Paul Craig Robert Asks “Do Financial Markets Still Exist?”

Authored by Paul Craig Roberts,

For many decades the Federal Reserve has rigged the bond market by its purchases. And for about a century, central banks have set interest rates (mainly to stabilize their currency’s exchange rate) with collateral effects on securities prices. It appears that in May 2010, August 2015, January/February 2016, and currently in February 2018 the Fed is rigging the stock market by purchasing S&P equity index futures in order to arrest stock market declines driven by fundamentals, and to push prices back up in keeping with a decade of money creation.

No one should find this a surprising suggestion.  The Bank of Japan has a long tradition of propping up the Japanese equity market with large purchases of equities. The European Central Bank purchases corporate as well as government bonds.  In 1989 Fed governor Robert Heller said that as the Fed already rigs the bond market with purchases, the Fed can also rig the stock market to stop price declines. That is the reason the Plunge Protection Team (PPT) was created in 1987.

Looking at the chart of futures activity on the E-mini S&P 500, we see an uptick in activity on February 2 when the market dropped, with higher increases in future activity last Monday and Tuesday placing Tuesday’s futures activity at about four times the daily average of the previous month.  Futures activity last Wednesday and Thursday remained above the average daily activity of the previous month, and Friday’s activity was about three times the previous month’s daily average. The result of this futures activity was to send the market up, because the futures activity was purchases, not sales.

Who would be purchasing S&P equity futures when the market is collapsing from under them?

The most likely answer we can come up with is that the Fed is acting for the PPT. The Fed can actually stop a market decline without purchasing a single futures contract. All that has to happen is that a trader recognized as operating for the Fed or PPT enters a futures bid just below the current price. The traders see the bid as the Fed establishing a floor below which it will not let the market fall.  Expecting continuing declines to make the bid effective, they front-run the bid, and the hedge funds algorithms pick it up, and up goes the market.

Is there another explanation for the shift in the market from decline to rise?  Are retail investors purchasing dips?  Not according to this report in Bloomberg that last week a record $23.6 billion was removed from the world’s largest ETF, the SPDR S& 500 index fund. Here we see retail investors abandoning the market.

If central banks can produce zero interest rates simultaneously with a massive increase in indebtedness, why can’t they keep equity prices far above the values supported by fundamentals?

As central banks have learned that they can rig financial asset prices to the delight of everyone in the market, in what sense does capitalism, free markets, and price discovery exist? Have we entered a new kind of economic system?

US Missile Defense Agency Wants Laser-Drones & Hypersonic-Weapons In Biggest-Ever Budget Boost

The U.S. Missile Defense Agency (MDA) has requested the largest-ever budget increase of $9.9 billion in funding for the 2019 fiscal year, citing growing intercontinental-range ballistic missile (ICBM) threats from North Korea and ballistic missile threats from Iran.

In fact, the request for the 2019 fiscal year is the single most significant request from the Agency since 1985, when President Reagan first established the Strategic Defense Initiative.

MDA fully supports President Trump’s National Defense Strategy of increased deficit spending, which allows the nation to: “Compete, Deter, and Win,” in the next world war.

The agency also wants to spend $269 million on laser drones to shoot North Korean ICBMs out of the sky, along with upgrading the nation’s defense systems against hypersonic threats.

The increase in MDA funding will allow the continued developments and deployments of integrated, layered missile defense systems to combat against missiles threats on the homeland.

MDA highlights their ten easy steps to intercepting a missile headed for the continental United States:

An ICBM can travel at extremely high speeds—at times more than 15,000 mph, or almost 20 times the speed of sound. Kinetic energy interceptors can travel fast enough to create closing speeds exceeding 25,000 mph. The speeds, trajectories, and points of launch that must be considered always change. In missile defense, everything is about precision. The BMDS must not only work in terms of milliseconds, but the missiles and warheads the system is targeting have bull’s-eyes measured in centimeters.

“Recent escalation of the threat from North Korea has demonstrated an advanced and accelerated capability,” the Agency’s Budget Estimates report notes. “North Korea is committed to developing a long-range, nuclear-armed missile that is capable of posing a direct threat to the United States.”

“Iran is fielding increased numbers of theater ballistic missiles, improving its existing inventory, and is developing technical capabilities to produce an ICBM, and this effort is benefiting from its ballistic missile and space launch vehicle programs,” the Agency’s report wrote. Iran’s ballistic missile program has not tested any missile capable of striking intercontinental ranges, but its rockets can strike as far as southeastern Europe which is concerning to NATO forces.

To combat the threats of North Korea and Iran, the MDA states the United States must continue developing new defense capabilities to tackle the future of risks. That means increasing investments in advanced technologies that bring upgraded capacities to the warfighter.

