Authored by Julie Kelly via RealClearInvestigations,

Liz Cheney, a staunch “Never Trump” former Republican representative, has joined Democratic presidential nominee Kamala Harris in key swing states in the final days of the campaign to warn voters that Donald Trump does not respect the “rule of law” or the U.S. Constitution. “[When] you think about, what are you looking for in somebody you hire, you’re looking for somebody that you can trust, you’re looking for somebody who’s going to be responsible, who’s going to operate in good faith,” Cheney told the Detroit Economic Club on Oct. 22.

But new evidence has emerged suggesting that Cheney may have unethically influenced crucial anti-Trump testimony while serving as vice chairman of the January 6 Committee that investigated the protest at the U.S. Capitol in 2021.

At issue is Cheney’s collaboration with Cassidy Hutchinson, now 27, a former aide to then-Chief of Staff Mark Meadows. Hutchinson, who also is campaigning for Harris, is widely considered the committee’s “star” witness for her damning account of Trump’s alleged conduct on January 6. For nearly two hours during her June 28, 2022, televised appearance, Hutchinson explained her version of what happened before and after Trump’s speech at the Ellipse as the White House scrambled to respond to the escalating chaos at the Capitol.

In one of the more explosive moments of that hearing, Cheney held up the handwritten draft of a tweet for President Donald Trump to post instructing protestors to disperse from the area.

Cheney asked Hutchison if she had written the tweet, which was never posted. “That’s my handwriting,” replied Hutchinson, who said the words had been dictated to her by Meadows that afternoon around 3:00 p.m. A footnote in the committee’s final report stated that a “review of Hutchinson’s handwriting was consistent with the script of the note.”

The import of the testimony was clear: Hutchinson was not only an eyewitness but a key participant as events unfolded that day. 

But a certified handwriting analyst retained by Rep. Barry Loudermilk (R-Ga), chairman of the House Administration Subcommittee on Oversight, determined that Hutchinson did not write the note. The handwriting, according to the expert, belongs to Eric Herschmann, a Trump White House lawyer who had immediately contradicted Hutchinson’s testimony in 2022 and later provided several samples of his own handwriting to Loudermilk’s analyst.

“The Select Committee was willing to take [Hutchinson] at her word, rather than checking into the facts. The American people deserve the truth,” Loudermilk said. 

Hutchinson’s attorney did not respond to a request for comment. Cheney could not be reached for comment.

This latest disclosure by Loudermilk – who is conducting separate inquiries into the events of Jan. 6 and the now defunct J6 select committee – appears to represent another example of Cheney’s questionable involvement on the committee, particularly related to Hutchinson. 

Loudermilk unearthed text messages on an encrypted chat app between Cheney and Hutchinson prior to her public testimony, which represented the fifth time Hutchinson testified before the committee; she had already sat for transcribed interviews in February, March, May, and on June 20, 2022.

On June 6, 2022, Hutchinson texted Cheney using Signal, asking “to have a private conversation with you,” according to information released by the House Administration Subcommittee on Oversight. They were connected by Alyssa Farah Griffin, a one-time co-worker of Hutchinson and also a witness before the committee who now appears on “The View.” The texts appear to indicate Cheney and Hutchinson spoke on the phone shortly after that initial outreach. 

Hutchinson dismissed her attorney at the time, former White House deputy general counsel Stefan Passantino, a few days later. Passantino had represented Hutchinson and was paid to do so by Trump’s Save America PAC. Two Cheney-recommended lawyers, Jody Hunt and William Jordan, soon agreed to represent Hutchinson pro bono.

Cheney, a lawyer who is a member of the Washington D.C. bar, appeared to know her communications violated ethics guidelines about communicating with witnesses behind their lawyer’s back. A text from Farah Griffin to Hutchinson acknowledged a “concern” that Cheney “can’t really ethically talk to you without [Passantino.]”

But Hutchinson did more than just change lawyers; in several instances, she changed her story from her previous testimony. During her televised testimony, which committee staffers later described as an “emergency” event initiated by Cheney, Hutchinson re-enacted an alleged confrontation between Trump, his driver, and the head of his security detail in the presidential vehicle following his speech at the Ellipse. Under questioning led by Cheney, Hutchinson said Trump became “irate” upon being told it was not safe to go to the Capitol after he advised his supporters to march there “peacefully and patriotically.”

Trump, according to Hutchinson’s second-hand account, attempted to grab the steering wheel of the vehicle. “Mr. Trump then used his free hand to lunge toward [Head of Security] Bobby Engel,” Hutchinson said as she recounted a conversation she purportedly had with Tony Ornato, the deputy White House chief of staff at the time, after the incident.

Her testimony rocked the political world, with legal analysts from across the spectrum insisting that the story would doom Trump. Others expressed skepticism, prompting Cheney to defend her witness. “I am absolutely confident in her credibility, I am confident in her testimony, and the committee is not going to stand by and watch her character be assassinated by anonymous sources,” Cheney told ABC News correspondent Jonathan Karl on June 30, 2022.

But no one in the White House corroborated Hutchinson’s version of events. To the contrary, Ornato said the first time he heard of any confrontation in the presidential vehicle was during Hutchinson’s testimony. “I recall, that day after Ms. Hutchinson’s testimony, going to the Secret Service Counsel and being in his office and then the Secret Service spokesperson asking me about my recollection was of that story. And I relayed that that is not a story I recollect and I don’t recall that story happening,” Ornato told Cheney, who asked about the incident.

And during the committee’s questioning of the unnamed Secret Service driver, investigators didn’t ask about the alleged incident. The subject was discussed only after the driver’s attorney “proactively” brought it up, according to a report by Loudermilk’s committee, prompting the driver to tell the committee that he “[President Trump] never grabbed the steering wheel. [President Trump] never grabbed the steering wheel. I didn’t see him, you know, lunge to try to get into the front seat at all.”

