The U.S. Justice System Must Focus On Elite Criminality

Authored by Mike Krieger via Liberty Blitzkrieg blog,

Two very important articles published in recent days serve to once again highlight America’s metastasizing elite criminality problem. A problem which our justice system simply refuses to address.

This corrupt two-tier justice system is something I’ve been focused on from the very beginning of my writings, and I continue to see it as a civilization-level threat for this country if not aggressively addressed and confronted in the very near future.

The two articles in question focus on different aspects of untouchable elite culture in America.

The first relates to the continued fraud pervasive in America’s largest financial institution, while the second covers a thirty year history of predatory sexual behavior by one of Hollywood’s biggest moguls, Harvey Weinstein. In both cases, countless people have known and reported on repeated abuses perpetrated by both the institution and the man, yet the U.S. justice system and the vast majority of “elite” culture happily help shield them from justice. Predators are predators, and elite predators are far more dangerous to society that your average street crook, so why does our justice situation deal with it in the exact opposite way?

Let’s start with the blockbuster article published in The Nation by the always informative David Dayen. The article is titled, How America’s Biggest Bank Paid Its Fine for the 2008 Mortgage Crisis—With Phony Mortgages!

Here’s just brief excerpt:

JPMorgan’s share of the settlement was $5.3 billion, but only $1.1 billion had to be paid in cash; the other $4.2 billion was to come in the form of financial relief for homeowners in danger of losing their homes to foreclosure. The settlement called for JPMorgan to reduce the amounts owed, modify the loan terms, and take other steps to help distressed Americans keep their homes. A separate 2013 settlement against the bank for deceiving mortgage investors included another $4 billion in consumer relief.

 

A Nation investigation can now reveal how JPMorgan met part of its $8.2 billion settlement burden: by using other people’s money.

 

Here’s how the alleged scam worked. JPMorgan moved to forgive the mortgages of tens of thousands of homeowners; the feds, in turn, credited these canceled loans against the penalties due under the 2012 and 2013 settlements. But here’s the rub: In many instances, JPMorgan was forgiving loans on properties it no longer owned.

 

The alleged fraud is described in internal JPMorgan documents, public records, testimony from homeowners and investors burned in the scam, and other evidence presented in a blockbuster lawsuit against JPMorgan, now being heard in US District Court in New York City.

Sounds hard to believe, but it’s true. Not only that, but as we’ve come to expect from the “rule of law” in America, it somehow never applies to that group of people with the greatest ability to financially destroy people and their lives. Bankers. For example, here’s some more from the same piece:

Federal appointees have been complicit in this as well. E-mails show that the Office of Mortgage Settlement Oversight, charged by the government with ensuring the banks’ compliance with the two federal settlements, gave JPMorgan the green light to mass-forgive its loans. This served two purposes for the bank: It could take settlement credit for forgiving the loans, and it could also hide these loans—which JPMorgan had allegedly been handling improperly—from the settlements’ testing regimes.

 

“No one in Washington seems to understand why Americans think that different rules apply to Wall Street, and why they’re so mad about that,” said former congressman Miller. “This is why.”

 

Most of the loans that JPMorgan released—and received settlement credit for—were all but worthless. Homeowners had abandoned the homes years earlier, expecting JPMorgan to foreclose, only to have the bank forgive the loan after the fact. That forgiveness transferred responsibility for paying back taxes and making repairs back to the homeowner. It was like a recurring horror story in which “zombie foreclosures” were resurrected from the dead to wreak havoc on people’s financial lives.

 

Federal officials knew about the problems and did nothing. In July 2014, the City of Milwaukee wrote to Joseph Smith, the federal oversight monitor, alerting him that “thousands of homeowners” were engulfed in legal nightmares because of the confusion that banks had sown about who really owned their mortgages. In a deposition for the lawsuit against JPMorgan Chase, Smith admitted that he did not recall responding to the City of Milwaukee’s letter.

 

Few would expect Jeff Sessions’s Justice Department to pursue such a case, but what this sorry episode most highlights is the pathetic disciplining of Wall Street during the Obama administration.

