How The Pentagon Is Preparing For A Tank War With Russia

Submitted by Patriuck Tucker via DefenseOne.com,

Reactive armor and cross-domain fire capabilities are just some of the items on the Army’s must-have list.

When Lt. Gen. H.R. McMaster briefs, it’s like Gen. Patton giving a TED talk — a domineering physical presence with bristling intellectual intensity.

These days, the charismatic director of the Army’s Capabilities Integration Center is knee-deep in a project called The Russia New Generation Warfare study, an analysis of how Russia is re-inventing land warfare in the mud of Eastern Ukraine. Speaking recently at the Center for Strategic and International Studies in Washington, D.C., McMaster said that the two-year-old conflict had revealed that the Russians have superior artillery firepower, better combat vehicles, and have learned sophisticated use of UAVs for tactical effect. Should U.S. forces find themselves in a  land war with Russia, he said, they would be in for a rude, cold awakening.

“We spend a long time talking about winning long-range missile duels,” said McMaster. But long-range missiles only get you through the front door. The question then becomes what will you do when you get there.

“Look at the enemy countermeasures,” he said, noting Russia’s use of nominally semi-professional forces who are capable of “dispersion, concealment, intermingling with civilian populations…the ability to disrupt our network strike capability, precision navigation and timing capabilities.” All of that means “you’re probably going to have a close fight… Increasingly, close combat overmatch is an area we’ve neglected, because we’ve taken it for granted.”

So how do you restore overmatch? The recipe that’s emerging from the battlefield of Ukraine, says McMaster, is more artillery and better artillery, a mix of old and new.

Cross-Domain Fires

“We’re out-ranged by a lot of these systems and they employ improved conventional munitions, which we are going away from. There will be a 40- to 60-percent reduction in lethality in the systems that we have,” he said. “Remember that we already have fewer artillery systems. Now those fewer artillery systems will be less effective relative to the enemy. So we need to do something on that now.”

To remedy that, McMaster is looking into a new area called “cross domain fires,” which would outfit ground units to hit a much wider array of targets. “When an Army fires unit arrives somewhere, it should be able to do surface-to-air, surface-to-surface, and shore-to-ship capabilities. We are developing that now and there are some really promising capabilities,” he said.

While the full report has not been made public, “a lot of this is available open source” said McMaster, “in the work that Phil Karber has done, for example.”

Karber, the president of the Potomac Foundation, went on a fact-finding mission to Ukraine last year, and returned with the conclusion that the United States had long overemphasized precision artillery on the battlefield at the expense of mass fires. Since the 1980s, he said last October, at an Association for the United States Army event, the U.S. has given up its qualitative edge, mostly by getting rid of cluster munitions.

Munitions have advanced incredibly since then. One of the most terrifying weapons that the Russians are using on the battlefield are thermobaric warheads, weapons that are composed almost entirely of fuel and burn longer and with more intensity than other types of munitions.

“In a 3-minute period…a Russian fire strike wiped out two mechanized battalions [with] a combination of top-attack munitions and thermobaric warheads,” said Karber. “If you have not experienced or seen the effects of thermobaric warheads, start taking a hard look. They might soon be coming to a theater near you.”

Karber also noted that Russian forces made heavy and integrated use of electronic warfare. It’s used to identify fire sources and command posts and to shut down voice and data communications. In the northern section, he said, “every single tactical radio [the Ukrainian forces] had was taken out by heavy Russian sector-wide EW.” Other EW efforts had taken down Ukrainian quadcopters. Another system was being used to mess with the electrical fuses on Ukrainian artillery shells, ”so when they hit, they’re duds,” he said.

Karber also said the pro-Russian troops in Donbas were using an overlapping mobile radar as well as a new man-portable air defense that’s “integrated into their network and can’t be spoofed by [infrared] decoys” or flares.

