— Michael Krieger (@LibertyBlitz) November 8, 2017

Which reminds me of an excellent observation from the Counterpunch article, Why Ridiculous Official Propaganda Still Works:

Chief among the common misconceptions about the way official propaganda works is the notion that its goal is to deceive the public into believing things that are not “the truth” (that Trump is a Russian agent, for example, or that Saddam had weapons of mass destruction, or that the terrorists hate us for our freedom, et cetera). However, while official propagandists are definitely pleased if anyone actually believes whatever lies they are selling, deception is not their primary aim.

 

The primary aim of official propaganda is to generate an “official narrative” that can be mindlessly repeated by the ruling classes and those who support and identify with them. This official narrative does not have to make sense, or to stand up to any sort of serious scrutiny. Its factualness is not the point. The point is to draw a Maginot line, a defensive ideological boundary, between “the truth” as defined by the ruling classes and any other “truth” that contradicts their narrative.

 

Imagine this Maginot line as a circular wall surrounded by inhospitable territory. Inside the wall is “normal” society, gainful employment, career advancement, and all the other considerable benefits of cooperating with the ruling classes. Outside the wall is poverty, anxiety, social and professional stigmatization, and various other forms of suffering. Which side of the wall do you want to be on? Every day, in countless ways, each of us are asked and have to answer this question. Conform, and there’s a place for you inside. Refuse, and … well, good luck out there.

Corporate media in the U.S. has finally made its final transition into the sort of outright propaganda described above.

Meanwhile, at almost the exact same time that Binney was being smeared by the likes of CNN and NBC, the U.S. government embarked on its very own dangerous and authoritarian mission against narratives that threaten their ability to brainwash people. Specifically, RT is being forced to register as a foreign agent as of this coming Monday.

RT reported on the matter:

Washington will apply its Foreign Agents Registration Act to RT America, the channel has announced. The Department of Justice has given the broadcaster until Monday to register as a foreign agent, otherwise the channel’s head faces arrest and its accounts could be frozen.

 

The piece of legislation was adopted in the US in 1938 to counter pro-Nazi agitation on US soil. Washington has made the decision to apply the act towards the company that supplies all services for RT America on its territory, including TV production and operations. Just over 400 entities are currently registered under the legislation, but it does not include a single media outlet.

 

“We believe that the demand does not only go against the law, and we will prove it in court – the demand is discriminative, it contradicts both the democracy and freedom of speech principles. It deprives us of fair competition with other international channels, which are not registered as foreign agents,” RT’s editor-in-chief, Margarita Simonyan said.

Simonyan had said the decision put freedom of speech in the US under question. RT has been under pressure for showing the American audience “a different point of view,” the editor-in-chief added.

In light of that, let’s recall a couple of the examples laid out in a U.S. intelligence report on Russia “meddling” in the U.S. election as examples of nefarious propaganda. From the DNI report:

• In an effort to highlight the alleged “lack of democracy” in the United States, RT broadcast, hosted, and advertised third-party candidate debates and ran reporting supportive of the political agenda of these candidates.The RT hosts asserted that the US two-party system does not represent the views of at least one-third of the population and is a “sham.”


• RT aired a documentary about the Occupy Wall Street movement on 1, 2, and 4 November. RT framed the movement as a fight against “the ruling class” and described the current US political system as corrupt and dominated by corporations. RT advertising for the documentary featured Occupy movement calls to “take back” the government. The documentary claimed that the US system cannot be changed democratically, but only through “revolution.” After the 6 November US presidential election, RT aired a documentary called “Cultures of Protest,” about active and often violent political resistance (RT, 1-10 November).

Given corporate media’s unwillingness to expose the systemic rigging and fraud inherent within our economic and political system, a void existed which RT came in to help fill. Exposing foreign audiences to an alternative perspective is precisely what foreign media channels do. Considering what I showed you earlier with regard to the character assassination campaign against NSA whistleblower William Binney, how can anyone argue that U.S. media isn’t just as biased as any other media organization?

This isn’t about nefarious Russians as much as it’s about the U.S. government wanting to regain its monopoly on the narrative it wishes to force feed to the public. Unfortunately for them, they haven’t accepted that the gig is up and we aren’t buying it anymore.

The three things I focused on today, war against Iran, the smearing of a celebrated NSA whistleblower, and attacks against RT are all related.

The degenerates in power know that another war in the Middle East won’t be popular. Dissent must be silenced ahead of a big war push, and narratives must get in line in order to successfully sell the public on another violent and disastrous adventure against our best interests.

Things are escalating quickly right now indeed.

*  *  *

If you liked this article and enjoy my work, consider becoming a monthly Patron, or visit our Support Page to show your appreciation for independent content creators.

The Secret Reason Trump Is So Cozy With Saudi Arabia

Authored by Nick Giambruno via InternationalMan.com,

As a candidate, Donald Trump used uncommonly harsh language to criticize Saudi Arabia—the world’s largest oil exporter.

