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Reports warn of disabling attacks to U.S. power grid that could wipe out “democracy” and the “world order”

Image: Reports warn of disabling attacks to U.S. power grid that could wipe out “democracy” and the “world order”
(Natural News) A pair of reports released in the past month from two separate federal entities both warn of dire, devastating consequences from the destruction or disabling of a substantial portion of the U.S. power grid.

In late November, the Pentagon released an eye-opening analysis of the effects of a potential  electromagnetic pulse (EMP) stemming from the detonation of a sizable nuclear weapon above the United States. The report by the Electromagnetic Defense Task Force at Air Force University noted that, “Based on the totality of available data, an electromagnetic spectrum attack may be a threat to the United States, democracy, and the world order.”

The report culled information from a mostly classified summit of government officials from 40 agencies who met just outside of Washington, D.C. over the summer and forcefully calls for a new focus by Congress and the Trump administration for making preparations either for an enemy EMP attack or a naturally occurring event such as a major solar storm, the Washington Examiner reported.

Much of the report focuses on the negative effects of an EMP event as it pertains to U.S. military capabilities. However, the report also appears to substantiate a congressional warning from 2017 that claimed up to 90 percent of the population along the East Coast could die within a year of the event.

Citing information from the Union of Concerned Scientists, the report said:

— Approximately 99 nuclear reactors would very likely melt down because there would be no electricity to power infrastructure that keeps them cool;

…click on the above link to read the rest of the article…

The “Meltdown” Story: How A Researcher Discovered The “Worst” Flaw In Intel History

Daniel Gruss didn’t sleep much the night he hacked his own computer and exposed a flaw in most of the chips made in the past two decades by hardware giant Intel, something we discussed in “Why The Implications Of The Intel “Bug” Are Staggering.” And as Reuters describes in fascinating detail, the 31-year-old information security researcher and post-doctoral fellow at Austria’s Graz Technical University had just breached the inner sanctum of his computer’s CPU and stolen secrets from it.

Until that moment, Gruss and colleagues Moritz Lipp and Michael Schwarz had thought such an attack on the processor’s ‘kernel’ memory, which is meant to be inaccessible to users, was only theoretically possible.

“When I saw my private website addresses from Firefox being dumped by the tool I wrote, I was really shocked,” Gruss told Reuters in an email interview, describing how he had unlocked personal data that should be secured.
Gruss, Lipp and Schwarz, working from their homes on a weekend in early December, messaged each other furiously to verify the result.

“We sat for hours in disbelief until we eliminated any possibility that this result was wrong,” said Gruss, whose mind kept racing even after powering down his computer, so he barely caught a wink of sleep.

Gruss and his colleagues had just confirmed the existence of what he regards as “one of the worst CPU bugs ever found”.

The flaw, now named Meltdown, was revealed on Wednesday and affects most processors manufactured by Intel since 1995.

Separately, a second defect called Spectre has been found that also exposes core memory in most computers and mobile devices running on chips made by Intel, Advanced Micro Devices and ARM Holdings, a unit of Japan’s Softbank.

…click on the above link to read the rest of the article…

In Fukushima, A Bitter Legacy Of Radiation, Trauma and Fear

In Fukushima, A Bitter Legacy Of Radiation, Trauma and Fear 

Five years after the nuclear power plant meltdown, a journey through the Fukushima evacuation zone reveals some high levels of radiation and an overriding sense of fear. For many, the psychological damage is far more profound than the health effects.

Christopher Furlong/Getty Images
A radiation monitoring station alongside a road in Namie, Japan.
Japan’s Highway 114 may not be the most famous road in the world. It doesn’t have the cachet of Route 66 or the Pan-American Highway. But it does have one claim to fame. It passes through what for the past five years has been one of the most radioactive landscapes on the planet – heading southeast from the Japanese city of Fukushima to the stricken nuclear power plant, Fukushima Daiichi, through the forested mountains where much of the fallout from the meltdown at the plant in March 2011 fell to earth.

It is a largely empty highway now, winding through abandoned villages and past overgrown rice paddy fields. For two days in August, I traveled its length to assess the aftermath of the nuclear disaster in the company of Baba Isao, an assemblyman who represents the town of Namie, located just three miles from the power plant and one of four major towns that remain evacuated.