Combat Vehicles and Defenses

The problems aren’t just with rockets and shells, McMaster said. Even American combat vehicles have lost their edge.

“The Bradley [Fighting Vehicle] is great,” he said, but “what we see now is that our enemies have caught up to us. They’ve invested in combat vehicles. They’ve invested in advanced protective systems and active protective systems. We’ve got to get back ahead on combat vehicle development.”

If the war in Eastern Ukraine were a real-world test, the Russian T-90 tank passed with flying colors. The tank had seen action in Dagestan and Syria, but has been particularly decisive in Ukraine. The Ukrainians, Karber said, “have not been able to record one single kill on a T-90. They have the new French optics on them. The Russians actually designed them to take advantage of low light, foggy, winter conditions.”

What makes the T-90 so tough? For starters, explosive reactive armor. When you fire a missile at the tank, its skin of metal plates and explosives reacts. The explosive charge clamps the plates together so the rocket can’t pierce the hull.

But that’s only if the missile gets close enough. The latest thing in vehicle defense is active protection systems, or APS, which automatically spot incoming shells and target them with electronic jammers or just shoot them down. “It might use electronics to ‘confuse’ an incoming round, or it might use mass (outgoing bullets, rockets) to destroy the incoming round before it gets too close,” Army director for basic research Jeff Singleton told Defense One in an email.

The T-90’s active protective system is the Shtora-1 countermeasures suite. “I’ve interviewed Ukrainian tank gunners,” said Karber. “They’ll say ‘I had my [anti-tank weapon] right on it, it got right up to it and then they had this miraculous shield. An invisible shield. Suddenly, my anti-tank missile just went up to the sky.’”

The Pentagon is well behind some other militaries on this research. Israeli forces declared its Trophy APS operational in 2009, integrated it onto tanks since 2010, and has been using it to protect Israeli tank soldiers from Hamas rockets ever since.

Singleton said the United States is looking to give its Abrams tank the Trophy, which uses buckshot-like guns to down incoming fire without harming nearby troops.

The Army is also experimenting with the Israeli-made Iron Curtain APS for the Stryker, which works similarly, and one for the Bradley that has yet to be named. Raytheon has a system called the Quick Kill that uses a scanned array radar and a small missile to shoot down incoming projectiles.

Anti-Drone Defenses

One of the defining features of the war in Eastern Ukraine is the use of drones by both sides, not to target high-value terrorists but to direct fire in the same way forces used the first combat aircraft in World War I.

The past has a funny way of re-inventing itself, says McMaster.

“I never had to look up in my whole career and say, ‘Is it friendly or enemy?’ because of the U.S. Air Force. We have to do that now,” said McMaster. “Our Air Force gave us an unprecedented period of air supremacy…that changed the dynamics of ground combat. Now, you can’t bank on that.”

Pro-Russian forces use as many as 16 types of UAVs for targeting.

Russian forces are known to have “a 90-kilometer [Multiple Launch Rocket System] round, that goes out, parachute comes up, a UAV pops out, wings unfold, and they fly it around, it can strike a mobile target” said Karber, who said he wasn’t sure it had yet been used in Ukraine.

Karber’s track record for accuracy is less than perfect, as writer Jeffrey Lewis has pointed out in Foreign Policy. At various points, he has inflated estimates of China’s nuclear arsenal from some 300 weapons (based on declassified estimates) to 3,000 squirreled away in mysterious tunnels, a claim that many were able to quickly debunk. In 2014, he helped pass photos to Sen. James Inhofe of the Senate Armed Services Committee that purported to be recent images of Russian forces inside Ukraine. It turned out they were AP photographs from 2008.

“In the haste of running for the airport and trying to respond to a last-minute request with short time fuse,” Karber said by way of explanation, “I made the mistake of believing we were talking about the same photos … and it never occurred to me that the three photos of Russian armor were part of that package or being considered.”

