Sir Michael Fallon’s resignation came after a day of intensifying controversy over the Westminster sex scandal
How the vote splits and the longer-term forecast will be scrutinised by markets
This morning, CoreLogic released its monthly report on Australian house prices – the world’s longest running bull market. Finally, measures to tighten credit standards and dissuade overseas buyers (especially Chinese in Sydney and Melbourne) are beginning to bite and price rises ground to a halt last month. From the report…
Since moving through a peak rate of growth in November 2016, capital gains across Australia’s housing market have been losing momentum, with national dwelling values unchanged over the month of October. For October, conditions were flat across both the combined capital cities and the combined regional areas of Australia, however over the past twelve months growth in the capital cities (+7.0%) has outperformed the regional areas (+4.9%).
CoreLogic head of research Tim Lawless said, “The slowdown in the pace of capital gains can be attributed primarily to tighter credit policies which have fundamentally changed the landscape for borrowers.”
“Lenders have tightened their servicing tests and reduced their appetite for riskier loans, including those on higher loan to valuation ratios or higher loan to income multiples. Additionally, interest only borrowers and investors are facing premiums on their mortgage rates which are likely to act as a disincentive, especially for investors who are generally facing low rental yields on investment properties.
“In fact, the peak rate of growth in dwelling values lines up closely with the peak growth rate for investment lending in late 2016. We saw the housing market respond in a similar fashion through 2015, and the first half of 2016 as investors faced tighter credit conditions following the announcement from APRA that lenders couldn’t surpass a 10% speed limit on investment lending.”
The top line in CoreLogic’s summary table below shows that Sydney prices seem to be leading national prices lower.
Following the release of the data, Bloomberg reports that UBS is calling an end to the boom in Australian housing…
The housing boom that has seen Australian home prices more than double since the turn of the century is “officially over,” after data showed prices now flatlining, UBS Group AG said.
National house prices were unchanged in October from September, while annual growth has slowed to 7 percent from more than 10 percent as recently as July, CoreLogic data released Wednesday showed. “There is now a persistent and sharp slowdown unfolding,” UBS economists led by George Tharenou said in a report.
“This suggests a tightening of financial conditions is unfolding, which we expect to weigh on consumption growth via a fading household-wealth effect.”
An end to Australia’s property boom will be welcome news for first-time buyers, who have struggled to break into the market after surging prices propelled Sydney past London and New York to be the second-most expensive housing market. Less impressed may be property investors, already squeezed by regulatory lending curbs that drove up mortgage rates.
The cooling housing market may encourage the Reserve Bank to keep interest rates at a record low. A rate hike would be undesirable as it would put further downward pressure on dwelling prices, said Diana Mousina, senior economist at AMP Capital Investors.
The regulatory crackdown on the insanely loose practice of lending on high loan to valuation ratios is well overdue. This was permitting speculators to use unrealized gains on one property as a down payment on another property, then another property as prices roses, and so on. See our post from last month “Australia Mortgage Market Is Now A $1.7 Trillion ‘House Of Cards.’”
As we noted at the times, over a decade ago, the U.S. residential housing market was revealed to be perhaps the biggest ponzi scheme ever created as easy financing enabled people to buy/build countless investment properties, that they were in no way adequately capitalized to own, with no money down all based on the premise that the house could be 'flipped' before the first mortgage payment even came due. It was a classic ponzi that worked great for a while but inevitably turned south when home prices suddenly soured and their was no cash equity backing the trillions of dollars in outstanding mortgage debt. But, if a new report from LF Economics is even directionally accurate, then the bubble currently percolating in Australia could take the residential housing ponzi game to a whole new level courtesy of a 'creative' little product called "cross-collateralized residential mortgages."
The Australian mortgage market has “ballooned” due to banks issuing new loans against unrealised capital gains of existing investment properties, creating a $1.7 trillion “house of cards”, a new report warns.
The report, “The Big Rort”, by LF Economics founder Lindsay David, argues Australian banks’ use of “combined loan to value ratio” — less common in other countries — makes it easy for investors to accumulate “multiple properties in a relatively short period of time despite high house prices relative to income”.