 

JPMorgan’s litany of acknowledged criminal abuses over the past decade reads like a rap sheet, extending well beyond mortgage fraud to encompass practically every part of the bank’s business. But instead of holding JPMorgan’s executives responsible for what looks like a criminal racket, Obama’s Justice Department negotiated weak settlement after weak settlement. Adding insult to injury, JPMorgan then wriggled out of paying its full penalties by using other people’s money.

 

The larger lessons here command special attention in the Trump era. Negotiating weak settlements that don’t force mega-banks to even pay their fines, much less put executives in prison, turns the concept of accountability into a mirthless farce. Telegraphing to executives that they will emerge unscathed after committing crimes not only invites further crimes; it makes another financial crisis more likely. The widespread belief that the United States has a two-tiered system of justice—that the game is rigged for the rich and the powerful—also enabled the rise of Trump. We cannot expect Americans to trust a system that lets Wall Street fraudsters roam free while millions of hard-working taxpayers get the shaft.

Of course, this is just the latest when it comes to JP Morgan. I highlighted the firm’s rap sheet in last month’s post, Which is Fraudulent – Bitcoin or JP Morgan?

How many JP Morgan executives have gone to jail?

Now onto Harvey Weinstein, a guy whose cretinous behavior has been the biggest non-secret in Hollywood for decades. Just like with banker crooks, he mere settles cases and continues to walk around, freely hunting the next defenseless victim.

The New York Times article published yesterday exposing some of this grotesque man’s history was extraordinary and I suggest everyone read it. Here’s just a little from the piece, Harvey Weinstein Paid Off Sexual Harassment Cases for Years:

Two decades ago, the Hollywood producer Harvey Weinstein invited Ashley Judd to the Peninsula Beverly Hills hotel for what the young actress expected to be a business breakfast meeting. Instead, he had her sent up to his room, where he appeared in a bathrobe and asked if he could give her a massage or she could watch him shower, she recalled in an interview.

 

“How do I get out of the room as fast as possible without alienating Harvey Weinstein?” Ms. Judd said she remembers thinking.

 

In 2014, Mr. Weinstein invited Emily Nestor, who had worked just one day as a temporary employee, to the same hotel and made another offer: If she accepted his sexual advances, he would boost her career, according to accounts she provided to colleagues who sent them to Weinstein Company executives. The following year, once again at the Peninsula, a female assistant said Mr. Weinstein badgered her into giving him a massage while he was naked, leaving her “crying and very distraught,” wrote a colleague, Lauren O’Connor, in a searing memo asserting sexual harassment and other misconduct by their boss.

 

There is a toxic environment for women at this company,” Ms. O’Connor said in the letter, addressed to several executives at the company run by Mr. Weinstein.

 

Dozens of Mr. Weinstein’s former and current employees, from assistants to top executives, said they knew of inappropriate conduct while they worked for him. Only a handful said they ever confronted him.

 

Mr. Weinstein enforced a code of silence; employees of the Weinstein Company have contracts saying they will not criticize it or its leaders in a way that could harm its “business reputation” or “any employee’s personal reputation,” a recent document shows. And most of the women accepting payouts agreed to confidentiality clauses prohibiting them from speaking about the deals or the events that led to them.

 

In interviews, some of the former employees who said they had troubling experiences with Mr. Weinstein asked a common question: How could allegations repeating the same pattern — young women, a powerful male producer, even some of the same hotels — have accumulated for almost three decades?

 

“It wasn’t a secret to the inner circle,” said Kathy DeClesis, Bob Weinstein’s assistant in the early 1990s. She supervised a young woman who left the company abruptly after an encounter with Harvey Weinstein and who later received a settlement, according to several former employees.

 

In March 2015, Mr. Weinstein had invited Ambra Battilana, an Italian model and aspiring actress, to his TriBeCa office on a Friday evening to discuss her career. Within hours, she called the police. Ms. Battilana told them that Mr. Weinstein had grabbed her breasts after asking if they were real and put his hands up her skirt, the police report says.

 

The claims were taken up by the New York Police Department’s Special Victims Squad and splashed across the pages of tabloids, along with reports that the woman had worked with investigators to secretly record a confession from Mr. Weinstein. The Manhattan district attorney’s office later declined to bring charges.

