By Michael Every of Rabobank

The Fed Chair’s dovish Jackson Hole speech was analysed pithily by our Fed watcher Philip Marey: “Regarding the Fed’s initial diagnosis that inflation was “transitory”, Powell tried to hide behind other economists who were also wrong: “The good ship Transitory was a crowded one, with most mainstream analysts and advanced-economy central bankers on board.” This is the classic sharing the-blame defence of failing economists, but totally inappropriate for the world’s leading central bank with the largest staff of economic researchers in the world, holding PhDs from America’s most prestigious universities. Even a modest Dutch bank could see that the Fed was going to be blindsided by inflation.

Powell has already concluded that the Fed has brought down inflation while preserving labor market strength. This may be a bit premature, given the unemployment rate is rising so fast that the Sahm rule has already been triggered, and the lagged effects of restrictive monetary policy could still materialize in the coming months. Instead, Powell was patting himself on the back. He concluded his speech with, “The limits of our knowledge –so clearly evident during the pandemic– demand humility and a questioning spirit focused on learning lessons from the past and applying them flexibly to our current challenges.” Humility? This speech reflected hubris, not humility.”

Indeed, the Fed Chair pivot to “do-everything-we-can” rate cuts, ostensibly with inflation beaten, and as a friend-of-labor –‘The Powell of the Powerless’– and markets swallowing it, makes me think of a political essay with a similar name. In 1978, just before the Fed got serious on rates under Volcker after years of crash and Burns, then Czechoslovak dissident Havel wrote ‘The Power of the Powerless’, showing how to resist an all-pervasive “post-totalitarian” system. In 2024, with a light edit on my end, Havel’s text is also a tongue-in-cheek critique of the assumption that the all-pervasive Fed won’t be resisted ahead:

“Our system is not limited in a local, geographical sense; rather, it holds sway over a huge power bloc controlled by one of the two superpowers… It commands [a] precise, logically structured, generally comprehensible and, in essence, extremely flexible ideology that, in its elaborateness and completeness, is almost a secularized religion… In an era when metaphysical and existential certainties are in a state of crisis, when people are being uprooted and alienated and are losing their sense of what this world means, this ideology inevitably has a certain hypnotic charm… [Its] mechanisms for wielding power are for the most part not established firmly, and there is considerable room for accident and for the arbitrary and unregulated application of power…

A portfolio manager places in his email the slogan: RATE CUTS! Why does he do it? What is he trying to communicate to the world? Is he genuinely enthusiastic about the idea of lower rates? Is his enthusiasm so great that he feels an irrepressible impulse to acquaint the public with his ideals? Has he really given more than a moment’s thought to how such rate cuts might occur and what they would mean?…He put RATE CUTS! into emails simply because it has been done that way for years, because everyone does it, and because that is the way it has to be. If he were to refuse, there could be trouble. He could be reproached for not having the proper decoration in his email; someone might even accuse him of disloyalty. He does it because these things must be done if one is to get along in life. It is one of the thousands of details that guarantee him a relatively tranquil life “in harmony with society,” as they say…

The slogan is really a sign, and as such it contains a subliminal but very definite message. Verbally, it might be expressed this way: “I, XY, live here and I know what I must do. I behave in the manner expected of me. I can be depended upon and am beyond reproach. I am obedient and therefore I have the right to be left in peace.” This message, of course, has an addressee: it is directed above, to his superior, and at the same time it is a shield…”

Of course, individual incentives for groupthink in markets are clear; “Stay alive ‘til 25” is a mantra for many praying for rate cuts; and the belief 2021-24 was a “long transitory” inflation aberration before a return to ZIRP and QE still holds sway with many. Yet that doesn’t mean the Fed’s ideology isn’t projecting an ideological ‘reality’ inconsistent with the facts: inflation is beaten… when over target, especially in services; the labour market was strong; now it’s suddenly cooling… yet the Fed can forecast the economy; and it cares about labour… after being prepared to see rising joblessness to cap inflation, worrying about high wage growth, and surely knowing mass low-wage, illegal immigration was underway for years.  

Havel notes a post-totalitarian system “has a natural tendency to disengage itself from reality… Because the regime is captive to its own lies, it must falsify everything. It falsifies the past. It falsifies the present, and it falsifies the future. It falsifies statistics… It pretends to fear nothing. It pretends to pretend nothing. Individuals need not believe all these mystifications, but they must behave as though they did, or they must at least tolerate them in silence, or get along well with those who work with them. For this reason, however, they must live within a lie. They need not accept the lie. It is enough for them to have accepted their life with it and in it. For by this very fact, individuals confirm the system, fulfil the system, make the system, are the system.”

