US Navy Could Abandon Major Israeli Port After Chinese Firms Begin Operations

The US and Chinese navies may find themselves unlikely neighbors in the Mediterranean as Israel’s partnership with Beijing on constructing sea ports at two sites where the US 6th Fleet deploys is set to begin, which is raising eyebrows in Washington and could ultimately result in the Navy abandoning a key Israeli port altogether

The US Navy has acknowledged that its longstanding operations in Haifa may change once a Chinese firm takes over the civilian port in 2021, prompting Israel’s national security cabinet to revisit the arrangement, The Jerusalem Post has learned.

Currently the Shanghai International Port Group (SIPG) is set to manage Israel’s largest port at Haifa as part of a contract to be inagurated in 2021, which will run for 25 years, and a separate Chinese firm was recently awarded a contract to construct a new port in the southern Israeli city of Ashdod, next to Israel’s main naval base near Tel Aviv. Both deals are what both Washington officials and some Israeli generals have expressed deep concerns about of late, with the latter multi-billion dollar contract having been awarded to China Harbor Engineering, one of China’s biggest government-owned enterprises.

Israel’s seaports are routinely used by the US Navy, via Newsweek

For example in September Israeli Brigadier General Shaul Horev, who had previously served as navy chief of staff and chairman of the Atomic Energy Commission, loudly questioned the move in Israeli press, saying “When China acquires ports it does so under the guise of maintaining a trade route from the Indian Ocean via the Suez Canal to Europe, such as the port of Piraeus in Greece. Does an economic horizon like this have a security impact?” 

And Israel Haaretz media recently reported of the growing controversy, “The civilian [Chinese] port in Haifa abuts the exit route from the adjacent [Israeli] navy base, where the Israeli submarine fleet is stationed and which, according to foreign media reports, maintains a second-strike capability to launch nuclear missiles.” Haaretz questioned further in an op-ed titled Israel Is Giving China the Keys to Its Largest Port – and the U.S. Navy May Abandon Israel, “No one in Israel thought about the strategic ramifications.”

America’s Middle East theater and Mediterranean vessels routinely make port calls in Haifa — the most recent being the Arleigh Burke-class guided-missile destroyer USS Ross’ Oct. 25 stop while supporting 6th Fleet headquarters operations based in in Naples, Italy.

Late last summer Israeli military officials who’ve been increasingly uncomfortable with Chinese economic expansion into Israel hosted a security conference with American military analysts. According to Israel’s Haaretz

The Haifa conference was held in conjunction with the conservative Washington-based Hudson Institute. Several of the American participants were former senior Pentagon and navy personnel. The remarks of the senior figure Horev quoted were sharper than the polite tone he used. The Americans who were at the conference think Israel lost its mind when it gave the Chinese the keys to Haifa Port. Once China is in the picture, they said, the Israel Navy will not be able to count on maintaining the close relations it has had with the Sixth Fleet.

Following the conference Arthur Herman, senior fellow at the Washington-based Hudson Institute think tank, noted the astronomical cost of the project, and the importance to Beijing for it’s vaunted Belt and Road Initiative. “At $3 billion, this is one of the biggest overseas investment projects in Israel, ever, and also one of the biggest for the Chinese company, China Harbor Engineering,” he wrote. “Ashdod on the Mediterranean coast is the destination of fully 90 percent of Israel’s international maritime traffic,” Herman continued.

Prior 2013 meeting between Chinese President Xi Jinping and Israeli Prime Minister Benjamin Netanyahu, via Getty

Critics have also noted that Israel’s Transportation Ministry and the Ports Authority went forward with construction of the Chinese ports at Haifa and Ashdod “with zero involvement of the [Israeli] National Security Council and without the [Israeli] navy,” according to Haaretz.

And an Economist magazine report from October called attention to an issue that Israel’s civilian leadership appears aloof to address: “The first [concern] is over Chinese control of strategic infrastructure and the possibility of espionage,” given that “Israeli submarines, widely reported to be capable of launching nuclear missiles, are docked there [at Haifa]. Yet the deal with the Chinese firm was never discussed by the cabinet or the national security council, a situation one [Israeli] minister described as astonishing,” the Economist said.

* * *

All of this should also worry Israeli leaders considering China’s increased ties with Iran and refusal to abide by White House sanctions on Tehran and Trump’s demand that countries should stop importing Iran’s oil. 

China had jumped at the opportunity to be a prime mover in Iran’s economy since international sanctions were lifted in January 2016 as part of the 2015 nuclear deal brokered by the United Kingdom, United States, France, Russia, China, and Germany, but which the Trump White House pulled the US out of last May. 