As disturbing as all that is, it might be the tip of the iceberg. Here’s some additional info from an article published today by The Daily Beast, Hollywood’s Loud Silence on Harvey Weinstein:

The Times piece later identified the 1997 actress as Rose McGowan, who starred in the 1996 film Scream, which was distributed by Weinstein-owned Dimension Films. In October 2016, McGowan tweeted, “Because my ex sold our movie to my rapist for distribution #WhyWomenDontReport.” It’s not known whom McGowan was referring to, though she dated filmmaker Robert Rodriguez from 2006 to 2009, and their film Planet Terror was distributed by Weinstein in 2007.

 

In the wake of the blockbuster Times exposé, The Daily Beast reached out to dozens of prominent actors, actresses, and filmmakers—who both have andhave not worked with Weinstein—only to receive many replies of “no comment” and plenty of radio silence.

Elite criminals are the most dangerous criminals on earth, but our justice system treats them like well-meaning philosopher kings who deserve endless breaks in the face of rampant unethical and often evil behavior. It should be completely obvious to everyone that the only reason elite crooks get treated with kid gloves is because they’re rich and powerful. The end result of this dereliction of justice is those entrusted with protecting the public have willingly created an entrenched, untouchable, distributed, criminal class which spans across and leads all major industries in America.

As I tweeted earlier today:

If we don’t get a grip on this now and begin to marshal our resources against the most dangerous criminals in America — those from the highest echelons of U.S. society — the country will continue to unravel and in an increasingly dangerous and chaotic fashion.

 

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San Franciscans Pissed To Learn Their Liberal Policies Caused A Wave Of Restaurant Failures

In a note that we’ll file away under the definition of ‘irony’, Bloomberg wrote today that the fun-loving, free-spirited socialists of San Francisco are suddenly really pissed off that their liberal economic policies have resulted in a wave of restaurant failures, making it nearly impossible to find good food at an ‘affordable’ price. 

We would be pissed too...who could have guessed that artificially raising wages well above market supported rates would result in business failures?

On Thursday, the Michelin Guide announced its 2018 Bib Gourmand winners for San Francisco with only 67 restaurants on the list this year, a decrease from the 74 restaurants in 2017. Twelve restaurants in total dropped off, once you factor in some new additions. In 2016, there were 73 restaurants, and in 2015, 76 were on the list.

 

Restaurants that rate a spot on the Bib Gourmand list are defined as places that offer notable food at a reasonable price. Michelin specifically defines that as two courses plus dessert or wine for $40, not including tax or tip. A group of anonymous inspectors choose the restaurants. Bib Gourmand restaurants are not eligible to receive Michelin stars.

 

Some of the attrition on the 2018 list is due to places that simply fell off (or maybe even got promoted to the star list, proper), like Bistro Jeanty in Yountville, Bistro 29 in Santa Rosa, and Le Garage in Sausalito. But the alarming rate of restaurant closures in the Bay Area also accounts for the dip on the list, with spots like Bar Tartine and Mason Pacific in San Francisco and Scopa in Healdsburg wine country shutting their doors.

San Fran

So what was the catalyst that sparked the ongoing massive wave of San Francisco restaurant failures?  Well, Bloomberg figures it’s the result of soaring minimum wages and health care costs…you know, all the things that San Fran liberals argue and protest for.

Factors like skyrocketing rents, minimum wage and health care have certainly taken a toll on Bib Gourmand-style restaurants around the Bay Area. More than 60 restaurants closed between Sept. 2016 and Jan. 2017, according to the East Bay Times. “We’re at this precipice where the model of the full-service restaurant is being pushed to the brink,” said Gwyneth Borden, executive director of the Golden Gate Restaurant Association.

 

Although ecstatic by the news of her Bib Gourmand, Brown Sugar Kitchen’s chef/owner Tanya Holland echoed the sentiment during a phone interview: “It’s so challenging to operate this kind of restaurant in the Bay Area right now” especially when it comes to staffing, she said.

Of course, as we pointed out back in January, a Thrillist article written by Kevin Alexander highlighted the demise of one independently owned restaurant in San Francisco, AQ, that shut down earlier this year for all the same reasons listed above.  When it came to minimum wage hikes, Alexander found that just a $1 per hour minimum wage increase reduced an independent restaurant’s already thin profit margins by $20,000, or 10%.  So we imagine the $5 minimum wage hike that California just passed is probably slightly less than optimal for restaurant owners.