  • Technology Maturation Initiatives (PE 0604115C):  MDA requests $148.8 million to build on the foundational successes in Weapons Technology and Discrimination Sensor Technology. MDA will integrate an advanced sensor into the tactically proven Multispectral Targeting System and MQ-9 combination to address precision track and discrimination performance of this technology with the goal of eventually migrating to a space sensor layer. MDA’s plan is to continue the design to begin fabrication of a UAV-borne laser to address boost phase missile defense risks. Scalable, efficient, and compact high-energy lasers can be game –changing capabilities within missile defense architectures.

  • Hypersonic Defense (PE 0604181C): MDA is requesting $120.4 million in FY 2019. MDA will execute a rigorous systems engineering process, identify and mature full kill chain technology, provide analysis and assessment of target of opportunity events, and execute near term sensor and command and control capability upgrades to address defense from hypersonic threats. This effort will execute the Defense Science Board’s recommendations to develop and deliver a set of material solutions to address and defeat hypersonic threats informed by a set of near-term technology demonstrations. An integrated set of enhancements will provide incremental capability measured by progress and knowledge points in the following areas: establishment of systems engineering needs and requirements to identify alternative material solutions; execution of a series of sensor technology

The Hill outlines where the MDA plans on spending the remainder of its budget on modernizing the nuclear arsenal and missile defense systems across the United States.

That would buy 43 Aegis interceptors for $1.7 billion, four Ground-based Midcourse Defense (GMD) interceptors and 10 silos for $2.1 billion, 82 Terminal High Altitude Area Defense interceptors for $1.1 billion and 240 Patriot Advanced Capability Missile Segment Enhancement interceptors for $1.1 billion.

The Pentagon also says the budget would allow it to develop an additional missile field in Alaska for the GMD and puts it on track to have a total of 64 deployed and operational GMD interceptors by 2023, 20 more than it has now.

The GMD is the system in Alaska and California that would defend against a long-range missile attack such as from North Korea. The system’s most recent test last year was successful, though critics have said it is too costly and has a spotty testing record.

And lastly, we will leave you with David Stockman, the former Director of the Office of Management and Budget under President Ronald Reagan, who warned that the out of control spending at the United States military will contribute to the coming economic problems in America.

The fact that the US military is “conducting seven wars that we don’t need to have,” said Stockman, is why there are the troubles with the military readiness that warmongering politicians are using to justify further war spending increases.

Is John Brennan The Mastermind Behind Russiagate?

Authored by Mike Whitney via Unz.com,

The report (“The Dossier”) that claims that Donald Trump colluded with Russia, was paid for by the DNC and Hillary Clinton campaign.

The company that claims that Russia hacked DNC computer servers, was paid by the DNC and Hillary Clinton campaign.

The FBI’s counterintelligence probe into Trump’s alleged connections to Russia was launched on the basis of information gathered from a report that was paid for by the DNC and Hillary Clinton campaign.

The surveillance of a Trump campaign member (Carter Page) was approved by a FISA court on the basis of information from a report that was paid for by the DNC and Hillary Clinton campaign.

The Intelligence Community Analysis or ICA was (largely or partially) based on information from a report that was paid for by the DNC and Hillary Clinton campaign. (more on this below)

The information that was leaked to the media alleging Russia hacking or collusion can be traced back to claims that were made in a report that was paid for by the DNC and Hillary Clinton campaign.

The entire Russia-gate investigation rests on the “unverified and salacious” information from a dossier that was paid for by the DNC and Hillary Clinton Campaign. Here’s how Stephen Cohen sums it up in a recent article at The Nation:

“Steele’s dossier… was the foundational document of the Russiagate narrative…from the time its installments began to be leaked to the American media in the summer of 2016, to the US “Intelligence Community Assessment” of January 2017….the dossier and subsequent ICA report remain the underlying sources for proponents of the Russiagate narrative of “Trump-Putin collision.” (“Russia gate or Intel-gate?”, The Nation)

There’s just one problem with Cohen’s statement, we don’t really know the extent to which the dossier was used in the creation of the Intelligence Community Assessment. (The ICA was the IC’s flagship analysis that was supposed to provide ironclad proof of Russian meddling in the 2016 elections.) According to some reports, the contribution was significant. Check out this excerpt from an article at Business Insider:

“Intelligence officials purposefully omitted the dossier from the public intelligence report they released in January about Russia’s election interference because they didn’t want to reveal which details they had corroborated, according to CNN.” (“Mueller reportedly interviewed the author of the Trump-Russia dossier — here’s what it alleges, and how it aligned with reality”, Business Insider)

Bottom line: Despite the denials of former-CIA Director John Brennan, the dossier may have been used in the ICA.

