TBR News September 1, 2017

Sep 01 2017

The Voice of the White House

Washington, D.C., September 1, 2017:”There are growing rumors in Washington that a significant number of its prominenten have been known to frequent Ukrainian child pornography sites, downloading material that is strictly forbidden by Federal law. I would not publish any of this but it appears that someone else will. www.juersmilitaria is the site to watch. I like peace and quiet but the proprietor of that site does not.”


Table of Contents

  • ‘Missile Gap’ Redux: Heroic Days of Threat Inflation Aren’t Over
  • Putin warns North Korea situation on verge of ‘large-scale conflict’
  • Petition to declare George Soros ‘terrorist’ and seize his assets gains 70k signatures
  • Israel is getting creative at countering its demographic disadvantage, but it may be too little, too late
  • Why The Shale Oil “Miracle” Is Becoming A “Debacle”
  • New Think Tank Emails Show “How Google Wields its Power” in Washington
  • Who will bear the financial burden for Harvey’s rampage? Not insurance companies.
  • 400,000 deaths in Syria civil war directly attributed to US & allies’
  • Fine Art as a Commodity
  • New York Times distorts reality of Israel’s walls
  • FCC closes virus upload loophole on its website


Missile Gap’ Redux: Heroic Days of Threat Inflation Aren’t Over

Ask who has the most to gain from North Korea hype.

August 30, 2017

by Andrew Cockburn

July 3, 1955 was an exciting day for CIA spooks and U.S. military intelligence officers in Moscow. Eagerly scanning the skies at the annual Tushino Air Show outside the city, at which the secretive Soviet military offered glimpses of their aerial arsenal, they watched 10 huge jet bombers of a previously unseen model roar overhead. After a short interval came another eighteen. That evening, urgent coded messages to Washington detailed the appearance of no less than 28 of these menacing craft, strategic weapons clearly capable of nuclear attacks on the continental U.S. Excited news commentators termed the display “A shock to the complacent; a spur to the alert.” Extrapolating assumptions of Soviet aircraft production rates, intelligence analysts reported that the Soviets would have a force of  no less than 800 Bisons by 1960.

In reality, those initial 10 planes at Tushino had merely flown out of sight and then, joined by eight others, turned and flown back for a repeat performance over the credulous spooks. In any case, the bombers lacked range and were therefore incapable of flying to the U.S. and back. Nikita Khrushchev later recorded that the plane’s designer suggested to him that the bombers could land in Mexico. “What do your think Mexico is—our mother-in-law?” retorted the-then Soviet leader. “You think we can go calling whenever we want?” In the event, very few models of the dreaded Bison were ever produced, and it was shortly dropped from the Soviet inventory.  Nevertheless, it had played a key role in fomenting the infamous “bomber gap,” that bestowed a Niagara of financial largesse on Air Force budgets and contractor balance-sheets until superseded by the even more bountiful (and fraudulent) “missile gap.”  Interestingly, Stanley Kubrick’s 1964 satire “Dr. Strangelove” invoked a “mineshaft gap”, but in the late 1970s there was actually a fierce argument in intelligence circles regarding the possible existence of a “civil defense gap.”

Lest anyone think that the heroic days of threat inflation ended with the Soviet Union, the North Korean missile program provides reassurance on an ongoing basis. Even when tensions recede, official assumptions that North Korea is relentlessly advancing its strategic capabilities persist unchallenged.  This is not a recent phenomenon. The specter of the Korean threat began growing in intensity not long after the old U.S.S.R. disintegrated into ruin. Indeed, the ground had been laid at least as long ago as the early 1980s. According to Chas Freeman, a first-hand observer as deputy chief of mission in Beijing at the time, Paul Wolfowitz, then assistant secretary of state for Asian affairs, sabotaged a 1982 Chinese initiative for a final peace settlement on the Korean peninsula by ensuring that the proposal was not relayed to Washington. When the Chinese made a follow-up enquiry, he suppressed that too. This ensured that the North Koreans’ nuclear and strategic missile ambitions would remain a live issue.

In 1998, Wolfowitz’s future partner in geopolitical crime, Donald Rumsfeld, chaired a Commission to Assess the Ballistic Missile Threat to the United States. (In 1995 the CIA had issued an estimate, unwelcome to neocon defense hawks, that there was no such missile threat to the U.S.) Rumsfeld’s commission duly reported a growing threat from “rogue” nations—Iraq, Iran, and North Korea, armed with ballistic missiles that could reach the United States.  As is so often the case, the North Koreans cooperated by testing a missile, the Taepodong 1, shortly after the report was issued. The test was a failure—the third stage broke up—but few paid attention to such details. The CIA recalled its duty and soon reported that the North Koreans might test an intercontinental missile “at any time.”  Congress celebrated this certification of the threat by passing the National Missile Defense Act, mandating a missile defense shield for the U.S.

By now, North Korea was an officially designated threat, ready to be invoked whenever the need arose. Just prior to the 2003 invasion of Iraq, CIA Director George Tenet testified to congress that “we are on high alert” due to the “proliferation of nuclear and chemical and biological weapons, in particular in Iraq and North Korea.” The Koreans meanwhile obligingly propelled themselves ballistically into the headlines at intervals with further tests of technologically primitive liquid fueled rockets—essentially venerable Scud missiles in various combinations. Even when tensions are ratcheted down in temporary lulls, assumptions of alleged enemy technological prowess persist undisturbed.

As in Cold War times, maximum performance in boosting the threat required the cooperation of complaisant journalists. On August 22, for example, the New York Times ran a multi-bylined article that opened with the forthright declaration that “North Korea is speeding (my emphasis) toward a goal it has sought for decades: The ability to hit a major American city with a nuclear weapon.” The piece highlighted alleged Korean progress in range—supposedly powerful enough to reach the western U.S. (with “Chicago and Denver also potentially in range”)—with guidance, accuracy, and nuclear warhead miniaturization, all couched in a faux-skeptical tone the better to lend weight to the overall alarmist conclusion prefigured in the opening sentence.