I should say before I go any further that all of the restaurant owners and chefs I’ve talked to are compassionate humans who support better coverage and livable wages, and seem on the whole progressive by nature, but restaurant margins are already slim as hell. There are no political agendas here — they’re just genuinely worried about how to afford to pay extra without radically changing the way they do business.

 

Let’s start with the minimum wage. According to the Bureau of Labor Statistics, of the 2.6 million people earning around the minimum wage in 2015, the highest percentage came from service jobs in the food industry. Though the Obama administration’s attempt to increase the federal minimum wage above $7.25 failed, 21 states and 22 cities have raised the minimum wage starting this year, including Washington, DC ($12.50 an hour), Massachusetts ($11), New York ($9.70), and Arkansas ($8.50).

 

Considering that hour-wage workers are usually the lowest earners and the increase is essential to ensure they earn an actual living, this is the least controversial of the newer expenses and something almost everyone in the industry supports, in theory, but it doesn’t change the fact that it’s an additional cost that must be factored in. If you have 10 hourly employees working eight-hour shifts, five days a week and you raise the wages a dollar an hour, that comes out to a nearly $20K increase on the year. In AQ’s best year — a phenomenal year by restaurant standards — that would have been nearly 10% of profits.

Meanwhile, when it comes to Obamacare, Alexander noted that AQ was hit with an incremental $72,000 of annual expenses in 2015 that didn’t exist in 2012, which eroded another ~30% of the company’s peak net income.

Then there’s health care. For the better part of its history, the restaurant business was a health care-free zone, which is ironic, given this Bureau of Labor Statistics’ description of the back-of-house work environment: “Kitchens are usually crowded and filled with potential dangers.” With the introduction of Obamacare, most restaurant workers finally got the coverage they’ve needed for years through the employer mandate, but critics often talk about the strain it puts on small-business owners due to a puzzling and controversial element that defines “full time” as 30 hours per week, and not the 40-hour workweek used almost everywhere else (the Save American Workers Act proposes to move this back to 40 hours).

 

Though this mainly affects bigger restaurants with staffs of 50 or more full-time workers, independent sit-down restaurants still need to provide suitable coverage (meaning it has to be affordable, less than 9.5% of the employee’s income) or face fees of $2K per employee. Consider AQ. Semmelhack told me that in 2012 they paid $14,400 for health care costs. In 2015, they paid $86,400. That’s an increase of $72K MORE per year than 2012, or 29% of their best year’s profit.

Then there are those pesky rental rates which have been driven ever higher by nearly a decade of 0% interest rates that have resulted in artificially high demand for “yieldy” commercial real estate.

In the restaurant world, rent always sucks. Unless you manage to play it perfectly, as a restaurant owner you’re either moving into a sketchy or “emerging” neighborhood where the rent is cheap but few want to go there, or you’re overpaying for an established ‘hood and need to be a runaway success from day one. And even if you do manage to make it in the former type of neighborhood, your success often ends up pricing you out of the ‘hood you helped revitalize.

 

In Miami, Michelle Bernstein’s Cena by Michy helped rebirth the MiMo historic district but was forced to close this year, after the landlord attempted to triple the rent. And even Danny Meyer had to close and move Union Square Cafe in New York, which, since 1985, had served as one of America’s culinary landmarks, when he couldn’t rationalize paying the huge rent hike the landlord proposed.

What’s next?  Is San Francisco going to tell us how mad they are that Obamacare is driving up healthcare premiums?

One Chart Explains What Bernie Madoff And Kentucky Public Pensions Have In Common

If Bernie Madoff taught us anything it’s that every successful ponzi scheme requires precisely one critical component to keep it afloat: a steady stream of fresh capital to fund redemptions.  Absent that key component, even the most carefully crafted ponzi, with the best, most creative accounting fabrications in the world, will inevitably fail from a lack of real, cold, hard cash to keep the illusion going.

Unfortunately, it seems that Kentucky’s public pensions are now running into the very same problem that ultimately brought down Madoff’s multi-billion dollar ’empire’.  As the Lexington Herald Leader points out today, it’s no coincidence that the Kentucky public pension system is suddenly collapsing just as the number of retirees (redemptions) has surged beyond the number of active employees (fresh capital) required to keep the ponzi going.