The driver’s transcript, in addition to hundreds of witness interviews conducted by the J6 committee, still has not been made public.

Hutchinson went on to testify twice more behind closed doors in September 2022 as her stories continued to change. In fact, her attorneys filed a 15-page errata sheet that same month to significantly revise her earlier testimony. The document not only added the allegations related to the incident in the presidential vehicle but also claimed Hutchinson had heard about the presence of dangerous weapons at the Capitol, including firearms – something she said she had not heard during earlier testimony – and that she heard chants of “Hang Mike Pence” on the television in the president’s dining room to suggest he was aware protesters were threatening his vice president.

She also reiterated her authorship of the Meadows’ note.

“These newly released texts are more evidence that Liz Cheney’s J6 Committee was not interested in the truth, only in promoting their predetermined political narrative,” Loudermilk told RCI on Monday. “Not only did Cheney use Alyssa Farah Griffin to covertly communicate with Hutchinson, but she also directly communicated with Hutchinson about the sensational new claims that Pres. Trump was to blame for all that happened on January 6.”

While her role as the committee’s star witness has been a lucrative endeavor for Hutchinson – who earned a book deal from Simon & Schuster, which published three Cheney family titles, and speaking arrangements – the same cannot be said for Stefan Passantino, her first lawyer.

Last year, Passantino, who headed the White House ethics office under Trump during the first half of his administration, filed a $67 million lawsuit against the federal government, accusing the committee of violating his privacy and causing “significant economic, reputational, and emotional harm.” Passantino accused Cheney and her general counsel, Dan George, of attempting to set up a “sting” operation “seeking to induce Mr. Passantino to obstruct Congress during a third interview of Ms. Hutchinson” in May 2022.

Leaks to the news media with selected portions of Hutchinson’s testimony attempted to portray Passantino as advising his client to mislead the committee. A December 2022 CNN “exclusive” report claimed Passantino told Hutchinson to “tell the committee that she did not recall details that she did” and suggested the matter had been referred to the Department of Justice. The committee’s final report also contained the unsubstantiated allegations.

CNN’s story seeded dozens of follow-ups, including an article at the student-run newspaper of Passantino’s law school alma mater, Emory University, and articles at MSNBC, the New York Times, and CBS News.

The bad press resulted in Passantino’s firing by an Atlanta law firm and two separate bar complaints against him in both Georgia and Washington. Both were dismissed. 

But other text messages between Hutchinson and Farah Griffin appear to support Passantino’s claims that he did not interfere in the investigation. A text chain between the women in May 2022 in preparation for Hutchinson’s testimony later that month shows Hutchinson telling Farah Griffin that “[Passantino] isn’t against me complying.” As the discussion continued, Hutchinson reiterated that Passantino advised her to cooperate with the committee. “He doesn’t want me to stonewall the committee,” she told Farah Griffin. Testifying a third time, Hutchinson said Passantino advised, “builds my credibility as a witness.”

Passantino, now partner of his own firm in Atlanta, considers the texts an exoneration of the allegations against him.

“When I first filed suit against Congress to hold Liz Cheney and the January 6 Committee accountable for the damage done to my family, my reputation, and my career 18 months ago, I knew we had the facts to support our complaint. I was less than confident, however, that the documents supporting my claims had not been destroyed or would ever see the light of the day,” Passantino told RealClearInvestigations last week. “It appears, however, that Cassidy Hutchinson captured screenshots of her encrypted communications with Liz Cheney and turned them over to Chairman Loudermilk. The tip of the iceberg appears to have crested the waterline.”

Passantino also filed a defamation lawsuit against former DOJ prosecutor and MSNBC legal analyst Andrew Weissmann for posting a tweet in September 2023 that accused Passantino of “coach[ing] her to lie.” Earlier this month, a federal judge allowed the case to move forward.

Proof of the backchannel communications also prompted a bar complaint last week against Cheney, a licensed attorney in Washington. America First Legal, founded by longtime Trump advisor Stephen Miller, filed the complaint on behalf of Passantino. In the complaint, Cheney is accused of violating a D.C. bar rule that prohibits a lawyer from communicating with “a person known to be represented by another lawyer in the matter, unless the lawyer has the prior consent of the lawyer representing such other person or is authorized by law or a court order to do so.”

A little more than two weeks after Toronto-Dominion Bank pleaded guilty to multiple criminal charges and paid $3 billion in fines and other penalties to the Department of Justice and financial regulators for failing to monitor money laundering operations of fentanyl drug traffickers and other criminals, the investigation into suspected money laundering at major banks appears to have expanded to the US.

Bank of America revealed in a filing on Tuesday that it’s in talks with several federal regulators “in relation to certain aspects of the Corporation’s Bank Secrecy Act/anti-money laundering and sanctions compliance programs (Programs), including transaction monitoring, training, governance, and customer due diligence.” 

“In cooperation with regulators, the Corporation has been, and plans to continue, implementing enhancements to these Programs. The Corporation is continuing discussions with its regulators about the Programs, and resolution of these discussions may include one or more public orders by the regulators,” BofA continued.

BofA is responding to an inquiry from the Consumer Financial Protection Bureau into electronic payments on the Zelle payment network.

“The CFPB staff has initiated discussions with the Corporation to pursue a resolution of the inquiry or file an enforcement action. The Corporation is evaluating next steps, including litigation,” the bank said. 

The filing did not mention specifics about potential AML issues. However, the TD Bank case, where the Canadian bank chose profits over AML compliance, allowed fentanyl and narcotics trafficking operations to use banking services.

In early September, we cited a conversation with Sam Cooper, an investigative journalist behind the Substack “The Bureau,” and David Asher, a former senior investigator for the State Department, in which Asher revealed, “And most of what we’re seeing is coming from this TD Bank case, and there’s a lot more. We’ll see which one of the big four US banks gets named next.”