“The use of unrealised capital gain (equity) of one property to secure financing to purchase another property in Australia is extreme,” the report says.
“This approach allows lenders to report the cross-collateral security of one property which is then used as collateral against the total loan size to purchase another property. This approach substitutes as a cash deposit.
“This has exacerbated risks in the housing market as little to no cash deposits are used.”
Yes, you read that correctly…Australian housing speculators can literally use unrealized gains in investment properties as a 'cash substitute' for down payments on other investment properties. Of course, we're not experts at 'the mathematics,' but if you constantly take every dollar worth of equity you accrue and pledge it as collateral toward a new purchase then doesn't that mean the entire system is built on debt and no actual equity at all?
Earlier this month, the Bank for International Settlements (BIS) released a new working paper, “Interest rates and house prices in the United States and around the world”.
This identified Australia’s 55-year housing bull market – 50 years from 1961-2010 then 2013-2017 without a downswing in between – as the longest in world. The US housing bull market from 1992-2006 was a mere 15 years. This was the BIS methodology.
Another way to appreciate the persistence of house prices is to contrast the length of their upswings and downswings. We define an upswing (downswing) as a period of house price increases (decreases) sustained in an individual country for three years or more. Based on this definition, periods of upswing accounted for nearly 80% of the advanced economy sample. The up swings lasted on average 13 years; with the longest one, in Australia, still continuing after half a century.
Here are the results in tabular form – Australia is third from bottom…
Since 2000, the BIS found that Australia has seen the second largest increase in real house prices, only exceeded by New Zealand – where the new government has just banned foreign buyers from the market.
Our gut feeling is that today’s data signals the beginning of a “Minsky Moment” for the Australian housing market.
Shares fell 5% in after-hours trading after admitting Model 3 production is months behind schedule.
It is without a doubt, our news cycle – in the age of 24/7 constant-connectedness – moves at a breakneck pace. With so much information and news reaching us, it’s easy to become overburdened and burned out on the world around us and the things taking place. It is true, too, that the mainstream media dictates what stays center in the mind of the public and what is allowed to fade away and be forgotten. It is of the utmost importance we remain aware – however exhaustive it may be – of stories that just don’t add up.
Enter the Las Vegas shooting; the worst mass-shooting in U.S. history…
On October 1, 64-year-old Stephen Paddock opened fire on a country music festival from the 32nd floor of the Mandalay Bay hotel, which overlooked the festival venue. Paddock’s onslaught left 58 dead and 546 injured.
A full month later, and we are still without any answers. Even more worryingly, the Vegas shooting has disappeared from any cable news channel. Even online, discussion over the shooting has all but vanished, save from the more conspiratorial corners of the web.
Here are the facts:
The official timeline of the Vegas shooting has changed three times. A week before the attack, Paddock wired $100,000 to an account in the Philippines. Paddock also took cruises to ports in the Middle East. Paddock’s laptop was also missing its hard drive when recovered in his hotel room.
Despite a month of being told otherwise, it’s now been revealed that police did discharge fire in Paddock’s hotel room upon entry… but why, if Paddock had already killed himself before police breached the room?
Jesus Campos is the security guard who first reportedly found Paddock as he started his killing spree, and was shot in the leg in the process. However, he not only disappeared after scheduling several television interviews, but it’s now been revealed Campos reportedly left the country just days after the Vegas shooting.
Why did authorities let Campos leave the country in the middle of an investigation? How did Campos travel unhindered with a gunshot wound in his leg?
Not only that, but Campos was said to have been last heard from when he went to a walk-in health clinic… but a spokesperson for UMC Quick Care – the facility Campos supposedly went to – said they had “heard nothing” about Campos visiting them.
On top of all of that, Campos only re-emerged to do a fluff, softball interview on Ellen. DeGeneres guides Campos along the interview, essentially framing and explaining the timeline of events so Campos didn’t have to. At times, the interview even seems scripted. Don’t take my word for that, I implore you to watch and see if you agree:
Plainly, things aren’t adding up with the Vegas shooting. Paddock was in an area with extremely heavy surveillance, yet no stills or video of him have been released to the public. No potential motive has been released. Really, no answers to any of the questions that arose in result of the story not adding up have been addressed… instead, the Vegas massacre has vanished from cable news channels and the public mind.