No Foolproof Technological Solution

All of these technologies could shape the future battlefield, but none of them are silver bullets, nor do they, in McMaster’s view, offset the importance of human beings in gaining territory, holding territory, and changing facts on the ground to align with mission objectives.

As the current debate about the authorization for the use of force in Iraq shows, the commitment of large numbers of U.S. ground troops to conflict has become a political nonstarter for both parties. In lieu of a political willingness to put troops in the fight, multi-sectarian, multi-ethnic forces will take the lead, just as they are doing now in Iraq and Syria.

“What’s necessary is political accommodation, is what needs to happen, if we don’t conduct operations and plan campaigns in a way that gets to the political accommodation,” he said. “The most important activity will be to broker political ceasefires and understandings.”

Sometimes that happens at the end of a tank gun…

'Cost-Burdened-Renters' Surge To Historic Highs As Hillbama-nomics Fails For Low-Income Faithful

As we have discussed many times in the past, for the Average American, owning a home is increasingly unaffordable. This has led to a dramatic surge in rents, and ultimately to a significant squeeze on the cash flow of renters across the nation.

Recall, here is RealtyTrac’s Q1 2016 Home Affordability Index, which showed that 9% of the US county housing markets were less affordable than their historical levels.

The unaffordability of owning a home of course has led to a plummeting national home ownership rate, as shown by Harvard’s recent State of the Nation’s Housing report.

Not surprisingly, as millennials are making less and drowning in debt, home ownership rates for younger age groups has completely fallen off a cliff. As a reminder, more millennials live at home with their parents now than at any other time since the great depression. However, as the chart below shows, home ownership has fallen across the board.

 

The result of all of the above, is that rental prices for everyone have surged, and is putting more and more renters in a position of being significantly cost burdened as more income needs to be directed toward paying the rent. The number of cost-burdened households rose by 3.6 million from 2008 to 2014 to a stunning 21.3 million households. Even more concerning is that the number of households with severe burdens (ie: paying more than 50% of income for housing) jumped by 2.1 million to a record 11.4 million households. As the report states, cost-burdened renters are at historic highs.

From the report

The divergence between the rental and owner-occupied markets is evident in the number of cost-burdened households in each segment. On the owner side, the number of households facing cost burdens (paying more than 30 percent of income for housing) has fallen steadily as high foreclosure rates have pushed out many financially strained owners, low interest rates have allowed remaining owners to reduce their housing costs, and fewer young households have moved into homeownership. As of 2014, the number of cost-burdened owners stood at 18.5 million, down 4.4 million since 2008.

 

The decline has occurred across all age groups, but especially among younger homeowners. Homeowners age 75 and over, however, are among the most cost-burdened groups, with their share at 29 percent compared with 24 percent for households under age 45. With the aging baby boomers swelling the ranks of older homeowners and larger shares of households carrying mortgage debt into retirement, the problem of housing cost burdens among the elderly is likely to grow.

 

On the renter side, the number of cost-burdened households rose by 3.6 million from 2008 to 2014, to 21.3 million. Even more troubling, the number with severe burdens (paying more than 50 percent of income for housing) jumped by 2.1 million to a record 11.4 million. The severely burdened share among the nation’s 9.6 million lowest-income renters (earning less than $15,000) is particularly high at 72 percent. In all but a small share of markets, at least half of lowest-income renters have severe housing cost burdens (Figure 4). While nearly universal among lowest-income households, cost burdens are rapidly spreading among moderate-income households as well, especially in higher-cost coastal markets.

As a result of all of this, low-income renters are increasingly exposed to the risk of eviction – this is the reality of those who can’t seem to understand why all of the experts continue to tell everyone the economy is performing so well.

According to the report, the median asking rent on new apartments was $1,381 per month in 2015, well out of reach for the typical renter earning $35,000 a year. As we pointed out when we discussed this report last year, for anyone curious as to where the “missing” inflation is, look no further than in the rental market. If that doesn’t suffice, ask the 710,000 renters who have been threatened with eviction in the previous three months, with nearly eight out of ten of these threats associated with a failure to pay rent. It is no wonder that millennials are being forced to live rent-free back at home with mom and dad.