It’s impossible to know exactly who, where or when, but one day in 2016, a Kentucky state employee packed up her desk, said goodbye to her colleagues and retired.

 

Once she hit the exit, the number of retirees drawing a pension from the Kentucky Employees Retirement System (Non-Hazardous), the struggling $2.6 billion fund that serves most of state government, officially topped the number of active workers paying into it.

 

The 60-year-old fund has been mathematically upside down from that day forward.

 

Social Security, by comparison, has a roughly 3-to-1 ratio of workers supporting retirees, but KERS’ ratio is less than 1 to 1. Its numbers are expected to worsen as state government continues to cut its work force and aging baby boomers keep heading into retirement. The average age of a worker in KERS is 45, up from 43 just a few years ago. And they retire at age 57 on average to draw a lifetime pension.

 

“You just can’t depend on this model anymore,” said state Sen. Joe Bowen, R-Owensboro.

As Senator Joe Bowen notes, “it creates a cash flow problem”…

Bowen is working with Gov. Matt Bevin and other GOP lawmakers on proposed changes to Kentucky’s public pension systems, which face tens of billions of dollars in unfunded liabilities due to inadequate contributions and unrealistic financial assumptions by state government over much of the past two decades.

 

Bowen said Wednesday that an outline of their pension proposals could be unveiled within the next week, with a special legislative session to enact those changes possible later this year.

 

“The model of a defined-benefits plan doesn’t work for us anymore because we can’t raise enough money from this work force to pay for everyone who is going into retirement,” Bowen said. “This is why moving to 401(k) accounts, moving to defined-contribution plans, and then committing to paying down the existing liabilities … that’s really the only option we have.”

 

“It creates a cash-flow problem,” said David Eager, interim executive director of Kentucky Retirement Systems, which manages KERS (non-hazardous) and other state and local government pension funds. “The benefit payments are going to continue to go up. The contributions are going to continue to go down. That’s just the math of it.”

Of course, the demographics of the Kentucky pension system are hardly unique.  A surge in Baby Boomer retirements over the next couple of decades, combined with technological advancements that ensure that only a fraction of those retirees will have to be replaced with actual human workers, will inevitably result in a wave public pension ponzi failures as they meet with the same “cash flow problem” as Bernie Madoff.

 

That said, unlike the Madoff ponzi, no one will go to jail when the public pension ponzi schemes of the U.S. are exposed because, for some reason, defrauding taxpayers, as opposed to investors, is perfectly legal.

Why Are Washington’s Clients Getting Cozy With Moscow?

Submitted by Nauman Sadiq,

Turkey, which has the second largest army in NATO, has been cooperating with Russia in Syria against Washington’s interests since last year and has recently placed an order for the Russian-made S-400 missile system.

 

Similarly, the Saudi King Salman, who is on a landmark state visit to Moscow, has signed several cooperation agreements with Kremlin and has also expressed his willingness to buy S-400 missile system.

 

Another traditional ally of Washington in the region, Pakistan, has agreed to build a 600 mega-watt power project with Moscow’s assistance, has bought Russian helicopters and defense equipment and has held joint military exercises with Kremlin.

All three countries have been steadfast US allies since the times of the Cold War, or rather, to put it bluntly, the political establishments of these countries have acted as virtual proxies of Washington in the region and had played an important role in the collapse of the former Soviet Union in 1991.

In order to understand the significance of relationship between Washington and Ankara, which is a NATO member, bear in mind that the United States has been conducting air strikes against targets in Syria from the Incirlik airbase and around fifty American B-61 hydrogen bombs have also been deployed there, whose safety became a matter of real concern during the failed July 2016 coup plot against the Erdogan administration; when the commander of the Incirlik airbase, General Bekir Ercan Van, along with nine other officers were arrested for supporting the coup; movement in and out of the base was denied, power supply was cut off and the security threat level was raised to the highest state of alert, according to a report by Eric Schlosser for the New Yorker.

Similarly, in order to grasp the nature of principal-agent relationship between the United States on the one hand and Saudi Arabia and Pakistan on the other, keep in mind that Washington used Gulf’s petro-dollars and Islamabad’s intelligence agencies to nurture jihadists against the former Soviet Union during the Cold War.