At the time, we even questioned if AML investigations were pending at major US banks and potentially one of the reasons Buffett was dumping shares in the bank.

More broadly, AML investigation across multiple North American banks comes ahead of a potential Trump win in the White House. The former president said Tuesday that he would “seize assets” of drug cartels for their drug death catastrophe, killing 100,000 Americans per year. In other words, Trump is indirectly saying that if he wins – the feds will be disrupting ‘command & control’ networks (fin networks) of drug cartels … 

… to stop this madness that Biden-Harris allowed to inflict great pain on the nation while jeopardizing national security.

What’s important to note is the AML investigation of major banks has broadened and could drastically widen in the months ahead. 

Shares of Eli Lilly & Co tumbled in premarket trading after third-quarter sales of its blockbuster weight-loss drug fell short of Wall Street’s expectations, with the company citing ‘inventory issues’ as the reason. In reality, it seems Lilly channeled stuffed GLP1s to cash in on the anti-obesity drug craze, only to discover demand fizzled in the quarter—likely because these drugs are expensive and insurance coverage is limited.

Lilly reported third-quarter revenue from all products of about $11.4 billion, +20% yoy, yet missed the Bloomberg Consensus of $12.18. Notably, the drug Mounjaro generated $3.11 billion in revenue, while weight-loss drug Zepbound brought in $1.26 billion. Bloomberg analysts expected $3.62 billion and $1.63 billion. 

Here’s a snapshot of the third-quarter earnings report (courtesy of Bloomberg): 

• Adjusted EPS $1.18 vs. 10c y/y

• Revenue $11.44 billion, +20% y/y, estimate $12.18 billion (Bloomberg Consensus)

• Trulicity revenue $1.30 billion, -22% y/y, estimate $1.21 billion

• Mounjaro revenue $3.11 billion, estimate $3.62 billion

• Zepbound revenue $1.26 billion, +1.2% q/q, estimate $1.63 billion

• Humalog revenue $534.6 million, +35% y/y, estimate $423.6 million

• Taltz revenue $879.6 million, +18% y/y, estimate $839.4 million

• Jardiance revenue $686.4 million, -2.1% y/y, estimate $823.7 million

• Verzenio rev. $1.37 billion, +32% y/y, estimate $1.39 billion

Lilly now anticipates full-year sales between $45.4 and $46 billion, lowering the top end of earlier guidance from $46.6 billion. It raised its full-year guidance twice this year… 

• Sees revenue $45.4 billion to $46.0 billion, saw $45.4 billion to $46.6 billion, estimate $46.21 billion

• Sees adjusted EPS $13.02 to $13.52, saw $16.10 to $16.60

More from the pharma giant:

“Following higher wholesaler inventory levels at the end of Q2, Mounjaro and Zepbound sales in Q3 were negatively impacted by inventory decreases in the wholesaler channel.” 

Perhaps channel-stuffing GLP1s wasn’t the best move by management as demand dries up, mainly because the drugs are super expensive and insurance coverage is limited. 

The unwinding of the fat bubble was visible for months.

Eli Lilly & Co. is now selling vials of its blockbuster weight-loss drug Zepbound to patients for as little as $399 a month: BBG

the fatty bubble popped

— zerohedge (@zerohedge) August 27, 2024

FDA said Eli Lilly’s weight-loss drugs are no longer considered to be in shortage in the US,

The Fat bubble has officially popped

— zerohedge (@zerohedge) October 3, 2024

In premarket trading, Lilly shares have dropped about 10.25%. If losses surpass the 10.51% plunge seen on December 16, 2016, this will mark Lilly’s largest single-day drop since October 2008.

Fat bubble implodes. 

Super Micro Computer says Ernst & Young resigns as auditor amid a review after EY communicated concerns about several matters relating to governance, transparency and completeness of communications in July.

SMCI stated in a filing that in late July 2024, EY communicated to the Audit Committee concerns about several matters relating to governance, transparency and completeness of communications to EY, and other matters pertaining to the Company’s internal control over financial reporting, and that the timely filing of the Company’s annual report was at significant risk.

EY stated in resignation letter that:

“…we are resigning due to information that has recently come to our attention which has led us to no longer be able to rely on management’s and the Audit Committee’s representations and to be unwilling to be associated with the financial statements prepared by management, and after concluding we can no longer provide the Audit Services in accordance with applicable law or professional obligations”

SMCI responded:

“Although the Company recognizes EY’s decision is final, it disagrees with EY’s decision to resign as the Company’s independent registered public accounting firm – the Special Committee has not yet obtained all information relevant for the Review and has not concluded the Review.

Nevertheless, the Company has taken the concerns expressed by EY seriously, and will carefully consider the findings of the Special Committee and any remedial or other actions recommended by the Special Committee following conclusion of the Review.”

This news triggered an almost 30% collapse in the tech company’s shares…

Is this a sign of things to come for other tech giants?

The resignation comes a month after the US Justice Department launched a probe into an ex-employee’s claims that Super Micro violated accounting rules.

Signs from the auto industry continue to look grim. Yesterday it was Ford guiding expectations below Wall Street’s estimates and today it’s Stellantis announcing it is pausing production of its Durango and Grand Cherokee models due to “slow sales”.

Manufacturing facilities at FCA’s large Detroit Assembly Complex – Jefferson will be paused for a week, Motor 1 reported. Stellantis told its workers there would be a ‘temporary shutdown’ and ‘subsequent layoffs’ as a result.

Mopar Insiders first posted the “Important Notice of Layoff” memo, which said: “There will be no scheduled production at Detroit Assembly Complex Jefferson” for the dates of October 28 to November 1. 

The Motor 1 report said that in 2022, the Jefferson complex employed over 5,000 people, but about 200 workers faced permanent layoffs in September. 

Stellantis told Motor 1: “Stellantis continues to take the necessary actions to align production with sales. This includes making production adjustments at the Detroit Assembly Complex – Jefferson. The Company will continue to monitor the situation to assess whether further action is required.”

