Investing in a Geopolitical World

June 28, 2018

To much has been made from terms like “political-risk trade,” “geopolitical risk premium,” and geopolitical tensions and headwinds that are supposedly driving global markets. These terms are causing everything from defensive tones in markets, bond sell-offs, trade war uneasiness and debt sustainability fears. Add anxieties and concerns over Italian governance structure, Turkey under Erdoganbecoming a dictatorship similar to President Xi’s power grabin China, major US sanctions on Russia,Venezuela’s collapse, the Iran nuclear deal in “critical condition,” and populist leftismtaking hold in Mexico’s upcoming elections; and what investors should have is volatility in currency, bond and stock markets. However, the CBOE Volatility Index (VIX) remains subdued, but the same geopolitical sentiments were bandied about in 2017 that markets were crashing over world events. Yet when examined factually – 2017 was a banner year for investors – and economies.

The prior year’s investment portfolio deliveredincredible results for investors: US stocks produced 20% returns with roughly 8.5% volatility, historically high Sharpe ratioratio of 2.4 (7-times the long-run average for the S&P 500), sustained global growth, lower inflation, good credit-spreads, a weaker dollar and rebounding oil prices from the 2014 crash. US Treasury’s stayed around 2.4% despite three US Federal Reserve interest rate hikes and corporate tax reform that is paying off with $300 billion repatriated back to the United States in the first quarter of 2018 accordingto the US Bureau of Economic Analysis.

Even the Economic Policy Uncertainty Index(EPUI) was calm for 2017:

“Marked by the absence of controversial elections, abundant liquidity, good growth, falling unemployment, few major military clashes and a US President focused on domestic matters contributed to an all-time low VIX reading in September 2017.”

In other words we have the same conditions in 2018 that occurred in 2017. Additionally, a majority of Americans, which will help calm geopolitical tensions and help markets and investors, believewe have the diminished threat of nuclear war with North Korea after the Trump-Kim summit. The biggest investment concern for 2018 should be how Shanghai’s benchmark stock index, “plunged to its lowest level in two years,” off US trade war concerns that have created a “bad sentiment for the market as a whole.” But the upside for Chinese investors domestically and globally is great news from a recent International Energy Agency (IEA) reportthat stated:

“China, whose market grew by an astonishing 15% in 2017 with a strong coal-to-gas switching program in the residential and industrial sectors, is set to continue to lead the trend with an expected average annual growth rate of 8% for the next five years. Driven by continuous economic growth and strong policy support to curb air pollution, China accounts for 37% of the global increase in gas consumption between 2017 and 2023, more than any other country.”

These are solid economic reasons to invest in the natural gas portion of the energy sector through all facets of the industry. Pipelines, steel, trucking, drilling services, etc., instead of being concerned about geopolitics that are hard to define and constantly evolving without giving concrete investment directions. Search for US, European and Asian firms that have a leading role in the supply and export growth of liquid natural gas (LNG). As shale output is expected to support the US exceeding 11 million barrels per day(bpd), and this means tight oil output will lead to increased fracking for natural gas. China has demand for LNG and the US can supply their needs; outside of politically heated buildup to trade wars that likely won’t take place or will be muted in their size at best.

Furthermore, in this environment that is saturated with geopolitical news, look for active private equity firms, global growth managers and hedge funds that focus on industries with multinational leadings firms that can navigate political stress. Exploiting global growth in 2018 will still be determined by supply and demand, clean financial statements; cash flow and are you an industry leader in your sector.

The situations in Iran, Venezuela, Libya and China’s hegemonic behavior in the South China Sea are distressing, but market impacts should be limited. At least Libya’s attemptingto fix their internal energy issues and China wants economic growth more than a war with the US or other Asian nations over the South China Sea or Taiwan, but Venezuelaand Iranshould be closely watched over large supplies of crude oil disappearing from the markets over geopolitics.

Venezuela and Iran are current, ongoing examples where geopolitics is shaping supply and demand and that should be closely monitored. But investors can use this geopolitical stress to their advantage and go long on oil futures, particularly with hot summer months leading to the US and other western nations demanding more oil and petroleum products.

If geopolitics sways your investment decisions then watch if the US dollar continues strengthening will it cause emerging-market currency weakness? Moreover, will interests rates keep rising over better economic indicators and if US high yield credit spreads to determineif there, “is a liquidity or solvency squeeze.”

Geopolitical events can certainly weigh on the market but there doesn’t seem to be any risk – outside of global energy prices rising – for other sectors to morph into crisis. Going back to the EPUI – it is still one of the best ways to track – anxious investment sentiments over world events and erratic political behavior. The latest readings indicate markets aren’t convinced there is a cataclysmic incident or contagion at this time or on the horizon. Let wise, economic reality and bullish attitudes guide your investments for the second half of 2018.

 

 

 

 

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What I Learned Covering the Fastest Growing Technology Conference in North America

May 10, 2018

A DISILLUSIONED INTRODUCTION

Roughly fifty journalists – including myself – were straining to hear the CEO of an Internet transparency, non-profit organization on day one speaks about why openness and inclusiveness make good business sense. Then his politics stole the show when he informed the assembled journalists the reason the Syrian war erupted into the disaster for a generation was over drought-like conditions in the Sahara Desert and climate change. That’s when I knew I was in for something I never signed up for when I accepted an offer to be a journalist at the Collision Conference, May 1-3 in the New Orleans.