The article was prompted by recent tests of the Hwasong-14, the three-stage missile supposedly capable of reaching the continental U.S. with a nuclear warhead on board thanks, according to the Times, to “a powerful new engine.” This turned out to be the RD-250, a liquid-fueled rocket engine developed in the U.S.S.R. in 1965 and covertly acquired by the North Koreans some time after the collapse of the Soviet Union.

The July 28 Hwasong 14 test achieved a height of some 2,700 kilometers, rising almost straight up before plummeting down into the Sea of Japan. A graphic in the Times article effortlessly translated this as proof that the missile, if guided on a shallower trajectory, could have reached the American mid-west. But the test proved no such thing, at least not without knowing accurately the weight of the warhead on the test vehicle, the engine burn rate, and other details that the Koreans have kept to themselves. Invoking a threat to Chicago therefore involves “modeling” the tested missile with the most favorably assumed attributes of power and weight. As it was, the missile could have had an empty warhead, or at least carried nothing equivalent to the bulky dimensions and weight of a half-ton North Korean bomb. Should the North Koreans have mastered the art of miniaturizing their nuclear weapons, the task of targeting the U.S. might be within reach. But there is no evidence that they have done so, apart from a photo—dutifully featured by the Times—of Kim Jong Un inspecting a shiny, basketball-sized globe that might just as easily have been a disco ball.

Large or small, the chances of a Korean warhead surviving re-entry appear to be slim, since Kim’s scientists have apparently failed to develop a warhead that does not break up as it plummets down through the thickening atmosphere. A Hwasong 14 warhead was actually caught by a Japanese TV camera in the moment of disintegration in July, a fact conceded by the Times, although the authors efficiently located a proliferation expert to attest that “Even if it did break up, it may not mean anything.” The Hwasong 12 that overflew Japan in recent days appears to have suffered from the usual re-entry breakup problems.

Could a North Korean warhead that miraculously survived re-entry land anywhere near its target? We have no idea what the test firings are aimed at, so it seems silly to make predictions. The Times suggests that they could be accurate to within “two or three miles”, based on early U.S. ICBM tests. But those were missiles fired over a single, extremely precisely mapped, oft-repeated flightpath from California to the Kwajalein lagoon in the Pacific, with wind, gravitational anomalies, and other pertinent sources of error exactly measured over the entire trajectory. Nor is it sensible to estimate the yield of a Korean bomb, as the Times unblushingly does, based on seismic data measured a very long distance from the test site.  Such data is only usable if we know accurately how deeply the test-bomb has been buried, and therefore how far the shockwave has travelled, and through what kind of rock formations. But the Koreans have once again failed to tell us.

In the world of threat inflation, none of this really matters.  Instead we have the logic of the Marx Brothers. In “Animal Crackers” Chico suggests that a stolen painting might be in the house next door. “Suppose there isn’t any house next door,” says Groucho. “Well,” replies Chico, “then of course, we gotta build one.”


Putin warns North Korea situation on verge of ‘large-scale conflict’

September 1, 2017

by Andrew Osborn, Dmitry Solovyov


MOSCOW (Reuters) – President Vladimir Putin warned on Friday that the standoff between North Korea and the United States was close to spilling into a large-scale conflict and said it was a mistake to try to pressure Pyongyang into halting its nuclear missile program.

Putin, due to attend a summit of the BRICS nations in China next week, said the only way to de-escalate tensions was via talks, and Sergei Lavrov, his foreign minister, said Washington not Pyongyang should take the initiative on that.

“It is essential to resolve the region’s problems through direct dialogue involving all sides without advancing any preconditions (for such talks),” Putin, whose country shares a border with North Korea, wrote on the Kremlin’s web site.

“Provocations, pressure, and bellicose and offensive rhetoric is the road to nowhere.”

The Russian leader, whose nuclear-capable bombers recently overflew the Korean Peninsula in a show of force, said the situation had deteriorated so badly that it was now “balanced on the verge of a large-scale conflict.”

Pyongyang has been working to develop a nuclear-tipped missile capable of hitting the United States and recently threatened to land missiles near the U.S. Pacific territory of Guam.

On Monday, North Korea, which sees joint war games between the United States and South Korea as preparations for invasion, raised the stakes by firing an intermediate-range missile over Japan.

“In Russia’s opinion the calculation that it is possible to halt North Korea’s nuclear missile programs exclusively by putting pressure on Pyongyang is erroneous and futile,” Putin wrote.

A road map formulated by Moscow and Beijing, which would involve North Korea halting its missile program in exchange for the United States and South Korea stopping large-scale war games, was a way to reduce tensions, wrote Putin.

Lavrov, addressing students in Moscow, said he felt events were building towards a war which he said would cause large numbers of casualties in Japan and South Korea if it happened.

“If we want to avoid a war the first step must be taken by the side that is the more intelligent and stronger,” said Lavrov, making clear he was referring to the United States.

He said Russia was working behind the scenes and that Moscow knew that Washington had a back channel to Pyongyang which he said he hoped would allow the two sides to de-escalate.

Editing by Richard Balmforth


Petition to declare George Soros ‘terrorist’ and seize his assets gains 70k signatures

September 1, 2017


In less than a fortnight, more than 70,000 people have signed a petition accusing billionaire investor George Soros of sedition against the US and demanding that he and his affiliates be declared “domestic terrorists” and that his assets be seized.

The petition was initially launched on August 20 by “E.B.” on the White House petitions website and has gained more than 70,500 signatures as of Friday morning. If it reaches the threshold of 100,000 signatures before September 19, the White House will have to provide a formal response.

The creators of the petition on the website ‘We the People’ say that Soros has “willfully” tried to “destabilize and otherwise commit acts of sedition against the United States and its citizens.” To achieve these goals, the author says, “Soros has created multiple organizations with a sole purpose is to apply Alinsky model terrorist tactics to destroy the US government.”

The “Alinsky model” refers to American community organizer and writer Saul Alinsky. In his book ‘Rules for Radicals,’ he outlines 13 rules for political struggle to seize power.

The petition calls on the Department of Justice to “immediately declare George Soros and all of his organizations and staff members to be domestic terrorists, and have all of his personal an organizational wealth and assets seized under Civil Asset Forfeiture law.”