In 1978, Havel’s power of the powerless was a Czechoslovak greengrocer not putting an official sign saying, “Workers of the world, unite!” in their state-run shop window. In 2024’s Western free(ish) society and free(ish) markets “there are always certain correctives that effectively prevent ideology from abandoning reality altogether.” Here’s some samizdat for those wanting to dissent:

• August payrolls are key: a weak number may see markets price a 50bp September Fed move, but would also prompt concern about corporate earnings. Yet what if we get a stronger print?
• Powell didn’t address China’s deflation and mercantilism, which help make US inflation look “transitory.” Yet were Beijing to switch to stimulus alongside Fed rate cuts, as pressure is lifted off CNY (chatter now of a $1trn inflow to China if so), global commodity prices would leap.
• High Fed rates and a strong dollar capped commodity prices too, but WTI oil rose 2.5% Friday and another 3.0% Monday – coincidence, warning, or both?
• Massive new liquidity flowing into the global system means asset price inflation: hooray – but that will create political problems as the powerless and assetless get restless.
• Then there’s (geo)politics. If Trump wins, tariffs, tax cuts, and a smaller US labor force follow, and inflation rises; Western voters seem discontent with high immigration, without which wage growth rises; the Houthis blowing up an oil tanker underline Suez isn’t coming back as a global trade conduit; Israel and Hezbollah came closer to war before the latter blinked; Libya stopped oil exports; Russia saw more refinery damage; Canada put 100% tariffs on Chinese EVs and steel; China is considering tariffs on EU autos; and its controls on and stock-piling of rare earth minerals are pushing up the prices of key inputs for vital silicon chips.
• On the downside, the IFO warned the German economy risks slipping into “crisis” ahead of September regional elections that could make it look ungovernable; France has no government, and President Macron won’t allow a left-wing one; and the new UK Prime Minister is singing “Things can only get worse before they get better”, while media say violent offenders are being let off prison sentences if they say “sorry”, while anti-immigration rioters can all find cells.
• Central banks who’d cut dovishly before Powell (i.e., the BOC, RBNZ, ECB) were already seeing their currencies rise the dollar rather than sink: are they happy about more exchange-rate deflation pressures, or worried about loss of exports if global growth slows?

If the Fed cuts, then has to hike again, the current decade, like the one fifty years before it and the one forty years before that, risks marking the failure of not just the Fed’s reputation, but our global system and its “because markets” ideology. In the 1970s, we moved past high inflation via much more debt, much more globalisation, and inflation targeting. Today, that trinity looks impossible to return to. So, what next? Nobody at the Fed, and few in markets, are willing to talk about these huge downside risks, just the apparent downside for rates ahead. Havel had a few things to say about that, as I just showed.

Yet if the Fed has to cut again more than expected, things also look ugly. A recent Kansas City Fed paper explains central banks and governments can coordinate on a ‘safe debt’ regime that insures bondholders or a ‘risky debt’ regime that insures taxpayers; monetary dominance (QE) = safe debt, fiscal dominance (and no QE) = risky debt. Tellingly, it then concludes “high-frequency evidence shows the risky debt regime is a better fit for the recent US Treasury market experience as well as the experience of other advanced economies. Large unfunded spending shocks trigger large adjustments in the valuation of the government debt portfolio, even in a well-functioning bond market.” There’s a major Fed warning about fiscal spending at a time when austerity seems impossible or improbable. Of course, the above was against a backdrop of high rates and QT as well as huge fiscal deficits, and if we were to go back to ZIRP and QE then logically we would also be back to ‘safe debt’ again (and taxpayers, shmaxpayers).

However, we wouldn’t be in a safe currency regime. Or, as a result, a safe global trade regime. Or, logically, a safe inflation regime. So, if the global system sees another major crisis, the go-to answer of ZIRP and QE just creates massive new problems, not a replay of 2008-2020.

In short, the key danger for markets is that while all they want to hear is ‘finally, Fed rate cuts!’, the FOMC Chair may yet show himself to be “The Powell of the Powerless”, in that he can’t do what he and they want.

Then the Velvet Revolution, or the Velvet Divorce, may really start.