Fortune 500 states, “Collision is America’s fastest growing tech conference bringing Fortune 500 companies, groundbreaking startups and world-class speakers to New Orleans.” However, because of left-leaning politics being the centerpiece of this conference, it is now moving to Toronto, Canada where Prime Minister Justin Trudeau believes in global warming, embraces technology, and more importantly, he isn’t Donald Trump. But it was the young, eager Collision staff  – who made promises they weren’t prepared to keep – that was the most troubling part of this conference. From being told there was 25,000 confirmed attendees (maybe 3-4k attended) to having promises made that I would have exclusive access to over 300 speakers. When in actuality the only ones I and other journalists truly had access to were the start-up app developers who dominated the convention floor.

This window into the “tech-world,” should make investors in these companies, economies built on technology and anyone who believes in the rule of law and contracts to stand back and take pause over the upcoming generation of technology leaders and their enthusiasts. The reality is technology will not be changing the future anytime soon if this conference is indicative of apps bought through iTunes or the Android platform running our lives that are big on promises but vague on actual execution.

AN INVITATION THAT PROMISED THE MOON

When I was invited as a journalist to report on the conference it seemed an odd fit. My writings and consulting practice focuses on energy, national security, and Foreign policy, and California politics. Somehow, in late 2017, early 2018 my energy writings caught the Collision staff’s attention and I received an invitation to attend the conference at no cost. Then I was sent the speaker list, which included people like Al Gore to Wycleff Jean (who was the best speaker at the conference when it came to actual substance). After big promises were made to me about exclusive access to these speakers I accepted the invitation to attend though I’ve been a strident critic of renewable energy, electric vehiclesand the overall conceptof clean energy.

Being able to request one-on-one interviews with some of the biggest names in media, finance, technology, A.I., investment management and clean energy was a unique opportunity. What I planned to write on had to be approved by the Collision media staff. Fair enough, I thought – and the story I pitched and got approved – was the problem of 600 million Africans without energy at this time according to The World Bank.

My interviews were going to center around their thoughts for the best way to blend traditional energy (fossil fuels) and clean energy (wind, solar, hydroelectric that have huge cost, reliability and deliverable problems) to these Africans to bring them out of energy poverty.  Collision’s media staff promised that my story would bring an exciting, fresh angle to the clean energy segment of the conference.

THE INFLUENCE-MAKERS DECLINED

Not one speaker accepted my invitation. Whether it was the President of the ACLU and Microsoft to famous actors and producers – even the President of ABC News – either never got back to me, outright declined the invitation, or would send me to a series of publicists and media-handlers who had no interest whatsoever in talking about anything related to my story. Never once did the millennial-dominated Collision staff intervene to assist with these problems.

I quickly learned that invitations given months ahead of time were never answered and “access,” during the conference was limited to controlled environments through pre-screened questions via public relations specialists or corporate communications departments in multi-national corporations. The only time high-profile speakers would take questions were in large groups that were tightly controlled by Collision media staff. Promised one-on-one interviews that I and other media members were assured of never happened.

But if I ‘d spoken of, written about, or pitched stories on climate change, global warming or how Donald Trump is ruining the world then more than likely my interview requests would’ve been accepted. The only time I had any success was when I accidentally sat down in the lobby for a late lunch next to a leading executive from BlackRock investment management firm. He politely informed that no way would his corporate communications’ department allow him to speak with me about such a complex issue as energy security and poverty in Africa. Sadly, this executive was a very handsome and successful African-American man.

BROKEN PROMISES OR OUTRIGHT LYING?

The younger generation that ran the Collision conference also has big problems when it comes to telling the truth – or what could be construed as outright lying – while understanding the correlation between profits and technology. Mainly, the overall lack of cohesion for why anyone attended the 3-day event in New Orleans loomed over the entire conference. I walked the convention floor for hours and interviewed individuals involved in each facet of the conference and no one could ever give me a cogent answer on why this conference existed. The group from Amazon Web Services (AWS) and the cloud architects from McKinsey Management Consulting seemed to be the only firms and individuals selling real services to grow businesses. Outside of enjoying New Orleans’ nightlife, no one gave me a valid for buying convention tickets that started at $800 and went up to $24,000 for the ubiquitous Collision VIP dinners where I was also promised access, but found out that wasn’t the case.

The best answer I received for Collision’s existence was from a magazine journalist who traveled the country covering conventions. This journalist believed that app development, cloud architecture, A.I., robotics and automation were the next wave of the future. And this conference was a beacon pointing to that bright path. We also compared notes to every promise made to us by the Collision staff and how none of them were kept.

Again, truth was a relative term at this conference. The best the Collision staff could help with keeping their word to others and me about access to speakers for interviews and stories was to let us know the chat feature on the Collision app was the best way to contact speakers. Somehow, I doubt if the Al Gore, the President of the ACLU or the Editor-in-Chief of WIRED magazine checked messages from the Collision app!

Either the Collision staff was lying to make sure media and journalists attended or it is something more insidious. Since truth and morality are no longer bound in reason or history, more than likely these young millennials believed what they told me and other journalists while never actually finding out if someone like Al Gore had any intention of sitting down with the media. Better to show you have a large media profile than find out if what you are saying is true or if you are exaggerating or even lying.