He called the Saudi regime the world’s biggest funder of terrorism.

He also said the Saudi government uses “our petro dollars—our very own money—to fund the terrorists that seek to destroy our people, while the Saudis rely on us to protect them!”

At another point, Trump said, “Who blew up the World Trade Center? It wasn’t the Iraqis, it was Saudi [Arabia].”

Trump also criticized Hillary Clinton for taking Saudi money for the Clinton Foundation. (They were its biggest “donors.”) He even challenged her to return the money.

He also famously got into a Twitter spat with a prominent member of the Saudi royal family, Alwaleed bin Talal.

As a candidate, Trump blasted the Saudis countless other times.

But, after he took office, Trump did a complete 180. He stopped criticizing the Saudis. In fact, he’s now singing their praises.

It’s bizarre… as if someone put a severed horse head in his bed.

Mere months after criticizing the Saudis, he was on Air Force One headed to Saudi Arabia to do the sword dance with his new friends.

It was his first foreign trip as president.

President Trump with King Salman

Trump’s about face was astounding. But his newly adopted deference to the Saudis is no different than Obama’s, Baby Bush’s, or any previous president’s.

President Obama with King Abdullah

President G.W. Bush with King Abdullah

Today, I’ll tell you why Trump made such an abrupt turnaround.

I’ll also explain why the Saudis get special treatment from the US Deep State.

“As Good As Gold” - From Bretton Woods to the Petrodollar

It’s been rightly said that he who holds the gold makes the rules.

After World War 2, the US had the largest gold reserves in the world, by far. Along with winning the war, this let the US reconstruct the global monetary system around the dollar.

The new system, created at the Bretton Woods Conference in 1944, tied the currencies of virtually every country in the world to the US dollar through a fixed exchange rate. It also tied the US dollar to gold at a fixed rate of $35 an ounce.

The dollar was said to be “as good as gold.”

The Bretton Woods system made the US dollar the world’s premier reserve currency. It effectively forced other countries to store dollars for international trade, or to exchange with the US government for gold.

However, this pseudo gold standard was doomed to fail.

Not surprisingly, runaway spending on warfare and welfare caused the US government to print more dollars than it could back with gold at the promised price.

By the late 1960s, the number of dollars circulating had drastically increased relative to the amount of gold backing them. This encouraged foreign countries to exchange their dollars for gold, draining the US gold supply. It dropped from 574 million ounces at the end of World War 2 to around 261 million ounces in 1971.

To plug the drain, President Nixon “temporarily” suspended the dollar’s convertibility into gold in 1971. This ended the Bretton Woods system and severed the dollar’s last tie to gold.

The “temporary” suspension is still in effect today.

This is why the Fed can print as much paper money as it pleases.

The death of the Bretton Woods system had profound geopolitical consequences. Most critically, it eliminated the main reason foreign countries stored large amounts of US dollars and used the US dollar for international trade.

At this point, oil-producing countries began to demand payment in gold instead of rapidly depreciating dollars.

It was clear the US would have to create a new monetary system to stabilize to the dollar.

So, the US government concocted a new scheme—the petrodollar system. It gave foreign countries another compelling reason to hold and use the dollar.

The new arrangement preserved the dollar’s special status as the world’s top reserve currency.

For President Nixon and Secretary of State Henry Kissinger, it was a geopolitical and financial masterstroke.

From 1972 to 1974, the US government made a series of agreements with Saudi Arabia that created the petrodollar system.

The US handpicked Saudi Arabia because of the kingdom’s vast petroleum reserves and its dominant position in OPEC—and because the Saudi royal family was (and is) easily corruptible.

In essence, the petrodollar system was an agreement that the US would guarantee the House of Saud’s survival.

In exchange, Saudi Arabia would:

1. 
   

   Use its dominant position in OPEC to ensure that all oil transactions would only happen in US dollars.

   
   


2. 
   

   Recycle the many billions of US dollars from oil revenue into American weapons manufacturers and infrastructure companies—and critically, into US Treasuries. This let the US issue more debt and finance previously unimaginable budget deficits. By 1977, at least 20% of all Treasuries held abroad were in Saudi hands.

   
   


3. 
   

   Guarantee the price of oil within limits acceptable to the US and prevent another oil embargo.

   
   

Oil is the largest and most strategic commodity market in the world.

As you can see in the chart below, it dwarfs all other major commodity markets combined.

Every country needs oil. And if foreign countries need US dollars to buy oil, they have a very compelling reason to hold large dollar reserves.

Think about it… If Italy wants to buy oil from Kuwait, it has to purchase US dollars on the foreign exchange market to pay for the oil first.

This creates a huge artificial market for US dollars.

In part, this is what differentiates the US dollar from a purely local currency, like the Mexican peso.

The dollar is just a middleman. But it’s used in countless transactions amounting to trillions of dollars that have nothing to do with US products or services.