Relations between China and Iran began to thaw from the moment Chinese President Xi Jinping took office in 2012, and by January 2016 – at the moment sanctions were lifted – Xi visited Tehran, meeting with Supreme Leader Ali Khamenei and President Hassan Rouhani – which marked the first time a Chinese president visited Iran in 14 years. Critics of the Chinese takeover of Haifa port say this will grow increasingly awkward for Tel Aviv, which has an official position that Iran seeks to wipe Israel off the map. 

Israeli submarine at Haifa port, via AFP

Iran’s President Rouhani and Xi have since the Israel-China Haifa port deal signed agreements related to the Belt and Road. This included 17 multi-billion-dollar deals covering areas of energy, finance, communications, banking, culture, science, technology, and politics, with a further ten year road map of broader China-Iran cooperation. In total this could see trillions pumped into the Iranian economy over the coming decades while physically connecting China with Europe and Africa on an infrastructural level and in an expanding trade relationship.

Yet China-Israel relations seem warm as ever considering in October Prime Minister Netanyahu hosted China’s Vice President Wang Qishan along with Jack Ma, CEO and founder of the e-commerce giant Alibaba, in Jerusalem, after which the Israeli PM commented the summit “reflects the growing ties between our countries, our economies, our peoples.” And followed Netanyahu’s 2017 trip to Beijing where he met with Chinese President Xi Jinping.

And this all brings back a key question: if China is to play a crucial lifeline for Iran as it attempts to survive aggressive US sanctions, and if Israel is growing economically closer to China, won’t such an alignment be dangerous to Israel’s long term security and its tied-at-the-hip relations to Washington?

Or perhaps trade and free markets will produce the opposite effect: soften tensions, turn nations away from war and toward pragmatism, and bring greater regional stability.  

Did Trump Put The Deep State On Notice With Syrian Withdrawal?

Authored by Robert Bridge via The Strategic Culture Foundation,

The reason so many people continue to misread the actions of US President Donald Trump is because they tend to confuse him with the actions and behaviors of past US administrations, where indiscriminate death and destruction was America’s calling card around a shell-shocked planet. Although certainly erratic in his actions, Trump thus far has been predictable on one score: keeping the powers-that-be guessing.

Last week, Donald Trump, acting unilaterally and within full power as Commander-in-Chief, derailed the Deep State’s plans for yet another disastrous regime change operation, announcing the withdrawal of US troops from Syria.

In a video released via Twitter, the American leader announced that, “We have won against ISIS…and it’s time for our troops to come home.”

In the not-so-distant past, such an announcement would have been greeted with cheers since it is generally agreed that war is – at least for those doing the grunt work – a very unpleasant enterprise. But the times have changed, together with the national agenda, and instead of applause filling the airwaves, the American people can hear nothing but the screeching of incensed hawks on both sides of the political aisle. That screeching is the sound of the Deep State expressing its deep displeasure and even pain.

Trump withdrawing US troops from Syria strongly suggests that the real estate magnate from Manhattan just might be the real deal, a rabble-rousing populist delivered to the White House by an army of voters across an angry and divided country that are tired of traveling snake-oil salesmen deceiving them with empty promises.

Is Trump the real deal?

There are two schools of thought on Donald J. Trump.

The first says that he is just another typical politician beholden to the puppet masters of the Establishment, dutifully carrying out orders from above, albeit with a bit more bluff and bluster than past frauds. After all, the argument goes, there is no possible way any individual could reach the Oval Office without the full support of the establishment – media, military, intelligence, etc.

Although that position has some merit, it underestimates the full extent of the desperation that has been gnawing away at the American heartland for many years. Such sentiments peaked out after it became painfully apparent that Trump’s predecessor Barack Obama, despite all the sweet talk of ‘hope and change,’ was no different from the others, and in many cases even worse.

At the same time, it overestimates the ability of the deep state to control every aspect of the political process. This explains why Russia was dragged into the picture – the Deep State needed to provide some sort of alibi as to how Hillary Clinton lost the 2016 election, as well as provide an 11 time-zone smokescreen to conceal her myriad wrongdoings.

The other school of thought says that Trump is the real deal, one of those rare, irresistible forces of political nature who, by sheer exertion of will, character and – dare I say it – genius, ascends the misty mountaintops despite, or because of, the powerful forces aligned against him. In other words, the Trump phenomenon is an open window of opportunity to salvage what is left of the American political system, and the elite, fully aware as to what is at stake, is doing everything to destroy it.

The reason for belonging to the second camp of thought is twofold.