Recall, operations at Stellantis have been nothing short of a nightmare this year, as we have been reporting. Early this month we wrote that Stellantis Chief Financial Officer Natalie Knight informed her team of white collar workers about the need to take “drastic measures” to shore up the Jeep and Ram parent’s finances. 

Knight told her team, “The Doghouse is back!” As she explained, this belt-tightening initiative involves heavily scrutinizing requests for purchases from outside vendors to ensure maximum cost savings. 

She said the doghouse “is the name for much stricter attention and control around purchase requisitions,” adding, “If we apply more discipline, we can ensure big savings for the company.”

The following Monday, Stellantis reduced its margin forecast for the entire year.

Back in September, the company’s dealer network wrote a letter to then CEO Carlos Tavares accusing him of the “rapid degradation” of the automaker’s brands. 

US dealer network leaders said Tavares had engaged in “short-term decision making” that boosted last year’s profits and increased his compensation but hurt the Jeep, Ram, Dodge, and Chrysler brands.

And it looks like they may have been right…

Authored by Conor Gallagher via NakedCapitalism.com,

Economist Mario Draghi has held a lot of roles: Goldman Sachs executive, the European Central Bank president, and unelected prime minister of Italy. He’s now continuing his decades-long mission to remake Europe into a neoliberal paradise for the financial class as a sidekick to European Commission President Ursula von der Leyen.

That’s the best way to read his much-anticipated September report titled “EU Competitiveness: Looking Ahead,” which was requested by von der Leyen and coincidentally gave an economist’s stamp of approval to all of Ursula’s goals as commission president. It’s also why the roadmap laid out by Draghi is so important: it reveals much of the policy goals of the EU, which have long been underway and are set to continue. And it’s not pretty.

I wrote about the nonsensical energy policy contained in the report and alluded to Draghi’s ideas on productivity in a recent review of Ursula’s China “de-risking” strategy. Here I want to focus on the central theme contained in the title: competitiveness.

What are Draghi and company talking about when they talk about competitiveness? More local production, better quality of life for citizens, more competition? Of course not. It’s the opposite. And it promotes the doubling down on self-created crises like energy policy and looking to create new ones via a trade war with China. While tariffs on Chinese products aren’t necessarily a bad idea, it’s difficult to argue that the EU is really trying to protect industry for three reasons:

1. If they were, they would be trying to get Russian gas flowing again. The lack of it has made EU manufacturing uncompetitive.

2. They cannot simultaneously pursue neoliberal policies like austerity and an industrial policy. They’re certainly doing the former while saying they want to do the latter.

3. They are escalating a trade war with China while being wholly unprepared as many products they rely on from China like certain drugs, chemicals and materials have no substitutes.

What Ursula, Draghi, and the European financial-political class are after isn’t more competitiveness at all; they’re seeking to complete the makeover of the EU into a neoliberal paradise (or hellhole depending on your viewpoint), which means less democracy, the further destruction of labor, and looking a lot more like — if not outright owned by — the US.

Europe now relies on the US for security, the US for (fossil) energy and the US for demand …

to rephrase an old trope about Germany https://t.co/0lxEdquQCn pic.twitter.com/m2aaIiYQn5

— Brad Setser (@Brad_Setser) October 18, 2024

Let’s look at some key points of Draghi’s prescription for more competitiveness.

More Concentration

The EU says it needs a ton of money for investment. Indeed that is what Ursula’s Commission has been calling for, that’s what the big report from Mario Draghi called for, and what hundreds of other similar reports want too, but it does not appear to be forthcoming.

So what they turn to next is a walling off from the East and a wholesale selloff to the US in order to help create the large firms they argue are necessary to build technological supremacy. How is this strategy already playing out?

The EU-US Trade and Technology Council is currently hard at work getting EU regulations in line with American interests. The EU is already dominated by US IT companies that supply software, processors, computers, and cloud technologies and we can expect more of that as Draghi and Ursula call for more mergers and acquisitions and more US private equity and venture capital.

US Secretary of State Antony Blinken calls the United States’ allies and partners “force multipliers” and “a unique asset.”

Assets, indeed. As more European companies struggle due to high energy costs and long-stagnant economies driven in large part by the EU’s obsession with austerity, they’re increasingly becoming the focus of merger and acquisition specialists from the US. CDI Global reports the following:

In recent years, a marked increase in cross-border mergers and acquisitions (M&A) by US companies in Europe has emerged as a notable trend. This surge in transatlantic investment signifies a strategic shift by American firms, grounded in the USA, aiming to harness the diverse advantages and lucrative opportunities presented by European markets. From established corporate giants seeking expansion to agile start-ups on the lookout for innovative growth pathways, numerous compelling factors drive US businesses to explore European bargain-hunting ventures…

A significant allure for US companies investing in Europe is the potential for acquiring assets at bargain prices. Economic uncertainties, geopolitical fluctuations, and evolving market dynamics have led to decreased valuations of European companies in recent years. This creates a favorable environment for US investors, allowing them to purchase valuable assets at more attractive prices than those typically found in the US market.

In addition to favorable valuations, Europe offers relatively lower costs associated with labor, research and development (R&D), and operational expenses. European countries often provide substantial subsidies, tax incentives, and grants aimed at fostering innovation and business development, reducing the financial burden on US firms.

US private equity giant Clayton Dubilier & Rice destroyed the UK’s fourth largest supermarket chain in a few short years. Warburg Pincus joined a consortium to snatch up T-Mobile Netherlands a couple years ago. US-based Parker Hannifin is taking private the UK aerospace and defence group Meggitt. Gores Guggenheim grabbed Swedish electric carmaker Polestar.