At times, the radiation levels seemed scarily high – still too high for permanent occupation. But radiation was just the start.

As we climbed into the mountains, the radiation measurements on the Geiger counter increased.

More worrying, I discovered, was the psychological and political fallout from the accident. While the radiation – most of it now from caesium-137, a radioactive isotope with a half-life of 30 years – is decaying, dispersing, or being cleaned up, it is far from clear that this wider trauma has yet peaked. Fukushima is going to be in rehab for decades.

…click on the above link to read the rest of the article…

A Look Inside Europe’s Next Crisis: Why Everyone Is Finally Panicking About Italian Banks

A Look Inside Europe’s Next Crisis: Why Everyone Is Finally Panicking About Italian Banks

Back in May 2013, we wrote an article titled “Europe’s EUR 500 Billion Ticking NPL Time Bomb” in which we laid out very simply what the biggest danger facing European banks was: non-performing, or bad, loans.

We further said, that “Europe’s non-performing loan problem is such an issue that there is increasing bluster that the ECB may take this garbage on to its balance sheet since policymakers realize that bad debts and non-performing loans (NPLs) reduce the capacity of banks to lend, hindering the monetary policy transmission mechanism. Bad debts consume capital and make banks more risk averse, especially with respect to lending to higher risk borrowers such as SMEs. With Italy (NPLs 13.4%) now following the same dismal trajectory of Spain’s bad debts, the situation is rapidly escalating (at an average of around 2.5% increase per year).

The conclusion was likewise simple:

The bottom line is that at its core, it is all simply a bad-debt problem, and the more the bad debt, the greater the ultimate liability impairments become, including deposits. As we answered at the time – the real question in Europe is: how much impairment capacity is there in the various European nations before deposits have to be haircut? With Periphery non-performing loans totaling EUR 720bn across the whole of the Euro area in 2012 and EUR 500bn of which were with Peripheral banks.”

Now, three years later, the bomb appears to be on the verge of going off (or may have already quietly exploded), and nowhere is it more clear than in an exhaustive article written by the WSJ in which it focuses on Italy’s insolvent banking system, and blames – what else – the hundreds of billions in NPLs on bank books as the culprit behind Europe’s latest upcoming crisis.

…click on the above link to read the rest of the article…

Brazil Posts Largest Budget Deficit Ever As Rousseff Cries “Coup,” Olympic Ad Sales Top $1 Billion

Brazil Posts Largest Budget Deficit Ever As Rousseff Cries “Coup,” Olympic Ad Sales Top $1 Billion

On Tuesday, embattled Brazilian President Dilma Rousseff was dealt a bitter blow when PMDB – the party of VP Michel Temer and House Speaker Eduardo Cunha – officially left the coalition government.

“Dialogue, I regret to say, has been exhausted,” Tourism Minister Henrique Eduardo Alves, a PMDB leader and former speaker of the lower house of Congress, said on Monday as he resigned from Rousseff’s cabinet.

To let the market tell it, a complete political meltdown is great news. As we showed yesterday and as we’ve discussed on a number of occasions this month, the more precarious things get politically in Brazil, the harder the BRL and Brazilian risk assets rally. Why? Because the assumption is that when it comes to the country’s floundering economy, anything is preferable to the current arrangement. With output in free fall, inflation running in the double digits, and unemployment marking an inexorable rise, it’s difficult to imagine how things could possible get any worse.

Indeed, the prospect that Rousseff and Lula will be sent packing has created so much upward pressure on the BRL that the central bank has begun selling reverse swaps to keep a lid on the currency lest its rapid appreciation should end up short circuiting a much needed economic adjustment.

Meanwhile, Brazilian stocks have soared this year amid the turmoil. Of course this state of affairs simply isn’t sustainable. As Craig Botham, an emerging markets economist at Schroder Investment Management put it, “you don’t invest in a place where you don’t know who’s in charge.

Right. And you also don’t invest in a place where the economic fundamentals get worse by the day.