It is an irrefutable fact that the United States sponsors militants, but only for a limited period of time in order to achieve certain policy objectives. For instance: the United States nurtured the Afghan jihadists during the Cold War against the former Soviet Union from 1979 to 1988, but after the signing of the Geneva Accords and consequent withdrawal of Soviet troops from Afghanistan, the United States withdrew its support to the Afghan jihadists.

Similarly, the United States lent its support to the militants during the Libyan and Syrian civil wars, but after achieving the policy objectives of toppling the Arab nationalist Gaddafi regime in Libya and weakening the anti-Israel Assad regime in Syria, the United States relinquished its blanket support to the militants and eventually declared a war against a faction of Sunni militants battling the Syrian government, the Islamic State, when the latter transgressed its mandate in Syria and dared to occupy Mosul and Anbar in Iraq in early 2014.

The United States regional allies in the Middle East, however, are not as subtle and experienced in Machiavellian geopolitics. Under the misconception that alliances and enmities in international politics are permanent, the Middle Eastern autocrats keep on pursuing the same belligerent policy indefinitely as laid down by the hawks in Washington for a brief period of time in order to achieve certain strategic objectives.

For example: the security establishment of Pakistan kept pursuing the policy of training and arming the Afghan and Kashmiri jihadists throughout the eighties and nineties and right up to September 2001, even after the United States withdrew its support to the jihadists’ cause in Afghanistan during the nineties after the collapse of its erstwhile archrival, the Soviet Union.

Similarly, the Muslim Brotherhood-led government of Turkey has made the same mistake of lending indiscriminate support to the Syrian militants even after the United States partial reversal of policy in Syria and the declaration of war against the Islamic State in August 2014 in order to placate the international public opinion when the graphic images and videos of Islamic State’s brutality surfaced on the social media.

Keeping up appearances in order to maintain the façade of justice and morality is indispensable in international politics and the Western powers strictly abide by this code of conduct. Their medieval client states in the Middle East, however, are not as experienced and they often keep on pursuing the same militarist policies of training and arming the militants against their regional rivals, which are untenable in the long run in a world where pacifism has generally been accepted as one of the fundamental axioms of the modern worldview.

Regarding the recent cooperation between Moscow and Ankara in the Syrian civil war, although the proximate cause of this détente seems to be the attempted coup plot against the Erdogan administration in July last year by the supporters of the US-based preacher, Fethullah Gulen, but this surprising development also sheds light on the deeper divisions between the United States and Turkey over their respective Syria policy.

After the United States reversal of “regime change” policy in Syria in August 2014 when the Islamic State overran Mosul and Anbar in Iraq in early 2014 and threatened the capital of another steadfast American ally, Masoud Barzani’s Erbil in the oil-rich Iraqi Kurdistan, Washington has made the Kurds the centerpiece of its policy in Syria and Iraq.

Bear in mind that the conflict in Syria and Iraq is actually a three-way conflict between the Sunni Arabs, the Shi’a Arabs and the Sunni Kurds. Although after the declaration of war against a faction of Sunni Arab militants, the Islamic State, Washington has also lent its support to the Shi’a-led government in Iraq, but the Shi’a Arabs of Iraq are not the trustworthy allies of the United States because they are under the influence of Iran.

Therefore, Washington was left with no other choice than to make the Kurds the centerpiece of its policy in Syria and Iraq after a group of Sunni Arab jihadists transgressed its mandate in Syria and overran Mosul and Anbar in Iraq in early 2014 from where the United States had withdrawn its troops only a couple of years ago in December 2011.

The US-backed Syrian Democratic Forces, which are on the verge of liberating the Islamic State’s de facto capital, Raqqa, and are currently battling the jihadist group in a small pocket of the city between the stadium and a hospital, are nothing more than the Kurdish militias with a symbolic presence of mercenary Arab tribesmen in order to make them appear more representative and inclusive in outlook.

As far as the regional parties to the Syrian civil war are concerned, Saudi Arabia, Jordan and the rest of the Gulf Arab States may not have serious reservations against this close cooperation between the United States and the Kurds in Syria and Iraq, because the Gulf Arab States tend to look at the regional conflicts from the lens of the Iranian Shi’a threat.

Turkey, on the other hand, has been more wary of the separatist Kurdish tendencies in its southeast than the Iranian Shi’a threat, and particularly now after the Kurds have held a referendum for independence in Iraq despite the international pressure against such an ill-advised move.