This morning, the spotlight has shined brightly on the GLP-1 complex after Eli Lilly & Co. announced that its new weight-loss drug, Zepbound, in single-low-dose vials, will be priced at a 50% or greater discount compared to the retail prices of other GLP-1s for obesity. Companies exposed to GLP-1s are lower on the news in premarket trading in New York, with Wall Street analysts speculating whether this steep discount signals that the ‘fatty bubble’ has burst… 

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

“This new option helps millions of adults with obesity access the medicine they need, including those not eligible for the Zepbound savings card program, those without employer coverage, and those who need to self-pay outside of insurance,” Lilly wrote in a press release. 

The new price for a 2.5 mg Zepbound single-dose vial is $399 ($99.75 per vial) for a four-week supply, and a 5 mg dose is $549 ($137.25 per vial). This is a 50% discount versus the average price of Zepbound injection pens, currently priced around $1,000 for a monthly supply.

Simple math shows the medication costs patients not covered by insurance upwards of $13,000 per year, clearly unaffordable for the vast number of overweight Americans who are struggling with a multi-year inflation storm and high interest rates sparked by disastrous policies pushed by the Biden-Harris team.

The discounts are only available on Lilly’s direct-to-consumer platform, LillyDirect, to patients who pay out of pocket for the drugs.

Lilly said the cheaper Zepbound vials will provide patients with a more affordable option, particularly people without insurance. This direct-to-consumer approach through LillyDirect may be enough to stimulate demand. 

Meanwhile, Democrats have pressured Lilly and Novo Nordisk, the makers of Ozempic and Wegovy, to lower the costs of GLP-1s.

In June, Sen. Bernie Sanders, I-Vt. and said monthly $1,000 payments for Novo Nordisk’s GLP-1 drug were “absurd” and that he was spearheading a public campaign to lower costs.

Maybe Sanders should spearhead a campaign like Robert F. Kennedy Jr. to make America healthy by fixing the corrupt federal health and food agencies overseeing the nation’s food supply chain, which is plagued with junk food and seed oils.

In markets, Lilly shares were flat in premarket trading in New York, and Novo Nordisk shares were down about 2%. 

Shares of Hims & Hers Health in premarket were down 5%. The company offers a range of direct-to-consumer knockoff GLP-1 weight-loss drugs. 

$LLY is now selling vials of its blockbuster weight-loss drug Zepbound to patients for half the price to boost access and supply.

This is not good for the companies that try to sell compounded knockoffs — $HIMS down 8% pre-market on the news. pic.twitter.com/KK6xyo4sCN

— Shay Boloor (@StockSavvyShay) August 27, 2024

One X user noted. 

$LLY The way this Bloomberg article is written would suggest that apparently demand is so high for weight loss pills that Eli Lilly is now forced to sell Zepbound at -50% discount. https://t.co/l54nZTSRKb pic.twitter.com/d4kMi3aQ1H

— JaguarAnalytics (@JaguarAnalytics) August 27, 2024

Here’s the state of the GLP-1 bubble via two Goldman indexes of companies exposed to and at risk of weight loss drugs. 

Zepbound is also available in 7.5 mg, 10 mg, 12.5 mg, or 15 mg. Like any other drug dealer, hook the client on cheap doses first.

Authored by Andrew Korybko via Substack,

If the Hindu Business Line’s source is correct, then the next summit will reaffirm its members’ voluntary right to de-dollarize their trade with each other (thus not obligating them to be drawn into the yuan’s orbit) and possibly make progress on a BRICS currency basket.

The Hindu Business Line cited an unnamed official to report on Monday that October’s BRICS Summit in Russia’s Kazan might see a non-binding agreement on de-dollarizing trade between member states. They also claimed that the much ballyhooed “BRICS currency” will be notional and have its value derived from a basket of currencies. What follows are their source’s exact words, which will then be analyzed in order to place them into context and assess the viability of these reported proposals:

“New Delhi is examining an appropriate response based on the extent to which it would benefit economically and diplomatically from the proposals without increasing its vulnerabilities vis-a-vis China.

It is each according to its comfort level. Within BRICS if you agree for currency settlement, you may choose not to do with x country, while doing with others.

If India chooses not to do with China in yuan and rupee, it is okay. But it may do with other countries, for instance the rouble or rand. For instance, Russia can ship out the surplus rupee that is collected in its vostro accounts in India, convert it into Brazilian [reals] to pay Brazil for some transaction. Or it can convert it into South African rand to make payment to South Africa.