Another note to add, in just the span of a month, 4 survivors of the Vegas shooting have died. Notably, both Kymberley Suchomel and Danny Contreras both publicly claimed there were multiple gunmen the night of the mass shooting. Dennis and Lorraine Carver died after their Mercedes smashed into a metal gate and exploded into flames. Per CNN:
The couple’s youngest daughter, 16-year-old Madison Carver, told the Las Vegas Review-Journal that she heard the crash from her bedroom. When she ran outside and down the street to find out what had happened, she recognized her family’s vehicle in flames.
By the time their daughter heard the crash (which only happened about a half mile from the Carver’s home) and ran down the road to see what had happened, the car was engulfed in flames… Much like everything else pertaining to the Vegas shooting, the story just doesn’t make sense.
Here we are, a month later – with exactly what we had immediately in the aftermath of the shooting: nothing. No answers, no coverage, no questions… nothing.
All of us should be asking many questions – if only to ourselves – about why the narrative behind Vegas isn’t adding up…
Compare the massacre in Vegas to the terrorist attack that happened yesterday in New York. Within hours, we knew the name of the terrorist, had a picture of him, had his history as a refugee in the U.S. under a “diversity visa”, and had a note declaring allegiance to ISIS. We have timelines and what the terrorist was doing in the hours, days before the attack…
…yet in the case of Stephen Paddock, nothing.
The victims of the Las Vegas shooting – R.I.P.
We owe it to the victims to not let this simply fade away. We owe it to their memory to ask why the narrative behind the shooting stinks. We owe it to their legacy to question and demand answers from our public representatives when discussion and coverage is being obviously stone-walled. Nary a peep has come from any legacy media concerning Vegas in the past month, and that alone should make you question what’s really going on. You don’t have to delve into conspiracy theories or hack-witted ideas of a hoax. Merely ask yourself…
Where did the investigative coverage on the Vegas shooting go? Why did the story drop out of the news cycle with so many unanswered questions?
The worst mass-shooting in America yet and seemingly everyone has shrugged their shoulders, thrown up their hands, and declared indifference until the next one.
It’s LME Week and there’s cause for celebration in metal markets. European mining stocks rose to a 4-year high as the nickel price surged more than 5% intraday to a two-year high and rose by the daily limit in Shanghai trading today. Metals used in electronic vehicles, like lithium, cobalt, copper and nickel, are hot right now and a focal point of discussion at the LME gatherings. As Metal Bulletin noted, the 2017 event has seen record attendance.
The annual LME Dinner week kicked off in a positive note, with record numbers gathering for the exchange’s keynote metals seminar on Monday October 30. “We have over 900 people over the day here…which is a record attendance,” London Metal Exchange chief executive officer (CEO) Matthew Chamberlain said.
Despite relatively high inventories, big miners and metal traders are becoming increasingly bullish on nickel’s prospects. According to Bloomberg…
Glencore Plc and Trafigura Group Pte are often at loggerheads, but one thing they agree on: the nickel market will be transformed by the rise of electric cars. Nickel sulphate, a key ingredient in lithium-ion batteries, will see demand increase 50 percent to 3 million metric tons by 2030, Saad Rahim, chief economist at Trafigura, said in an interview. While other battery metals like cobalt and lithium have more than doubled since the start of last year, nickel prices have been subdued because of large inventories.
"When you look structurally, we should start to get bullish now,” Rahim said.
“Are you going to be able to meet that demand when the time comes, given underinvestment in the supply side?”
Glencore, which was devastated by the downturn in nickel, is also optimistic, as are some of the analysts, as Bloomberg notes…
(Glencore) told analysts recently that nickel production would need to increase 1.2 million tons by 2030, equal to more than half of current global output, to keep up with demand from the battery industry. Prices are currently more than double what it costs Glencore to mine the metal. It’s a surprising mood change for a market with a disastrous reputation. Nickel was long a thorn for Glencore, which was saddled with unprofitable operations following its takeover of Xstrata. It sold an Australian nickel mine, which Xstrata bought in 2007 for $2.4 billion, for just $19 million in 2015.