Finally, any radical departure from the longstanding policy of providing unequivocal support to Washington’s policy in the region by the political establishment of Turkey since the times of Mustafa Kemal Ataturk is highly unlikely. But after this perfidy by Washington of lending its support to the Kurds against the Turkish proxies in Syria, it is quite plausible that the Muslim Brotherhood-led government in Turkey might try to strike a balance in its relations with the Cold War-era rivals.

*  *  *

Nauman Sadiq is an Islamabad-based attorney, columnist and geopolitical analyst focused on the politics of Af-Pak and Middle East regions, neocolonialism and petro-imperialism.

BLS Caught Fabricating Wage Data

While it’s not the first time we have observed the BLS manipulate data (the last time was in “This Is What Happens When The Bureau Of Labor Statistics Is Caught In A Lie“), never before had we actually caught the Bureau Of Labor Statistics openly fabricating data. Until now.

As reported earlier today, in one of the most closely watched statistics in today’s payrolls report, the BLS reported that the annual increase in Average Weekly Earnings was a whopping 2.9%, above the 2.5% expected, and above the 2.5% reported last month. On the surface this was a great number, as the 2.9% annual increase – whether distorted by hurricanes or not – was the highest since the financial crisis.

However, a problem emerges when one looks just one month prior, at the revised August data.

What one sees here, as Andrew Zatlin of South Bay Research first noted, is that while the Total Private Average Weekly Earnings line posted another solid increase of 0.2% month over month, an upward revision from the previous month’s 0.1%, when one looks at the components, it become clear that the BLS fabricated the numbers, and may simply hard-coded its spreadsheet with the intention of goalseeking a specific number.

Presenting Exhibit 1: Table B-3 in today’s jobs report. What it shows is that whereas there was a sequential decline in the Average Weekly Earnings for Goods Producing and Private Service-producing industries which are the only two sub-components of the Total Private Line (and are circled in red on the table below) of -0.8% and -0.1% respectively, the BLS also reported that somehow, the total of these two declines was a 0.2% increase!

Another way of showing the July to August data:

  • Goods-Producing Weekly Earnings declined -0.8% from $1,118.68 to $1,109.92
  • Private Service-Providing Weekly Earnings declined -0.1% from $868.80 to $868.18
  • And yet, Total Private Hourly Earnings rose 0.2% from $907.82 to %909.19

What the above shows is, in a word, impossible: one can not have the two subcomponents of a sum-total decline, while the total increases. The math does not work.

This, as Zatlin notes, undermines not only the labor inflation narrative, but it puts into question the rest of the overall labor data, and whether there are other politically-motivated, goalseeked  “spreadsheet” errors.

We have sent an email to the BLS seeking an explanation for the above data fabrication, meanwhile here is what likely happened: a big, juicy fat-finger error, whether on purpose or otherwise because if one looks at the finalized July weekly earnings of $907.82, it’s precisely the same as what the August preliminary wage number was as released last month, also $907.82.  For the excel fans out there, it means that the August totals were simply hard coded when the BLS shifted cells in the spreadsheet, becoming July.

Of course, if the BLS confirms that this was a transposition fat finger error, it would also imply that the August number is in fact, the September data, a rather massive mistake which today has had a impact on trillions dollars worth of assets.

Source: BLS

5 Ways To Understand Trump’s North Korea Talk

Authored by Robert Kelly via NationalInterest.org,

Could we be sliding toward a self-fulfilling prophecy?

This is arguably the strangest North Korea crisis ever. The conventional wisdom is that it is the most dangerous yet. But the risks of military action are well-known and enormous, so kinetic options are still rather unlikely. Instead, what strikes me the most about this time around is the interventions of the American president. Not only has Donald Trump’s comments worsened tension rather than soothed it, they are often made in an off-the-cuff, gleefully belligerent manner. This combination creates the bizarre outcome of a U.S. president mixing the frightening (threats of nuclear war) with the comedic (it is all just Trump being Trump, the boyish bomb-thrower). This peculiar disjuncture of the ultra-serious and the childish is so unnerving that it is firing much of the social media debate about this particular crisis. Once again, as so often with Trump, the whole thing is becoming about him rather than events themselves.