In the last two weeks, documents have been released that have exposed the weak underpinnings of the Russia investigation while at the same time revealing serious abuses by senior-level officials at the DOJ and FBI. The so called Nunes memo was the first to point out these abuses, but it was the 8-page “criminal referral” authored by Senate Judiciary Committee Chairman Chuck Grassley and Senator Lindsey Graham that gave credence to the claims. Here’s a blurb from the document:

“It appears the FBI relied on admittedly uncorroborated information, funded by and obtained for Secretary Clinton’s presidential campaign, in order to conduct surveillance of an associate of the opposing presidential candidate. It did so based on Mr. Steele’s personal credibility and presumably having faith in his process of obtaining the information. But there is substantial evidence suggesting that Mr. Steele materially misled the FBI about a key aspect of his dossier efforts, one which bears on his credibility.”

There it is. The FBI made a “concerted effort to conceal information from the court” in order to get a warrant to spy on a member of a rival political campaign. So –at the very least– there was an effort, on the part of the FBI and high-ranking officials at the Department of Justice, to improperly spy on members of the Trump team. And there’s more. The FBI failed to mention that the dossier was paid for by the Hillary campaign and the DNC, or that the dossier’s author Christopher Steele had seeded articles in the media that were being used to support the dossier’s credibility (before the FISA court), or that, according to the FBI’s own analysts, the dossier was “only minimally corroborated”, or that Steele was a ferocious partisan who harbored a strong animus towards Trump. All of these were omitted in the FISA application which is why the FBI was able to deceive the judge. It’s worth noting that intentionally deceiving a federal judge is a felony.

Most disturbing is the fact that Steele reportedly received information from friends of Hillary Clinton. (supposedly, Sidney Blumenthal and others) Here’s one suggestive tidbit that appeared in the Graham-Grassley” referral:

“…Mr. Steele’s memorandum states that his company “received this report from REDACTED US State Department,” that the report was the second in a series, and that the report was information that came from a foreign sub-source who “is in touch with REDACTED, a contact of REDACTED, a friend of the Clintons, who passed it to REDACTED.”

It is troubling enough that the Clinton campaign funded Mr. Steele’s work, but that these Clinton associates were contemporaneously feeding Mr. Steele allegations raises additional concerns about his credibility.” (Lifted from The Federalist)

What are we to make of this? Was Steele shaping the dossier’s narrative to the specifications of his employers? Was he being coached by members of the Hillary team? How did that impact the contents of the dossier and the subsequent Russia investigation?

These are just a few of the questions Steele will undoubtedly be asked if he ever faces prosecution for lying to the FBI. But, so far, we know very little about man except that he was a former M16 agent who was paid $160,000 for composing the dubious set of reports that make up the dossier. We don’t even know if Steele’s alleged contacts or intermediaries in Russia actually exist or not. Some analysts think the whole thing is a fabrication based on the fact that he hasn’t worked the Russia-scene since the FSB (The Russian state-security organization that replaced the KGB) was completely overhauled. Besides, it would be extremely dangerous for a Russian to provide an M16 agent with sensitive intelligence. And what would the contact get in return? According to most accounts, Steele’s sources weren’t even paid, so there was little incentive for them to put themselves at risk? All of this casts more doubt on the contents of the dossier.

What is known about Steele is that he has a very active imagination and knows how to command a six-figure payoff for his unique services. We also know that the FBI continued to use him long after they knew he couldn’t be trusted which suggests that he served some other purpose, like providing the agency with plausible deniability, a ‘get out of jail free’ card if they ever got caught surveilling US citizens without probable cause.

But that brings us to the strange case of Carter Page, a bit-player whose role in the Trump campaign was trivial at best. Page was what most people would call a “small fish”, an insignificant foreign policy advisor who had minimal impact on the campaign. Congressional investigators, like Nunes, must be wondering why the FBI and DOJ devoted so much attention to someone like Page instead of going after the “big fish” like Bannon, Flynn, Kushner, Ivanka and Trump Jr., all of whom might have been able to provide damaging information on the real target, Donald Trump. Wasn’t that the idea? So why waste time on Page? It doesn’t make any sense, unless, of course, the others were already being surveilled by other agencies? Is that it, did the NSA and the CIA have a hand in the surveillance too?