…click on the above link to read the rest of the article…

The Next Fukushima? Active Fault Line Discovered Directly Below Japanese Nuclear Power Plant

The Next Fukushima? Active Fault Line Discovered Directly Below Japanese Nuclear Power Plant

Five years after the Fukushima disaster, things are getting worse.

As we reported last week, “the fuel rods melted through their containment vessels in the reactors, and no one knows exactly where they are now. Tepco has been developing robots, which can swim under water and negotiate obstacles in damaged tunnels and piping to search for the melted fuel rods. But as soon as they get close to the reactors, the radiation destroys their wiring and renders them useless, causing long delays, Masuda said.”

More troubling was our assessment that the “2011 disaster will be repeated. After the Fukushima nuclear meltdown, Japan was flooded with massive anti-nuclear protests which led to a four-year nationwide moratorium on nuclear plants. The moratorium was lifted, despite sweeping opposition, last August and nuclear plants are being restarted.”

And now we have the candidate for the “next Fukushima” – as Japan’s Yomiuri Shimbun reports, one of the faults that run under the premises of Hokuriku Electric Power Co.’s Shika nuclear power plant in Ishikawa Prefecture can be reasonably concluded to be active, according to an evaluation compiled last Thursday by an expert panel at the Nuclear Regulation Authority.

According to the Shimbun, the No. 1 reactor at the Shika plant may have to be decommissioned under the new nuclear regulatory standards, which ban the construction of important facilities above an active fault. The fault in question lies directly under the No. 1 reactor building.

Eight faults run under the premises of the Shika power station. Of these, three faults called S-1, S-2 and S-6 have been subject to close scrutiny. The S-1 fault lies directly under the No. 1 reactor building, a facility designated as an important facility under the new regulatory criteria.

…click on the above link to read the rest of the article…

Fukushima Five Years Later: “The Fuel Rods Melted Through Containment And Nobody Knows Where They Are Now”

Fukushima Five Years Later: “The Fuel Rods Melted Through Containment And Nobody Knows Where They Are Now”

Today, Japan marks the fifth anniversary of the tragic and catastrophic meltdown of the Fukushima nuclear plant. On March 11, 2011, a massive earthquake and tsunami hit the northeast coast of Japan, killing 20,000 people. Another 160,000 then fled the radiation in Fukushima. It was the world’s worst nuclear disaster since Chernobyl, and according to some it would be far worse, if the Japanese government did not cover up the true severity of the devastation.

At least 100,000 people from the region have not yet returned to their homes. A full cleanup of the site is expected to take at least 40 years. Representative of the families of the victims spoke during Friday’s memorial ceremony in Tokyo. This is what Kuniyuki Sakuma, a former resident of Fukushima Province said:

For those who remain, we are seized with anxieties and uncertainties that are beyond words. We spend life away from our homes. Families are divided and scattered. As our experiences continue into another year, we wonder: ‘When will we be able to return to our homes? Will a day come when our families are united again?’

There are many problems in areas affected by the disaster, such as high radiation levels in parts of Fukushima Prefecture that need to be overcome. Even so, as a representative of the families that survived the disaster, I make a vow once more to the souls and spirits of the victims of the great disaster; I vow that we will make the utmost efforts to continue to promote the recovery and reconstruction of our hometowns.

…click on the above link to read the rest of the article…

China Goes Full “Minority Report”, Creates “Pre-Crime” Program

China Goes Full “Minority Report”, Creates “Pre-Crime” Program

By now, the world is largely familiar with Chinese President Xi Jinping’s fabled “Tigers and Flies” campaign.

Since taking office in 2013, Xi has embarked on an ambitious effort to root out party corruption and ensure that the directives passed down from on high in the Politburo are executed faithfully among the sprawling rank and file. As The Atlantic wrote last year, the discipline “problem” is “made more urgent by a slowing economy,” an economy which desperately needs to be reformed.

“Reform, however, requires the ability to enact policy,” The Atlantic flatly adds. “That in turn necessitates bureaucrats who follow the central government’s orders.”

Publicly there have been more than 1,500 announced cases against party officials. But that’s just “publicly.” Knowing the Party’s reputation for “disappearing” those who “disappoint” or otherwise act in morally objectionable ways, the real number is impossible to know but is likely orders of magnitude higher.