First, if Trump truly were just another political cutout in the Republican-Democrat, two-party dichotomy, the mainstream media would not be so fiercely committed to destroying this man and everything he stands for. It’s no exaggeration to say that never before in US history has a political leader attracted so much vitriolic, spleen-bursting venom from the so-called Fourth Estate, itself just another compromised arm of the deep state. Not only is he vilified 24/7 in nearly every mainstream media outlet, with Fox News as perhaps the only major exception, the attacks continue when the sun goes down and the merchants of late-night ‘comedy’ take over, spinning their tired anti-Trump ‘jokes’ night after shameless night. When has comedy in America ever been so mean-spirited? The same could be said of Hollywood, where the award ceremonies have turned into marathon hate rallies. Meanwhile, even across the pond in Britain the anti-Trump crusade continues, which seems rather odd given that a foreign country would be expected to present a more balanced version of reality. This concerted attack on one individual suggests something more than hate and loathing; it has the smell of palpable fear.

Another reason to believe that Trump is the real deal is because if he were just another political stooge, doing the bidding of special interests, then certainly we’d have been at war by now. It is easy to forget since the media never mentions it, but America has not experienced such a dry spell in full-blown military action like this for many years, since Barack and Hillary destroyed the most developed country in Africa and called it a peace.

And who could forget how giddy the establishment became last year when Trump gave them their first taste of bloodshed with a limited missile strike on Syria? Hopeful of a military conflict, neo-Liberal wolves in sheep clothing, like CNN analyst Fareed Zakaria who declared that “Trump became president last night” following the unauthorized strike on the sovereign state. MSNBC anchor Brian Williams, not to be outdone, referred to the “beauty” of the nighttime airstrike three times in 30 seconds.

Today, the ‘peace-loving’ Liberals have once again betrayed their true colors, not to mention masters, by rebuking Trump for having the audacity to bring our troops home from a warzone.

Does all of this mean that Trump – who may have been compelled to withdraw from Syria as an act of vengeance against the Deep State for not only pursuing him with ‘Russiagate’ for the last two years, but for refusing to fund his Mexican Wall – will continue to endorse non-military solutions to global problems? Not at all. In fact, we may actually live to see more militaristic mayhem under this president than from his predecessors.

Already, the situation between Ukraine and Russia, for example, where Kiev is deliberately provoking Moscow, looks ripe for some sort of escalation of events that could trigger a chain reaction of unfathomable consequences.

Whatever the case may be, one thing looks certain right now, and that is Trump’s newfound desire to unilaterally call the shots in his presidency. The Deep State must now be rightly wondering what Trump could do next: order the US military to build his wall on the Mexico border? Initiate indictments against the Clinton Foundation over “pay to play” allegations, among other things? Shut down the Federal Reserve and bring back the US Treasury to print America’s money supply, as called for in the US Constitution? Everything is now on the table as far as Trump’s options go, and that must certainly be of no small concern to the powers-that-be in Washington DC.

China Showcases New Combat Drone; Can Fly 35 Hours Straight While Armed To The Teeth

China has rolled out its latest combat drone for its first public flight, after Beijing released footage of the Wing Loong I-D combat unmanned aerial vehicle (UAV), which can carry over 10 different types of weapons (up to 881 lbs) and operate up to 35 continuous hours without refueling.

It is China’s first all-composite unmanned aerial vehicle, which Beijing plans to sell to customers worldwide, according to Sina news. 

the Pterosaur-1D is basically compatible with most of the pterosaur-1/2 weapons, including the BA-7 air-to-ground missile, the YZ-212 laser-guided bomb, the YZ-102A killing bomb and the 50 kg LS-. 6 miniature guided bombs –Sina (translated)

One of the missiles is China’s BA-7, or Blue Arrow-7 laser guided munition, reported to be one of the most powerful anti-tank missiles in the world according to Chinese media. According to military blog QQ.com, the BA-7 can destroy tanks with armor as thick as 1.4 meters (55″) from nearly 23,000 feet away. 

The UAV can also carry the YZ-102A anti-personnel bomb, YZ-212 laser-guided bomb and a 50kg LS-6 mini guided bomb according to Sina. 

According to Sina, the Wing Loong I-D has a wider wing span of 17.5 metres (57.4 feet), compared to Wing Loong I’s 14 metres (45.9 feet). In addition, it can carry an external load of up to 400 kilograms (881 pounds), compared to Wing Loong I’s 100 kilograms (220 pounds).

Wing Loong I-D completed its maiden flight at an airport in western China yesterday. 

According to CGTN, which released the video of the flight, Wing Loong I-D flew for about 30 minutes before landing smoothly. –Daily Mail

The Wing Loong’s sister aircraft – the Wing Loong II stealth bomber, can be equipped with laser-guided missiles which can destroy targets from 25 miles away, has a top speed of 230 miles an hour, and can fly as high as 30,000 feet according to an earlier report by Xinhua News Agency. It was designed as an answer to the US-deployed MQ-9 reaper. 

For comparison, the General Atomics MQ1-Predator drone has an endurance of 24 hours, a top altitude of 25,000 ft., and can carry three types of missiles (AGM-114 Hellfire, AIM-92 Stinger and AGM-175 Griffin air-to-surface).