“The nickel industry’s been a bit of a dog since about 2007,” Oliver Ramsbottom, a partner at McKinsey & Co. in Tokyo, said by phone.
The battery industry could revive the fortunes of miners more than a decade after nickel collapsed from a peak of $51,600 a ton in 2007
Despite the hype, Bloomberg cautions that there are still naysayers highlighting elevated inventories and the potential for supply to ramp-up faster than currently expected.
Still, some analysts are skeptical that the bullish scenarios will play out. Electric cars are still a niche industry and nickel oversupply remains a threat, with current stockpiles four times bigger than since the start of 2012.
“For years, the market has completely dismissed the idea that something positive could happen in nickel,” Ingrid Sternby, senior research analyst at Blenheim Capital Management LLP, said in an interview in London. “With the recent announcements about Indonesia and the Philippines, it’s easy to see why the market is still scary enough for people not to want to be involved…
“You can see the tightness ahead in the nickel market, but my concern is that we’re going to see a lot of value destroyed along the way,” said Colin Hamilton, managing director for commodities research at BMO Capital Markets Ltd.
“If the miners really believe in the EV growth story, the thing to do would be to keep the nickel in the ground until the deficit arrives.”
When assessing the prospects for nickel, it is really two separate markets, nickel alloyed with iron and nickel sulphate used in batteries. Bloomberg expects the latter to progressively trade at a premium to the former.
About half of global nickel production is in the form of ferronickel or nickel pig iron, which is nickel alloyed with iron, making it suitable for stainless steel. Battery makers, instead, use nickel sulphate, produced by dissolving pure nickel metal in sulphuric acid. One hope is that the pricing of nickel pig iron and the high-grade nickel sulphate will diverge in the coming years, improving the fortunes of miners that can produce battery-quality material.
The global nickel market is heading for a deficit once above-ground stockpiles of battery-grade metal are consumed, according to Wood Mackenzie. The question for miners is how quickly the premium for top-quality nickel will emerge.
The nickel alloy versus nickel sulphate certainly adds complexity to analysing nickel. However, while the fundamentals for the latter seem very positive, it makes us slightly nervous when record numbers of participants gather at industry jamborees.
Still, politicians and automakers are increasingly counting on a future of electric cars, attracting traders such as Trafigura.
“Will we see a real breakout in next 12 months? That’s hard to see, but beyond that, structurally this looks to be going up,” Rahim said.
In an effort to “uphold the respect of the people” for the country’s national anthem and “regulate their behavior while singing or playing” it, as the China Daily writes, China’s government is considering stiffening the penalty for mocking the tune. From the state-run outlet on Tuesday:
“People who disrespect China’s national anthem could face up to three years in prison if a draft amendment to the Criminal Law is approved.
"Besides a prison sentence, those found guilty could also be put under surveillance or deprived of their political rights, according to the draft, which was submitted on Tuesday to the Standing Committee of the National People’s Congress, the top legislature, for its first reading.”
The National Anthem Law, which was passed by the Standing Committee back in September and went into effect in early October, lays out for Chinese citizens the situations where playing the song, “The March of the Volunteers,” is appropriate.
Some of the situations stated in an October 2 article from China’s Xinhua News Agency are “constitutional oath ceremonies, flag raising ceremonies, major celebrations, awards ceremonies, commemorations, national memorial day events, important diplomatic occasions, major sport events and other suitable occasions.”
The same article says citizens found guilty of mocking the song, including those who “maliciously modify the lyrics [or] play or sing the national anthem in a distorted or disrespectful way,” could be detained for up to 15 days.
Now, however, it seems the Chinese government feels this punishment isn’t severe enough. In addition to the possible three years behind bars, “those found guilty could also be put under surveillance or deprived of their political rights.”
This is significant because, as Anti-Media has reported, there is currently a growing independence movement in Hong Kong, and the local government increasingly bristles at Beijing telling it how to handle its affairs.