When China’s stock market began to crash last summer as the country’s margin “miracle” finally buckled under the weight of the millions of illiterate daytrading housewives who poured their life savings into everything from umbrella manufacturers to industrial companies-turned P2P outfits, Beijing extended the corruption probe to those “responsible” for the equity meltdown.

Soon, the quest for stock market “manipulators” and those (like journalists) who would otherwise seek to harm the national interest by, well, by reporting the facts became part and parcel of a kind of mini Tigers and Flies campaign focused specifically on China’s financial markets. That campaign eventually ensnared quite a few officials, prominent money managers, and eminent businessmen, including Guo Guangchang, a self-styled “Chinese Warren Buffett.”

…click on the above link to read the rest of the article…

The Market Has Lost Faith In Our Board, Bank Of International Settlements Laments

The Market Has Lost Faith In Our Board, Bank Of International Settlements Laments

The BIS’ Claudio Borio was vindicated in January – and it was a long time coming.

When last we checked in with Claudio, it was December and the bank’s Head of the Monetary and Economic Department was busy explaining what may befall $3.2 trillion in EM USD debt in the persistently strong dollar environment. “The stock of dollar-denominated debt, which has roughly doubled since early 2009 to over $3 trillion, is still there [and] in fact, its value in domestic currency terms has grown in line with the US dollar’s appreciation, weighing on financial conditions and weakening balance sheets,” he warned.

We also laid out the progression of Borio’s most recent warnings as delineated in the banks’ widely-read, if on occasion perfunctory, quarterly reports. Below, is a brief review.

From 2014, warning about the market’s dependence on central bank omnipotence:

To my mind, these events underline the fragility – dare I say growing fragility? – hidden beneath the markets’ buoyancy. Small pieces of news can generate outsize effects. This, in turn, can amplify mood swings. And it would be imprudent to ignore that markets did not fully stabilise by themselves. Once again, on the heels of the turbulence, major central banks made soothing statements, suggesting that they might delay normalisation in light of evolving macroeconomic conditions. Recent events, if anything, have highlighted once more the degree to which markets are relying on central banks: the markets’ buoyancy hinges on central banks’ every word and deed.

From March of 2015, speaking out about the dangers of increasingly illiquid secondary markets for corporate bonds:

As a result, market liquidity may increasingly come to depend on the portfolio allocation decisions of only a few large institutions. And, more broadly, investors may find that liquidating positions proves more difficult than expected, particularly in the context of an adverse shift in market sentiment.

…click on the above link to read the rest of the article…

Satyajit Das: This Is Why You Can Expect Another Global Stock Market Meltdown

Satyajit Das: This Is Why You Can Expect Another Global Stock Market Meltdown

The mispricing of assets across world markets has reached epidemic proportions.

Stock prices have made strong advances over the past several years, yet market analysts see further gains, arguing that the selloffs of August 2015 and early 2016 represent a healthy correction.

But this rise in stock values has been underpinned by financial engineering and liquidity — setting the stage for a global financial crisis rivaling 2008 and early 2009.

The conditions for a crisis are now firmly established:overvaluation of financial assets; significant leverage; persistent low-growth and deflation; excessive risk taking reliant on central banks for liquidity, and the suppression of volatility.

Steve Blumenthal, CEO of CMG Capital Management Group, tells Barron’s funds writer Chris Dieterich that his firm has been clinging to ultra-safe bonds and utility stocks during the market storm.

For example, U.S. stock buybacks have reached 2007 levels and are running at around $500 billion annually. When dividends are included, companies are returning around $1 trillion annually to shareholders, close to 90% of earnings. Additional factors affecting share prices are mergers and acquisitions activity and also activist hedge funds, which have forced returns of capital or corporate restructures.

The major driver of stock prices is liquidity, in the form of zero interest rates and quantitative easing.

To be sure, stronger earnings have supported stocks. But on average, 70% to 80% of the improvement has come from cost-cutting, not revenue growth. Since mid-2014, corporate profit margins have stagnated and may even be declining.

A key factor is currency volatility. The strong U.S. dollar is pressuring American corporate earnings. A 10% rise in the value of the dollar equates to a 4%-5% percent decline in earnings. Rallies in European and Japanese stocks have been driven, in part, by the fall in the value of the euro and yen  respectively.