General Atomics MQ-1 Predator

The “deadlier” MQ-9 Reaper (sometimes referred to as the “Predator B”) can fly as high as 50,000 feet – more than double that of China’s new drone, and has 7 hardpoints which can accept over 3,000 lbs of armaments. 

General Atomics MQ-9 Reaper

Just wait till these things get AI…

The World According To The “Adults In The Room” – A Year Of Forever War In Review

Authored by US Army Major Danny Sjursen via TomDispatch.com,

Leave it to liberals to pin their hopes on the oddest things. In particular, they seemed to find post-Trump solace in the strange combination of the two-year-old Mueller investigation and the good judgment of certain Trump appointees, the proverbial “adults in the room.” Remember that crew? It once included Secretary of State Rex Tillerson, the former ExxonMobil CEO, and a trio of active and retired generals — so much for civilian control of the military — including Secretary of Defense Jim Mattis, National Security Advisor H.R. McMaster, and White House Chief of Staff John Kelly. Until his sudden resignation, Mattis was (just barely) the last man standing. Still, for all these months, many Americans had counted on them to all but save the nation from an unpredictable president. They were the ones supposedly responsible for helming (or perhaps hemming in) the wayward ship of state when it came to foreign and national security policy.

Too bad it was all such a fantasy. As Donald Trump wraps up his second year in the Oval Office, despite sudden moves in Syria and Afghanistan, the United States remains entrenched in a set of military interventions across significant parts of the world. Worse yet, what those adults guided the president toward was yet more bombing, the establishment of yet more bases, and the funding of yet more oversized Pentagon budgets. And here was the truly odd thing: every time The Donald tweeted negatively about any of those wars or uttered an offhand remark in opposition to the warfare state or the Pentagon budget, that triumvirate of generals and good old Rex went to work steering him back onto the well-worn track of Bush-Obama-style forever wars.

All the while, a populace obsessed and distracted by the president’s camera-grabbing persona seemed hardly to notice that this country continued to exist in a state of perpetual war. And here’s the most curious part of all: Trump wasn’t actually elected on an interventionist military platform. Sure, he threw the hawkish wing of his Republican base a few bones: bringing back waterboarding as well as even “worse” forms of torture, bombing “the shit” out of ISIS, and filling Guantánamo with “some bad dudes.” Still, with foreign policy an undercard issue in a domestically focused campaign to “Make America Great Again,” most Trump supporters seemed to have little stomach for endless war in the Greater Middle East — and The Donald knew it.

Common Sense on the Campaign Trail

Despite his coarse language and dubious policy positions, candidate Trump did seem to promise something new in foreign policy. To his credit, he calledthe 2003 Iraq War the “single worst decision ever made” (even if his own shifting position on that invasion was well-documented). He repeatedly tweeted his virulent opposition to continuing the war in Afghanistan and regularly urged President Obama to stay out of Syria. And to the horror of newly minted Cold War liberals, he even suggested a détente with Russia.

Like so much else in his campaign, none of this was from the standard 2016 bullet-point repertoire of seasoned politicians. Sure, Donald Trump lacked the requisite knowledge and ideological coherence usually considered mandatory for serious candidates, but from time to time he did — let’s admit it — offer some tidbits of fresh thinking on foreign policy. However blasphemous that may sound, on certain international issues the guy had a point compared to Hillary, the hawk.

During his presidency, traces of his earthy commonsense still showed up from time to time. In August 2017, for instance, when announcing yet another escalation in the Afghan War, he felt obliged to admit that his original instincthad been to “pull out” of it, adding that he still sympathized with Americans who were “weary of war.”  He sounded like a man anything but confident of his chosen course of action — or at least the one chosen for him by those “adults” of his. Then, last week, he surprised the whole business-as-usual Washington establishment by announcing an imminent withdrawal of U.S. troops from Syria.  Whether he reverses himself, as he’s been apt to do, remains unknown, but here was at least a flash of his campaign-style anti-interventionism.

How, then, to explain the way a seemingly confident candidate had morphed into a hesitant president — until his recent set of decisions to pull troops out of parts of the Greater Middle East — at least on matters of war and peace? Why those nearly two years of bowing to the long-stale foreign policy thinking that had infused the Bush-Obama years, the very thing he had been theoretically running against?

Well, pin it on those adults in the room, especially the three generals. As mid-level and senior officers, they had, after all, cut their teeth on the war on terror. It and it alone defined their careers, their lives, and so their thinking. Long before Donald Trump came along, they and their peer commanders had already been taken hostage by the interventionist military playbook that went with that war and came to define the thinking of their generation. That was how you had to think, in fact, if you wanted to rise in the ranks.