Since the oil market is so enormous, it acts as a benchmark for international trade. If foreign countries are already using dollars for oil, it’s just easier to use the dollar for other international trade.

In addition to nearly all oil sales, the US dollar is used for about 80% of all international transactions.

This gives the US unmatched geopolitical leverage.

The US can sanction or exclude virtually any country from the US dollar-based financial system at the flip of a switch. By extension, it can also cut off any country from the vast majority of international trade.

The petrodollar system is why people and businesses everywhere in the world take US dollars. Other countries have had little choice over this.

Today, the biggest US exports are dollars and government debt. The US government can create unlimited quantities of both… from nothing.

It requires no effort to create US dollars, which can then be exchanged for real things like French wine, Italian cars, electronics from Korea, or Chinese manufactured goods.

Ultimately, the petrodollar boosts the US dollar’s purchasing power. It entices foreigners to soak up many of the new currency units the Fed creates.

The system helps create a deeper, more liquid market for the dollar and US Treasuries.

It also helps the US keep interest rates artificially low. This allows the US government to finance enormous and permanent deficits. Otherwise, this would be impossible without destroying the currency through money printing and inflation.

The petrodollar allows the US to finance the world’s largest military, which is bigger than the next seven largest militaries combined.

The petrodollar has also allowed the US to spend astronomical amounts of money on welfare and other benefits for over half of its population. It gives Americans a much higher standard of living than they would have otherwise.

In short, the petrodollar is the ultimate enabler of big government.

The US government could never have become as powerful without it.

It’s hard to overstate how much the petrodollar system benefits the US. It’s the bedrock of the US financial system.

And it’s the reason the US political elite pamper the Saudis.

Bretton Woods lasted 27 years. So far, the petrodollar has lasted over 40 years.

I think we’re on the cusp of another paradigm shift in the international financial system. It will be at least as fundamental as the end of Bretton Woods in 1971.

For decades, the petrodollar system has allowed the US government and many Americans to live way beyond their means.

The US takes this unique position for granted. But it will disappear once the petrodollar system breaks down.

When that happens, I expect severe inflation.

This will likely be the tipping point…

Afterward, the US government will be desperate enough to implement capital controls, people controls, nationalization of retirement savings, and other forms of wealth confiscation.

I urge you to prepare for the economic and sociopolitical fallout while you still can. Expect bigger government, less freedom, shrinking prosperity… and possibly worse.

It probably won’t happen tomorrow. But it’s clear where this trend is headed.

One day soon, Americans may wake up to a new reality.

Once the petrodollar system kicks the bucket and the dollar loses its status as the world’s premier reserve currency, you will have few, if any, options.

The sad truth is, most people have no idea how bad things could get, let alone how to prepare…

Yet there are straightforward steps you can start taking today to protect your savings and yourself from the financial and sociopolitical effects of the collapse of the petrodollar.

We recently released a special Guide to Surviving and Thriving During an Economic Collapse. Click here to download the PDF now.

Iran Slams Saudi, US Claims It Ordered Ballistic Missile Attack From Yemen

On Tuesday Iran slammed Saudi and US claims that it was supplying Yemen"s Houthi rebels with advanced ballistic missiles that Saudi Arabia says targeted Riyadh international airport on Saturday - which would be a violation of a UN resolution which ensures conformity to the Iran nuclear deal.

Iran"s state-run IRNA news cited a letter sent to the UN Security Council signed by Iranian ambassador Gholamali Khoshroo, saying that Iran “categorically” rejects Saudi Arabia’s “baseless and unfounded accusations and considers it as destructive, provocative and a ‘threat to use of force”’ against a UN member state in defiance of the UN charter. Iran"s foreign minister further called the Saudi claims "contrary to reality and dangerous".

Iran"s state-run PressTV file photo purporting to show a missile being fired from the direction of Yemen toward Saudi Arabia earlier during the conflict. 

Though Saudi Arabia has mounted an aggressive aerial bombing campaign of deeply impoverished and disease-ridden Yemen for over the past two years, killing and wounding tens of thousands of civilians, it is Iran that is coming under intense pressure this week. Yesterday Saudi Arabia charged its regional rival Iran with "an act of war" while stating through its military coalition executing Yemen operations that, “Iran’s role and its direct command of its Houthi proxy in this matter constitutes a clear act of aggression that targets neighboring countries, and threatens peace and security in the region and globally.”

However, the Iranian ambassador"s letter to the UN responded directly to the charges with, “Such provocative statements by the Saudis are nothing but an attempt to shift the blame and to distract attention from its war of aggression against Yemen.” Other Iranian officials, according to various reports, called the Saudi claims "fake news". 

Saudi Arabia has cast itself as the victim of external Iranian and pro-Shia plotting after its internal weekend of chaos which included a missile attack from Yemen, the deaths of two princes and other high officials within a mere 24 hours, and an aggressive crackdown against dissent in the royal family which saw close to a dozen princes placed under house arrest. While lashing out at Iran"s supposed campaign of destabilization in Yemen and in the region, it appears that the Saudis are set to step up proxy skirmishes with Iran across the Middle East, possibly with the support of regional allies. 