It is genuinely hard to know what to make of this, of just how close we are to serious conflict. Usually the American president plays a calming role regarding North Korea, because it is an extremely dangerous state with a long history of provocation and gangsterism. President Bill Clinton tried to normalize it and pull it into the post–Cold War world (however haltingly) through the Agreed Framework and a visit by the U.S. secretary of state at the time, Madeleine Albright. Barack Obama was famously cool, even letting North Korea’s racism bounce off. (The North Korean Central News Agency [KCNA] referred to him as a monkey.) Even George W. Bush who provocatively placed North Korea on the ‘Axis of Evil’ in 2002 eventually came around to dealing with Pyongyang in the Six Party Talks in his second term. At no point did Trump’s three predecessors speak as explosively as he is doing. Indeed, it seems like Trump is talking as KCNA does. Trash talk for trash talk. This has been Secretary of State Tillerson’s defense of the president’s language.

As I have suggested elsewhere, there seem to be five possible explanations for Trump’s unique rhetoric. How this crisis unfolds in the next six months—it seems primed to roll on for awhile yet—will depend on why exactly Trump is talking about North Korea in a way no U.S. president ever has before:

1 – Trump Means It, but as a Wheeler-and-Dealer He Really Wants a Deal

This is what the Trump administration would have us believe: All the psychological explanations are wrong. The president simply means what he says. Trump is at the end of his rope. Previous presidents have buck-passed this issue until it landed on his desk, and now he must take action. If this is true, Trump is almost certainly bluffing in search of a deal and hoping his bluff will not be called. If he is actually rational in talking this way, i.e., if he genuinely means it, then he is also rational enough to understand just how great the risk of war is and does not want one. This is Trump as he likes to present himself—the tough negotiator willing to go to the brink to get a good deal.

 

2 – Trump is Baiting the North into a Casus Belli Provocation

This is the most frightening possibility. Here the reason for Trump’s outlandish threats is to bait North Korean leader Kim Jong-un into some kind of extreme provocation which could serve as justification for U.S. military action. If so, then Trump has already decided that conflict is either inevitable or that it is preferable to a worsening future. There is a logic here: North Korea is a dangerous nuclear weapons state today which will be an even more dangerous nuclear-weapons state tomorrow, so it is better to fight today than tomorrow. A similar logic is sometimes used to explain Germany’s decision to fight in 1914. Time was on the side of the Russians, and it was better to fight them sooner than later.

 

3 – Trump is Pushing Back on His Own Staff

This is a domestic politics interpretation, popular on cable news with its intense interest in the staffing ups-and-downs of the administration. Trump is simply acting out. He clearly dislikes being told what to do by his staff, especially Chief of Staff John Kelly. He instinctively resents any outside direction and enjoys being a bomb-thrower. This explains why he keeps ad-libbing explosive, unnecessary commentary like “fire and fury” or “totally destroy” North Korea. He is pushing back against Kelly and his own staff who have warned not to speak this way.

 

4 – Trump is Diverting Attention from His Mounting Scandals

This is another cable news-domestic politics explanation, especially popular on the political left. Trump is flirting with a diversionary war. Robert Mueller’s investigation into Trump’s Russia links in particular is accelerating, with the looming indictment of Paul Manafort. This seems like the most cynical of all hypotheses, but it also has the promise of easy change. If Trump is as innocent as he say he is, there is no need to change the subject to North Korea.

 

5 – Trump is Simply Overwhelmed by the Office and Says Whatever Comes to Mind

One might call this the Daniel Drezner theory of Trump’s behavior. Drezner, a political scientist who writes at the Washington Post, has repeatedly argued that Trump’s administration is characterized by an amateurishness that cripples it. In my experience in Korea, this argument is locally persuasive. Many of my acquaintances worry that Trump is simply mentally unhinged.

The most alarming of these is option two, that Trump actually believes a war is more or less inevitable. The others suggest that much of the crisis is artificial, ginned up by Trump’s own language for other reasons. The worry is that the more Trump talks, the more he is talking himself, and Kim Jong-un, into a corner, where they feel must act. Even if he is not baiting Kim Jong-un—and it becomes harder and harder to avoid that conclusion with every new tweet—it may happen anyway. We are sliding toward a self-fulfilling prophecy.