The adults weren’t, for the most part, political partisans. Then again, neither was the militarist playbook they were following. Both Hillary Clinton and Jeb Bush had been selling exactly the same snake oil in 2016. Only Trump — and to some extent Bernie Sanders — had offered a genuine alternative. Nevertheless, the Trump administration sustained that same policy of forever war for almost two full years and the grown-ups in the room were the ones who made it so. Exhibit A was the Greater Middle East.

The Same Old Playbook

While George W. Bush favored a “go-big” option of regime change, massive military occupation, and armed nation-building, Barack Obama preferred expanded drone strikes, increased military advisory missions, and — in the case of Libya — a bit of light regime-changing. In Trump’s first two years in office, the U.S. military seemed to merge aspects of the losing strategies of both of those presidents.

If Trump’s gut instinct was to skip future “dumb” Iraq-style wars, “pull out” of Afghanistan, and avoid regional conflict with Russia, his grown-up advisers pushed him in exactly the opposite direction. They chose instead what might be called the more strategy: more bombing, more troops, more drone strikes, more defense spending, more advisors, more everything. And if a war seemed to be failing anyway, the answer came straight from that very playbook, as in Afghanistan in 2017: a “surge” and the need for yet more time. As a result, America’s longest-ever war grew longer still with no end faintly in sight.

Given such thinking, it’s odd to recall that those adults in the room were, once upon a time, reputed to be outside-the-box thinkers. Secretary Mattis was initially hailed as such an avid reader and devoted student of military history that he was dubbed the “warrior monk.” H.R. McMaster was similarly hailed for having written a book critical of U.S. strategy in Vietnam (though wrong in its conclusions). Both Democrats and Republicans in Washington were similarly convinced that if anyone could bring order to the Trump administration, it would be the ever-responsible John Kelly.

Let’s review, then, the advice that these innovators offered the president in his first two years in office and the results in the Greater Middle East, starting with that presidential urge to pull out of Iraq. You won’t be surprised to learn that U.S. troops are still ensconced there in an ongoing fight against what’s suddenly a growing ISIS insurgency (now that its “caliphate” is no more). Nor has Washington taken any meaningful steps to bolster the legitimacy of the Shia-dominated Baghdad government, which portends an indefinite Sunni-based insurgency of some sort (or sorts) and a possible Kurdish secession.

In Syria, rather than downsize the U.S. military mission in the interest of Trump’s stated wish for détente with Russia and his urge to get the troops out “like very soon,” his administration had more than stayed put. It essentially chose to go with an indefinite American occupation of eastern Syria, including up to 4,000 mainly Special Operations forces backing predominantly Kurdish rebels there. In fact, only recently Mattis and other “senior national security officials” reportedly tried unsuccessfully to talk the president out of his recent tweeted proclamation to end the American role in Syria and withdraw those troops from the country as, it seems, is now happening. In this, he clearly wants to avoid the ongoing risk of war with both Russia and NATO ally Turkey, not to speak of Iran. The Turks continue to threaten to invade the northern Syrian region controlled by those U.S.-backed Kurds, while Russian forces had, alarmingly, exchanged fire with U.S. troops more than once along the Euphrates River buffer zone. The Syrian mission was all risk and no reward, but the adults in the room continued to work feverishly to convince the president that to pull out might create a new “safe haven” not just for ISIS but also for the Iranians.

In Afghanistan, whatever Trump’s “instinct” may have been, after many meetings with his “cabinet and generals,” or what he called his “experts,” the president decided on a new escalation, a mini-surge in that then 17-year-old war. To that end, he delegated yet more decision-making to the very generals who were so unsuccessful in previous years and they proceeded to order the dropping of a record number of bombs, including the first-ever use of the largest non-nuclear ordnance in the Air Force arsenal, the so-called Mother of all Bombs. The results were the very opposite of reassuring. Indeed, the U.S. and its Afghan allies may be headed for actual military defeat, as the Taliban controls or contests more districts than ever, while Afghan government casualties have become, in the phrase of an American general, “unsustainable.”

Now, in a rebuke to those very experts and adults, the president will apparently remove half the U.S. troops in Afghanistan. After so many years of fruitless war, this sensible decision raised immediate alarm among the hawks in Congress and in the rest of the Washington national security establishment.  That decision, plus pulling the plug on the Syrian operation, apparently proved to be a red line for the last adult left standing and Jim Mattis promptly resigned in protest.  For the outgoing secretary of defense, it seems that complicity in Saudi war crimes in Yemen and the murder of Washington Post columnist and Saudi citizen Jamal Khashoggi were passing events.  Trump’s willingness to try to end the American role in two failing, dubiously legal quagmires, however, proved to be the general’s breaking point. 