Another recent high-profile petition, which has already exceeded the 100,000-signature threshold by three times, calls on US President Donald Trump to classify the Antifa activist group as a terrorist organization, accusing them of violence at demonstrations and incitement to kill police.

The White House, however, has left almost a dozen petitions unanswered since Donald Trump took office in February, and is considering shutting the service down.

George Soros is a Hungarian-American billionaire with a net worth of $25 billion and 33rd richest man in the world, according to Forbes. The 87-year-old investing heavyweight is behind many organizations and projects, some of which have been the target of criticism for years. His Open Society Foundation, along with USAID and the National Endowment for Democracy, have been accused of fomenting color revolutions to install governments friendly to the US – from Serbia in 2000 to Ukraine in 2014.


Israel is getting creative at countering its demographic disadvantage, but it may be too little, too late

Still, opening the doors to “Jewish” non-Jews is a step too far

August 31, 2017

by Jonathan Cook

The National

Israeli prime minister Benjamin Netanyahu offered a crushing rebuke to the perennial optimists roused to hopes of imminent peace by the visit to the Middle East last week of Donald Trump’s adviser and son-in-law, Jared Kushner. At an event on Monday in the West Bank celebrating the half-centenary of Israeli occupation, Mr Netanyahu effectively admitted that US efforts to revive the peace process would prove another charade.

There would be no dismantling of the settlements or eviction of their 600,000 inhabitants – the minimum requirement for a barely feasible Palestinian state. “We are here to stay forever,” Mr Netanyahu reassured his settler audience. “We will deepen our roots, build, strengthen and settle.”

So where is the Israeli-Palestinian conflict heading if the two-state solution is dead? The answer: back to its origins. That will entail another desperate numbers battle against the Palestinians – with Israel preparing to create new categories of “Jews” so they can be recruited to the fray.

Demography was always at the heart of Israeli policy. During the 1948 war that founded a Jewish state on the ruins of the Palestinian homeland, 750,000 Palestinians were expelled in a campaign that today would be termed ethnic cleansing. By the end, a large native Palestinian majority had been reduced to less than a fifth of the new state’s population. David Ben Gurion, the country’s founding father, was unperturbed. He expected to swamp this rump group with Jews from Europe and the Arab world.

But the project foundered on two miscalculations.

First, Ben Gurion had not factored in the Palestinian minority’s far higher birth rate. Despite waves of Jewish immigrants, Palestinians have held fast, at 20 per cent of Israel’s citizenry. Israel has fought a rearguard battle against them ever since. Studies suggest that the only Israeli affirmative action programme for Palestinian citizens is in family planning.

Israeli demographic scheming was on show again last week. An investigation by the Haaretz newspaper found that in recent years, Israel has stripped of citizenship potentially thousands of Bedouin, the country’s fastest-growing population. Israel claims bureaucratic “errors” were made in registering their parents or grandparents after the state’s founding.

Meanwhile, another Rubicon was crossed last month when an Israeli court approved revoking the citizenship of a Palestinian convicted of a lethal attack on soldiers. Human rights groups fear that, by rendering him stateless, the Israeli right has established a precedent for conditioning citizenship on “loyalty”. Justice minister Ayelet Shaked underlined that very point this week when she warned the country’s judges that they must prioritise demography and the state’s Jewishness over human rights.

The second miscalculation arrived in 1967. In seizing the last fragments of historic Palestine but failing to expel most of the inhabitants, Israel made itself responsible for many hundreds of thousands of additional Palestinians, including refugees from the earlier war. The demographic “demon”, as it is often referred to in Israel, was held at bay only by bogus claims for many decades that the occupation would soon end. In 2005, Israel bought a little more breathing space by “disengaging” from the tiny Gaza enclave and its 1.5 million inhabitants.

Now, in killing hopes of Palestinian statehood, Mr Netanyahu has made public his intention to realise the one settler-state solution. Naftali Bennett, Mr Netanyahu’s chief rival in the government, is itching to ignore international sentiment and begin annexing large parts of the West Bank.

There is a problem, however. At least half the population in Mr Netanyahu’s Greater Israel are Palestinian. And with current birth rates, Jews will soon be an indisputable minority – one ruling over a Palestinian majority.

That is the context for understanding the report of a government panel – leaked last weekend – that proposes a revolutionary reimagining of who counts as a Jew and therefore qualifies to live in Israel (and the occupied territories).

Israel’s 1950 Law of Return already casts the net wide, revising the traditional rabbinical injunction that a Jew must be born to a Jewish mother. Instead, the law entitles anyone with one Jewish grandparent to instant citizenship. That worked fine as long as Jews were fleeing persecution or economic distress. But since the arrival of 1 million immigrants following the fall of the Soviet Union in the early 1990s, the pool of new Jews has dried up.

The United States, even in the Trump era, has proved the bigger magnet. The Jerusalem Post newspaper reported last month that up to one million Israelis may be living there. Worse for Mr Netanyahu, it seems that at least some are included in Israeli figures to bolster its demographic claims against the Palestinians. Recent trends show that the exodus of Israelis to the US is twice as large as the arrival of American Jews to Israel. With 150 Israeli start-ups reported in Silicon Valley alone, that tendency is not about to end.

With a pressing shortage of Jews to defeat the Palestinians demographically, the Netanyahu government is considering a desperate solution. The leaked report suggests opening the doors to a new category of “Jewish” non-Jews. According to Haaretz, potentially millions of people worldwide could qualify. The new status would apply to “crypto-Jews”, whose ancestors converted from Judaism, “emerging Jewish” communities that have adopted Jewish practices and those claiming to be descended from Jewish “lost tribes”.

Though they will initially be offered only extended stays in Israel, the implication is that this will serve as a prelude to widening their entitlement to eventually include citizenship. The advantage for Israel is that most of these “Jewish” non-Jews currently live in remote, poor or war-torn parts of the world, and stand to gain from a new life in Israel – or the occupied territories.

That is the great appeal to the die-hard one-staters like Mr Netanyahu and Mr Bennett. They need willing footsoldiers in the battle to steal Palestinian land, trampling on internationally recognised borders and hopes of peace-making.