TRUMPism and political multi-culturalism post Brexit

Brexit, like a Trump Presidency, is yet another broken cog shaking the Elite’s machine towards global domination.  For better or worse, some are calling it a rise of ‘populism.’  But at the end of the day, social unrest can be easily predicted and scientifically quantified.  The Elite are doing a poor job running the world.  From the French Revolution to the Onion revolution in India – studies have been done that correlate the simple common sense knowledge: when people are hungry, they fight.  Very rarely, such as in the case of the Bolshevik revolution in Russia, any drastic social reform is based on intellectual concepts.  Usually people are just hungry, fed up, angry, and displeased with their owners.  Over a period of 500 years, Feudalism simply changed forms, demographics changed, technology changed the way the people are goverened.  The world’s richest lost $127 Billion on Brexit loss.  So what?  They made Trillions during the last decade.  Practically, very little has changed socially over this 500 year period – still there is a 1% of rulers that own and control the 99%.  The one percent movement should read history.  Again, with few exceptions such as Soviet Russia and a few others, the world has always been like this.  But during that time the Elite have learned a lot about people – and specifically what works and what doesn’t.  People need entertainment, so they’ve made politics a circus.  People don’t want to read books about a political ideology, or study philsophy, they want to watch TV.  Modern ‘politics’ is just another form of entertainment for the masses to keep them fat and happy.  In their lazy-boys loaded with Prozac, Alcohol, and high fructose corn syrup – they like to watch in Ultra High Definition – other people talk about their opinions.  It’s a form of voyeurism (like sports), they don’t actually want to participate in anything, that’s the idea – just press play.  But animal planet- it just doesn’t cut it.  People like drama, gossip, war, and natural disasters.  Hurricanes, Earthquakes, have great ratings.  

Tyler Durden keeps talking about how the net winner of the Brexit situation is Russia.  Well, recently, a local governor in Russia of Kirov region, has been caught ‘red-handed’ receiving a 400,000 Euro bribe.  This begs the question – how is America’s freedom based, capitalist democracy any different from the current system in Russia, or in any other country for that matter?  When Russia had the soviet union, it was easier to compare and contrast the two political economic systems, because they were so different.  During Stalin, there wasn’t any corruption, they were all killed.  But so were millions of innocents.  So what’s the best way forward?  

First, we need to understand that Russia is like a big capitalist baby.  There really is freedom in Russia since the collapse of the Soviet Union – the problem is that – freedom means the freedom to shoot your enemies on the street.  It’s not like the 90’s – but still more like the Wild West, than in Britain, Germany, or America.  There’s no bankruptcy court, no class action precedents, if you don’t pay loans, banks may send out some rough looking guys to ‘check up on you’.  The people who are alive now, they were alive during Soviet Union, either as adults or children.  They received in that time, some sort of government stamps, that they used to get products they needed such as food and basics.  Day to day life, wasn’t so bad – people worked, with paid vacations.  Families would gather in cabins (dachas) near lakes during the summer, much like Americans do in the mid-west (Wisconsin).  They had a film industry.  Science, art, chess, and their own games like Gorodki.  Russia produced Europe’s most advanced culture post World War 2, in many respects.  Anyway – the point is that just like today’s Russia – most of what we know about Russia in the west is just wrong.  

In Russia, the system needs time to evolve (meaning, many generations).  There’s babies being born now who will be the Edward Snowden of their system, the lawyers who will go to law school in New York to return to Moscow and create a securities class action litigation industry.  Why is corruption like this not possible in America today?  Well, for several reasons – one – there’s a highly monitored electronic payments system that monitors politicians (in extreme cases of outright fraud).  Two, political watchdogs, action groups, and even the FBI will follow up on public corruption leads.  Why does America have all this?  Because public corruption was so bad in America, it even ruined our biggest cities.  Many Americans have never heard the name “Tweed” but they should know it:

Tweed was convicted for stealing an amount estimated by an aldermen’s committee in 1877 at between $25 million and $45 million from New York City taxpayers through political corruption, although later estimates ranged as high as $200 million.