Elsewhere, the Trump team has moved ever closer to a regime-change policy in Iran, especially after the replacement of Tillerson and McMaster by the particularly Iranophobic duo of Mike Pompeo and John Bolton as secretary of state and national security advisor. Still, don’t blame any looming Iran disaster on them. Washington had unilaterally pulled out of the Obama-negotiated nuclear deal with that country well before they arrived on the scene. While the grown-ups might not have been quite as amenable to war with Iran as Bolton and Pompeo, they couldn’t countenance détente for even a second.

And, of course, all those adults in the room supported U.S. complicity in the Saudi-led terror bombing and starvation of Yemen, the poorest Arab country. They also favored sustained ties with Saudi Arabia and its increasingly brutal crown prince, Mohammed bin Salman. Indeed, despite the recent murder and dismemberment of Washington Post columnist and Saudi citizen Jamal Khashoggi in that country’s embassy in Istanbul, Turkey, and the Senate’s increasing disenchantment with the war in Yemen, Mattis remained a vocal supporter of the Saudis. Just before the Senate recently voted to pull U.S. military assistance for the Saudi war, he joined Pompeo in urging that chamber not to abandon Riyadh. In addition, key senators called Mattis’s testimony “misleading” because he “downplayed” the Saudi crown prince’s role in the murder, ignoring the conclusion of the CIA that the prince was indeed “complicit” in it.

So when it comes to outside-the-box thinking about the Greater Middle East almost two years into the president’s first term, the U.S. remains ensconced in a series of distinctly inside-the-box and unwinnable wars across the region.  Trump, however, now appears ready to change course, at least in Syria and Afghanistan, perhaps out of frustration with the ever-so-conventional mess the adults left him in. 

A Militarized Planet

Elsewhere, matters are hardly more encouraging. At a global level, the grown-ups have neither tempered the president’s more bizarre policies nor offered a humbler, more modest military approach themselves. The result, as the country enters 2019, is an increasingly militarized planet. Mattis’s ownNational Defense Strategy (NDS), released in January 2018, represents a blatant giveaway to the domestic arms industry, envisioning as it does a world eternally on the brink of Great Power war.

On that planet of the adults, the U.S. must now prepare for threats across every square inch of the globe. Far from the military de-escalation hinted at by candidate Trump (and suggested again in a recent tweet of his), Mattis’s “2-2-1 policy” has the Pentagon ramping up for potential fights with two “big” adversaries (China and Russia), two “medium” opponents (Iran and North Korea), and one “sustained” challenge (conflicts and terrorism across the Greater Middle East). Few have asked whether such a strategy is faintly sustainable, even with a military budget that dwarfs that of any other power on the planet.

In fact, the implementation of that NDS vision is clearly leading to a new arms race and a burgeoning Cold War 2.0. Washington is already engaged in a spiraling trade war with Beijing and has announced plans to pull out of a key Cold War nuclear treaty with Russia, while developing a new group of treaty-busting intermediate range nuclear missiles itself. In addition, at the insistence of his military advisers, the president has agreed to back an Obama-era “modernization” program for the U.S. nuclear arsenal now estimated to cost at least $1.6 trillion over the next three decades.

So much for a Republican insistence on balanced budgets and decreased deficits. Furthermore, climate-change denial remains the name of the game in the Trump administration and, in this singular case, the adults in the room could do nothing about it. Despite earlier Pentagon reports that concluded man-made climate change presents a national security threat to the country, the Trump administration has ignored such claims. It has even insisted upon substituting the term “extreme weather” for “climate change” in current defense reports. Here, the grown-ups do indeed know better — the military has long been focused on the dangers of climate change — but have dismally failed to temper the president’s anti-science policies.

So, as 2018 comes to a close, thanks to the worldview of those grown-ups and the pliability of Trump’s own ideology (except when it comes to climate change), Washington’s empire of bases, its never-ending war on terror, and its blank-check spending on the military-industrial complex were more firmly entrenched than ever.  It will fall to the president — if indeed he proves to be serious when it comes to a course change — to begin the long work of (modestly) undoing a planet of war.

The Last Adult?

Looking toward 2019 in a world on edge, here are a couple of thoughts on our future. Expect that Robert Mueller’s future report will find many things to focus on, including plenty of collusion with women, but — whatever the Russians did and whatever the desires of those around candidate Trump may have been — no actual collusion of substance with Moscow in election 2016. That will undoubtedly break the hearts of liberals everywhere and ensure — despite the best efforts of a new Democratic House — a full Trump term (or two!). Furthermore, whatever “blue-wave” Democrats do domestically, they are unlikely to present a coherent, alternative foreign-policy vision. Instead, prepare to watch them cede that territory (as always) to Trump and the Republicans. Meanwhile, at least until 2021, they will continue to lament the absence of those “adults in the room” and their supposed ability to preserve a respectable foreign policy, which, of course, would have meant war all the way to the bank.