Predictably, the US immediately backed Saudi claims of direct Iranian involvement in the Yemeni conflict while citing no specific evidence. US Ambassador to the UN Nikki Haley pointed to a prior missile fired in July which she said was an Iranian Qiam, and likened the previous attack with Saturday"s missile launch, saying it "may also be of Iranian origin," and added that the ballistic missiles were not "a type of weapon that had not been present in Yemen before the conflict."

Haley further claimed that Iran"s Islamic Revolutionary Guard Corp‎s had violated UN resolutions on Yemen and Iran, and said, "We encourage the United Nations and international partners to take necessary action to hold the Iranian regime accountable for these violations."

Why don"t these congresspeople want to talk about the war in Yemen? pic.twitter.com/ghp82AtnMS

— NowThis (@nowthisnews) November 4, 2017

Above: Why is Yemen ignored in US politics? The US itself has been an integral part of the coalition (also including Bahrain, Kuwait, UAE, Egypt, Sudan, and with the UK as a huge supplier of weapons) fighting Shia Houthi rebels, which overran Yemen’s north in 2014. Saudi airstrikes on the impoverished country, which have killed many thousands of civilians and displaced tens of thousands, have involved the assistance of US intelligence and use of American military hardware.

Regardless of the degree to which Iran may or may not be involved in advising and assisting Houthi rebels, it is astounding that in the rare moments that US officials actually make reference to the humanitarian disaster in Yemen, it is nebulous "Iranian agents" that are blamed even while American and British bombs are dropped from Saudi-piloted jets on a civilian population. 

Saudi Arabia has in recent years managed to use the UN to protect and enhance its image when it comes to questions of both domestic human rights abuses and rampant war crimes in Yemen. Absurdly, the autocratic country which has Wahhabi Islam for its official state religion continues to serve its 3-year term on the UN Human Rights Council.

But it appears that for now that the Saudi "but Iran did it" line is enough to satisfy Nikki Haley and the US administration. 

Another Gulf Crisis: Dinar Devaluation Looms As Bahrain Begs Neighbors For Bailout

Despite the recent rise in oil prices, all is not well among the allies in the Gulf. The "pegged-to-the-dollar" Bharaini Dinar has tumbled in the last few days as Bloomberg reports the nation has asked Gulf Arab allies for financial assistance as it seeks to replenish its foreign-exchange reserves and avert a currency devaluation - which could spread contagiously through MidEast markets.

Bloomber notes that the slump in oil prices has battered the six-member Gulf Cooperation Council, at times raising questions over whether a dollar peg seen as a bedrock for economic stability for more than three decades was sustainable. And while bets against the region’s currencies have subsided this year, a devaluation of a GCC member would risk shifting the attention to others. Gulf central banks, including Bahrain’s, have repeatedly brushed aside talk of abandoning their exchange-rate regimes.

But Bahrain has seen its central bank"s foreign reserves collapse over 75% from 2014 highs as they have defended the currency peg.

And so, as Bloomberg reports, according to people with knowledge of the talks, Bahrain has asked for a bailout.

The request was made to Saudi Arabia and the United Arab Emirates, two of the people said.

 

A third person said Kuwait was also asked.

 

The countries responded by requesting the island kingdom do more to bring its finances under control in return for the money, the people said on condition of anonymity because the discussions were private.

 

The talks are at an early stage, one person said.

It appears the FX markets are not convinced as the Dinar tumbled...

The IMF estimates that Bahrain needs oil prices at $99 a barrel to balance its budget this year, compared with $73.1 a barrel for Saudi Arabia, which is overhauling its economy.

While Brent crude is trading at the highest level in more than two years, it’s still almost $40 below Bahrain’s breakeven price.

But, Bloomberg points out that economists say that a Saudi-led bailout of Bahrain will be less costly than cleaning up the mess of a devaluation.

“Most people are fully expecting the other Gulf countries to come to Bahrain’s aid,” said Jason Tuvey, a London-based economist at Capital Economics.

 

“If Bahrain was forced to devalue its currency it would probably start to raise questions about other currency pegs.”

Will this be the next ripple to spook markets? Or just another dip to buy?

The Petrodollar"s Biggest Challengers

Authored by Michael Kern via CryptoInsider,

Established in the early 1970s, the petrodollar has secured the United States’ influence over the oil trade for over 40 years, but recently, it is clear that this monopoly is slowly beginning to fall apart – in some part due to the influence of Bitcoin and other emerging cryptocurrencies.

Background

Due to the plummeting value of the dollar, the debt from the Vietnam War, and excessive domestic spending, President Nixon abruptly pulled out of the Bretton Woods Accord, which pegged the dollar to the price of gold and based the value of other currencies on that of the dollar. Labeled the “Nixon Shock,” these actions left the country bursting with debt and low on cash, with many of its key allies such as Britain, France, and Germany questioning whether the U.S. was justified in its position as the leader of the global economy.

