News Dump Thursday: Geopolitical Risk Edition

Entire senior State Department resigns

Secretary of State Rex Tillerson’s job running the State Department just got considerably more difficult. The entire senior level of management officials resigned Wednesday, part of an ongoing mass exodus of senior foreign service officers who don’t want to stick around for the Trump era...
Then suddenly on Wednesday afternoon, Kennedy and three of his top officials resigned unexpectedly, four State Department officials confirmed. Assistant Secretary of State for Administration Joyce Anne Barr, Assistant Secretary of State for Consular Affairs Michele Bond and Ambassador Gentry O. Smith, director of the Office of Foreign Missions, followed him out the door. All are career foreign service officers who have served under both Republican and Democratic administrations.

2.5 minutes to midnight

A group of scientists warn that human civilization is nearer destruction than at any time since 1953. Amid nuclear proliferation, American leadership that dismisses climate change—and in a nod to the 2016 U.S. presidential election—the risk of fake news sparking a crisis, the end is apparently a lot closer than it used to be.
The Doomsday Clock, set by the Bulletin of the Atomic Scientists, was reset Thursday to 2.5 minutes until midnight, a change from 3 minutes, where it was set for two years. It was the first time the organization changed the clock by a half-minute. In 2015, the group changed it from 5 minutes to 3 minutes until midnight, citing threats from “unchecked climate change” and aging nuclear weapons arsenals.
“Nuclear rhetoric is now loose and destabilizing,” Thomas Pickering, a member of the group and a former U.S. ambassador to Russia and the United Nations, said today. He cited U.S. President Donald Trump’s comments that South Korea and Japan might consider becoming nuclear states. “We are more than ever impressed that words matter, words count.”

Science goes rogue

In the wake of the Badlands National Park Service’s Twitter account having its pro-science tweets deleted (after the Department of the Interior had ordered all Park Service social media accounts to go quiet), “rogue” Twitter accounts have begun to sprout up for the NPS, and now for EPA, USDA and NASA. It’s unclear who’s behind these accounts, but their strong defense of established climate science quickly won them a big following.
The AltUSNatParkService Twitter account (@AltNatParkSer) was launched on Tuesday, announcing that it has been “activated in time of war and censorship to ensure fact-based education.” As of Thursday morning, they have 980,000 followers — more than double the number of followers on the main National Park Service account (381,000).
The account introduced itself with defiant messages: “Mr Trump, you may have taken us down officially. But with scientific evidence & the Internet our message will get out,” and “Respect goes out to our brothers and sisters at the @BadlandsNPS. When they silence you, we will speak for you.”

Europe worriees over France's election

Leaders in Spain and Germany voiced concern that the Europe Union faces collapse as a result of anti-establishment forces campaigning to tear down the bloc, singling out their common neighbor France as the potential trigger.
Europe’s unprecedented electoral calendar, with ballots this year in France, the Netherlands and Germany -- plus possibly in Italy -- presents the continent’s “enemies” with the chance to wreck the EU, according to German Vice Chancellor Sigmar Gabriel, a Social Democrat....
Polls suggest that National Front leader Marine Le Pen will make it to France’s run-off vote on May 7, giving her a shot at claiming the presidency on anti-euro, EU-skeptic ticket. She shared a stage last weekend with Frauke Petry of Alternative for Germany and Geert Wilders, whose anti-Islam platform has helped propel his Freedom Party to within reach of winning the March 15 Dutch election.

Al-Qaeda Forces Wipe Out Syrian Rival

Jaish al-Mujahideen, a merger of several “moderate Islamist” factions intended to fight ISIS, was among the Turkey-backed rebels participating in the Astana talks, which led Nusra Front to accuse them of a “conspiracy” against them, since Nusra was not invited to the talks.
Nusra attacked them late Tuesday, vowing to end the conspiracy by force, and FSA officials now say the group has been totally overrun and essentially no longer exists on the ground in Syria’s Idlib Province, which has long been dominated by the Nusra Front.

All of Egypt now a terrorist zone

Coupled with the group's highest profile attack outside Sinai, the bombing of Cairo's Coptic Christian cathedral in December which killed 28, the online campaign shows that the group has extended operations to the rest of Egypt, a key U.S. ally seen as a bulwark against Islamist militancy in the region....
Hundreds of Egyptian soldiers and police have been killed fighting the Islamist insurgency in Sinai. It has gained pace since mid-2013 when General Sisi, then military chief, ousted President Mohamed Mursi of the Muslim Brotherhood, Egypt's oldest Islamist movement, after mass protests against his rule.
Militant group Ansar Bayt al-Maqdis (Supporters of Jerusalem), bolstered by recruits from disenfranchised Bedouin tribes, had been fighting government troops in Sinai since before Mursi's ouster. It pledged allegiance to Islamic State and changed its name to Sinai Province in 2014, the year Sisi was elected president.
When the group claimed the cathedral bombing, its statement did not bear Sinai Province's logo. It said "Islamic State Egypt".
"When the attacks are claimed by 'Islamic State in Egypt' and not simply 'Sinai Province', it is a clear expression from them that they are not simply going to target Sinai, but the broader country," said Hellyer.

wage inequality

Top earners last year made 5.05 times what their lowest-income counterparts took home, the widest gap in data going back to 1979, according to the Labor Department. What’s worse, it shows the most recent improvement -- in 2014 -- was just a blip, and the trend is again moving in the wrong direction seen over almost four decades.
Resilient economic growth and a solid stretch of hiring the past few years had raised expectations that the gap between rich and lower-income workers would shrink in a sustained manner. The reality was disappointing. The growing divide underscores the angst that helped land President Donald Trump in the White House, with his appeal to working-class voters feeling left behind in the economy.