Maybe it’s time to start thinking of those adults as the tools (and often enough the future employees) of a military-industrial-congressional complex that feeds Americans ample servings of endless war, year after year, decade after decade. In truth, in this century presidents change but the failing policies haven’t.

Call it the deep state, the swamp, or whatever you like, but bottom line: during Trump’s first two years in office, there wasn’t, until now, any serious rethinking of American foreign and military policy, not in terms of peaceableness anyway. Trump’s original adults in the room set the table for endless war. Their replacements clearly intended to devour plentiful helpings of the same dishes. Make no mistake, if it were up to those adults, the United States would be ringing in this New Year with yet another copious serving of militarism.  It still may.

I must admit that I find myself in a lonely spot as 2018 ends. I’ve been serving in the U.S. Army during this period, while dissenting from prevailing foreign policy. After spending 18 years in uniform, including tours of duty in both the Afghan and the Iraq wars, and observing a slew of retired generals and policymakers who oversaw those very wars champion yet more (failed) conventional thinking, forgive me for wondering, from time to time, if I weren’t the last true adult in the room.

The Richest People In The World Lost More Than $550 Billion In 2018

Like the old saying goes: What goes up must come down. And just as the fortunes of the world’s wealthiest swelled during the post-crisis era as QE and ZIRP bolstered asset prices, now that trend has been thrown into reverse thanks to the turbulence in global markets during the second half of the year.

According to Bloomberg, even the world’s richest individuals failed to find respite from a global market meltdown that has rendered 2018 the “worst year for markets on record.”

DB

Bloomberg’s Billionaires Index showed that the 500 richest people in the world had a combined $4.7 trllion in wealth as of Friday’s close, some $511 billion less than they had at the beginning of the year. With one week left to trade this year, 2018 is set to become the second year since the list was created in 2012 that the world’s wealthiest have seen their wealth decline.

Coaster

At their peak, soaring markets drove the aggregate wealth of the world’s wealthiest above $5.6 trillion before the downturn began shortly after the Federal Reserve raised interest rates for the third time this year back in September.

“As of late, investor anxiety has run high,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management. “We do not expect a recession, but we are mindful of the downside risks to global growth.”

Even Amazon founder and CEO Jeff Bezos, who saw his fortune swell to $168 billion earlier this year, has watched it fall more than $50 billion from the highs as FANG stocks have lead the market lower.

Even Jeff Bezos, who recorded the biggest gain for 2018, wasn’t spared the volatility. His fortune peaked at $168 billion in September, a $69 billion gain. It later tumbled $53 billion – more than the market value of Delta Air Lines Inc. or Ford Motor Co. – to leave him with $115 billion at year-end.

But Bezos’ losses were mild compared with Mark Zuckerberg, whose net worth took the biggest hit among the world’s tech titans.

Zuck

The Amazon.com Inc. founder had a better year than Mark Zuckerberg, who recorded the biggest loss since January, dropping $23 billion as Facebook Inc. careened from crisis to crisis. Overall, the 173 U.S. billionaires on the list — the largest cohort — lost 5.9 percent from their fortunes to leave them with $1.9 trillion.

Billionaires in Asia lost a combined $144 billion…

Even Asia’s fabled wealth-creation machine stumbled as the region’s 128 billionaires lost a combined $144 billion in 2018. The three biggest losers in Asia all hailed from China, led by Wanda Group’s Wang Jianlin, whose fortune declined $11.1 billion.

Despite the turmoil, Asia continued to mint new members of the three-comma club. The Bloomberg index uncovered 39 new members from the region in 2018, although that status proved short-lived for some. About 40 percent had lost their 10-figure status as of Dec. 7.

…While billionaires in Europe also saw their fortunes decline.

From Zara founder Amancio Ortega to former Italian Prime Minister Silvio Berlusconi, most of Europe’s billionaires saw their fortunes fall. Germany’s Schaeffler family, the majority shareholders of car-parts maker Continental AG, lost the most as extra costs and tough business conditions in Europe and Asia hampered the company’s performance.

Georg Schaeffler and his mother Maria-Elisabeth Schaeffler-Thumann are $17 billion worse off than at the start of the year. That sum alone would place them among the world’s 100 richest people.

Mexico’s Carlos Slim, the majority shareholder of Latin America’s largest mobile-phone operator, also suffered big losses. Once the world’s richest person, Slim now ranks sixth with a $54 billion pile. 3G Capital co-founder Jorge Paulo Lemann saw his fortune drop the most among Latin American billionaires, losing $9.8 billion. But even with that fall, he remains Brazil’s richest person.

Russian fortunes on average fared better. The volatility caused by collapsing oil prices, a flare-up in tensions with Ukraine and tightening sanctions was partially offset by periodic gains. The combined net worth of the country’s 25 wealthiest people was down only slightly, ending at $255 billion, according to the ranking.