The private equity firm KKR, which includes former CIA director David Petraeus as a partner, took home the fixed-line network of TIM, Italy’s largest telecommunications provider.  German energy service provider Techem was just sold off to the US asset manager TPG, and Germany’s awful economy is increasingly making its companies more likely targets for takeovers. The spooky Silicon Valley company Palantir is already making itself at home in the UK National Health Services, and it’s knocking on the door in Italy. Meera Shah, a senior corporate finance manager at Buzzacott and member of the Corporate Finance Faculty’s board, explains:

“Selling assets into the US has always been a fairly chunky part of what we do, but even with that track record, we’ve seen a significant increase in inbound interest from the US. There have been months where up to one third of the businesses we’ve sold have gone to US buyers.”

Guarding against China and Russia while the US strip-mines Europe is apparently a good thing because letting the US take over Europe means a successful “de-risk” from China and Russia.

Well, except for the people who live in the EU.

Take the example of TIM in Italy. As mentioned it already sold off its fixed line network and plans to unload even more assets soon. Telecom is one sector Draghi focuses on, lamenting the lack of concentration. Europeans have too many options, he says, but this idea that the EU needs consolidation (led by US firms as it so happens) in order to be more competitive begs the question: competitive for whom?

Italy has one of the world’s most competitive telecom markets, with monthly subscriptions for full-fiber landline services, which usually include unlimited Internet, priced as low as €20 to €25, about a quarter of what most US consumers pay.

So could a telecom behemoth that has a monopoly in the US and Europe feasibly be more competitive with Chinese companies? Maybe in profits or company value.

Would it help lead to technological supremacy as the other part of the argument goes? There are reasons to doubt that.

The story of TIM is instructive. The company used to employ 120,000 people compared to 40,000 (and dwindling) today and had “a strong innovative capacity” boosted by cutting-edge subsidiaries such as the Torino-based Centro Studi e Laboratori Telecomunicazioni. The company’s downfall began three decades ago when Italy came under EU control and Telecom Italia was privatized. As journalist Marco Palombi writes at Il Fatto Quotidiano (translation):

However, this disaster began thirty years ago when “the mother of all privatizations” was deemed necessary for Italy to respect the parameters of the Maastricht Treaty. There was no industrial plan, just the requirement to raise cash. It is the first of many financial choices that destroyed an industrial giant.

So the EU helped soften the target up before the US swooped it for the kill. It’s a process that continues today, and upcoming austerity in the EU will do so again:

The four largest €zone countries will all run contractionary fiscal policies in 2025. France, Germany, Italy, Spain represent ~75% of €zone GDP and have tight trade links with others. They will all go for budget cuts when the €zone economy is already weak.

Not far-sighted… pic.twitter.com/GJfDuGOclh

— Philipp Heimberger (@heimbergecon) October 23, 2024

Here I’m going to rattle off some quotes from the Draghi report with limited comment as I think they’re self-explanatory and to keep this post from going too long. One thing to keep in mind when reading Draghi’s wisdom, however, is that automation is considered productivity growth and therefore equals competitiveness.

Less Labor Law for “Innovative” Companies

…the EU should support rapid growth within the European market by giving innovative start-ups the opportunity to adopt a new EU-wide legal statute (the “Innovative European Company”).

This status would provide companies with a single digital identity valid throughout the EU and recognised by all Member States. These companies would have access to harmonised legislation concerning corporate law and insolvency, as well as a few key aspects of labour law and taxation, to be made progressively more ambitious, and they would be entitled to establish subsidiaries across the EU without incorporating separately in each Member State.

Free Rein to AI and Tech Start Ups

Regulatory barriers to scaling up are particularly onerous in the tech sector, especially for young companies [see the chapters on innovation, and digitalisation and advanced technologies]. Regulatory barriers constrain growth in several ways.

First, complex and costly procedures across fragmented national systems discourage inventors from filing Intellectual Property Rights (IPRs), hindering young companies from leveraging the Single Market.

Second, the EU’s regulatory stance towards tech companies hampers innovation: the EU now has around 100 tech-focused laws and over 270 regulators active in digital networks across all Member States. Many EU laws take a precautionary approach, dictating specific business practices ex ante to avert potential risks ex post. For example, the AI Act imposes additional regulatory requirements on general purpose AI models that exceed a pre-defined threshold of computational power – a threshold which some state-of-the-art models already exceed.

Third, digital companies are deterred from doing business across the EU via subsidiaries, as they face heterogeneous requirements, a proliferation of regulatory agencies and “gold plating”04 of EU legislation by national authorities.

Fourth, limitations on data storing and processing create high compliance costs and hinder the creation of large, integrated data sets for training AI models. This fragmentation puts EU companies at a disadvantage relative to the US, which relies on the private sector to build vast data sets, and China, which can leverage its central institutions for data aggregation. This problem is compounded by EU competition enforcement possibly inhibiting intra-industry cooperation.

Finally, multiple different national rules in public procurement generate high ongoing costs for cloud providers. The net effect of this burden of regulation is that only larger companies – which are often non-EU based – have the financial capacity and incentive to bear the costs of complying. Young innovative tech companies may choose not to operate in the EU at all.

Less Sovereignty

The lack of a true Single Market also prevents enough companies in the wider economy from reaching sufficient size to accelerate adoption of advanced technologies. There are many barriers that lead to companies in Europe to “stay small” and neglect the opportunities of the Single Market. These include the high cost of adhering to heterogenous national regulations, the high cost of tax compliance, and the high cost of complying with regulations that apply once companies reach a particular size. As a result, the EU has proportionally fewer small and

medium-sized companies than the US and proportionally more micro companies [see Figure 7]. However, there is a close link between the size of companies and technology adoption. Evidence from the US show that adoption rises with firm size for all advanced technologiesxii. Likewise, while in 2023 30% of large businesses in the EU had adopted AI, only 7% of SMEs had done the samexiii. Size enables adoption because larger companies can spread the high fixed costs of AI investment over greater revenues, they can count on more skilled management to make the necessary organisational changes, and they can deploy AI more productively owing to larger data sets. In other words, a fragmented Single Market puts EU companies at a disadvantage in terms of the speed of adoption…