The BRICS currency will be a notional currency and not a currency in physical form. The issue is how does one peg the value for it. Naturally, the value will derive from the value of all the currencies in the basket put together. Notionally, one gets the impression that yuan is a dominant currency. So, it will have a greater weightage. India has to see whether that will be acceptable to it.”

For starters, BRICS is a voluntary collection of countries with a shared interest in accelerating financial multipolarity processes. It doesn’t have a secretariat nor even a charter, but its joint statements throughout the years enable observers to obtain an understanding of its working culture. There’s no mechanism to enforce compliance with their declarations so cooperation has to be built on trust. That’s why everything that they agree to is already non-binding and always will be.

This is very relevant as regards their members’ shared goal of de-dollarization.

India is the world’s fifth-largest economy and is on pace to become its third-largest one by the end of the decade. It accordingly envisages the rupee playing a larger role in global trade, but that would be difficult to do if the global financial system bifurcates between the American and Chinese superpowers. In that scenario, China could gain an edge over India amidst their rivalry, plus other countries’ sovereignty would be curtailed.

India therefore wants true financial multipolarity, not financial bipolarity, but it also understands that the yuan will indeed hasten its internationalization through BRICS’ de-dollarization efforts. Nevertheless, India is uncomfortable contributing to this trend due to its abovementioned national interests, which is why the source suggested ways in which the yuan could be avoided in trade with fellow BRICS members. China is once again India’s top trade partner, however, so there are limits to how far this policy can go.

The same holds true for BRICS’ currency plans since there’s no doubt that the yuan will become the dominant one in any such basket thereof. India will have to weigh whether it would gain more by contributing the rupee to this or not, but the absence of details about this proposal makes it impossible for observers to do anything more than speculate at this time. On the one hand, it could help internationalize the rupee, but the drawback is that India will also help internationalize the yuan.

Since the yuan’s internationalization is inevitable, India might conclude that it’s better for the rupee to also internationalize alongside the yuan through a BRICS currency basket than to not benefit whatsoever from this proposal seeing as how China will still go through with it even if India doesn’t. India could then focus on de-dollarizing its trade with the Indo-Pacific countries through the use of national currencies instead of China’s to keep the yuan’s internationalization in check and further internationalize the rupee.

In principle, India’s approach is shared by the rest of the world apart from the American and Chinese superpowers of course, each of which prefer for their currency to be the world’s dominant one. Everyone else though would benefit more by balancing between the dollar, yuan, perhaps also the euro, and definitely their own national currency too. The first three facilitate trade with the world’s largest economies while the last can be used bilaterally with everyone else to bolster their national economy.

The challenge is to de-dollarize without replacing dependence on the dollar with dependence on the yuan, but smaller economies have a much more difficult time doing this than larger ones like India. What India can do, however, is internationalize the rupee as much as possible given the constraints of the evolving global financial system in order to chip away at both the dollar’s dominance and the yuan’s rise. The eventual rise of another currency will help advance true financial multipolarity and avert bipolarity.

It’ll admittedly take a long time for the rupee to have such an impact, and it’s always possible that poor financial planning and prioritizing convenience over national interests could torpedo these noble plans, but the world would objectively benefit by India counteracting financial bipolarity processes. As the fastest-growing major economy that’s on pace to become the third-largest one by the end of the decade, India has a huge role to play in this respect, and BRICS can do a lot to help it along.

If the Hindu Business Line’s source is correct, then the next summit will reaffirm its members’ voluntary right to de-dollarize their trade with each other (thus not obligating them to be drawn into the yuan’s orbit) and possibly make progress on a BRICS currency basket. The first indisputably serves India’s interests while the second very well could too but it’s still too early to say without knowing the details. In any case, these reported plans will further erode the dollar’s dominance, thus weakening US hegemony.

After 8 of the last 9 months seeing consumer confidence revised lower, July’s Conference Board data was revised significantly higher (from 100.3 to 101.9)…

Source: Bloomberg

And August’s headline print was considerably better than expected (103.3 vs 100.8 exp) with the expectations gauge adjusted significantly higher for July and higher still in August…

Source: Bloomberg

The Present Situation remains languishing near COVID lockdown lows, which is perhaps explained by the fact that the overall trend in the labor market indicator remains weaker…

Source: Bloomberg

…and purchase plans for homes, cars, and appliances all plunged.

Source: Bloomberg

But some good news is that inflation expectations tumbled back to pre-COVID levels…

Source: Bloomberg

This soft survey data supports The Fed’s dovish stance (if you look hard enough), but given the lack of buying interest, it seems the consumer is more than stretched.