If truth is relative to a majority of millennials then say what you want if it fits into your hyperbolic narrative. That’s the biggest thing I took out of the conference was how the millennial generation can’t be trusted and needs to be double-checked on anything they say or have it in a contract. This sentiment pervaded the entire conference. For investors, companies and markets that rely on this generation I would double-check their financial statements and everything this generations says before fully trusting them.

THE BRIGHT SPOTS 

The hard working, believers in the American dream, app developers and start-up companies on the convention floor pitching their apps were the best part of the conference. And one millennial gave me hope for his generation’s future and his company. His name is Soffonias Gebrehiwot and he is the CEO and Founder of a travel app named, Gage Inc. Soffonias is everything you would want in a young, business leader. Smart, dedicated, and enough business acumen and moxy to make his company profitable. He’s from Ethiopia, graduated with a human design engineering degree from the University of Washington and before starting his company worked for Accenture. He embodies the spirit of anyone can be successful in America while wanting to make travel a way to connect people through local guides using a peer-to-peer platform. Gage Inc. under Soffonias’ leadership believes they can cut travel costs by 50% while changing minds and opinions through world travel. Soffonias has a belief that man can help each in profitable businesses by immersing one another in different cultures. A lofty goal and if anyone can succeed in this vision it is Soffonia.

The company and person that blew me away is a geospatial energy firm, Transect.com, led by Chief Business Officer and Co-Founder, Sam Laine. This company literally maps the safest, most environmentally friendly way to lay pipelines that bypasses endangered species, protected wetlands and any type of affected waterways. I wouldn’t be surprised if Exxon-Mobil, British Petroleum or any leading oil-pipeline firm buys this company for over a billion dollars in the near future. Sam was a seasoned professional in his early 50s and was a welcome change to the millennial crowd and older, hostile liberal speakers who made up the bulk of the convention.

FINAL THOUGHTS 

No one should accept that technology led by apps; robots and automation will rule the world or do away with human workers. The Collision staff and participants are possibly well meaning but I’d argue decades away from making this tech-driven future a possibility. Utopian-filled dreams came to mind during my three days covering the event over real-world profits and sustainable business models. It’s no accident the company with the best future was led by an older professional (Sam of Transect.com) that had a real product (geospatial pipeline mapping) that services the largest industry in the world (fossil fuels). New Orleans is an amazing city, but unless major changes take place I won’t return to Collision Conference and I wouldn’t recommend the event to anyone unless you had a specific reason for attending.

 

 

 

 

 

 

 

 

 

 

 

 

 

The Geopolitical Disconnect Taking Place in World Markets

April 28, 2018

Geopolitical spats taking place in Syria, tensions over China’s militarization of the South China Sea, nuclear threats from North Korea and daily tweets from President Trump have caused market turbulence in 2018. Yet the ten-year United States (US) Treasury yield reached 3%for the first time in ten years showing a sign of investor confidence and stable economic growth. The IMF also reiterated strongmarket fundamentals and US jobless claims are at their lowest level in 48 years. Then why are markets considered so volatile at this time? The reason seems to be geopolitical-news-headlines-of-the-day trumping market sanity and strong macroeconomic fundamentals.

But it’s worse for investors within this latest round of geopolitical bluster when, “export-facing currencies, trade-sensitive emerging markets and government bonds have barely moved.” Yes, the CBOE volatility index (Wall Street’s fear gauge), measuring expected precariousness of the S&P 500 based on option prices has recently climbed12%, but currencies are unmoved. The Deutsche Bank Currency Volatility Index is near its lowest level in three month; two points below its 5-year average, and the Merril Lynch Bond Volatility Index has declined, “since tariffs were signed.”

James Athey, senior investment manager at Aberdeen Standard Investments pointedly states, “This is headline risk and volatility-driven removal of positions rather than rational increase in the probability of trade wars.” Equity markets aren’t looking at stable income statements and balance sheets or even the basics of economic supply demand, instead short-term equity markets participants are allowing themselves to be slaves to news-driven investment strategies.

Goldman Sachs joined this bandwagon when they stoked fears about global markets by saying, “The Only Two Times We’ve Seen A Market Like This Was The Cuban Missile Crisis And The 1987 Crash,” on their way to record earnings. Even JP Morganhas been perplexed by this disconnect taking place between “volatility in asset classes,” when they stated in a strategic research note in early April:

“Most of what is passing for explanations are little more than post-facto rationalizations of price action. Our sense is that market participants are as perplexed about comatose [FX volatility] as we are.”

Here’s a sampling of recent overheated news headlines that haven’t made a dent in healthy markets or companies but give the impression we are heading towards WWIII or the next Great Depression. Russia and Iran warn of “global chaos,” after US led strikes on Syria. Putin predicts chaosif more strikes occur in Syria. Saudi Arabia would send and assist leading an Arab coalitionagainst Iran in Syria stoking further regional tensions.

China though seems to particularly rattle markets with the threat of a trade war that never materialized with the US. While China is a  geopolitical case-studyreminiscent of Japan in the 1930s according to historian – Dr. Victor Davis Hanson – the danger China currently poses via “China’s New Revolution,” is excessive. While President Xiis similar to Mao by having absolute control over China’s government and Communist Party, the Pentagon and its allies have plans to confrontthe Chinese army and Xi over their aggressive behavior in Southeast Asia.