More “Disruption”

A better financing environment for disruptive innovation, start-ups and scale-ups is needed as barriers to growth within the European markets are removed [see the chapters on innovation, and investment]. While high-growth companies can typically obtain finance from international investors, there are good reasons to further develop the financing ecosystem within Europe. Very early-stage innovation would benefit from a deeper pool of angel investors. Ensuring sufficient local capital to fund scale-ups would concentrate the spillovers of innovation within Europe. Increasing the appeal of European stock markets for IPOs would improve funding options for founders, encouraging more start-up activity in the EU. To generate a significant increase in equity and debt funding available to start-ups and scale-up, the report proposes the following measures. First, expanding incentives for business “angels” and seed capital investors. Second, assessing whether further changes to capital requirements under Solvency II are warranted, which establishes capital adequacy rules for insurance companies, and issuing guidelines for EU Pension Plans, with the aim of stimulating institutional investment in innovative companies in selected sub-sectors. Third, increasing the budget of the European Investment Fund (EIF), which is part of the EIB Group and provides finance to SMEs, improving coordination between the EIF and the EIC, and eventually rationalising the VC funding environment in Europe. Finally, enlarging the mandate of the EIB Group to enable co-investment in ventures requiring larger volumes of capital, while also enabling it to take on more risk to help “crowd in” private investors.

Learn from Hyper-globalization which Decimated Labor by Embracing AI which Could Decimate Labor.

The key driver of the rising productivity gap between the EU and the US has been digital technology (“tech”) – and Europe currently looks set to fall further behind. The main reason EU productivity diverged from the US in the mid-1990s was Europe’s failure to capitalise on the first digital revolution led by the internet – both in terms of generating new tech companies and diffusing digital tech into the economy. In fact, if we exclude the tech sector, EU productivity growth over the past twenty years would be broadly at par with the US. Europe is lagging in the breakthrough digital technologies that will drive growth in the future. Around 70% of foundational AI models have been developed in the US since 2017 and just three US “hyperscalers” account for over 65% of the global as well as of the European cloud market. The largest European cloud operator accounts for just 2% of the EU market. Quantum computing is poised to be the next major innovation, but five of the top ten tech companies globally in terms of quantum investment are based in the US and four in China. None are based in the EU.

Overhaul Education “Skills Investment” With a Focus on Training Workers to Become Productive Tools for Capital:

The EU should overhaul its approach to skills, making it more strategic, future-oriented and focused on emerging skill shortages. The report recommends that, first, the EU and Members States enhance their use of skills intelligence by making much more intense use of data to understand and act on existing skills gaps. Second, education and training systems need to become more responsive to the changing skill needs and skill gaps identified by the skills intelligence. Curricula need to be revised accordingly, also involving employers and other stakeholders. Third, to maximise employability, a common system of certification should be introduced to make the skills acquired through training programmes easily understandable by prospective employers throughout the EU. Fourth, the EU programmes dedicated to education and skills should be redesigned, so that the funding allocated can achieve a much greater impact. To improve the efficiency and scalability of skills investments, the disbursement of EU funds should be coupled with stricter accountability and impact evaluation. In parallel, it is proposed to adopt specific interventions to address the most acute skills shortages in technical and STEM skills. A particular focus is needed on adult learning, which will be key to update worker’s skills throughout their lives. Linked to this, vocational training also needs a broad reform across the EU. Specific sectors (strategic value chains) or specific skills (both worker and managerial capabilities) will require complementary targeted interventions. For example, it is proposed to launch a new Tech Skills Acquisition Programme to attract tech talent from outside of EU, adopted EU-wide and co-funded by the Commission and Member States. This programme would combine a new EU-level visa programme for students,graduates and researchers in relevant fields to stimulate inflow, a large number of EU academic scholarships, in particular in STEM subjects, and student internships…

While the Draghi report was almost comical for its refusal to address the reasons behind the EU energy crisis, it was also an incredibly sad read. That’s because it ignores the disadvantages of chasing Draghi and Ursula’s brand of competitiveness and productivity.

The transatlantic crowd doesn’t have to look far for what all these policy prescriptions would mean for Europe: it would become more like the US. And there are plenty of downsides for all the workers who form the backbone of  “competitiveness” of such a change.

Draghi actually mentions the healthcare sector as an example of where the US outcompetes the EU. How is that competitiveness measured? By things like productivity and profit. And not, of course, by data like this:

How about wealth inequality?

That graph there is probably as good an explanation as any to answer the question of why the EU elite want to follow the US model. For Ursula, Draghi and capital these are signs of being uncompetitive, and their solutions are coming: lower wages, a more flexible workforce (preferably machine), more private equity, more privatization, more asset-price bubbles, and more over-indebtedness for the bottom 90 percent.

In certain places in the EU, such as Italy, this process has been ongoing for decades dismantling what the communist party and trade unions helped build out of the rubble of WWII.

The good news is that’s typically a long tear down process (although the crises are coming more frequently nowadays). The EU moves methodically through the byzantine layers of bureaucracy and push and pull with national governments dealing with what’s left of the unions. That means there’s time to halt the march of financialization and reverse course. The bad news is it’s like boiling a frog who fails to notice the slow deterioration of quality of life until it’s too late.

The United States is warning that it is ready to escalate NATO involvement in Ukraine if North Korean troops join Russia’s war in Ukraine. The Zelensky government has long been lobbying for the US to provide long-range missiles and authorize their use against Russian territory. Kiev might soon gets its wish granted…

“The U.S. will not impose new limits on Ukraine’s use of American weapons if North Korea joins Russia’s war, the Pentagon said on Monday, as NATO said North Korean military units had been deployed to the Kursk region in Russia,” Reuters reports.