Will they get away with it? They may think so, especially at a time when the US administration claims it would show “bias” to commit itself to advancing a two-state solution. Mr Trump has said the parties should work out their own solution. Mr Netanyahu soon may have the arithmetic to do so.



Why The Shale Oil “Miracle” Is Becoming A “Debacle”

Dispelling the magical thinking behind the hype

August 25, 2017

by Chris Martenson


Energy is everything.

This is an amazingly important concept. Yet it’s almost universally overlooked.

Sometimes it’s hard to appreciate the magical role energy plays in our daily lives because most of what we experience is a derivative of it. The connection is hidden from direct view.  Because of this, most people utterly fail to detect or appreciate the priceless and irreplaceable role of high net-energy fuel sources (such as oil and gas) to our modern lifestyle.

With high net-energy, society enjoys increasing complexity and technological advances. It’s what enables us to pursue massive goals like desalinating billions of gallons of seawater, or going to Mars.  But without high net-energy fuel sources, our capabilities quickly regress to those of decades — or even centuries — past.

Which is why understanding where we truly are in the ‘net-energy story’ is so incredibly important. Is the US on the cusp of being “energy independent” from here on out? Is the “shale miracle” ushering in a glorious new ‘boom’ era that will vault America to unprecedented prosperity?

No. The central point of this report is that the US is deluding itself when it comes to energy abundance (generally) and oil (specifically).

Yet that’s not what we hear from the cheerleaders in the industry or in our media. From them, we hear a silver-tongued narrative of coming riches — a narrative that contains some truth, some myth, and a lot of fantasy.

It’s those last two parts — the myths and fantasies — that are going to seriously hurt many investors, as well cause a lot of extremely poor policy and investment decisions.

The bottom line is this: The US shale industry resembles a fraudulent Ponzi scheme much more so than it does any kind of “miracle”.

How do I know that?  Because, collectively, US shale companies have lost cash in every year of their existence.  The burned through cash when oil was $100 — and again when it was $90, $80, $70, $60, $50, $40, and $30 a barrel.  They burned through cash in 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015 and 2016.

You don’t have to be a finance guru to appreciate or understand that any industry that persistently burns through cash is a bad deal.  Especially one whose prime product – shale wells – principally deplete (-85%) in roughly three years.  If you’ve been in business for 9 years drilling wells that mostly run out in 3 years, and you haven’t managed to produce positive cash flow at any point along the way, then it’s time to admit that your business model simply doesn’t work.

As even The Economist magazine recently noted:The [US shale] industry has also lifted productivity. Drilling is faster, more selective and more accurate, and leakage rates are lower. Wells are being designed to penetrate multiple layers of oil that are stacked on top of each other.

But the fact that the industry makes huge accounting losses has not changed. It has burned up cash whether the oil price was at $100, as in 2014, or at about $50, as it was during the past three months.

The biggest 60 firms in aggregate have used up $9bn per quarter on average for the past five years.

As a result the industry has barely improved its finances despite raising $70bn of equity since 2014. Much of the new money got swallowed up by losses, so total debt remains high, at just over $200bn.

Let’s run that math. Five years is 20 quarters. That times $9 billion/quarter is $180 billion dollars in cumulative operating losses. This begins to give us a sense of the magnitude of losses investors will face when the music finally stops.

Or we could note the $200 billion of total debt outstanding for the industry.  Hmmmm…with WTIC oil at $47/barrel, a typical wellhead price (that the operators actually receive being less than WTIC, always) might be closer to $40.  $200 billion divided by $40 means that 5 billion barrels of future wellhead production is required just to pay back the debt!

If the industry decided to use the next 5 billion barrels coming out of the ground to debt reduction (it never would decide this, but bear with me for the sake of this intellectual exercise), we’d also need to include the time value of money (and actual production rates over time) and observe that the debt carries an interest rate of 5% to 8% (depending on the company). Taking that into consideration, then the next 6 billion barrels would be required to satisfy the debt, plus interest payments!

Oh, right. And then there’s the issue of repaying the $70 billion of equity raised since 2014. With some sort of return, if possible, of course.

I hope you see the same staggering disconnect in these numbers I do. Which is why, without have to go too far out on a limb, I’ll state that massive losses are coming to the (bag)holders of all this debt and equity.

So why care? Because you need to understand these details in order to position yourself properly for the future. The implications are enormous.

The Danger Behind Myths and Fantasies

Once you become aware of the magical thinking involved, you then have a chance of knowing why the future is going to be very difficult for the shale industry, its investors, and then the nation(s) depending on its oil production.

Hey, sometimes myths and fantasies are harmless to hold. Like dreaming that someday you’ll be a major rock star.

But some can be incredibly damaging because they lead to poor life choices and decision-making. Like emptying your bank account to bet on the Powerball lottery, where your chances of winning are 292,201,338 to one. Or committing your nation to a ground war in Asia thinking you can “win”.

The promise of US shale oil is a very dangerous siren song. It was so carefully marketed to gullible investors that even Obama’s speechwriter and fact checkers got swept along.  This is from Obama’s State of the Union speech from 2014:

Now, one of the biggest factors in bringing more jobs back is our commitment to American energy.  The all-of-the-above energy strategy I announced a few years ago is working, and today, America is closer to energy independence than we’ve been in decades.

What does “energy independence” mean?  It turns out, this crowd-pleasing phrase is a fantasy that lacks any useful grounding in reality.  What  those who claim “energy independence” are doing are lumping all forms and sources of energy into a single bucket, and then asking if the size of that bucket matches our current demand.

This is an inappropriate and dangerously misguided way to look at things is because the various types and sources of energy are not interchangeable.  They don’t function the same way. They generally can’t be substituted for each other. And they don’t cost the same.

For example, your automobile might run on gasoline which costs $2.50 a gallon.  Suppose instead you could buy coal cheaper than gasoline on a BTU basis; is that any help to you as an auto driver?  Would you suddenly put crushed coal into your gas tank instead of gasoline? No, of course not.

What if you had a micro hydro plant operating in your backyard and could extract a more Kilowatt hours of electricity from it each week than you needed. Would that make you “energy independent?”

Not if you drive a car that requires gasoline. Or cook on a gas-powered stove. Or heat your house with an oil-burning furnace.