Moreover, one crucial part of China’s force projection through their outdated aircraft carrier, Liaoning,isn’t as lethalas made out to be by China, other governments and world press organizations. China’s own state television admitted, “it requires a little bit of luck plus a strong body and mind to land a plane safely on its deck.” And it appears Xi, “blinked first,” according to Business Insider in its trade battle with the US and Trump. The geopolitical tensions China causes markets globally appear to be rhetoric surpassing prudent financial and investment principles.

Crude prices are where the greatest price swings over geopolitical volatility take place, more so than stocks or bonds. OPEC’s historyhas shown Saudi Arabia playing the role of, “swing producer, by regulating its output to keep the market in balance.” OPEC, particularly Saudi Arabia, has also gone to warwith US shale over the 2015 Iran nuclear dealand imposed a costly oil embargo over President Nixon’s decision during the 1973 Yom Kippur warto establish emergency supply lines that included oil, gas and arms shipments.

What are really driving oil’s bullish sentiments aren’t geopolitical events, such as the de-certification of the Iran deal by President Trump; instead oil markets are tightening. But US oil output is expected, “to hit 10.7 million bpd this year, rivaling top producers Russia and Saudi Arabia.” Just one region of west Texas has seen an 800,000 bpd surgein one year, “pushing the region’s crude to almost a $13 a barrel below international benchmark Brent crude, the biggest discount in three years.” This signals US exports to Europe will increase and they have. The US is now setting all-time records of exportsto Europe in April of 550,00 bpd; likely negating any negative geopolitical tensions arising from pulling out of the Iran deal.

There is, however, a bullish and bearish case for oil from an April 12 notefrom Barclays stating:

“Oil prices could rise due to the perfect storm of stagnant supply, geopolitical risk and a harsh winter. On the flip side (bearish) explosive growth of U.S. shale keeps the market well supplied, and ultimately forces a downward price correction in the second half of the year.”

The bull side reveals that oil is in high demand – especially in Asia– with Reuters estimatingthat China will import over 9 million bpd in April. China’s overall demand is expected to jump 370,000 bpdbpd in 2018. Other concrete reasons for oil to rise is the latest Oil Market Reportfrom the International Energy Agency (IEA). The report revealed OPEC production cuts are working since supply is expected to be less than demand for 2018, causing additional inventory depletion.

Recently, Brent closed in the $70 dollar range for the first time in over three years. These prices are roughly 50% higher than they were last August. Bullish news was also buoyed by the weekly reportfrom the Energy Information Administration (EIA) showing a 1.1 million barrel drop in US crude oil inventories, gasoline and diesel also dropped by 3.0 million barrels bringing total commercial inventory draws to 10.6 million barrels in late April. A very large and bullish draw on inventories that caused Bloombergto report Saudi Arabia’s new Brent target price of $80/bbl. Reuters, however, reported the price target could be as high as $100/bbl. These are fundamental reasons for oil prices to be high instead of the “geopolitical risk premium.”

On the bear-side that could see price decline the EIA said in its monthly Drilling Productivity Report, “that U.S. shale production is expected to increase 125,00 bpd in May over April.” Furthermore, there is more than enough supply to withstand OPEC production cuts and geopolitical events in the Middle East, Venezuela or the South China Sea. There are billions of barrels of oiloff both American coasts. New finds in South America that includes offshoreand shale plays. Canadian Prime Minister Trudeau backscontroversial, though plentifulCanadian oil sands.  And the new estimated80 billion barrel findin Bahrain means the world is awash in oil and prices could crater instead of worries over the geopolitical risk premium raising prices.

Now, of course, there are geopolitical risks that some are seeing as back to the Cold Warthat could disrupt markets. But our world is a byproduct of the Bretton Woods agreement, which set up liberal, interconnected global markets. It’s why North Korea will now possibly lay down their nuclear weapons, China doesn’t wanta trade war and the US wantsto rejoin the TPP trade pact.

The Chinese, Russians, Iranians and other countries who loathe the west and the US-led post WWII order may speak aggressively, like the US, but none of these countries are going to kill global prosperity by starting another world war. Investors should regain wise investment strategies and turn off the nightly news and opinion sections in newspapers, magazines and media websites searching for ad dollars through hyperbolic headlines. Return to supply and demand and clean financial statements over attempting to predict geopolitics. The world has stress but overall peace and human progress resonateand positive opportunities aboundfor investors.

 

 

 

 

 

 

How the US Shale Revolution Could Come to a Grinding Halt

December 22, 2017

The US shale revolution has upended global oil markets and reshaped how OPEC does business. But Wall Street has different ideas for the revolution that could raise oil prices higher in 2018. In September, twelve major shareholders, portfolio managers and fund officials invested heavily in US shale oil and gas producing companies met in Manhattan to reiterate their position to shale executives that fracking companies via shale oil need to “make money for a change.”

Shale companies aren’t making return on investment or profits for their shareholders and investors. This caused the meeting’s participants to demand that shale executives change how they do business, which “could ripple through the global oil market.” Simply put, US shale exploration and production (E&P) has a “profit problem.”