After presiding over the worst illegal immigration crisis in US history, failed ‘border czar’ Kamala Harris has now pledged to spend hundreds of millions of dollars to build a wall at the southern US border – a plan she called “un-American” during the Trump administration.

According to Axios, which calls it the “latest example of Harris flip-flopping on her past liberal positions,” Harris is now embracing a ‘more hawkish’ immigration policy while the Trump campaign spends tens of millions of dollars on attack ads over the Biden-Harris administration’s failed border policies.

Last week, Harris told the Democratic National Convention that she would sign a recent bipartisan border security bill negotiated by Sens. James Lankford (R-OK) and Chris Murphy (D-CT), which calls for hundreds of millions of dollars of unspent funds to be used to continue Trump’s wall.

“It requires the Trump border wall,” Lankford told Axios. “It is in the bill itself that it sets the standards that were set during the Trump administration: Here’s where it will be built. Here’s how it has to be built, the height, the type, everything during the Trump construction.”

In 2017, then-Senator Harris called Trump’s border wall project a “stupid use of money,” and committed to blocking funding for it.

Trump’s border wall is just a stupid use of money. I will block any funding for it.

— Kamala Harris (@KamalaHarris) April 21, 2017

Kamala Harris now says she wants a wall on our southern border if elected.

Unfortunately for her, we have receipts: pic.twitter.com/akBDYk7Qa7

— End Wokeness (@EndWokeness) August 27, 2024

Then, under her watch as the so-called “Border Czar,” illegal crossings on the southern border spiked (at least) 140% compared to numbers seen during the Trump administration, according to the House Committee on Homeland Security.

After Democrats gained control of the House in 2019, they opposed the large-scale funding Trump requested for the wall – leading to a government shutdown. Eventually, some funding was approved – but was far less than what Trump had requested. In response, Trump declared a national emergency in February 2019 to divert funds from other federal projects to the wall’s construction, which led to various legal challenges.

Last week Harris came under fire for a campaign video which prominently featured images of Trump’s partially built US-Mexico border wall, boasting that her credentials as a “border-state prosecutor” would allow her to get the job done.

🤔 What is that in this ad?

Looks like the @realDonaldTrump BORDER WALL to me! https://t.co/QeNVJNjOcD pic.twitter.com/QFugDm7bjc

— Mike Howell (@MHowellTweets) August 23, 2024

The flip-flop was so brazen that ABC News called her out on it!

🚨 ABC just CALLED OUT Kamala Harris for using video of President Trump’s border wall in her new ads

If even *ABC* is calling her out for her hypocrisy, you know it’s REALLY bad 🤣 pic.twitter.com/R9DakoOKw5

— Nick Sortor (@nicksortor) August 26, 2024

Amazing…

Artificial intelligence crypto tokens have surged over the past week ahead of a highly anticipated second-quarter earnings report from tech giant Nvidia. 

As Arijit Sarkar reports via CoinTelegraph.com, the market capitalization of artificial intelligence and big data cryptocurrency projects and tokens has surged by 79.7% over the past three weeks, reflecting renewed confidence among crypto investors.

On Aug. 6, the total market cap of AI and big data crypto projects recorded a yearly low of $18.21 billion, primarily due to its indirect reliance on the underperforming price of Bitcoin and crypto markets in general. At the time, Bitcoin’s price fell sharply under $50,000, according to data from Cointelegraph Markets Pro and TradingView.

Market capitalization and volume of AI and big data tokens market. Source: CoinMarketCap

Specifically, AI-focused tokens such as Near Protocol, Artificial Superintelligence Alliance (FET), Bittensor (TAO) and Render (RENDER) have seen gains outpace the broader crypto market over the past week.

Proof-of-stake layer-1 network Near’s native token surged 35% over the past week to hit a four-week high of $5.20 on Aug. 25. 

Artificial Superintelligence Alliance — a consortium of Fetch.ai, Ocean Protocol and SingularityNET — saw even bigger gains, with its FET token surging almost 70% in a week to reach $1.39 on Aug. 26.

Onchain analytics platform Lookonchain observed the big gains and noted strange whale transaction behavior in FET in an Aug. 26 X post. 

It noted that a whale “seemed to regret selling” at a lower price before spending $2.38 million Tether  to repurchase 1.79 million FET tokens from Binance at a higher price of $1.33 on Aug. 25. 