One outlier, though, was Russia, where billionaires fared better than elsewhere in the world (though only slightly).

Russian fortunes on average fared better. The volatility caused by collapsing oil prices, a flare-up in tensions with Ukraine and tightening sanctions was partially offset by periodic gains. The combined net worth of the country’s 25 wealthiest people was down only slightly, ending at $255 billion, according to the ranking.

Still, 16 of the 25 Russian billionaires on the Bloomberg index saw their net worth fall in 2018. Aluminum magnate Oleg Deripaska, who remains under U.S. sanctions, lost the most — $5.7 billion — and dropped out the Bloomberg ranking of the world’s top 500 richest people.

By contrast, energy moguls Leonid Mikhelson, Gennady Timchenko and Vagit Alekperov added a total of $9 billion. Timchenko, sanctioned in 2014, added 27 percent to his net worth as shares of gas producer Novatek rose 40 percent.

And if the co-CIO of the world’s largest hedge fund is right, the aggregate net worth of the world’s richest and most powerful individuas could be on track to worsen next year, which would, in our view, only ratchet up pressure on central banks to do whatever it takes to spare the global elite any more discomfort.

Japan Gives Up On Inflation, Now Wants Deflation (Sort Of) To Offset Tax Hikes

Authored by Mike Shedlock via MishTalk,

Today seems straight from the Twilight Zone: First the PPT and now Abenomics in full reverse.

Please consider Japan Finally Concedes Its Crazy Low Prices Can’t Be Beat.

Japan has virtually given up on reaching 2% inflation after nearly six years of trying. An argument gaining ground in Tokyo holds that the inflation goal, once seen as paramount, doesn’t matter so much after all. Inflation excluding volatile fresh food and energy prices was just 0.3% in November, and it has barely budged all year.

Mr. Abe has largely stopped discussing the dangers of deflation, and his government is actually trying to push some prices down ahead of a tax increase set to take effect in October 2019. Mr. Abe’s de facto No. 2, Chief Cabinet Secretary Yoshihide Suga, has called on mobile-phone carriers to lower fees by about 40%—a move that could knock a full percentage point off inflation, according to government estimates.

“There is no change to our stance of seeking the 2% price goal as soon as possible by patiently continuing powerful easing,” Mr. Kuroda said at a November press conference. At the same time, he has started talking more about the potential downsides of aggressive monetary easing,

Still, BOJ officials are hesitant to abandon the target altogether out of fear it could damage expectations and push the country back into deflation, said people familiar with the BOJ’s thinking.

Raising Prices

Torikizoku (Chicken Nobility), raised prices for the first time in 30 years last year, by the equivalent of 16 cents.

“Once prices went up, it wasn’t just the chickens that got skewered. Same-store sales at the chain have fallen more than 5% every month since May and profit fell 76% compared with a year earlier in the most recent quarter.”

Abe now wants mobile-phone carriers to lower fees by about 40%, a move that could knock a full percentage point off inflation, so it can raise taxes.

Price Stability

The BOJ does not officially want to abandon its inflation target. And BOJ predecessor, Masaaki Shirakawa saysWhat is more important is…to aim for sustainable price stability in the medium to long term.

Japan is the one nation that seems to have a modicum of price stability. It doesn’t want it. Heck, it does not even seem to know it has some stability.

The Fed defines stability as prices forever rising.

This is all straight from the Twilight Zone.

What’s Coming?

I do suspect that at some point these sorts of financial shenanigans will “succeed” beyond Japan’s wildest expectations with Japan intervening to stop massive inflation.

All it will take is an attitude changes that’s arguably long overdue.

For discussion, please see Japan’s Red Queen Race.

They Aren’t BTFD: S&P Futures Slide In Early Illiquid Trading

On Christmas Day, president Trump had a simple message for Americans: BTFD. They chose to sell instead.

As we noted earlier, in a presser following his address to U.S. armed forces members on a Christmas Day video conference call, Trump told reporters “we have companies, the greatest in the world, and they’re doing really well. They have record kinds of numbers. So I think it’s a tremendous opportunity to buy. Really a great opportunity to buy.

Alas, following the historic Christmas Eve rout which saw the S&P plunge the most ever on the shortened pre-Christmas session, Americans are clearly not seeing the market as a “tremendous opportunity to buy” and are instead selling futures with the E-mini sliding off the gate when futures trading resumed at 6pm, down as much as 1.1% and touching a session low of 2,316.75 in an early burst of selling before rebounding in what appears to be a session with absolutely no liquidity.

And while it is safe to say that already record low liquidity is even more abysmal than usual, with the Plunge Protection Team now active, the president himself urging Americans to buy stocks, and with hedge funds desperate for at least a little bounce into the final 4 sessions of the year, if stocks still can’t stage even a tiny relief rally it will be safe to say that the bear market has indeed arrived.