The same is true for the US (or any country). A country is not “energy independent” unless it can meet all of its national energy demands with enough BTUs in each of the needed fuel types. Just looking at oil alone, the US still imports millions of barrels per day — even with the “shale miracle”. I’ll get into this more deeply in just a moment.

So, when the US lumps all of its various sources of energy into one spot – including hydropower, wind, solar, coal, oil and natural gas – nothing useful emerges from that method.  We cannot know from it if we will have too much or too little of any one type of energy, or how much we’d be under or over budget in selling the surplus of one and buying to cover the deficit of another.

The delusion has only gotten worse under Trump. The useless and misleading clumping of energy into a single bucket has morphed into an even larger error; one shared by many otherwise intelligent “experts”.

Trump Hails ‘Energy Revolution’ as Exports Surge

June 27, 2017

WASHINGTON (AP) — President Donald Trump on Tuesday hailed an energy revolution marked by surging U.S. exports of oil and natural gas.

Trump cited a series of steps the administration has taken to boost energy production and remove government regulations that he argues prevent the United States from achieving “energy dominance” in the global market” Together, we are going to start a new energy revolution — one that celebrates American production on American soil,” Trump said in a statement, adding that the U.S. is on the brink of becoming a net exporter of oil, gas and other energy resources.’

It is a massive error to state that the US “is on the brink of becoming a net exporter of oil.” While I can see how that conclusion follows logically from all the disinformation provided about “energy independence” and the hype spouted by Wall Street and the shale companies — it’s totally false.

The US is NOT on the brink of becoming a net oil exporter. And it almost certainly never will be.

To become a net exporter, the US would have to both hold demand steady (i.e. not increase consumption at all) while also boosting production by nearly 5 million barrels a day (mbd).  That is, the entire current output of the shale “revolution” would have to be replicated, because current total shale oil output in the US is around 5 mbd

But it would actually be harder than that. As already mentioned, shale wells have ferocious decline rates; so an additional 5 million barrels per day would require adding to new production aggressively each year to offset this ongoing extreme loss of production.

Well, before another shale ‘miracle’ comes roaring out of the gate we’d need two things: enough new places to drill and more massive injections of capital.  Both are suspect at this point.

One analyst doing a superior job looking at the details is Rune Livkern of Fractional Flow, who made this excellent chart estimating that in the Bakken play, one of the best-performing  shale basin darlings of the entire “revolution,” the cumulative negative cash flow between 2009 and 2016 (a full 7 years of history) totaled some -$32 billion in losses:

Now why do shale oil operators keep burn cash in every time period?  Especially given the hype that they’re constantly becoming better and more efficient at drilling.  Better productivity should mean better profitability, especially when you have the big operators like Pioneer Natural Resources (PXD) constantly saying things like this (from their last investors conference call)

“Our break-even oil price is $20 a barrel,” Frank Hopkins, Pioneer’s senior vice-president, told an industry conference in London this week. “Even in a $40 world, in a $50 world, we are making good returns.

(Source – Bloomberg)

A company breaking even at $20 should be rolling in cash with oil at $45.  But they aren’t.

What explains the huge gap between the company’s own statements and its actual performance?  How can the entire industry be doing so poorly?

This mystery is solved by some basic research showing that as the price of oil moves up or down, so too do the breakeven prices:

Dr. Anas Alhaji, an economist and oil industry consultant based in Texas, along with Al Rajhi Capital, compiled the breakeven points for the largest shale producers between 2014 and the start of 2017. When placed alongside a graph of the spot price of WTI oil from the end of three quarters prior, it appears the breakeven points for shale are actually a function of the past price of oil itself.

This indicates that because shale costs are not fixed or even stable, the industry will likely struggle to achieve consistent profit unless the labor market an

Essentially, shale should struggle to achieve sustained profitability, no matter the price of oil.

What can investors do to position themselves to hedge against or profit from the inevitable losses that will be realized in this industry? Given the size and the importance of this sector and its product (oil), the repercussions will be felt far beyond the share companies themselves, up to and including sovereign assets.


New Think Tank Emails Show “How Google Wields its Power” in Washington

August 31, 2017

by David Dayen

The Intercept

Barry Lynn, the critic of monopolies fired this week from the New America Foundation, insisted in emails to his superiors that pressure from Google got him and his Open Markets program terminated. Anne-Marie Slaughter, the think tank’s CEO, has denied that Google played any role in Lynn’s termination from the think tank.

Last night, New America released three emails from Slaughter to Lynn. They reference two separate events: an anti-monopoly conference organized by the Open Markets program in June 2016 that featured Sen. Elizabeth Warren, D-Mass., as the keynote speaker, and a series of communications in June and July 2017, involving the termination of Lynn and his group.

The emails New America released did not include Lynn’s side of the email. The Intercept obtained his responses.

The first set of emails concerned the June 2016 conference, notable because a politician of Warren’s stature made a full-throated endorsement of Lynn’s work. For 15 years, Lynn has pointed out the dangers of increasing concentration in practically every sector of the U.S. economy, including technology and internet companies.

Slaughter began the chain by asking Lynn to answer questions — which were not in the emails obtained by The Intercept — from Meredith Hanley, New America’s director of development, who is responsible for day-to-day fundraising. Slaughter mentioned that she would be meeting with Google’s top lobbyist, former Rep. Susan Molinari, R-N.Y., and she needed answers about why Lynn’s New America colleagues and Google weren’t alerted about the conference and Warren’s participation.

Google, and the family foundation of Eric Schmidt, executive chair of Google’s parent company, Alphabet, have donated $21 million to New America over the years.

Lynn responded that he did give a heads-up internally, even trying to get another group at New America, the Open Technology Institute (which works on universal internet access and net neutrality), to co-sponsor the event. OTI declined, Lynn said, but discussed having some of their representatives moderate panels. Lynn concluded that he didn’t understand how anyone at OTI or New America would feel surprised by the event.

As for Google, Lynn said it wasn’t standard practice to alert an outside company about events or articles from his team (there’s a reference to such a request from Stephanie Valencia, who works on “strategic outreach and partnerships” at Google). Moreover, the event was publicly announced, and the eventual co-sponsor, the Capitol Forum, actively sought participation from Google employees on one of the panels.