The frustration for investors is that the shale-fracking boom has “made the U.S. the world’s largest oil-and-gas producer,” and a disruptive force keeping prices lower against OPEC’s wishes. For investors though, shares in US shale producers have fallen 31%, while the S&P 500 rose 80%; in that time energy companies have also spent $280 billion more than profits generated from shale investments according to Evercore ISI.

The Manhattan meeting had limitations to lower shale production, because speaking about specific companies or appearing to have an action plan would have invoked, “antitrust regulations and rules governing passive and activist investors.” The intent was there but the discussion evolved into “how to make frackers pump less and profit more.” Two participants in the meeting, Invesco Ltd., and Sailing Stone Capital Partners LLC all agreed that near existent shale profits “have become an existential issue for us.”

No one is certain the shale industry can change, yet determination is there to force operators to turn profits by changing executive compensation practices that reward CEOs for increasing production no matter the cost or outcome on investors returns. Todd Heltman, senior energy analyst at Neuberger Berman Group LLC said,

Investors are tired of getting burned. Many are telling companies that unless this becomes a more discipline industry, they aren’t going to come back.”

But there are conflicting reports that firms like Mr. Heltman’s group can impose discipline on shale oil producers. The International Energy Agency (IEA) published a report in mid-December stating, “U.S. shale would grow so sharply that it would help bring back inventory builds in 2018.” But OPEC believes global balancing will take place and the supply glut will end in 2018.

The most interesting quote regarding these conflicting reports came from Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S when he said, “Both (OPEC & IAE) cannot be right. Whichever way the pendulum swings will have a significant impact on the market.”

Adding to the confusion about production discipline and higher investment returns was an article by Reuters stating:

Financiers keep pouring cash into the shale oil sector, providing producers with a path to keep U.S. output rising through the middle of the next decade.”

Then add in the Trump administration’s pro-fossil fuel policies and Republican tax plan, which rewards energy companies and it’s a perfect storm of production upticks for 2018 that will have U.S. shale “surging.” The IAE reiterates this stance by estimating the United States will likely deliver, “80% of the world’s oil production gains through 2025, fueled by access to easy capital undermining OPEC and investors looking for profits over production. Through the third quarter of 2017, private equity firms have invested $20.26 billion into energy, 36% more than last year according to financial data provider Prequin.

Hedge funds and private equity seem to want higher profits but according to interviews Reuters conducted with more than a dozen financiers, advisors and executives that paints a different picture than what came out of the Manhattan meeting:

Shale producers now have a range of new and traditional financial levers they can pull as needed to keep shale rigs drilling. Money continues to flows despite rising pressure from some investors for drillers to prioritize better profit margins over expanded production.”

This rising investment market for shale producers is a marked reversal from the 2014 oil price collapse that caused banks to abruptly taper lending to oil and gas producers. Shale has been tested before and “these firms have adapted to lower prices using new technologies and financing vehicles,” according to Charlie Leykum, founder of private equity fund CSL Capital Management LLC.

In 2018 the shrewd investor should look at shale investments on a case-by-case basis or consider using DrillCos (this finances new wells and control cash flow for a few years until double-digit rates of return are met), or use a combination of production hedging and contracts, as leveraged-vehicles to lock in prices on future output. This type of hedging can act as insurance against price drops, geopolitical disruptions or market fluctuations seen by the Forties pipeline cracking.

Geopolitical disruptions though can overtake high-powered Manhattan meetings or billions in new shale investments; and need to be consistently monitored. From Israel drawing a “redline” over Iranian aggression in Syria to Saudi Arabia shooting down missiles aimed from Houthi fighters in Yemen targeting senior government officials in Riyadh – the Middle East continues experiencing geopolitical tensions. Moreover, according to a senior Trump administration official based off a new national security laid out by the President:

Russia and China are attempting to revise the global status quo – Russia in Europe with its military incursions into Ukraine and Georgia, and China by its aggression in the South China Sea.“

Many are skeptical shale drillers can change their ways or habits, which means company boards may need to step in or seek counsel how to improve their industry’s lower return on investments and profit performance. The factors for where oil is moving in 2018 aren’t consistent with laying out a specific investment strategy unless hedges are used. One thing is certain – investors at the Manhattan meeting aren’t backing down – and that will cause oil prices to move significantly unless a geopolitical event materializes that no one is planning for at this time.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Iran Will Be a Bigger Problem Than North Korea

The Middle East is in shambles, as Iranian proxy-wars, and other wars dominate Syria, Iraq, Lebanon, Mali, and Egypt along with a Palestinian civil war possibly being around the corner. Recently, the United States (US) Navy has defended itself from missile strikes by Houthi rebels, backed by Iran off Yemen’s coast. The P5+1 Iranian agreement, or treaty, was a gross dereliction of duty by all countries involved in the negotiations. The Republican-controlled US Congress for doing absolutely nothing to exercise its constitutional control over implementation also holds blame along with the Germans and French.

We still live in a world where the US is the sole superpower, though reluctantly under President Obama, and someone has to lead. Unfortunately, and with dire consequences, President Obama chose to believe the world’s leading state sponsor of terrorism and misery when negotiating a partial stop to their nuclear weapons program.