In fact, Hong Kong’s defiant streak, as it relates to China’s national anthem, got the territory in a bit of trouble this week, as Reuters reported:
“The Hong Kong Football Association (HKFA) was warned by the Asian Football Confederation (AFC) on Tuesday over the conduct of fans who booed the Chinese national anthem last month.
“A small section of supporters jeered during the playing of ‘The March of the Volunteers’ and turned their backs on the Chinese flag ahead of a 2-0 win for the former British colony over Malaysia at Hong Kong Stadium in qualifying for the Asian Cup finals.”
Incidentally, these new, harsher penalties would also apply to citizens disrespecting the Chinese flag. For the central government in Beijing, it all goes back to the “One China” ideology, which purports that all of China, even semi-autonomous regions like Hong Kong, is subject to the mainland’s rule.
Zhang Rongshun, deputy director of the Standing Committee’s legislative affairs commission, says it’s about stopping a problem before it gets out of control:
“In recent years, incidents of disrespecting the national anthem have occurred in Hong Kong, challenging the bottom line of the principle of ‘one country two systems’ and social morality, and triggering rage among Chinese, including most Hong Kong residents. It is urgent and important to apply the national anthem law in Hong Kong to prevent and handle such offences.”
Amnesty International China researcher William Nee told Agence France-Presse (AFP) on Tuesday that Beijing attempting to force semi-autonomous regions to adopt these harsh penalties “would clearly be out of step with international law.”
“Besides being incompatible with the right to freedom of expression to begin with,” he said, “extending the law to Hong Kong and Macau is also especially worrying. It could be the first step in chipping away at internationally recognised human rights, using mainland China’s nearly limitless and vague concept of national security.”
Just over a week ago we highlighted how China’s financial regulator had instructed companies to delay the reporting of bad corporate news until after the Party Congress. As Bloomberg noted…
China’s securities watchdog has asked some loss-making companies to avoid publishing quarterly results this week as authorities seek to ensure stock-market stability during the Communist Party Congress, according to people familiar with the matter.
The China Securities Regulatory Commission made its requests via the country’s stock exchanges, the people said, asking not to be named as they’re not authorized to talk to the media.
At least 17 Shenzhen-listed companies announced delays to their earnings reports from Oct. 20 to Oct. 24, up from three during the same period last year, exchange filings show.
Now that the Congress is out of the way, announcements of corporate debt defaults are also reportable it seems.
The latest relates to Dandong Port Group as the WSJ reports…
A debt-laden port management company in northeast China defaulted on $150 million in bonds, as highly leveraged businesses get squeezed by Beijing’s campaign to weed out risks in the financial system.
Dandong Port Group Co., controlled by a Chinese construction magnate with political ties in the U.S., told bondholders this week that it is unable to repay part of 1 billion yuan in bonds due Monday.
A company statement cited “heavy interest-bearing debt burdens and high short-term payment pressure” and said it is working with underwriters to repay the investors.
The port, located at the mouth of the Yalu River on the border with North Korea, has expanded energetically in recent years to handle soybean imports from the U.S. and coal from Mongolia, even as much of northeast China’s resource-heavy economy struggled. International sanctions on North Korea have pinched some trade, though a company representative said the port halted business with the country in 2010 and so hasn’t been affected by the restrictions.
The timing of the Dandong default is also noteworthy, coming shortly after PBoC Governor, Zhou Xiaochuan, warning on the sidelines of the Party Congress. Zhou warned about the high level of corporate debt and the risk of a “Minsky Moment.”
“If we are too optimistic when things go smoothly, tensions build up, which could lead to a sharp correction., what we call a ‘Minsky Moment’. That’s what we should particularly defend against.”
As WSJ notes, Dandong Port’s default is one of the largest this year…
“The real market is slowly coming out, after the congress,” said Shen Meng, director at Beijing-based investment bank Chanson & Co. “Dandong Group’s problems reflect the lackluster state of the whole Chinese economy and the northeast region.”