What Tweed did was create a roadmap for future corrupt politicians – what to do and what not to do.  For example, Tweed invented the idea of overbilling for simple jobs, such as $50,000 toilet seat:

….For example, the construction cost of the New York County Courthouse, begun in 1861, grew to nearly $13 million – about $178 million in today’s dollars, and nearly twice the cost of the Alaska Purchase in 1867.[13][17] “A carpenter was paid $360,751 (roughly $4.9 million today) for one month’s labor in a building with very little woodwork … a plasterer got $133,187 ($1.82 million) for two days’ work”.[17]

But finally – it wasn’t possible to sustain and social unrest ultimately caused the corrupt ring to unravel:

..Tweed’s downfall came in the wake of the Orange riot of 1871, which came after Tammany Hall banned a parade of Irish Protestants celebrating a historical victory against Catholicism, because of a riot the year before in which eight people died when a crowd of Irish Catholic laborers attacked the paraders. Under strong pressure from the newspapers and the Protestant elite of the city, Tammany reversed course, and the march was allowed to proceed, with protection from city policemen and state militia. The result was an even larger riot in which over 60 people were killed and more than 150 injured.

It resulted in major reforms.  Of course, under such rule, the City of New York could not flourish, regardless of the economic strength.  

Thus, the city’s elite met at Cooper Union in September to discuss political reform: but for the first time, the conversation included not only the usual reformers, but also Democratic bigwigs such as Samuel J. Tilden, who had been thrust aside by Tammany. The general consensus was that the “wisest and best citizens” should take over the governance of the city and attempt to restore investor confidence. The result was the formation of the Executive Committee of Citizens and Taxpayers for Financial Reform of the City (also known as “the Committee of Seventy“), which attacked Tammany by cutting off the city’s funding. Property owners refused to pay their municipal taxes, and a judge – Tweed’s old friend George Barnard, no less – enjoined the city Comptroller from issuing bonds or spending money. Unpaid workers turned against Tweed, marching to City Hall demanding to be paid. Tweed doled out some funds from his own purse – $50,000 – but it was not sufficient to end the crisis, and Tammany began to lose its essential base.

But even today, this game of cat and mouse continues, as a group close to the Bush family struggles to control electronic voting in America through Diebold:

Diebold: the controversial manufacturer of voting and ATM machines, whose name conjures up the demons of Ohio’s 2004 presidential election irregularities, is now finally under indictment for a “worldwide pattern of criminal conduct.” Federal prosecutors filed charges against Diebold, Inc. on Tuesday, October 22, 2013 alleging that the North Canton, Ohio-based security and manufacturing company bribed government officials and falsified documents to obtain business in China, Indonesia and Russia. Diebold has agreed to pay $50 million to settle the two criminal counts against it. This is not the first time Diebold’s been accused of bribery. In 2005, the Free Press exposed that Matt Damschroder, Republican chair of the Franklin County of Elections in 2004, reported that a key Diebold operative told Damschroder he made a $50,000 contribution to then-Ohio Secretary of State J. Kenneth Blackwell’s “political interests” while Blackwell was evaluating Diebold’s bids for state purchasing contracts. Damschroder admitted to personally accepting a $10,000 check from former Diebold contractor Pasquale “Patsy” Gallina made out to the Franklin County Republican Party. That contribution was made while Damschroder was involved in evaluating Diebold bids for county contracts. Damschroder was suspended for a month without pay for the incident. Despite the scandal, he was later appointed as Ohio Secretary of State Jon Husted’s Director of Elections.