While the U.S. economy entered a nose dive, another geopolitical event was unfolding which exacerbated the economic free fall.

In 1973, Syria and Egypt, backed by several other Arab Nations, launched an attack on Israel which marked the beginning of the Yom Kippur War (or Ramadan War). The war placed increased pressure on oil prices, and when the United States provided Israel with financial aid and arms, the Arab Nations responded.

In 1960, the Organization of Petroleum Exporting Countries (OPEC) was formed. At the core of this organization were Kuwait, Iran, Libya, Qatar, Saudi Arabia, Iraq and the United Arab Emirates – countries which were strongly opposed to U.S. interference in the 20-day war.

Following U.S. provisions to Israel, resource rich OPEC placed an oil embargo on all those thought to have aided Israel, including the United States, Britain, Canada, Japan, the Netherlands and later South Africa and Portugal. By 1974, the price of oil quadrupled.

With the success of the embargo, and cartel’s new role as an oil price influencer, Saudi Arabia became the de facto leader of OPEC.

In 1974, desperate to return value to the U.S. dollar, President Nixon and Secretary of State Kissinger entered negotiations with the Saudi Royal Family. In the agreement, the United States would provide Saudi Arabia with arms and assist with the protection of oil fields. In exchange, Saudi Arabia was to price all oil sales in U.S. dollars and invest surplus oil proceeds in U.S. debt securities. And by 1975, all oil-producing members of OPEC followed suit. This began the reign of the petrodollar.

The petrodollar has since elevated the United States economically and politically throughout the world, but after years of unprovoked wars and geopolitical belligerence, U.S. influence is beginning to fade.

Through the years, there have been a number of attempts to move away from the petrodollar system, especially within OPEC, in which many of its members are not particularly friendly with the United States. Another strong advocate of change is Russia, which suggested to China and Japan to purchase oil in yen or yuan.

Bitcoin, the Russian Miner Coin and the Cryptoruble

A Kuwaiti finance firm, however, took this debate a step further, suggesting in 2014 that the Gulf Cooperation Council could benefit from trading oil for bitcoin. The suggestion was based on the idea that the GCC could save time and money with faster, cheaper, and more efficient transactions.

This idea has been debated back and forth for some time, with some even suggesting that the “anonymity” factor could usher in a new era of world peace. The idea is that, using a neutral “petro-bitcoin,” countries would be immune to currency manipulation from governments, which has clear global impacts. In an unbiased-blockchain could act as a great medium for doing business on a global scale.

While this is all well and good, neither the U.S. or China are looking to ease up on their power push.

China, indeed, has taken the lead in the fight against the petrodollar. In 2012, Iran began trading oil in yuan,  and earlier this year, in response to U.S. sanctions, OPEC member Venezuela began pricing its oil sales in Chinese yuan, as well. China’s biggest move, however, was its push for Saudi Arabia to do the same. One of the most notable efforts from China to tackle the petrodollar was the country’s yuan-priced crude oil benchmark, which it recently unveiled.

While China pushes for the petro-yuan, Russia is also making moves which could have serious implications for the U.S. dollar.

In addition to the Russian Miner Coin, the Kremlin announced that it will be creating a new state-endorsed cryptocurrency backed by gold. The goal of this coin is to allow free exchange between the cryptoruble and the ruble, and to reduce dependence on foreign currency while stimulating the domestic online economy.

While few details of the cryporuble are known, the technology does seem to be blockchain-based, as Putin has met with Ethereum and WAVES advisors to build the platform.

With these major moves from China and Russia, there is no doubt that the dollar will see downward pressure in the near future. As the world’s major economies vie for geopolitical power, it is worth following the growing role of bitcoin and cryptocurrencies in this story.

Personal Recollections From The Crash Of 1987: "There Was No 'Smart Money' That Day!"

Via LyonsSharePro.com,

The following guest post is a first-hand account of the events surrounding the Crash of 1987 by JLFMI President, John S. Lyons.

Personal Recollections of the Crash of 1987 on its 30th Anniversary

“There was no ‘smart money’ that day.”

What do the assassination of President John F Kennedy, the beginning of Desert Storm and 9/11 have in common? Provided you are old enough to recall JFK’s assassination, the answer probably is that you remember exactly where you were on the day of those events. If not that old, there is most likely another event that is so memorable that you recall where you were and what you were doing at that moment.

Being in the securities business for many, many years, the Crash of ’87 on October 19th of that year is right up there with JFK’s assassination and 9/11 as one of the mind-numbing catastrophes I’ve witnessed.

In retrospect only, it was fortunate that I had entered the brokerage business in 1969 and immediately weathered a 36% market decline into 1970. On the heels of that decline, I then endured one of the worst bear markets in modern history in 1973-74 when the Dow Jones Industrial Average lost almost 50% of its value. As a result, I was weaned on risk in my new profession. And I learned early on that if a career that centered around the stock market were to be endurable, I had to find a way to practice risk management.