Pentagon spokesperson Sabrina Singh on Monday issued a fresh update on the situation. Speaking of a detachment of North Korean troops, she said: “A portion of those soldiers have already moved closer to Ukraine, and we are increasingly concerned that Russia intends to use these soldiers in combat or to support combat operations against Ukrainian forces in Russia’s Kursk Oblast near the border with Ukraine.”

NATO Secretary General Mark Rutte in separate comments from Europe had claimed that North Koreans are helping Russia regain its territory in southwest Kursk region, following Ukraine’s incursion there which began in early August.

“The deepening military cooperation between Russia and North Korea is a threat to both the Indo-Pacific and Euro-Atlantic security,” Rutte said at the press conference. “The deployment [of] North Korean troops to Kursk is also a sign of Putin’s growing desperation.” Butte urged: “NATO calls on Russia and the DPRK to cease these actions immediately.”

Ukraine, South Korea, and the United States all say that Pyongyang has sent between 10,000 and 12,000 of its troops to Russia for readiness to fight in Ukraine.

Zelensky’s office has again this week used these reports to call for more immediate military help from Western allies. “This is an escalation. Sanctions alone are not enough. We need weapons and a clear plan to prevent North Korea’s expanded involvement in the war in Europe,” Zelensky’s chief of staff Andriy Yermak has said.

“Today, Russia brings in North Korea; next, it could broaden their engagement, and then other autocratic regimes may see that they can get away with this and come to fight against NATO,” Yermak added. “The enemy understands strength. Our allies have this strength.”

Currently, North Korea’s Foreign Minister Choe Son Hui is in Russia on a state visit. Choe arrived in Russia’s far eastern city of Vladivostok on Tuesday, and is expected to travel to Moscow Wednesday. It’s as yet unclear which leaders in the Russian government she’ll meet with.

VIDEO: North Korea has sent 10,000 troops to train in Russia and likely fight Ukraine in weeks, Washington says, as South Korean President Yoon Suk Yeol warns that the deployment posed a “significant security threat.” pic.twitter.com/JeXt66JRGX

— AFP News Agency (@AFP) October 29, 2024

In June, Russian President Putin and North Korea’s Kim Jong Un signed a security and defense treaty in Pyongyang. The Kremlin says this is the basis for troop sharing, but has not said whether North Korean troops are actually in Ukraine at this point.

Over the last several weeks, Ukraine has been warning the West of the presence of North Korean troops in eastern Ukraine, and has claimed that already they’ve suffered casualties. But little of this alleged on the ground battlefield presence has been confirmed.

Authored by Chris Morrison via DailySceptic.org,

Over the last decade as offshore wind farms proliferated around the U.K., there has been a disturbing rise in coastline strandings of whales, dolphins and porpoises. Since the turn of the century, strandings have more than doubled and are now running at over 1,000 animals a year. The slaughter has been largely ignored by the mainstream media that runs with the agreed narrative that offshore wind is environmentally friendly and is the key to achieving Net Zero by 2050.

In fact, wind turbines, whether on or off the shore, are a clear danger to many endangered species and concerns are mounting about their widespread and harmful effects on the natural world. Years ago, the great cause in environmentalism was to save the whales, but these concerns seem to have abated of late, while the slaughter of millions of onshore bats, along with the destruction of many types of large raptors, is simply ignored.

Andrew Montford of Net Zero Watch has updated his graph on the stranding of U.K. cetaceans and compared it to the rise of offshore wind capacity.

Both totals have soared in recent years. Is there a causal link? Perhaps not one that would inconvenience Net Zero fanatics, but Montford says the suggestion of a causal relationship “remains very strong”.

The Daily Sceptic has reported in the past about the mounting casualties of whales stranded off the north eastern coast of the United States in the wake of massive offshore windfarm construction. There have been around 300 fatalities in the last five years, and many suggest the extensive sonar soundings, pile driving and heavy concentrated vessel traffic is causing havoc with aquatic feeding, breeding and migration up and down the coast.

The latest U.K. stranding figures have been reported to Ascobans, a UN environmental conservation body for cetaceans in the NE Atlantic. Commenting on the “shocking” figures, the environmental writer and campaigner Jason Endfield called them “a wake-up call to those planning to further industrialise our seas in the name of renewable energy, and especially offshore wind farms”. In his view, it made no sense to increase ocean noise to levels that are “literally unbearable for marine mammals”.

The great cover-up of this environmental disaster continues with massive industrial parks being erected around the coasts of many countries. In the U.K., the incoming Labour government is committed to a massive expansion with the Mad Miliband spraying around billions of pounds in additional subsidies to boost an industry that would not exist in a free market.

To the fore in blowing smoke over the issue is Greenpeace USA’s senior oceans campaigner Arlo Hemphill who claims there is “no evidence whatsoever” connecting wind turbines to whale deaths. “It’s just a cynical disinformation campaign,” says another Greenpeace spokesman. The mainstream media often goes along with this narrative as shown by recent tweets from Agence France-Presse reporter Manon Jacob. He dismissed the focus on wind farms as a red herring “when offshore wind remains thus far marginal in the U.S. and scientific evidence of large marine mammal deaths is lacking”. This is the same Jacob who wrote a recent ‘fact check’ of the Daily Sceptic that was so bad and misleading it should feature in future journalism schools as an example of how not to criticise well-sourced material.

The investigative science journalist Jo Nova has a different take on the matter:

“Researchers have known since at least 2013 that pile drivers were permanently deafening porpoises, leaving them presumably to die miserable deaths wandering blindly through dark or murky seas. Where were all the professors of marine science, paid by the public to know these things, and where was the BBC?”

Spread the word, she continued.

Fifty years ago, environmentalists would have raised hell about a thousand dead whales and dolphins. Now they are part of the cover-up. “They don’t want to draw attention to the blubber on the beach in case people start asking hard questions,” she observed.