Defaults, still rare in China, are expected to increase following that congress, which handed President Xi Jinping a second five-year term and endorsed his broad program to make China a rich world power. To do that, Mr. Xi emphasized that the government will sustain a push begun this year to reduce high levels of debt that might pose a risk to the financial system. Money is increasingly tight for Chinese companies as banks respond to government calls to more closely scrutinize borrower business plans and authorities crack down on riskier financing plays. Yields on triple-A rated five-year corporate bonds are at nearly 5%, compared with 3.9% at the beginning of the year. Chinese firms have defaulted on 35 bond payments this year, compared with 78 last year and 23 in 2015, according to data from Shanghai Wind Information Co.
When asked whether Dandong Port expected the authorities to help, a company representative was non-committal, saying that they have always worked closely with local government. The WSJ provided more details on the default…
Dandong Port’s 1 billion yuan in bonds, issued in 2014, carried a coupon rate of 5.86% in annualized interest. Though the company made the 58.6 million yuan in interest due Monday, it couldn’t meet payment of principal on the bonds, whose investors exercised an option to sell them to the company early. Dandong’s profits have been sliding, and the firm warned about debt risks last year. The company has more than 40 billion yuan in unpaid debt, including several billion yuan in bonds, according to its half-year statement issued in August. It had a 76% debt-to-asset ratio as of last year.
The company’s controlling shareholder, Wang Wenliang, was replaced as Dandong Port’s legal representative this August, although he remains in control of Dandong Port through two corporate entities, one of which is based in Hong Kong, according to company filings.
Our question is whether the Dandong default is part of a post-Congress willingness to allow over-leveraged entities in the private sector to go to the wall. If so, we might see a flurry of similar events in the coming months. Alternatively, was the failure (so far) of the authorities to bailout Dandong part of Xi’s ongoing crackdown on corruption?
Wang Wenliang was implicated in vote-rigging scandal in 2016, as the Journal notes…
A fixture on lists of China’s wealthiest people, Mr. Wang has surfaced in separate scandals in China and the U.S. in recent years. He was one of several dozen deputies from Liaoning province expelled from China’s legislative body last year in a vote-buying scandal. In the U.S., his political funding and other donations have also been scrutinized. His construction business Rilin Enterprises, for instance, gave $1 million to $5 million to the Clinton Foundation since its founding, according to records published by the organization co-founded by the former candidate Hillary Clinton.
A spokeswoman for Mr. Wang put his total donations to the foundation around $2 million. Also last year, The Wall Street Journal reported the Federal Bureau of Investigation had also examined a $120,000 donation by a U.S. business owned by Mr. Wang to then-Virginia Gov. Terry McAuliffe. Mr. Wang has also donated to U.S. universities including Harvard and at least one think tank, the Center for Strategic and International Studies. There is no sign that any of the donations was illegal. Spokesmen for the recipients and for Mr. Wang have pointed out that he has significant business in the U.S.
Whatever the reason for allowing the Dandong default, life is getting tougher for the over-leveraged Chinese corporate sector. From Bloomberg’s take on the Dandong default…
Bond yields in China have surged after central bank governor Zhou Xiaochuan voiced concern about high corporate borrowing on Oct. 15. That sparked a 16 basis point jump in the average yield on AA- rated corporate securities this month, set for the biggest increase since May, according to China bond data. Twenty onshore bonds have defaulted this year, compared with 21 in the same period of 2016, according to Bloomberg-compiled data.
“The rising borrowing costs have eroded companies’ profits and made it more and more difficult to roll over existing debt,” Xu Hanfei and Li Yuze, analysts at China Merchants Securities Co. said in a report Tuesday, commenting on the default.
In the end, debt will out, even in China.
Whether it's the Middle East, Africa, or Eastern Europe, the familiar pattern of American military expansion goes something like this: first we are promised that US troops are merely in a country for limited "training" missions with "partner" forces; next we are told of "counter-terror" operations which require an increased "footprint"; after which we are assured once again that there are "no boots on the ground" but a "minimal" increase of train and assist missions; finally, US soldiers begin to come home in body bags at which point the 9/11 era AUMF is cynically invoked (Authorization For Use of Military Force).