FET price, one week chart. Source: Cointelegraph

Other AI-affiliated crypto assets outperforming at the time of writing include TAO, which has gained 26% over the past week, topping $350 on Aug. 26. 

RENDER is also up around 40% over the past seven days, climbing to $6.45 on Aug. 26, according to CoinGecko. 

Most major AI tokens have fully recovered from the market crash earlier in August. 

Nvidia described as “most important tech earnings in years”

The surge in AI-related assets comes as markets prepare for one of the year’s most significant tech firm earnings reports. On Wednesday, Aug. 28, Nvidia will release its Q2 results.

One of Wall Street’s most influential tech bulls, Wedbush Securities’ Dan Ives, told Fortune on Aug. 23 that this is “the most important tech earnings in years.”

He said he believes the tech bull market is driven by demand for new data center capacity, which is needed to power the plethora of AI chatbots that have emerged in recent years. In a note on Aug. 22, Ives wrote:

“There is one company in the world that is the foundation for the AI Revolution, and that is Nvidia.”

Mike Smith, a portfolio manager at Allspring Global Investments, told Reuters:

“Nvidia is the zeitgeist stock today,” before adding, “You can think of their earnings four times a year as the Super Bowl.”

Nvidia’s revenue jumped 18% between Q3 2023 and Q1 2024 and has surged 262% in the past year. 

Nvidia stock has skyrocketed a whopping 180% over the past 12 months, hitting an all-time high of $135 in mid-June. Its stock has recovered 30% since the market dump in August and traded at just under $130 at the close of markets on Friday. Aug. 23.

Tensions are soaring between NATO-member Poland and Russia amid allegations of another airspace violation. Poland’s military says it is currently hunting for a potential downed Russian drone within its sovereign borders.

Poland’s Armed Forces announced a ‘likely’ airspace violation during Monday’s major Russian air assault which targeted 15 out of 24 Ukrainian oblasts, and which chiefly took out energy and electrical infrastructure. The attack included cruise missiles, drones, and Kinzhal hypersonics and is being widely acknowledged as one of the biggest nationwide aerial assaults of the war.

“We are probably dealing with the entry of an object on Polish territory. The object was confirmed by at least three radiolocation stations,” Major General Maciej Klisz told reporters, describing that it was probably a drone. “It is clear from its characteristics that the object is not a missile, it is not a hypersonic, ballistic or guided missile.”

The Polish military described an ongoing search for what is “probably an unmanned aerial vehicle” that is some 30 kilometers from the Ukrainian border. “There was full readiness to neutralize this object,” a statement said further.

“The object disappeared from the radars around 25 kilometers (15.5 miles) deep into Polish territory early in the morning,” Gen. Klisz specified. 

Since the war in neighboring Ukraine began, there have been several instances of reported Polish airspace violations, with the most serious being the November 2022 incident which saw an errant Ukrainian air-defense missile falling on the Polish village of Przewodow, killing two Polish citizens.

And in December 2023, a Russian cruise missile spent several minutes inside Polish airspace before entering back into Ukraine.

President Zelensky has since claimed that Poland is now committed to shooting down Russian missiles and drones over Ukrainian territory if the inbound projectiles are deemed a threat to Poland’s defense.

Ukrainian media reported in July:

Ukraine and Poland agreed to further develop political, military, and economic cooperation, and “cooperate closely in the reconstruction of Ukraine as a sovereign and democratic state.”

During the joint press conference with Tusk, Zelensky thanked Poland for the “special agreements” in the document.

The president added that the security agreement includes a provision to develop “a mechanism” for intercepting Russian missiles and drones in Ukraine’s airspace aimed at Poland.

However, Polish leadership never explicitly backed these statements, but only said such a defense posture is under review and discussion.

Thus far, NATO states have not fired directly on Russian forces or assets operating inside Ukraine, on fears that this could ignite nuclear-armed war between Moscow and NATO.

Authored by Andrew Korybko via Substack,

Its Foreign Ministry’s ominously implied ultimatum to Minsk and reaffirmation of Ukraine’s right to self-defense suggest that Kiev might invade Belarus’ Gomel Region and/or Russia’s Bryansk Region.

The Ukrainian Foreign Ministry released a statement on Sunday warning about what it described as the “threat” posed by Belarus’ military buildup along the border, the motivations of which were analyzed here in early August. Belarusian President Lukashenko also drew attention last week to the whopping 120,000 Ukrainian troops that he claims were the first to deploy there. For reference, Belarus only has around 65,000 active soldiers, one-third of whom are stationed along the Ukrainian border.