This agreement/treaty, which was suppose to be the dawn of a new era for Iran – the cradle of civilization – instead, has only emboldened Russia to now threaten the US and world with nuclear war, and the Chinese to become more insistent on their crackdown of domestic freedom of speech, the overthrow of international law in the South China Sea, and rising tensions with the Japanese.

And the Chinese are sitting idly by while their proxy – the North Koreans – are drawing near to testing another nuclear weapon. Negotiating with the Iranians has done nothing, but embolden bad actors across the globe that only understand military strength, crippling economic sanctions, deterrence and forceful balance of power. Even once staunch western ally, the Philippines, now openly mocks the US and looks to become closer with the Chinese. When tiny, inconsequential countries mock the US, EU, and NATO those are problems that can’t be solved unless something changes with the above entities weakness on the world stage.

The Iranian deal, led by President Obama, then Secretary of State Hillary Clinton, and current Secretary of State John Kerry was built upon lies, and unfathomable naïve weakness. Hillary Clinton in 2008 nailed it when she stated that Barack Obama’s foreign policy was “naïve.” In the new book: “The Iran Wars: Spy Games, Bank Battles and the Secret Deals that Reshaped the Middle East,” by Wall Street Journal Chief foreign correspondent details the inept schmoozing, sordid details and unbelievable danger the US and the world is now in since this agreement has been executed.

The Iranians, the Russians, and Chinese torched the US, led by President Obama at the negotiating table, and pacifist Germany laughed all the way to the bank. Business is booming from the Iranians, and now weaker Iran and other foes have been led to believe that nothing will stand in their way to whatever it is they want to accomplish in their neighborhoods, and the world stage.

The post World War II order, established and led by the US, is now dead. In its place is a multi-polar world that no one knows where it is headed – but actually men such as Angelo Codevilla predicted in his book: Character of Nation exactly what will take place.

Mr. Codevilla saw a world on page 322 of his book where America will not come to the world’s rescue, and at that point all bets are off from World War III happening. Mr. Codevilla believes the west will cave to Islamists, Russia and abrasive China along with Mexico on the southern US border in the name of peace. Not a hard fought peace won in WWII that has endured for over seventy years, but one not unlike the book by Phillip K. Dick, The Man in the High Castle where Germany and Japan divided the world up after winning WWII.

If the Iranians achieve a nuclear weapon, the Russians become more belligerent and the Japanese and Chinese start a shooting war in the South China Sea what happens next? The Iranians aren’t going anywhere, and now are flush with post-sanction relief money. According to General Martin Dempsey, the former Chairman of the US Joint Chiefs, he has openly opined about needing to invade the Iranians, because the deal with them only made them more, not less hostile towards peace-loving nations.

We’ve witnessed what happened when the US pulled out of Iraq, and now world economies are beginning to greatly slow down, and not recover from the 2008 recession, because of retreat on the world stage by the US, British, NATO, and other former allies. But the question to ask is who will lead the world unless the Americans lead it? This questions was forcefully and eloquently asked by Anders Fogh Rasmussen, former Prime Minister of Denmark and Secretary-General of NATO in a Wall Street Journal editorial where he pleads with America to once again lead the world, and not make dangerous deals with maniacal Islamic fatalists.

This P5+1 agreement was built on lies, ego-driven-nihilism for the sake of Presidential legacies, and the need to have peace at all cost while denying human nature, ideology and the history of the Iranian regime. The Iranians have been two-bit bullies since the Islamists took over that country. While certain segments of Islam are peaceful and even poetic in their nature that never was the Iranians.

Why President Obama led the coalition to negotiate with Iran is still a mystery. But it isn’t a mystery to know that they aren’t backing down, certainly aren’t leaving the world or petroleum stage anytime soon, and now know they have backed the US, EU and NATO into a corner. Impotent western governments believing terrorism is the new norm, a US Presidential election based upon sexual harassment, and an agreement that even the Socialist French thought was horrible only spells disaster for the world.

The wild card is the Saudis. Now that Afghanistan is in play by the Iranians and Saudis, and oil prices aren’t reaching $100 barrel this year or next what will the Saudis try to accomplish moving forward? It’s publicly known they are changing their economy into a 21st century one, and not its current model based mainly on petro-dollars. That’s a good thing, but the eerie part is where will they turn as the Iranians become stronger and more adventurous?

More than likely, the Saudis will turn to the Israelis to purchase nuclear weapons in the near future now that there is a détente between the Egyptians, Saudis and Israelis over the transfer of the Tiran and Sanfir islands to the Saudis by the Egyptians. Though initially blocked in Egyptian court, it is believed the Egyptian parliament will approve the transfer to gain a three-country strategic balance of power against the Iranians.

Western sophisticates and real-world political strategists such as Vladimir Putin and Chinese Premier Xi believe war is impossible to one and a means to ends for the others. Man’s nature never changes, but remains unforgiving of past aggressions; irrational in structure, and appeasement with thugs is only seen as timidity to be used to crush weaker nations. The reciprocity the P5+1 thought would be gained by the Iranian has done the exact opposite – made madmen into believers – that the weak can take on the strong, and win while being celebrated on the world stage by the disciples of Neville Chamberlin.