…click on the above link to read the rest of the article…

This Is The NIRP “Doom Loop” That Threatens To Wipeout Banks And The Global Economy

This Is The NIRP “Doom Loop” That Threatens To Wipeout Banks And The Global Economy

Remember the vicious cycle that threatened the entire European banking sector in 2012?

It went something like this: over indebted sovereigns depended on domestic banks to buy their debt, but when yields on that debt spiked, the banks took a hit, inhibiting their ability to fund the sovereign, whose yields would then rise some more, further curtailing banks’ ability to help out, and so on and so forth.

Well don’t look now, but central bankers’ headlong plunge into NIRP-dom has created another “doom loop” whereby negative rates weaken banks whose profits are already crimped by the new regulatory regime, sharply lower revenue from trading, and billions in fines. Weak banks then pull back on lending, thus weakening the economy further and compelling policy makers to take rates even lower in a self-perpetuating death spiral. Meanwhile, bank stocks plunge raising questions about the entire sector’s viability and that, in turn, raises the specter of yet another financial market meltdown.

Below, find the diagram that illustrates this dynamic followed by a bit of color from WSJ:

From WSJ:

In a way, the move below zero was a gamble. The theory went like this: Banks would take a hit, but negative rates would get the economy moving. A stronger economy would, in turn, help the banks recover.

It appears that wager isn’t working.

The consequences are deeply worrying. Weak banks may now drag the economy down further. And with the economy weak and deflation—a damaging spiral of falling wages and prices—looming, central banks that have gone negative will be loath to turn around and raise rates.

…click on the above link to read the rest of the article…

Why A Former Fed Official Fears A Global Meltdown

Why A Former Fed Official Fears A Global Meltdown

Authored by Gerald O’Driscoll, former vice president at The Dallas Fed, posteed op-ed at The Wall Street Journal,

Are we headed for another global financial crisis? The market convulsions of the past week reflected a continuation of a market selloff that began on the first trading day of 2016. Investors have reasons to be fearful—but not terrified.

This year is likely to be one of financial crises in industries and countries around the world. Whether those turn into a global financial crisis is an open question, and the answer will likely turn on the health of the U.S. financial industry and broader economy. No crisis is global if American financial markets hold up. The best I can foresee, at this moment, is that a true global financial crisis is not likely.

Pundits are focused on collapsing oil prices, which reflect the technological revolution in production among nimble private producers, combined with weakening global demand for their product. The result has been layoffs in the energy industry, and there will be more. Weak and highly leveraged energy firms have gone bankrupt and more will. But bankruptcy doesn’t necessarily mean that production will decline.

Creditors who lent to these energy producers will suffer losses on their loans, and they too might become financially impaired. If past is prologue, those lenders will be reluctant to fully realize their losses, and they will continue to view future energy prices through too-rosy glasses. Banks will be reluctant to mark down the value of nonperforming loans and book losses, or even set aside sufficient loan loss reserves. They will instead “extend and pretend”—i.e., extend maturities and pretend they expect the loans to be paid back. Will federal and state banking regulators aid and abet the process?

…click on the above link to read the rest of the article…

China’s Hard Landing To Trigger Meltdown In India: “We Will See Another Crisis”

China’s Hard Landing To Trigger Meltdown In India: “We Will See Another Crisis”

Despite RBI Governor Raghuram Rajan’s penchant for catching markets off guard and despite the fact that exports had fallen for eight consecutive months, economists still failed to predict that anything more than 25 bps was in the cards.

“The weakness in India’s exports is striking, not only in terms of past trend, but also from a cross country perspective,” Deutsche Bank wrote at the time. “Indeed, India’s exports performance has been the weakest in the region in 2015.”

In short: in a world gone Keynesian crazy, you live and die by your willingness to engage in competitive easing and with China having just a month earlier moved to devalue the yuan, India had little choice but to cut lest the export picture should darken further.

Since then the malaise has deepened.

Exports have now fallen for 12 straight months and although some of the decline is probably attributable to slumping prices (as opposed to lower volumes), it’s worrisome nevertheless.