It’s a moot point, isn’t it? Because now that there’s evidence that senior-level officials at the DOJ and the FBI were involved in improperly obtaining warrants to spy on members of the opposite party, the investigation is going to go wherever it goes. Whatever restrictions existed before, will now be lifted. For example, this popped up in Saturday’s The Hill:

“House Intelligence Committee lawmakers are in the dark about an investigation into wrongdoing at the State Department announced by Chairman Devin Nunes (R-Calif.) on Friday. …Nunes told Fox News on Friday that, “we are in the middle of what I call phase two of our investigation. That investigation is ongoing and we continue work toward finding answers and asking the right questions to try to get to the bottom of what exactly the State Department was up to in terms of this Russia investigation.”…

Since then, GOP lawmakers have been quietly buzzing about allegations that an Obama-era State Department official passed along information from allies of former Secretary of State Hillary Clinton that may have been used by the FBI to launch an investigation into whether the Trump campaign had improper contacts with Russia.

“I’m pretty troubled by what I read in the documents with respect to the role the State Department played in the fall of 2016, including information that was used in a court proceeding. I am troubled by it,” Gowdy told Fox News on Tuesday.” (“Lawmakers in dark about ‘phase two’ of Nunes investigation”, The Hill)

So the State Department is next in line followed by the NSA and, finally, the Russia-gate point of origin, John Brennan’s CIA. Here’s more background on that from Stephen Cohen’s illuminating article at The Nation:

“….when, and by whom, was this Intel operation against Trump started?

In testimony to the House Intelligence Committee in May 2017, John Brennan, formerly Obama’s head of the CIA, strongly suggested that he and his agency were the first, as The Washington Post put it at the time, “in triggering an FBI probe.” Certainly both the Post and The New York Times interpreted his remarks in this way. Equally certain, Brennan played a central role in promoting the Russiagate narrative thereafter, briefing members of Congress privately and giving President Obama himself a top-secret envelope in early August 2016 that almost certainly contained Steele’s dossier. Early on, Brennan presumably would have shared his “suspicions” and initiatives with James Clapper, director of national intelligence. FBI Director Comey… may have joined them actively somewhat later….

When did Brennan begin his “investigation” of Trump? His House testimony leaves this somewhat unclear, but, according to a subsequent Guardian article, by late 2015 or early 2016 he was receiving, or soliciting, reports from foreign intelligence agencies regarding “suspicious ‘interactions’ between figures connected to Trump and known or suspected Russian agents.”

In short, if these reports and Brennan’s own testimony are to be believed, he, not the FBI, was the instigator and godfather of Russiagate.” (“Russiagate or Intelgate?”, Stephen Cohen, The Nation)

Regular readers of this column know that we have always believed that the Russiagate psyops originated with Brennan. Just as the CIA launched its disinformation campaigns against Saddam Hussein and Muammar Gadhafi, so too, Russia has emerged as Washington’s foremost rival requiring a massive propaganda campaign to persuade the public that America faces a serious external threat. In any event, the demonizing of Russia had already begun by the time Hillary and Co. decided to hop on the bandwagon by blaming Moscow for hacking John Podesta’s emails. The allegations were never persuasive, but they did provide Brennan with some cover for the massive Information Operation (IO) that began with him.

According to the Washington Times:

“It was then-CIA Director John O. Brennan, a close confidant of Mr. Obama’s, who provided the information — what he termed the “basis” — for the FBI to start the counterintelligence investigation last summer….Mr. Brennan told the House Intelligence Committee on May 23 that the intelligence community was picking up tidbits on Trump associates making contacts with Russians.”

It all started with Brennan. After Putin blocked Brennan’s operations in both Ukraine and Syria, Brennan had every reason to retaliate and to use the tools at his disposal to demonize Putin and try to isolate Russia. The “election meddling” charges (promoted by the Hillary people) fit perfectly with Brennan’s overall strategy to manipulate perceptions and prepare the country for an eventual confrontation. It provided him the opportunity to kill two birds with one stone, to deliver a withering blow to Putin and Trump at the very same time. The temptation must have been irresistible.

But now the plan has backfired and the investigations are gaining pace. Trump’s allies in the House smell the blood in the water and they want answers. Did the CIA surveil members of the Trump campaign on the basis of information they gathered in the dossier? Who saw the information? Was the information passed along to members of the press and other government agencies? Was the White House involved? What role did Obama play? What about the Intelligence Community Assessment? Was it based on the contents of the Steele report? Will the “hand-picked” analysts who worked on the report vouch for its conclusions in or were they coached about what to write? How did Brennan persuade the reluctant Comey into opening a counterintelligence investigation on members in the Trump campaign when he knew it would be perceived as a partisan attempt to sabotage the elections by giving Hillary an edge?

Soon the investigative crosshairs will settle on Brennan. He’d better have the right answers.