On Tuesday the whole Orwellian cycle of American non-deployment to non-wars (by our politicians' standards) was on display during a single Pentagon press briefing, when Army spokesman Maj. Gen. James B. Jarrard told reporters that 4,000 US troops were deployed to Syria, but then awkwardly attempted to walk back the statement less than 30 seconds later:
Wow. Question on how many US troops are in Syria. MG initially says 4,000 (!) then apologizes, changes to 500 after a follow-up. pic.twitter.com/ru92GkU3PW
— Jake Godin (@JakeGodin) October 31, 2017
Army spokesman: I think it's a little over 4,000 US troops in Syria right now that are supporting efforts against Daesh, and supporting the SDF.
Reporter: So you have 4,000 US troops in Syria, cause I thought that publicly, previously the number was 1,000. So this would be four times – well it was actually 500, but your saying 4000 US troops are currently in Syria?
Army spokesman: I'm sorry I mispoke there – there are approximately 500 troops in Syria.
…[press pool breaks out in laughter…]
Interestingly, Major Jarrard appeared to have thought carefully as he struggled to articulate the initial "over 4,000" number. Though he begins his response by stumbling over his words, he actually appears firm and confident when he finally asserts the 4,000 number. It is only after the incredulous reporter points out the colossal leap in numbers (compared to previous official Pentagon statements) that the US coalition spokesman quickly walks it back and says, "I'm sorry I mispoke there – there are approximately 500 troops in Syria."
Though the DoD has long stuck to its official "503 U.S. troops, which mostly covers special operations units", it appears that not even the usually tame and docile Pentagon press pool is buying this, as the reporters broke out into loud laughter, after which long awkwardness and silence followed.
And even the Military Times, in its coverage, isn't buying it:
However, those numbers don’t paint the actual picture of the size and scope of the U.S. footprint in either country. U.S. commanders on the ground have leeway to bring in extra troops for limited periods of time that don’t count towards the total FML.
The current number of troops in Syria is above the FML, Eric Pahon, a Pentagon spokesperson told Military Times. But the number of U.S. boots on the ground in Syria is “not anywhere near” the 4,000 figure Jarrard mistakenly told reporters on Tuesday.
The special operations commander “is only human; he just made a mistake,” Pahon told Military Times.
Last summer, in a move that angered the US administration, Turkish state media leaked the locations of no less than ten small scale American military bases in northern Syria alone (revelations of US bases in southern Syria began surfacing as well). As the Military Times further acknowledges, these bases – though likely special forces forward operating bases – require a broad support base of US personnel operating in various logistical roles inside Syria.
And with the recent US-SDF build up in and around Raqqa after its recent liberation from ISIS, there is no doubt that this support base of US personnel on the ground in Syria has necessarily increased on a significant scale.
According to Military Times:
Images of massive convoys carrying coalition trucks and weapons and supplies to Syrian Democratic Forces could be seen on an almost daily occurrence, hinting that U.S. involvement in the Syrian battlefield was much higher than the 503 telegraphed in daily press briefings.
Moreover, U.S. forces have been operating in a number of capacities to include security presence patrols to keep the peace between Turkey and U.S.-backed Kurdish militants. Images of rangers steam rolling through the northern Syria countryside in Stryker vehicles brandishing American flags during the spring was a common sight for several months.
A task force of U.S. Marines has also been providing 24-hour all-weather artillery support to Syrian fighters. And U.S. special operations forces are actively advising and supporting SDF fighters as they continue to take ground from ISIS.
As we noted previously, even the former senior national security adviser to the Obama administration, Colin Kahl, (among the very architects of Obama's dangerous and disastrous Syria policy) admitted that that the United States has entered a “quagmire” and will inevitably climb “further up the escalation ladder in Syria.” It is perhaps an obvious sign that we have already long been in the midst of a quagmire in Syria (the result of failed regime change plans) when the Pentagon spokesman comically spouts obvious lies, which elicits press pool laughter at the obvious absurdity of it all.
Of course, the US was already very far up the “escalation ladder” from the moment it attempted to save face regarding the failed regime change war against Assad by investing itself in the war to the point of having to defend its SDF assets on the ground – a "plan B" of sorts: embed with the SDF (or Kurdish-Arab Syrian Democratic Forces). This "plan B" will no doubt lead to more and more troop deployments, which itself will likely result in more absurdly comical (and tragic) displays of Orwellian Pentagon press briefings.