The email is collegial, and Lynn openly acknowledges the tough spot Slaughter and Hanley faced, given Google’s funding support. He adds that Warren had originally planned to give her anti-monopoly speech at New America’s annual conference that May, which Lynn discouraged because it might create high-level discomfort. So it got moved to the June conference.

Slaughter’s response to Lynn is what got published last night. “I have to say I am with Meredith on this,” she wrote. “We worked so hard with you to get you 11th Hour funding; just THINK about how you are imperilling [sic] funding for others.” There’s at least a hint in there that Google would strip funding from New America if any part of the organization hosted a popular senator warning of threats from monopolies like Google. Slaughter also references “trying to expand our relationship with Google,” and asks Lynn for some talking points to use with Molinari.

The next series of emails concern Lynn’s firing a year later. It’s generally understood that the precipitating event was a 150-word press release from Open Markets, applauding the European Union for its $2.7 billion fine against Google for violating antitrust laws with its Google Shopping tool, which preferred its own programs over that of rivals. The New York Times reported that Schmidt voiced his displeasure to Slaughter about the press release, which then was temporarily removed from the New America website. Lynn was told that Open Markets would have to separate from New America a couple days later.

New America released two of the three emails in this chain: Slaughter’s recap of the June 29 conversation informing Lynn that New America and Open Markets would part ways, and a later email where Slaughter says, “I am disappointed in your response below, as I made clear repeatedly that I am absolutely not deciding that we must part ways based on any response from Google.” Lynn’s side of the conversation was not included in New America’s email release.

In that response, Lynn took issue with Slaughter’s characterization. He accepted the attempt to work toward a swift resolution and reiterated his affection for New America and Slaughter herself. But he disagreed that he had acted in any unprofessional manner during his tenure. And he states very explicitly his understanding of the June 29 conversation, that Google’s response to the press release about the EU fine was why Open Markets had to be cast off. Slaughter denies this in her follow-up email, saying that the issue was Lynn’s behavior, which “has been troubling to myself and your colleagues for over a year.”

There is certainly a he said/she said element to these emails. Slaughter thinks Lynn wasn’t sensitive enough to giving notice internally about his team’s practices; Lynn thinks that the content of his work, not the communication of it, was the problem. Without more context it’s hard to say much definitively. But the additional emails from Lynn do not show someone dismissive of his colleagues or the tricky situation at New America. And though Slaughter protests that Google’s influence played no role in the firing, New America’s funding from the tech giant hangs over the entire set of exchanges.

“The emails clearly show the influence that Google wields over New America’s operations,” stated the Open Markets team in a statement provided to The Intercept. “What Google did in pressuring New America to suppress the work of reporters and researchers who have directly criticized how Google wields its power is common among think tanks in D.C. It is why Louis Brandeis warned tirelessly of the political dangers posed by concentrations of power. The only unusual aspect of this particular situation is that Google got caught.” (New America and Slaughter did not immediately respond to requests for comment.)

Just this week, Google said they would comply with the EU’s request to change its shopping search so it no longer discriminates against rivals.

Correction: Aug. 31, 9:18 p.m.

Due to an editing error, this story originally misidentified Molinari’s party affiliation. She is a former Republican congressperson.


Who will bear the financial burden for Harvey’s rampage? Not insurance companies.

August 31, 2017

by Peter Whoriskey

The Washington Post

The estimated bills for Harvey are just now trickling in and they are preliminary, but a couple of facts are becoming clear.

First, Harvey will be rank among the costliest hurricanes to strike the U.S.

Second, a very large portion of the bill will wind up on property owners.

Among the more credible estimates for Harvey’s damage was issued on Wednesday by RMS, the risk modelling firm that works for insurance companies. Their model incorporates everything from property values and land elevations to river gauges and rainfall totals. While previous estimates had run from $30 billion to $160 billion, they put the economic costs of Harvey at between $70 billion and $90 billion.

That burden, moreover, is expected to be borne by property owners.

“The majority of these losses will be uninsured,” Michael Young, a senior director at RMS said in a blog post.

The primary reason that the nation’s insurance companies are off the hook for the damage is that most of the destruction came from flooding, which is not normally covered by a standard home insurance policy. They cover wind damage, not floods.

As a result, the portion of losses in Harvey that are covered by the insurance industry may be relatively tiny.

AIR Worldwide, another catastrophe modeling firm, estimated industry insured losses at between $1.2 billion and $2.3 billion. An analysis by another firm, CoreLogic showed that insured losses for residential and commercial properties would run between $1 billion and $2 billion from wind and storm surge damage – not flooding. Another firm, S&P Global placed the figure at $6 billion.

If they’re right, in other words, standard insurance coverage may cover less than ten percent of the Harvey bill.

The other way that property owners may have coverage, of course, is through flood insurance, which is typically provided by the federal government.

But the vast majority of people in the areas stricken by the floods did not carry flood coverage. In fact, only 17 percent of homeowners in the eight counties most directly affected by Harvey have flood insurance policies, according to a Washington Post analysis of Federal Emergency Management Agency data.

Overall, what that means is that the responsibility for the huge bills will mainly lie with the property owners in Harvey’s path.


400,000 deaths in Syria civil war directly attributed to US & allies’

September 1, 2017

by Dan Glazebrook


African and Asian leaders are denied by the West to have any military means against an insurgency in their countries, while the US and its allies have absolute impunity when they want to take on a population anywhere in the world, says political analyst Dan Glazebrook.

The US-led coalition against Islamic State has confirmed another 61 civilian deaths are likely to have been caused by its air and artillery strikes in Iraq and Syria. That brings the total number of civilians it has acknowledged killing since the conflict began to 685

Dan Glazebrook: I think it’s also likely to be a gross underestimate because we found out in 2012, for example, that all military-age males killed in US airstrikes are not classified by the US military as civilians, they’re automatically excluded from those statistics. So if I was walking down the street in Iraq, unarmed, and I was directly and intentionally blown to pieces by a US airstrike, that would not be recorded as a civilian death. Now, I don’t know if they still use this criterion currently, but what we certainly do know is that the monitoring group Airwars suggested almost 1,500 people may have been killed in US coalition bombings in Iraq and Syria in March of this year alone, including the terrible strike on a residential block in Mosul that is thought to have killed around 200 people. So these statistics are certainly likely to be a gross underestimate.