As a result, I developed a risk model during the 1970’s as a means of guarding against such disastrous losses in the future. Fortunately, the model has been of very valuable assistance, protecting clients from every major decline since its inception in 1978. Its Sell Signals have occurred prior to insignificant declines as well, but its risk avoidance guidance supersedes those times. On September 25th of 1987, for example, our model issued a Sell Signal and I sold over half of my clients’ holdings. I was reminded just recently by an associate of mine at that time about how he passed by my office that day and was amazed at the pile of sell orders on my desk.

The Friday prior to the October 19th crash ended with the first triple digit decline in the history of the Dow Jones Industrial Average. In total, the market lost just over 10% that week. The apprehension of professionals in the business was palpable to say the least as we entered the weekend and yet there was no seemingly immediate cause for a significant decline. I have learned that such unexplained declines are the most insidious. On Saturday night, at dinner with friends at a restaurant in Chicago, I could not eat my food!

On Monday morning, the market opened and headed south immediately. There were no buyers – just panic. Program trading, a technique supposedly providing insurance for portfolios in which computers entered sell orders at certain predetermined levels below the market, simply propelled the decline. Markets were in complete disarray. There were no bids. No one to fill the mountain of orders that were coming from all over the world. Traders left the pits crying as the carnage grew. It seemed like the end of the world – their world at least. And there was nothing stock brokers could do except watch in horror. Paradoxically, on the way home that night, the outside world was acting like nothing happened. That was no comfort.

The DJIA closed down 508 points or 22.6% that Monday, October 19th. To provide some perspective, that decline today would be the equivalent of a 5,176 point loss. The Nasdaq would have fared worse were it not for the fact that it completely failed and effectively shut down. Bid prices were often higher than asked prices. When asked what smart money was doing that day, one leading money manager admitted that “there was no smart money”.

Though most of the eventual decline was over by the close on Tuesday, the gut wrenching market action continued for the rest of the week. And its wreckage would last for weeks and months. First Options, the company charged with settling trades on the Chicago Board Options Exchange couldn’t function for weeks and had to be bailed out by its parent, the Continental Bank. Significant corporate mergers that were almost completed were canceled or at least became questionable. My only major problem during the crash – and it was a big one – was that I was selling puts on some merger candidates that were all but assured prior to the crash.

For example, I had sold hundreds of puts at a quarter of a point with a strike price of 40 on a company that was trading at the 52-53 level. All the company’s stock had to do was to close over 40/share and the puts would be worthless and the trade profitable. Instead, the stock dropped to about 37 which made the intrinsic value of the put 3. Unbelievably, they were bid at 18 for more than a week despite having negligible trading in them. Unbelievably as well, I was issued no margin calls on the positions for over two weeks due to First Options being in chaos. Unfortunately I eventually had to take sizable losses in them. In some other cases that I knew about, no margin calls were ever issued for some substantial unsecured debits. I recall one investor who had a deficit in his account of almost $250,000 and was never called to cover that amount!

When I say chaos, I mean chaos. Will it happen again? Although it is always claimed that we learn by our previous mistakes and take the appropriate steps to avoid the same problems in the future, history doesn’t bear that out. So called “reforms”, as well as proclamations such as that by Yale’s first Ph. D in economics, Irving Fisher, nine days before the stock market crash of 1929 that stock prices “reached what looks like a permanently high plateau”, are made with ultimately untimely confidence throughout history. Portfolio insurance during the ’87 crash was anything but insurance. Although it was embraced as risk management, it turned out to be risk fertilizer. Society in general always thinks that we have hit that new plateau in managing ourselves but unfortunately that is often quite the opposite. To me, the message is that we never should abandon employing some measure of risk management in investing and probably in most of our activities. So how is that accomplished?

Human Nature, The Stick in the Spokes of Risk Management

One of the phenomena that increasingly seems axiomatic is that human nature is the enemy of such risk management. The longer that one has gone without the need for caution, the more it is thought not to be needed when, in actuality, the more it is needed. This is due to a condition called perceptual recency, which simply stated means that one’s expectations of the future are the result of what one has experienced and is in their active memory. We are not good at anticipating junctures of change. That is understandable.

The following two charts show that we humans indeed clearly react to what has occurred in our memorable past. The higher we go and the longer we go higher, the more confidence we have that we will continue to go higher — and the less we feel the need for risk management. That eventually, and I repeat eventually, is injurious to one’s investing health. Note how the level of both household stock investment and consumer confidence continue to grow the higher the market goes.

So, as asked, how do we guard against the human natural tendency to dismiss the need for risk protection the higher the market goes — and to become more bearish, the lower it goes? Frankly the answer probably is that most investors, i.e., humans, cannot. I have spent a career practicing human nature avoidance in my job. Now I will admit that there will be times when the market does not need risk protection and there will be other times when there appears to be substantial risk afoot as quantified by our 40-year-old risk model but the market chooses to ignore it and continue to move higher. However, like wearing a seat belt, you cannot possibly choose to employ caution only shortly before an accident.