Corruption is not possible in America, as what happened in Kirov, Russia recently.  But one reason, it’s because America has made an industry out of corruption it’s called “lobbying.”  Capitalism has created a democracy such that- one dollar = one vote.  America is free, but people choose to watch TV and become programmed zombies.  If you believe in the free press, if you believe in democracy, read this true life story about a hacker who fixed elections in South America:

When Peña Nieto won, Sepúlveda began destroying evidence. He drilled holes in flash drives, hard drives, and cell phones, fried their circuits in a microwave, then broke them to shards with a hammer. He shredded documents and flushed them down the toilet and erased servers in Russia and Ukraine rented anonymously with Bitcoins. He was dismantling what he says was a secret history of one of the dirtiest Latin American campaigns in recent memory.

For eight years, Sepúlveda, now 31, says he traveled the continent rigging major political campaigns. With a budget of $600,000, the Peña Nieto job was by far his most complex. He led a team of hackers that stole campaign strategies, manipulated social media to create false waves of enthusiasm and derision, and installed spyware in opposition offices, all to help Peña Nieto, a right-of-center candidate, eke out a victory. On that July night, he cracked bottle after bottle of Colón Negra beer in celebration. As usual on election night, he was alone.

Not in America?  Remember – our recent account of Tweed.  So, while corruption like what happened recently in Kirov is not possible- it is however possible for a family to become billionaires with their power while in office, in a string of odd ‘coincidences.’ (i.e. Clinton, Bush)  They can’t make bribes – but they can trade favors, they can do power-broking.  

So, has anything really changed in America?  Special interest groups dominate the political scene – along with lobbyists, foreigners, and others with a political agenda.  But isn’t that a natural evolution of capitalism?  Those who amass wealth ultimately buy the system that ensures their dominance?  And that includes the political system.  

How to stop corruption?

Ultimately, if corruption is out of control – the only way to stop it is with a mass of angry villagers with pitchforks.  Whether it be the riots that stopped Tweed, or the million man march in Washington DC – this is the only real change.  Protests, political action groups, lawsuits, are a step in the right direction, but by themselves meaningless.  Corruption can be stopped only by exposing the corruption first, and then by presenting with a solution.  Without a solution then the corrupt politicians will just be replaced with another corrupt politician.  Is a Trump presidency a start to shake up that status quo?  Trump supporters think so.  Will the election be fixed?  Well, the Republican party is already trying to change the rules, that they won’t let Trump on the ballot.  One delegate of the RNC is suing on grounds that Trump isn’t fit to be President:

Correll is bound to vote for Trump on the first ballot at the convention. Trump won Virginia’s primary on Super Tuesday.

“Correll believes that Donald Trump is unfit to serve as President of the United States and that voting for Donald Trump would therefore violate Correll’s conscience,” the complaint reads. “Accordingly, Correll will not vote for Donald Trump on the first ballot, or any other ballot, at the national convention. He will cast his vote on the first ballot, and on any additional ballots, for a candidate whom he believes is fit to serve as President.”

Most of the RNC is against Trump – can they stop him?  Well, they certainly can choose to not support him, but Trump can always form his own political party.  It’s surprising he hasn’t done this already.  Those in politics always try to change the rules in their favor – it’s part of how politics works.  Reagan got the Christian Coalition to vote for him, Christians who previously weren’t even registered.  The Democrats then retorted with the Black & Hispanic vote, and finally the gay vote.  Rules of registered voters, where the district lines are drawn, and how voting is held – can change election results.  In the most extreme case, which is unlikely, the Electoral College could basically select whoever they want for President – Newt Gingrich.  Someone they all know.