 

 

 

 

Obama should be made to testify over the Iran nuclear deal

Another damning revelation was recently brought to light over the possible treasonous deal the former President of the United States, Barack Obama, negotiated with the world’s largest sponsor of terrorism – the Islamic Republic of Iran. The latest discovery revealed Iran will soon launch two, brand-new, domestic satellites into space, “that is likely cover for the test firing of advanced intercontinental ballistic missile technology that could be used as part of Iran’s nuclear program,” according to U.S. national security insiders.

Not surprisingly, Iran continues in defiance of the P5 +1 nuclear agreement to test ballistic missile technology that coincides with North Korea’s provocative moves. Tehran and Pyongyang have been partners in illegal missile technology and arm sales on the black market for years, but now their advancement of Intercontinental Ballistic Missile (ICBM) forward progress mirrors one another.

President Obama should be asked under oath, why you did a nuclear deal with Iran knowing their dubious history? Further, if you and your national security officials knew the collusion between Iran and North Korea why continue a so-called nuclear deal while implementing “strategic patience,” with the North Koreans? This is when conspiracy theorists come out of the woodwork, but no one is asking these questions of the former U.S. President. Instead, he should be called in front of Congress, and made to testify over the consequences of Iranian actions.

Ironically, sanctions against Iran were working: they were getting desperate for hard currency, their oil industry was in shambles, and the economic situation for most Iranians was in a free-fall until President Obama came to the rescue. But why would he do this, knowing history will judge him on these actions that will see the sponsor of Hezbollah, Hamas, and other terrorists across the world acquire ICBMs capable of hitting the U.S. or at the very least, Israel?

Now Iran is flush with billions in post-sanction relief from the U.S. to “engage in an unprecedented military buildup meant to transform the Islamic Republic’s fighting force into an offensive juggernaut.” President Rouhani announced in late April the military’s budget had increased 145% to build a hegemonic force capable of menacing the Middle East for decades. Iran now has the ability to project power outside of their borders for the first time since their Islamic revolution. The consequences are frightening. To believe President Obama didn’t know dealing with Iran could backfire defies reason.

The Harvard-educated, erudite President must’ve had a briefing from national security advisors giving plausible reasons for how this could happen. The point needs to be reiterated: should President Obama be liable for treason over the Iran nuclear deal? Because under the current regime, there’s no way this ends well, and Rouhani is seen as a moderate.

The most troubling aspect of the entire agreement and now its ramifications are the Iranians got to keep their weapons-grade enrichment path while getting economic sanctions lifted. Iran keeps its nuclear program, reaps billions, and never has to enter into peaceful existence with the world community. The equivalent are Japan and Germany being able to be rebuilt after World War II, but never having to change. That scenario played out post World War I, which led to WWII.

Iran can use this false deal for as long as it’s strategically useful, because they don’t have to change. With the world’s leftists trying to undo Brexit and the election of Donald Trump, the Iranians are laughing all the way to nuclear weapons and a revived economy. Exactly the way the Germans stood by and did nothing to deter the Iranians before or after the deal and the Europeans reaped billions in economic benefits from the P5 + 1 deal without having to make any hard changes, compromises or security overhauls.

Yet many still believe President Obama knew nothing at all while believing this is in the best interest of the U.S., European and Asian allies to allow Iran to flourish while hiding an ICBM program, growing their military and booming economically? The former President should be made to testify what he strategically and tactically thought when he put the world on this path of appeasement with Iran.

Expect Obama as he reengages in domestic and international politics to double down on the virtues of the agreement while Iran strengthens Hamas and Hezbollah – both Iranian war-making proxies – instead of owning his disastrous mistake. Iran will use their unvarnished diplomatic recognition to “fund more terrorism, offer more provocations to Israel and the Sunni Gulf States.”

Saeed Ghasseminejad, research fellow and Iranian regime expert at the Foundation for the Defense of Democracies believes the Trump administration should impose new sanction on Iran in specific industries related to their military buildup and nuclear program. Mr. Ghasseminejad stated:

“The Obama administration removed sanction on Iran enabling it to reap billions and to stop their ballistic missile program sanctions should be imposed on Iranian petrochemical, mining and metallurgy, telecommunications, automotive, oil and gas and electronic industries.”

The world learned the lesson of appeasement when President Obama backed down to the Iranians in Syria, which only reinforced Assad’s violence towards his own country. While the U.S. begged for restraint and asked the feckless U.N. for assistance, Iran (post nuclear deal) along with Russia swooped into Syria and the U.S. lost influence, deterrence and projected weakness. The North Koreans were certainly watching and capitalized on this feebleness.

Former U.S. Secretary of State, George P. Schultz has called the relationship between the U.S. and Iran, “troubled,” and the lies that predicated this deal are staggering to not even consider launching an investigation into Obama, John Kerry and the U.S. negotiating delegation. Even the French thought President Obama was naïve and the U.S. Congress should scuttle the deal.

The lesson to be learned is “once you capitulate to a foe, your foe dominates.” Restraining the Iranians will be as hard as regaining deterrence lost under the Presidency of Barack Obama.

 

 

 

 

President Trump’s foreign tour recharges US global strengths

 

The Great War of 1914-18 was suppose to be the war that ended all wars – if only the theory postulates, the United States (US) would’ve accepted Article X of the Versailles Treaty establishing the League of Nations – and presently if enlightened nations would accept the ad hoc authority of the United Nations – then war would be a thing of the past. But the world had the Kellogg-Briand Pact outlawing war, nevertheless still received the deadliest bloodshed in history – World War II.