As stated above, declines that are the most hurtful typically begin with no seeming warning or at least before any provocation is identified. For example, on July 30, 1990, our model issued a Sell Signal and we sold 100% of our clients’ holdings. On August 2, Saddam Hussein marched into Kuwait and Operation Desert Shield began — as well as a substantial decline in the stock market. Similarly, the completion of selling 100% of our clients’ holdings on account of a Sell Signal on September 4, 2001 was obviously done without any known external provocation. The lesson regarding employment of risk management is that, no, you will not know when to sell by just “having that feeling” or even more remotely, by getting tipped off by the news in the morning paper. That said, many investors do believe that they will know when to protect their holdings.

Now of course, there will be legions of market experts, many with an investment product to sell, who will say it is foolishness to even try to “time the market” as they put it. I will admit it is difficult to find a good practitioner of avoiding risk. However, one must try. Failing to avoid a substantial market decline is a double whammy. It is well quantified that losing money has twice the negative emotional impact vs. the pleasing emotional impact derived from making money. That emotional jolt on the downside is what contributes to selling at the bottom (one whammy) and makes you divorce Wall Street until it is well into its next bull phase (a 2nd whammy).

So what was learned from the Crash of ’87? Not much in my opinion. For starters, the laws of human nature have yet to be repealed. Additionally, high frequency trading is today’s version of program trading. Only now, instead of transmitting an order through a stock broker, who sends it to a floor broker, who give it to a trader, who takes it to a specialist at the post where the stock in question is trading, high frequency computer generated orders are automatically entered at the behest of complex algorithms and are executed and reported back in milliseconds. Witness the May of 2010 “flash crash” where the market lost about 1000 points and then mostly recovered all within 15 minutes.

In summary, risk cannot be removed from the stock market. The Crash of ’87 affected everyone. Crashes will occur again. Wear a seat belt!

– John S. Lyons is President and Founder of J. Lyons Fund Management, Inc.

If you’re interested in the “all-access” version of our charts and research, we invite you to check out our new site, The Lyons Share. TLS is currently running a 30th anniversary 1987 Crash Commemoration SALE, offering a discount of 22.6%, or the equivalent of the Dow’s 1-day drop 30 years ago. The SALE ends October 22 so considering the discounted cost and a potentially treacherous market climate, there has never been a better time to reap the benefits of our risk-managed approach. Thanks for reading!

*  *  *

Could never happen again...

Never Forget: The US Government Has A Known History Of Using False Flags

Authored by Caitlyn Johnstone via Medium.com,

When it comes to 9/11, there are two groups of people: those who don’t know exactly what happened, and those who orchestrated it.

Nearly everyone on earth belongs in the former category, but a lot of folks like to pretend they have a rock solid understanding of the events which transpired on that fateful day in 2001. Scoffing mainstream adherents like to pretend they’re confident that the official narrative is accurate, but they aren’t. A lot of hardcore conspiracy analysts like to pretend they know the real story, but they don’t. There’s simply not enough publicly available information for anyone to be certain exactly how things went down that day; all we can know for sure is that (A) the official story is riddled with plot holes, and (B) the American power establishment has an extensive and well-documented history of using false flags and propaganda to manipulate the public into supporting evil acts of military interventionism.

If you think you know for a fact that the official story of what happened on September 11, 2001 is the true account and that all conspiracy theories have been “debunked”, you are ignorant.

If you think you know the precise details of how what really happened differs from the official story, you’ve spent way too much time diving down conspiracy theory rabbit holes and should probably ease off the weed. There’s no need to get all defensive and go bedding yourself down to one hard doctrine of certainty when the US power establishment has already discredited itself so thoroughly. It’s unnecessary to plunge deep into theory when these people’s track record is so firmly established in fact.

Here are just a few of the times the US government is known to have distorted the reality of events in order to manufacture public support for military intervention, which is per definition what a false flag is:

The False Nayirah Testimony

On October 10, 1990 a 15 year-old girl known only as Nayirah testified before the Congressional Human Rights Caucus about the horrors that Iraqi troops were inflicting upon the people of Kuwait. Her testimony that hundreds of babies had been taken out of their incubators and left to die on hospital floors was repeated as fact by Amnesty International, the mass media, numerous senators, and President H. W. Bush, tugging at the heartstrings of America and manufacturing support for American action in the Gulf War.

It was a lie. Nayirah was in fact the daughter of the Kuwaiti Ambassador to the US, and her TV-friendly “removing babies from incubators” testimony was false. It never happened.