Only a mass of people can stop corruption, in a number of ways.  One way – stop voting.  Stop paying taxes.  If no one voted, there could be no corrupt winner.  But everyone believes in the system, and ‘buys in’ to the party line, that their candidate is less evil than the other, even though they know deep down that 99% of candidates are dirty, lying, corrupt, scummy, vultures.  In the corporate world we see often Boycotts as a means to stop a practice that consumers don’t like.  Generally, it works.  In the case of Russia – the people need to wake up and start participating.  And same as in America too and probably all countries – there’s always freedom to drop out.  It’s not legally required to have a Television.  It’s possible to shoot it, or throw it out the window.  

In other words, by using the system, the people support it.  This is true with any system, such as the US Dollar.  When America has a ‘strong dollar’ policy, they encourage the use of the US Dollar.  It has nothing to do with Fed interest rate policy.  Because when people need to use the US Dollar, there is a natural demand to buy dollars.  To understand how this works checkout Splitting Pennies – Understanding Forex.  It’s the same with the political system.  As long as people use it, and support it – they’ll get the politicians they deserve.  In fact, voters always get the politicians they deserve.  Democracy works, even though it’s a terrible idea.  Democracy is the tyranny of the mob; the weak, unwashed, unenlightened, and incompetent.

They Are Putting Armed Guards On Food Trucks In Venezuela

Submittted by Michael Snyder via The End of The American Dream blog,

Security Guard - Public Domain

We are watching what happens when the economy of a developed nation totally implodes.  Just a few years ago, Venezuela was the wealthiest nation in all of South America, and they still have more proven oil reserves than anyone else on the entire planet including Saudi Arabia.  But now people down there are so hungry and so desperate that some of them are actually hunting dogs, cats and pigeons for food.  Just a few days ago, I gave a talk down at Morningside during which I warned that someday we would see armed guards on food trucks in America.  After that talk was done, I went back up to my room and I came across a New York Times article which had been republished by MSN that explained that this exact thing is already happening down in Venezuela…

With delivery trucks under constant attack, the nation’s food is now transported under armed guard. Soldiers stand watch over bakeries. The police fire rubber bullets at desperate mobs storming grocery stores, pharmacies and butcher shops. A 4-year-old girl was shot to death as street gangs fought over food.

 

Venezuela is convulsing from hunger.

 

Hundreds of people here in the city of Cumaná, home to one of the region’s independence heroes, marched on a supermarket in recent days, screaming for food. They forced open a large metal gate and poured inside. They snatched water, flour, cornmeal, salt, sugar, potatoes, anything they could find, leaving behind only broken freezers and overturned shelves.

All over the country, people are standing in extremely long lines day after day hoping to get some food.  Sometimes the food trucks don’t bring anything, and sometimes it is just scraps like fish heads and rotten fruit.  To get a better idea of what life is like in Venezuela right now, just check out this YouTube video

As people down in Venezuela get hungrier and hungrier, extreme desperation is setting in.  And with extreme desperation comes crime and violence

A 4-year-old girl, Britani Lara, was reportedly shot to death Tuesday in the Caracas suburb of Guatire as she stood in line with her mother outside a  government-owned Mercal grocery store.

 

El Nacional newspaper reported that gangs on motorcycles have fought over the right to control and distribute food at the Guatire store and that the gunfire may have been a result of  that dispute. Eight others were reportedly injured in the incident.

 

Violence also was reported at a food protest staged in front of a store in the city of Cariaco in central Sucre state, where 21-year-old Luis Fuentes was killed by a gunshot. Eleven others were wounded, according to El Nacional newspaper.

Could you imagine living in a nation where all this is going on?

Most Americans could not even conceive of such a thing.  But of course the truth is that up until just recently most Venezuelans could not either.  In fact, just a couple years ago Venezuela was one of the most prosperous nations in all of South America

Two years ago, Venezuela was a normal functioning nation, relatively speaking of course. It was by no means a free country, but the people still had a standard of living that was higher than most developing nations.

 

Venezuelans could still afford the basic necessities of life, and a few luxuries too.