Less than a week ago, a small Ukrainian force unsuccessfully tried to invade a tiny village in Russia’s Bryansk Region that’s only 30 kilometers from the Belarusian border. It was likely a probing attempt in hindsight, but any Kursk-like invasion along that front could risk impeding or even cutting off Russia’s military logistics to Belarus’ southeastern city of Gomel. That’s because there’s a nearby highway running between there and Bryansk’s eponymous capital just 30-50 kilometers inside of Russia from the border.

Ukraine might be gearing up to either attack Gomel (which is just 30 kilometers from the border) or at least threaten Russia’s military logistics to there from Bryansk judging by its Foreign Ministry’s statement, which the “Kyiv Independent” noted was the first about Belarus since last September. They ominously implied an ultimatum by writing that “we urge its armed forces to cease unfriendly actions and withdraw forces away from Ukraine’s state border to a distance greater than the firing range of Belarus’ systems.”

This was backed up by them reminding Belarus that “We warn that in case of a violation of Ukraine’s state border by Belarus, our state will take all necessary measures to exercise the right to self-defense guaranteed by the UN Charter. Consequently, all troop concentrations, military facilities, and supply routes in Belarus will become legitimate targets for the Armed Forces of Ukraine.”

The stage is therefore set for opening up another front on this false pretext if Kiev has the political will to do so.

There are arguments for and against the five most likely scenarios.

The first one is that Ukraine doesn’t invade either Gomel or Bryansk Regions, instead remaining content to continue sending drones across the former’s border and possibly continuing to carry out small-scale raids in the second.

The advantage is that Ukraine wouldn’t further extend itself, but the disadvantage is that also wouldn’t further extend its adversaries either. This is the least risky scenario of the five.

As for the second scenario, Ukraine might provoke Belarus into initiating conventional hostilities or orchestrate a false flag to that end.

Either could pressure the West into conventionally intervening like Italy’s La Repubblica newspaper reported that it would do if Belarus formally got involved in this conflict. Ukraine might desperately need the pressure relief that such an intervention could bring, but it might either be hung out to dry or the intervention could lead to tensions spiraling out of control.

The third, fourth, and fifth scenarios are similar in that Ukraine could either attack Gomel, Bryansk, or both.

This would pose the same risks that the first one would avert with regards to either further extending its own forces and/or its adversaries’. It’s the most dramatic set of scenarios due to how much it would worsen the conflict, but that might be precisely what Ukraine wants if it believes that this could get the West to conventionally intervene in its support, thus implying that it’ll soon lose if they won’t.

Out of these five, while the first would arguably be the best, it appears to be the least likely.

The Ukrainian Foreign Ministry wouldn’t have made its first statement about Belarus in almost a year if it didn’t believe that this would bring it some sort of benefit, let alone ominously imply an ultimatum and then reaffirm its right to self-defense, which would be twisted to justify aggression in the event that it decides to attack Gomel and/or Bryansk.

Something is cooking, and it doesn’t bode well for Belarus.

The West faces dire consequences if the Iran-backed Houthi aggression in the southern Red Sea persists. Beyond the intermediate inflation threat caused by shipping disruptions and skyrocketing container rates due to rerouted merchant ships around Africa’s Cape of Good Hope, the long-term game is even more troubling: America’s “credibility and deterrence” is quickly eroding. This perceived weakness could embolden China to escalate disputes in the South China Sea, sensing a weakening West becoming increasingly entangled in multiple conflicts, including those in Ukraine and the Middle East. 

Former Navy Seal and Blackwater founder Erik Prince wrote on X this weekend about the Houthi rebel missile attack on Greek-flagged oil tanker MV Sounion about 77 nautical miles west of the Yemeni port of Hodeidah last week that eventually led to a massive explosion and potential environmental disaster. 

“Where is the rightful outrage from environmentalists? Thousands of tons of crude oil will now pour into the Red Sea,” Prince wrote on X, adding, “Thousands of tons of crude oil will now pour into the Red Sea.” 

Where is the rightful outrage from environmentalists? Thousands of tons of crude oil will now pour into the Red Sea.
This is a clear sign of the collapse of American credibility and deterrence. Letting the Iranian proxy Houthis shut off a major maritime seaway is an epic fail.… https://t.co/ThmzZ5FAED

— ErikDPrince (@realErikDPrince) August 24, 2024

To put things in perspective, Sounion is hauling 150,000 tons of crude—a little more than four times the amount spilled by the Exxon Valdez in 1989. 