Former CIA Director Bush with the Kuwaiti Ambassador, who watched his daughter’s false testimony before congress

The Gulf of Tonkin Incident

In 2005 a declassified historical study by the NSA revealed that one of the two incidents which were used to propel America into the disastrous Vietnam War happened the opposite of the way it was reported to have happened, and the second of the two incidents did not happen at all. The allegation that there were “deliberate” and “unprovoked” attacks upon the US Navy in the Gulf of Tonkin on August 2 and August 4 of 1964 was solemnly affirmed by President Johnson, which led to the swift passage of the Gulf of Tonkin Resolution authorizing full presidential authority to commit US military power to the Vietnamese intervention.

In reality the August 2 incident was not in any way “unprovoked”, and it was in fact America’s USS Maddox which fired upon North Vietnamese boats first. On August 4 there was no engagement with any ships whatsoever, with Johnson privately admitting a year later that “For all I know, our navy was shooting at whales out there.”

The USS Maine

“But when the smoke was over, the dead buried and the cost of the war came back to the people in an increase in the price of commodities and rent?—?that is, when we sobered up from our patriotic spree?—?it suddenly dawned on us that the cause of the Spanish-American War was the price of sugar.”

~ Emma Goldman

This goes way back. The video above describes how the Spanish-American war was brought on by a highly suspicious explosion upon the USS Maine while it was docked at the Havana Harbor in 1898, combined with the anti-Spain narratives of the plutocrat-owned newspapers of that time. Like all US wars, it was extremely profitable and benefitted the very rich.

*  *  *

This tradition of using lies to rally the unwashed masses behind military endeavors on behalf of the rich and powerful has probably been going on since the dawn of civilization, and it is only humanity’s increasing adeptness at networking and sharing information which has enabled us to begin catching on to the deceitful manipulations of the people who rule us. Our history books are doubtless riddled with countless inaccuracies as to the real reasons underlying violent conflicts between various kingdoms and factions, because the few literate people who were permitted to write the official historic accounts of them had full control of the narrative at the time.

This is why we’ve been seeing increasingly blatant panic from existing power structures about alternative media. Whoever controls the narrative controls the world. It is only by general societal consensus that power exists where it exists, that money works the way it works, etc. At any time the public could stop honoring existing power structures and create an entirely different model for itself, deciding to distribute resources and allocate responsibilities in a way that benefits more people more efficaciously than the current paradigm. It is only by their ability to manipulate and control the mainstream narrative that powerful people have been able to keep this from happening.

If the power elites didn’t need the consent of the public to rule, they wouldn’t have to lie constantly about their reasons for war. The public would never consent to military interventions if politicians were allowed to appear on CNN and say “Yeah well America has become a stronghold for the most powerful plutocracy in the history of civilization and it needs to maintain its status as the world’s only superpower in order to protect the investments of that plutocracy. This is why we have to keep knocking the pillars of support out from underneath Russia and China, and why I get millions in re-election campaign donations.”

My more pessimistic readers won’t like hearing this, but the reality is that Americans are basically good people who generally want what’s best for the world. If they weren’t, the unelected power establishment which rules over them wouldn’t have to keep making up lies about babies in incubators and protecting their family from Weapons of Mass Destruction in order to secure US hegemony. If they ever told the public the truth, they’d be dealing with hundreds of millions of heavily-armed Americans telling them to get their sociopathic asses out of here.

Obama Urged Trump To Continue Neoconservative Foreign Policy#Trump #Obama #letter #neoconhttps://t.co/b4BMZqpof2

— Caitlin Johnstone (@caitoz) September 4, 2017

What this means is that those of us who want what’s best for America and the world instead of endless war and economic oppression are necessarily locked in a media war with the plutocracy and its cronies. The populist alternative media owned and operated by ordinary people is the natural enemy of the plutocrat-owned mainstream media designed to prop up the existing power structure with establishment propaganda. Our ability to win this media war increases the more networked and internet-literate our society becomes, which is why the oligarchs have been working overtime to shut us down with corporate censorship.

There is no reason to believe anything these lying sociopaths say, especially not about something that has served such a crucial role in their openly stated agenda to ensure US dominance over the world using its military and economic might. When you’ve got the extremely influential neoconservative think tank Project for the New American Century saying in September of 2000 that it would require “a new Pearl Harbor” to advance this agenda, and then getting exactly that one year later in an American tragedy which was used to manufacture support for greatly expanded US military interventionism, there’s no good reason to take all that in with a trusting “Yeah, that sounds legit.”

These people are liars, and they are depraved. They have no problem using lies to kill a million Iraqis and thousands of US soldiers to advance their agendas, and there’s no reason to believe they wouldn’t kill US civilians as well. There’s no harm in familiarizing yourself with all the details about the various conspiracy theories surrounding 9/11 if that’s what you want to spend your brainpower on, but really all you need to know is that these people are known liars who have no problem slaughtering countless people to advance their agenda of global domination. There is no reason to trust them and many reasons not to. End of.

*  *  *

I’m a 100 percent reader-funded journalist so if you enjoyed this, please consider helping me out by sharing it around, liking me on Facebook, following me on Twitter, or throwing some money into my hat on Patreon.