 

They could send their children to school and expect them to receive a reasonably good education, and they could go to the hospital and expect to be effectively treated with the same medical standards you’d find in a developed nation. They could go to the grocery store and buy whatever they needed, and basic government services like law enforcement and infrastructure maintenance worked fairly well. The system was far from perfect, but it worked for the most part.

There are all sorts of signs that the thin veneer of civilization that we all take for granted in the United States is starting to crumble as well.  If you follow End Of The American Dream on a regular basis, you know that I post articles about this theme all the time.  But today I just want to share one tidbit with you.  Reuters is reporting that the number of heroin users in this country has nearly tripled since 2003, and the number of heroin-related deaths is now about five times higher than it was in the year 2000…

A heroin “epidemic” is gripping the United States, where cheap supply has helped push the number of users to a 20-year high, increasing drug-related deaths, the United Nations said on Thursday.

 

According to the U.N.’s World Drug Report 2016, the number of heroin users in the United States reached around one million in 2014, almost three times as many as in 2003. Heroin-related deaths there have increased five-fold since 2000.

 

“There is really a huge epidemic (of) heroin in the U.S.,” said Angela Me, the chief researcher for the report which was released on Thursday.

Just like Venezuela, our society is rotting too.  As I have warned before, the exact same things that are happening down there right now are coming here too.

It is just a matter of time.

On a side note, I would like to congratulate the British people for voting for independence from the European Union.  As I have been writing this article, the results have been coming in, and at this point it looks like victory is virtually assured for the “Leave” campaign.

I would have voted “Leave” myself if I lived in the United Kingdom, but let there be no doubt about what comes next.  Uncertainty and chaos are going to reign in European financial markets, and we have already seen the biggest one day drop in the history of the British pound.  There is going to be short-term economic and financial pain, but the people of the United Kingdom have done the right thing for their children and their grandchildren, and for that they are to be applauded.

China Devalues Yuan Most In 10 Months As Premier Li Warns Of Brexit "Butterfly Effect" On Financial Markets, Economy

In a somewhat shockingly honest admission of the frgaility of the global financial system, Chinese Premier Li warns that a disillusioned British butterfly has flapped its wings and the entire global financial system could collapse. Responding to the plunge in offshore Yuan since the Brexit vote (down 7 handles to 5-month lows over 6.65), PBOC devalued Yuan fix by 0.9% (6 handles) – the most since the August crash – to Dec 2010 lows. Finally, we note USD liquidity pressures building as EUR-USD basis swaps plunge.

Offshore Yuan is 3 handles cheap to onshore Yuan and 9 handles cheap to Friday’s fix…

And so PBOC was somewhat forced to devalue yuugely…

  • *CHINA WEAKENS YUAN FIXING BY 0.9%, MOST SINCE AUGUST
  • *PBOC TO INJECT 270B YUAN WITH 7-DAY REVERSE REPOS: TRADER

 

While Chinese stocks remain ‘stable’ (despite Goldman suggesting more pain is due – regional cost of equity to rise 50-75bps as risk appetite shrinks after Brexit, equal to 5%-10% index decline), the less managed rest of the world is struggling and China knows it…

Premier Li Keqiang said an increase in instability in a particular country or region could trigger the “Butterfly Effect,” which could, in turn, affect the global economic recovery and financial market stability, according to comments posted on Chinese central govt’s website.

 

All economies highly dependent on each other and no country can manage alone, Li said during meeting with WEF executive chairman Klaus Schwab in Tianjin.

 

Li called on all nations to enhance coordination and work together to address difficulties.

The shift in the Yuan Fix (red) seemed clear from the collapse in offshore Yuan… CNH > 6.65 (7 handles weaker than pre-Brexit)

 

Here’s why Americans might want to care about this Brexit butterfly and China crash…

 

Finally, we note that USD liquidty needs are getting very serious as EUR-USD basis swaps surge lower indicating major USD demand…