Ten months after Houthi forces in Yemen started disrupting maritime traffic in the Red Sea, global shipping companies have had to reroute merchant ships around the Cape of Good Hope. This has resulted in delays and higher container costs that will only worsen as capacity stretches thin. 

• Supply Shock: Shipping Container Costs Top $10,000 Amid Red Sea Turmoil Thinning Global Capacity

Meanwhile, the US and EU have launched numerous military operations committed to ensuring freedom of navigation and maritime security in the highly contested region but have failed repeatedly.

Prince said, “This is a clear sign of the collapse of American credibility and deterrence. Letting the Iranian proxy Houthis shut off a major maritime seaway is an epic fail.” 

He noted, “America can and must do better! Leadership matters.” 

3/3 Some keep asking why the Houthis are attacking those commercial vessels. The Yemeni group has an agenda, and they have divided their maritime campaign into five phases so far, and they’ve been following it. I summarize below the phases based on statements from the group, and… pic.twitter.com/kCBnmHknUN

— Noam Raydan (@NoamRaydan) August 23, 2024

Why is the Biden-Harris administration’s failed freedom of navigation military operation in the Red Sea significant?

Because it projects extreme weakness for the world’s top superpower, embroiled in conflicts in Eastern Europe, the Middle East, and the Red Sea. This all exposes Biden and other far-left Western leaders who are extraordinarily weak. This perceived vulnerability could now accelerate the possibility of a major US-China confrontation in the South China Sea.

The focus in recent months by military officials and experts on heightening WW3 risks in the South China Sea has been on clashes between Chinese and Filipino ships. We have detailed this extensively: 

• US, Allies Condemn China’s Actions Against Philippine Vessels In South China Sea
• Watch: Filipino Soldiers Fought Off Axe-Wielding Chinese Coast Guard ‘With Bare Hands’
• US, Philippines Working On Intel Sharing Deal Amid Clashes With Chinese Vessels

With the US obligated to defend the Philippines if China attacks the Filipino military, Beijing is observing the West being bogged down in multiple conflicts as a sign of major weakness. As a result, the chances of armed conflict in the South China Sea are rising. 

Authored by Kyle Anzalone via The Libertarian Institute,

As Kiev attempts to bask in triumph over its territorial gains inside of Russia, its forces are losing territory along the Eastern front lines in Ukraine. Ukrainian military commanders say the reason for the losses is poorly trained soldiers; many are even afraid to fire their weapons. 

Speaking with the Associated Press, a battalion commander in Ukraine’s 47th Brigade said, “Some people don’t want to shoot. They see the enemy in the firing position in trenches but don’t open fire. … That is why our men are dying. When they don’t use the weapon, they are ineffective.”

After pushing Kiev to forego a diplomatic settlement with Moscow in April 2022, Western leaders pledged that they would arm, equip, and train Ukrainian soldiers to fight off the Russian invaders.

However, two and a half years into the conflict, it has turned into a war of attrition, and Kiev’s backers are struggling to sustain Ukraine’s military amid massive losses. 

While Kiev has not made an official statement regarding its casualties, they are estimated to be well into the hundreds of thousands. Support for the war has also been dipped in Ukraine, leading Kiev to draft more Ukrainians, including increasingly younger citizens, into the military. 

Many of the recruits and conscripts receive training in NATO countries, but their commanders say they are not performing routine operations.

“From the command point, I would like to issue orders to small (infantry) groups, but I am not sure if they are capable of executing these orders because they lack coordination and communication,” the officer told the AP. “Sometimes, I want to shoot myself.”

One soldier said the lack of experience is leading to territorial losses. “The main problem is the survival instinct of newcomers. Before, people could stand until the last moment to hold the position. Now, even when there is light shelling of firing positions, they are retreating,” said one soldier. 

NEW: Russian milbloggers claimed that Russian forces recently regained lost positions in Kursk Oblast amid reports of continued Ukrainian attacks in the area on Aug. 25.

Russian forces recently advanced near and within Toretsk and southwest of Donetsk City.

More key takeaways⬇️ pic.twitter.com/fuxFhGrIo7

— Institute for the Study of War (@TheStudyofWar) August 26, 2024

“This fear creates panic and chaos,” said the battalion commander in the 47th Brigade. “This is also the reason we have lost.”