There are a couple of other points I’d like to make about this as well. This narrow focus on civilians we must recognize is deeply ideological because it serves to whitewash the true scale of the slaughter taking place in Iraq and Syria right now. Why should a 16-year-old boy, pressed into service by ISIS and then blown to pieces by the US before even firing a shot, why should his life be considered so unworthy, so meaningless, as not to be recorded in any kind of statistic because he’s, “not a civilian”? This use of the term and focus on civilians is actually a means of placing all soldiers, all militants, in the same category of subhuman and implies they deserve to be killed. More than that, not only do they deserve to be killed, but their lives are so meaningless and unworthy, they don’t even deserve to be recognized in any kind of balance sheet as to the costs of this war.

And a third point I’d like to make is that in 2011, Syria was at peace until, in that year, the US, Britain, and France sponsored a violent sectarian insurgency, an insurgency in Syria that eventually morphed into ISIS and spilled over into Iraq. So I would actually go further than this and I would attribute all 400,000 deaths in the Syrian civil war directly to the US, France, Britain and their allies.

RT:What would you make of comments made by US Defense Secretary James Mattis that Americans are the good guys and locals know the difference. Is there a difference between good bombs and bad bombs?

DG: No, of course, there isn’t, and what’s absolutely clear is their recklessness, which was actually bad enough under Obama but has increased under Trump. The recklessness with which the US is pursuing its foreign policy goals – and Britain and its allies in the coalition, I should add – have got complete impunity and complete disregard for the lives of those living in places like Mosul and Raqqa and it really shows the racism which is inherent in what’s going on here. Leaders of African and Asian states are denied by the West to have any kind of military means against an insurgency that happens within their borders. And yet when the US and its allies decide they want to take on a population anywhere in the world, they have absolute impunity to do so. So in 2011 Gaddafi was trying to put down a proto-ISIS rebellion in Benghazi and was labeled by the West as a bloody genocidal dictator and so on and was eventually subjected to torture and lynching by those states. When the US decides it wants to carpet-bomb Mosul or Raqqa thousands of miles from its shores, it can do so with complete recklessness and impunity and disregard for the populations living there.


Fine Art as a Commodity

September 1, 2017

by Christian Jürs

During the course of the Second World War, the Germans systematically acquired all the fine art they could lay their hands on. France, Belgium, Holland, Poland, Soviet Russia and later, Italy, were stripped of paintings, sculptures, tapestries, silver, furniture, coins, rare arms and armor, wood carvings, prints and anything else of artistic or intrinsic value. The finest pieces were delivered to Hitler and were designed to be displayed in a huge museum complex located in his boyhood town of Linz in what had been Austrian territory. This project was called the Sonderauftrag Linz and was headed by Dr. Hermann Posse, formerly of the State Gallery at Dresden.

At the end of the war, there was a great descent by Allied art experts, and others less altruistically inclined, to locate the stolen art and, at least by the official commissions, to return it to the proper owners.

Much of this enormous treasure trove was recovered, but many precious items vanished. At least some of the missing pieces played a role in the Cold War.

The looting of art objects by conquering armies did not begin in 1939 but the Germans were more organized and effective than Napoleon or the Allied troops who looted the Imperial Palace in Peking, China, after they suppressed the Boxer Rebellion in 1900.

It was Hitler’s aim to establish a huge museum complex in the provincial Austrian city of Linz where he had lived as a child. To this end, he set up the Sonderauftrag Linz where much of the art located by his agents in Europe was to be cataloged and eventually displayed in the projected museums. Hitler had rivals in this art collecting—Hermann Göring was the most prominent. But by and large, the Linz project garnered an enormous collection of the most valuable art in the world.

When the war ended, various Allied commissions, directed by the Americans, located most of this art and made attempts, mostly successful, to return it to the original owners.

Many items, however, managed to disappear—some before the end of the war into the hands of Germans looking for portable treasures, and after the war into the hands of its liberators for precisely the same reason.

Much of the Reichsbank bullion vanished into the purses of individuals as well as agencies. Many paintings, sculptures, rare books, manuscripts and other valuables have never surfaced in public since the war ended in 1945.

A Signorelli, the “School of Pan,” one of Signorelli’s earlier paintings and is considered his masterpiece. It vanished in Berlin in 1945 when someone stole it from the holdings of the Kaiser Friederich Museum. The Bellini, a Madonna, also disappeared from the same holding at the same time. A Raphael belonged to the wealthy Polish Czartoryski family.

It had been taken by the Germans, along with the famous Da Vinci picture titled “The Lady with the Ermine” and given to Hans Frank, the Governor of the former Polish territory. Frank brought the painting back to Germany since he had to evacuate his post as the Soviets advanced into Poland. The Raphael was taken from Frank by the Gestapo, and the Americans seized the Da Vinci and later returned it to the Poles.

The Raphael painting, “Portrait of a Gentleman,” (or most likely a self-portrait) is still listed as missing.

It has been reported that this painting now reposes in the Virginia home of a member of the CIA.

The Rothschild coins consisted of a collection of over 2,000 rare gold coins taken from the Vienna branch of the Rothschild family and kept at the Hohenfurth monastery in Czechoslovakia for safe keeping. These coins were taken from the Linz collection in the last month of the war by Dr. von Hummel, Bormann’s secretary, and Dr. Rupprecht, curator of Hitler’s armor collection. The collection was transported by car to Berchtesgaden and vanished from sight.

The coin collection alone is worth over $4 million. The coins are easily converted to cash in the international numismatic market.

Recently surfaced are the ledgers of a person who sold many of these items through a front and then disbursed the monies to members of the CIA whose agency had taken possession of the looted art after it was transferred from US Army control in 1948.



New York Times distorts reality of Israel’s walls

August 18, 2017

by Michael F. Brown

Media Watch

Isabel Kershner, writing in The New York Times, recently misrepresented the reality of Israeli-built walls and the fact that it is Palestinians enclosed by them and not Israelis.