“India’s external trade likely fell for second consecutive year in FY16E, with both exports and imports contracting by 18.5%YoY and 17.2%YoY in the period Apr-Nov’15,” Citi notes, adding that “the meltdown in India’s exports and imports was even sharper than the global tradewhich contracted by 12- 13%YoY.”

On Friday, in the wake of China’s continued devaluation of the yuan, Indian Trade Minister Nirmala Sitharaman expressed concern about the effect a sharply weaker RMB will have on her country’s trade deficit with Beijing. “It’s worrying,” she said. “My deficit with China will widen.”

India is now looking at ways to prevent a flood of cheap imports from hitting domestic producers.  “India steel companies such as JSW Ltd have asked the government to set a minimum import price to stop cheap imports undercutting them,” Reuters writes. “A similar measure was adopted in 1999.”

…click on the above link to read the rest of the article…

For Commodities, This Is The Next Great Depression

For Commodities, This Is The Next Great Depression

While the “sell in 1973, and go away” plan had worked out for some in the commodity space, the destruction of the last decade has only one historical comparison… the middle of The Great Depression.

The 10-year rolling annualized return for commodities is -5.1% – the lowest since 1938…

During the same period Stocks are up 7.3% annualized, Bonds 6.6%, and Cash unchanged. Dip-buying opportunity? Maybe.

UBS thinks so: Tactically we can see a bounce in Q1 before the capitulation starts

Tactically, in September 2015, we actually expected a more significant oversold bounce in commodities from last year’s late September risk bottom into ideally early Q2 2016 before we anticipated more weakness into later 2016. So far, the bounce failed since particularly in the energy complex we saw further weakness into December and the metals have been actually just trading sideways. Nonetheless, according to our Q1 US dollar pullback call, we still see the chance for another rebound attempt in commodities into later Q1, and if so the move can be significant (short covering). Such a rebound would however not change our underlying cyclical roadmap for commodities, and this means that any rebound in Q1 should be limited in price and time before we expect another and potential final capitulation wave to start into H2 2016, where we expect the CCI index to minimum test its 2008 low at 350 to worst case 320.

Commodities… on the way into a multi-year buying opportunity

All in all we are sticking to our last year’s projection and strategy call that commodities are on the way into an important H2 2016/early2017 cyclical bottom. What is missing in our view is the final act in this first bear market.

…click on the above link to read the rest of the article…

Saudi Devaluation Odds Highest In 20 Years, Kingdom Now More Likely To Default Than Portugal

Saudi Devaluation Odds Highest In 20 Years, Kingdom Now More Likely To Default Than Portugal

On Monday, we brought you “Saudi Default, Devaluation Odds Spike As Mid-East Careens Into Chaos,” in which we outlined the jump in riyal forwards and widening of CDS spreads that Riyadh witnessed in the aftermath of the kingdom’s move to cut diplomatic ties with Iran.

In short: the market is getting worried that Riyadh is about to careen into crisis. In the face of slumping crude, the Saudis are staring down double digit budget deficits and the prospect of having to once again tap debt markets in order to offset the SAMA burn and keep the kingdom from having to implement further subsidy cuts.

The open hostilities with Iran all but guarantee the war in Yemen will escalate (just today for instance, Tehran accused the Saudis of bombing the Iranian embassy in Sana’a) and that entails a further drain on the kingdom’s finances as the monarchy will be forced to fund a prolonged and intractable struggle with the Houthis.

Additionally, the more tension there is between Riyadh and Tehran, the more fractious OPEC will become and with Iranian supply set to rise in the new year as international sanctions are lifted, this may well be one Mid-East conflict that drives oil prices lower rather than higher – especially if the SAR peg falls.

On Thursday, in the wake of a veritable meltdown in markets across the globe, riyal forwards hit their highest level in almost two decades as oil plummeted. As Bloomberg notes, “twelve-month forward contracts for the riyal climbed 260 points to 950 as of 3:49 p.m. in Riyadh, set for the steepest close since December 1996 [reflecting] growing speculation the world’s biggest oil exporter may allow its currency to slide against the dollar for the first time since 1986.”

…click on the above link to read the rest of the article…

Olduvai IV: Courage
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Olduvai II: Exodus
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