Under the transformative Presidency of Barack Obama, war was a thing of the past, which is what he declared in his famous 2009 Cairo speech by strikingly never mentioning terror or terrorism one time, in stark contrast to President Donald Trump’s speech to Saudi Arabia in late May where he mentioned the word “terror,” or “terrorism,” thirty times.

Here’s how President Obama’s bowing to dictators, war on terror, foreign policy and loss of deterrence’s outcome went: Syria’s destruction allowing Russia and Iran a strategic foothold in the Middle East, unwisely leaving Iraq creating ISIS, acquiescing to North Korea through “strategic patience,” and the Iran nuclear treaty that is now a disaster. However, Trump confronting Arab leaders and trip to Saudi Arabia let the world know that the words of Anders Fogh Rasmussen have taken shape – “only America has the material and moral greatness to stop the slide into chaos and foster peace.”

No one would’ve predicted that the home of Salafi piety, and Sunni-Wahhabi Islamic-terror would open a terrorist monitoring center and King Salman of Saudi Arabia would lavishly welcome President Trump, while his predecessor who was devoted to Iran was snubbed by the Sunni king on his final visit as US President. Trump is the Middle East and Asia’s best hope, as the Philippines have witnessed that ISIS and its terrorist offshoots can destroy anything in their path left unchecked (Syria, Egypt, Libya, Iraq, Afghanistan).

Now deterrence, balance of power and a forceful reentry of the US to combat evil are on tour and economically successful, instead of the feckless Europeans, and global warming infatuated former administration. Even oil companies are thriving again. Whereas, Trump is tackling real evil and lives lost, Obama is giving speeches on global warming while spewing CO2 in private airplanes and large motorcades. North Korea, Iran, ISIS and China laugh at the US and world that believes in the weak nothingness of the environmental movement. War is never far off when ridiculous western proclamations about the efficacy of world emissions are at the forefront, instead of confronting and eliminating evil through strong militaries, nuclear triads and active intelligence apparatuses.

The world though is growing more dangerous as each day passes, because of non-contributing NATO countries, and the toothless former US administration that allowed evil to run rampant. Trump and Asia have inherited a world that could erupt at any moment. North Korea continues firing off ballistic missile tests, and boasts they can hit the US anytime they want. Meanwhile the Europeans at the G7 and NATO Summits didn’t speak about North Korea, Chinese aggression in the South China Sea or Russia on their doorstep, but choose to obsess over the Paris Climate Agreement that will do absolutely nothing to alleviate unproven global warming.

It’s laughable if it wasn’t so terrifying how the world’s left thinks about Iran: that the Iranians just elected a moderate President according to Kasra Naji in a recent issue of Foreign Affairs. Unfortunately since Rouhani’s election he has amassed Iranian-led troops near American forces in Syria, built a third, underground ballistic missile factory, broken the recent OPEC production limit agreement and Rouhani recently said: “we don’t need anyone’s permission to test ballistic missiles,” while the US-Saudi-Iranian rift deepens after Trump chose the Sunni-led Saudi’s over the militant Iranian Shias.

Additionally, China has started harassing US airplanes again, and Russia continues violating airspaces. Why Trump, NATO and Asian allies don’t take defensive measures is beyond reason and dangerous, because it allows rogue, and undeveloped nations (North Korea, Russia, China and Iran) to believe they are strong.

Deterrence isn’t difficult to lose, but nearly impossible to reacquire. Yet that is exactly what is happening from North Korea to the Middle East. It doesn’t require shots fired or lives lost, but respect has to be its number one outcome. That’s also what having a robust nuclear deterrent has accomplished – keeping the world at bay – without a major world war in over seventy years. While the weapons are hideous they serve their purpose. But that’s what deterrence does – it deters the aggressor from making war-like moves and behavior.

But the west is killing itself by attempting a bloodless coup against Trump through a series of unmerited, unfounded leaks that have no merit, a former CIA Director who politicized the job unlike no other Director in US history, and the Obama administration oversaw vast intelligent breaches that earned a severe rebuke from the US Foreign Intelligence Surveillance (FISA) court to harass Americans who voted for Trump.

Meanwhile the world was on fire, and Trump’s tour produced respect in the Middle East, but muddled resistance elsewhere. When the Pope and European leaders lecture Trump and the US on the environment, whose rules should be eliminated, yet crave the US military, and Asian money to prop up their maleficent governments and economies then war-like trouble is on the horizon.

A pragmatic realism has now overtaken the Trump administration that was lost when President George W. Bush bowed to American and European media that formed a military of resistance against him over Iraq and now against Trump. The new Axis of Evil now has a new member – Communist China – and they are on the march along with Russia, Iran and North Korea. Let the first bomb drop and the Europeans, South Koreans and others will beg the hated Donald Trump to protect them from the hordes of devastation that will await them if they continue acquiescing to this expanded axis.

Seize the positive fact that deterrence and realism have reentered the American Presidency and that the Audacity of Hope tour continues calling out enemies and making new economic friends. It’s the best hope the world has to allay the beasts of World War III from breaking out of their cages and fulfilling the words of V.I. Lenin: “Who can do what to whom?”