Establishing that she spends far too much time in an Israeli milieu and too little in occupied Palestinian territory, she flips reality by penning, “Challenged by hostile forces on most of its fronts, Israel is already pretty much walled in.”

Yet it is Israel itself which has chosen to build walls. The people to describe as “walled in” are Palestinians in the West Bank and Gaza Strip. Palestinians are the ones being forcibly enclosed within bantustans as part of a comprehensive system of apartheid – not Israelis.

Throughout the article, Kershner repeatedly omits vital information about an underground wall Israel is building to further obstruct Palestinian egress from the tightly blockaded Gaza Strip.


Israel has peace agreements with both Egypt and Jordan – and security arrangements with the Palestinian Authority to police its own people under Israeli occupation.

Even on its frontline in the occupied Golan Heights with Syria, where a devastating civil war has killed hundreds of thousands of people, Israel funds Syrian armed opposition groups to maintain a buffer zone controlled by “friendly forces.”

Yet these facts are excluded in Kershner’s decision to present a tough neighborhood spin with Israel “challenged by hostile forces on most of its fronts.”

Most of those fronts – beyond those where the Israeli government has signed peace agreements with other states – are occupied territory held by Israel for over 50 years.

Treating occupied people as “hostile” is akin to the moral equivalency offered by US President Donald Trump in equating anti-fascists and anti-racists with Nazis and white supremacists.

How else are people under an oppressive military occupation that deprives them of their most basic rights, while systematically colonizing their land, supposed to feel about their occupiers?

Yet Kershner dismissively employs the term “hostile forces,” undercutting millions of occupied people calling for equal rights and a return to stolen homes and properties.

Also omitted is a racist quote early last year from Prime Minister Benjamin Netanyahu regarding his determination to build walls all around Israel, though some of this construction would clearly be on occupied Palestinian territory.

Likening Palestinians to animals, Netanyahu stated, “In our neighborhood, we need to protect ourselves from wild beasts.”

Israel’s wall with Egypt, though readers won’t learn it in this article from Kershner, was built in significant part to keep out African migrants and refugees, principally from Eritrea and Sudan, fleeing war and other perils.

Netanyahu himself admitted as much

Not noted in Kershner’s article is that last year the US earmarked $120 million over three years for the US and Israeli militaries to develop jointly a system to detect tunnels. The New York Times reported on that funding, but in the context of an article about tunnels between Mexico and the US.

Land grab unreported

Kershner claims the “aboveground fences and sections of concrete wall [that] run along and through parts of the West Bank” are “a legacy of Palestinian suicide bombings during the second intifada.”

But she fails to note many observers’ contention that due to the fact 85 percent of the barrier runs inside the occupied West Bank, Israel’s construction of it appears to be far more of a land grab than anything to do with security.

There remain large gaps and other vulnerabilities that tens of thousands of Palestinians use to bypass the unfinished West Bank barrier every year.

This fact undermines Israel’s claim – repeated even by Trump to justify his plan to build a wall along the US-Mexico border – that the barrier is an effective security measure.

The evidence indicates that what stopped the suicide bombs is not the wall, but that Palestinian factions decided to abandon the tactic.

Nor does Kershner mention that the International Court of Justice ruled in 2004 that Israel’s barrier runs “contrary to international law.”

This follows on the heels of a New York Times article in March that The Electronic Intifada reported on.

There, Russell Goldman reported that the windows of a “nine-room guesthouse” in Bethlehem “overlook the barrier that separates the territory [the West Bank] from Israel.”

In fact, the wall outside the hotel separates occupied West Bank territory from occupied West Bank territory. The New York Times’ unwillingness to correct the article may leave readers with the impression it doesn’t know the relevant geography or that it has ceded at least part of the West Bank to Israel.

Misrepresenting tunnels

Kershner is also vague on how the tunnels were used by Hamas during Israel’s 2014 assault on Gaza.

She writes: “In 2014, after 50 days of fighting, Israel said it had put dozens of Hamas tunnels out of commission, including several extending into Israeli territory, threatening nearby civilian communities. Some had been used to attack soldiers.”

She should be clearer. Were any of these tunnels used to attack civilians? The answer from the UN Human Rights Council’s independent investigation into the 2014 war is no.

The 2015 report stated that “the tunnels were only used to conduct attacks directed at IDF [Israeli army] positions in Israel in the vicinity of the Green Line, which are legitimate military targets.”

Kershner has an obligation to her readers to state this, particularly in the aftermath of carnage which saw only six Israeli civilians killed, but 1,462 Palestinian civilians – including 551 children – lose their lives during Israel’s assault.


FCC closes virus upload loophole on its website

September 1, 2017

BBC News

The Federal Communications Commission (FCC) has taken steps to secure its website after users discovered they could upload malware to it.

On Thursday, security researchers discovered a function connected to the US government agency website’s comment system that let them upload files.

The site allowed anyone to sign up to obtain a software key that let them upload the files they wanted.

The FCC said there was no evidence malware had actually been uploaded.

“The FCC comment system is designed to maximise inclusiveness and part of that system allows anyone to upload a document as a public comment, which is what happened in this case,” the FCC told the BBC.

The Commission has had procedures in place to prevent malware from being uploaded to the comment system. And the FCC is running additional scans and taking additional steps with its cloud partners to make sure no known malware has been uploaded to the comment system.”

At the time of writing it is no longer possible to upload files in this manner, the communications watchdog said.

In plain sight

The bug emerged in what is known as application programming interface (API) available via the FCC site.

APIs are a well established technology and let developers interact via the web with the data that organisations hold and the services they offer.

While the comment system was easy for members of the public to use and upload files to when making complaints to the watchdog, the API was not meant to be publicly accessible.

However, anyone who knew where to find the API on the FCC’s website could request access to it. Documentation explaining how to upload documents was also publicly available on the site.

Security researchers experimented with the API, filling in forms to request access to keys that let them use it via email.

When they received the key, the users were surprised to find that they were able to upload any file type they liked to the website, whether the files were documents, music files or executable code.

The programmers claimed they were able to upload files as big as 25MB in size, Guise Bule, the editor of Contratastic magazine wrote on website Medium.












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