There are however some signs that the ‘nothing to see here, guv’ line is starting to crack. A recent essay in Watts Up With That? suggested that an impact statement from the U.S. Bureau of Ocean Energy Management (BOEM) had finally acknowledged the harm caused by offshore wind farms. Examining leases off the New Jersey and New York coast covering over 488,000 acres, the BOEM hints that these developments are not entirely benign “despite being repeatedly framed as environmentally friendly solutions to the climate crisis”. Marine mammals, sea turtles, birds and fish could suffer due to noise, habitat displacement and changes in migration patterns, it is said. Even bats, says WUWT?, which are not typically associated with offshore environments, could be affected.

The essay noted that this latest BOEM work may signal a more cautious approach, “perhaps influenced by increasing legal challenges, public backlash, and even emerging scientific research indicating that wind turbines are not as harmless as once believed”.

Despite a massive price war and European nations doing their best to create a trade war, the Chinese EV market still looks like it will easily be crowned the best electric auto market in the world heading into the final months of 2024.

China’s major EV makers ended Q3 stronger than last year, with solid deliveries reducing the need for discounts, according to a new report from Bloomberg. 

Now, analysts predict a sales surge in Q4. EV and hybrid sales are booming, driven by expanded subsidies, boosting stock prices and Tesla’s best Chinese quarter. In September, EVs and hybrids made up about 53% of new car sales.

Bloomberg Intelligence analyst Joanna Chen commented: “Industry demand has been better than expected since the third quarter following China’s beefed-up subsidies but many automakers still need a major push in the fourth quarter to hit their annual sales targets.”

She continued: “The first nine months usually contribute 70% of annual car sales and automakers below that threshold are under greater pressure to step up discounts in the quarter.”

Bloomberg writes that EV and hybrid sales are soaring, boosted by expanded subsidies encouraging trade-ins of older cars. This policy led to Tesla’s best Chinese quarter, with EVs and hybrids comprising 53% of new car sales in September.

Chinese EV sales are expected to rise further following a recent directive for government agencies to increase purchases of new energy vehicles. For example, Zhejiang Leapmotor, Nio, and Zeekr are thriving through major deals and brand expansions. Top-sellers BYD and Geely are on course to hit ambitious sales targets of 4 million and 2 million, respectively. BYD’s earlier pricing strategies triggered months of market-wide discounting, the article notes. 

Yale Zhang, managing director at Shanghai-based consultancy AutoForesight, added: “I do not see a need to launch another price war. Most of them are in pretty good shape. The majority of these NEV or carmakers will reach their volumes.”

The fourth quarter is set for a surge in auto spending, driven by new EV launches and a year-end rush to use trade-in subsidies, according to Yuqian Ding of HSBC Qianhai Securities. Ding’s data shows EVs need fewer discounts, while gas cars maintain peak discounts of about 22%, the highest in three years. 

European brands like Volkswagen, Mercedes, and BMW, which had a tough Q3 in China, may resort to deeper price cuts. AutoForesight warns of a potential premium segment price war, with traditional luxury car production down 4% year-over-year, possibly ending 15 years of growth.

Authored by Andrew Korybko via Substack,

There was never any reason to take this report seriously in the first place…

German outlet Bild reported late last week that India allegedly vetoed Turkiye’s BRICS membership request over its ties with Pakistan, which prompted Turkiye’s Center for Combating Disinformation to respond by clarifying that the membership process wasn’t even on the Kazan Summit’s agenda. The Turkish foreign policy expert who was quoted in Bild’s article also refuted their report and added that they didn’t include the nuances of his views that he shared with them.

Reputable Indian journalist Sidhant Sibal earlier reported that BRICS agreed to grant Turkiye partnership status together with a dozen other countries, while Kremlin spokesman Dmitry Peskov said that “everyone is interested in inviting Turkey” to join their association. “BRICS Membership Or Lack Thereof Isn’t Actually That Big Of A Deal” though for the reasons explained in the preceding hyperlinked analysis, namely that anyone can voluntarily coordinate their financial multipolarity policies with the group.

Membership only imbues countries with the right to participate in discussions on this subject whereas partnership status lets them observe these talks in real time while everyone else waits until they’re over to hear about the results. Both have an element of prestige associated with them and that’s why so many countries want to formalize such relations with BRICS. Turkiye considers itself to be a rising power and accordingly believes that it has the right to at least observe their financial multipolarity discussions.

Russia, which hosted this year’s summit, agrees. President Recep Tayyip Erdogan was thus invited to participate in the BRICS Plus/Outreach meeting. His country has an important role to play in accelerating financial multipolarity processes due to its transcontinental location and economic influence in the Eurasian Heartland brought about by the “Middle Corridor”. The specific form in which this takes and the degree of coordination with BRICS remain to be seen but this fact exists regardless of that.

India also appreciates Turkiye’s abovementioned role in the global systemic transition despite those two’s disagreements over the unresolved Kashmir Conflict. Its grand strategy aims to carefully multi-align between competing power and influence centers in order to maximally reap the benefits from each. India only decisively takes a side on issues that directly concern its interests, especially those related to national security, since it wants to indefinitely perpetuate this balancing act.

Turkiye’s request to formalize its relationship with BRICS isn’t considered to be something that directly concerns India’s interests, especially not its national security ones, so it was always dubious that it vetoed this even before Turkiye’s Center for Combating Disinformation debunked Bild’s report. India also respects Russia as a state while Modi and Putin are close friends so it would have been scandalous for Delhi to get in the way of Ankara’s plans after Putin invited Erdogan to attend to lobby in support of this.

There’s no credible indication that Russia and India had any sort of disagreement over BRICS expansion during last week’s summit. Bild’s report was therefore bonafide fake news that was published for reasons that only this outlet’s editors can account for if they were honest with the public. Whatever they may be, they were ultimately counterproductive after Turkiye itself debunked their report, which damaged Bild’s reputation and exposed it as more of a tabloid than a reliable source of news and insight.