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Americans near the top of the income scale, whose weekly earnings exceed those of 90 percent of all full-time wage and salary workers, made at least $2,095 in a typical week last year, according to the report released Jan. 24. Those in the bottom 10 percent earned less than $415.

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sticking it to labor

For decades, that balance was a roughly even -- in the U.S., labor earned about two-thirds of all income, capital about one-third. That relationship looked so stable that many economists wrote it down in their models as a law of nature. But at least since 2000 -- and possibly since the 1970s -- capital has been taking steadily more of the pie:

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This shift is a concern because it raises the specter of an all-powerful ownership class lording it over a society of impoverished workers -- a sure recipe for mass misery and social unrest. We’re still very far away from that dystopian future, of course, but economists are trying to diagnose the reason for the trend before it gets worse.
Three main explanations had been put forth. Some economists attributed the change to globalization -- a glut of labor from China and other post-communist countries that made workers cheap and plentiful. Others claimed that capital was simply becoming cheaper, leading companies to substitute machines for human workers. And a few others attributed the change to a rise in land rents.
Now, a fourth explanation is emerging. Two new papers suggest that the rise might be due to an increase in market concentration. If industries are slowly inching toward monopoly, a few superstar companies in each sector could be squeezing profits out of the rest of the economy.

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Barkai finds that under this narrower definition, capital’s true income share has actually declined over time -- due in large part to the fall in interest rates and decreasing levels of business investment. What’s grown enormously is profit. Companies are investing less but making a lot more. The author estimates that true profit -- which in a perfectly competitive economy would be zero -- has gone from just over 2 percent of the economy in the early 1980s to more than 15 percent today. Like Autor et al., he pins the blame on increasing monopoly power, noting the correlation between how concentrated an industry is and how little of the pie its workers take home.

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China’s escalating crackdown on capital outflows is sending shudders through property markets around the world.

In London, Chinese citizens who clamored to purchase flats at the city’s tallest apartment tower three months ago are now struggling to transfer their down payments. In Silicon Valley, Keller Williams Realty says inquiries from China have slumped since the start of the year. And in Sydney, developers are facing “big problems” as Chinese buyers pull back, according to consultancy firm Basis Point.

“Everything changed’’ as it became more difficult to send money offshore, said Coco Tan, a broker at Keller Williams in Cupertino, California.

Less than a month after China announced fresh curbs on overseas payments, anecdotal reports from realtors, homeowners and developers suggest the restrictions are already weighing on the world’s biggest real estate buying spree. While no one expects Chinese demand to disappear anytime soon, the clampdown is deterring first-time buyers who lack offshore assets and the expertise to skirt tighter capital controls.

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CB's picture

All of the World’s Money and Markets in One Visualization

Derivatives are a nuclear economic time bomb that can decimate the world's fiat currency. Maybe that is why Russia, China and other Eurasian countries have been buying so much gold?

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CB's picture

It's destroying itself from within.

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ZimInSeattle's picture

In the meantime, here's a great essay about the happenings in Syria: We’ve exhausted the Smooth Operator; time to try the Huckster. Different salesman, same product.

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"Those who make peaceful revolution impossible will make violent revolution inevitable." - JFK | "The more I see of the moneyed peoples, the more I understand the guillotine." - G. B. Shaw Bernie/Tulsi 2020

riverlover's picture

Are bad. A lesson to be re-learned every five years? Waaay behind the ball.

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Hey! my dear friends or soon-to-be's, JtC could use the donations to keep this site functioning for those of us who can still see the life preserver or flotsam in the water.

are when a new administration takes over, those senior staff hand in their resignations. Procedure.
Usually they are told to stay on.

In this case, Trump accepted their resignations.

Think it's a hoot. Wonder what happens next. At least it means no more Patrick Kennedy.

Kinda wanna yell - BAZINGA.

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LeChienHarry's picture

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You may choose to look the other way, but you can never say again you did not know. ~ William Wiberforce

If you can donate, please! POP Money is available for bank-to-bank transfers. Email JtC to make a monthly donation.

Wasn't the State Dept. loaded with corrupt Clinton supporters?

Now Trump can load it up with corrupt Trump appointees.

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Psychopathy is not a political position, whether labeled 'conservatism', 'centrism' or 'left'.

A tin labeled 'coffee' may be a can of worms or pathology identified by a lack of empathy/willingness to harm others to achieve personal desires.