Authored by Charles Hugh Smith via OfTwoMinds blog,

This time around, the Fed may not be able to “save” the bubble from a complete round-trip deflation, which history suggests might decline by 50%.

Let’s start by stipulating that my interest in housing bubbles is purely abstract. I’m not rooting for any set of participants or betting on housing going up or down. My approach is to simply look at the dynamics in play and consider what history offers up as potential trajectories. Rick Blaine summed up this perspective in the film Casablanca: “I understand the point of view of the hound, too.”

With that said, all bubbles pop, and every bubble is declared “the new normal” that will only continue inflating to new heights just before it pops. Housing only goes up, there’s a permanent shortage of housing, and so on.

The bias in reporting bubbles bursting is on the losers, those whose fortunes deflated along with the bubble. But there are also winners when bubbles burst, as what was unaffordable becomes affordable again, and capital that was chasing speculative gains is mangled, and duly chastened, seeks safer returns. Both of these dynamics offer rewards to those who avoided the speculative bubbles.

For context, let’s start with the wellspring of the housing bubble, credit. Asset bubbles can arise without credit expanding–the South Seas Bubble, etc.–but in the modern era, gargantuan increases in credit (a.k.a. debt) pump up asset bubbles. Absent a vast expansion of credit, it’s hard to inflate a massive speculative bubble.

Here is total credit in the U.S. Even the casual observer will note that the parabolic rise in credit has outstripped the real economy (GDP). As bubbles rise in assets such as stocks, the phantom wealth leaks out of the first bubble and seeks more fertile speculative ground in another asset class, which then bubbles up in a speculative frenzy.

When credit bubbles pop, asset bubbles pop, too as the constant pressure of new money is what kept the bubbles inflated.

The consensus holds that housing is bubbling higher because there are enormous scarcities in housing: demand exceeds supply, and so prices skyrocket. While this is undoubtedly true in specific locales, the nation as a whole has more housing units per capita than ever before.

This suggests housing hoarding by the wealthy as a factor: corporations have snapped up tens of thousands of homes as rentals, a double play of steady income from rising rents and a speculative bet on gains from additional appreciation. Wealthy households have snapped up hundreds of thousands of homes as short-term vacation rentals (STVRs) for the same reason: income and appreciation.

Millions of homes are empty or lightly used as wealthy families have no pressing need to sell vacation homes, homes left empty when the parents passed or moved to assisted living, etc. Riding the bubble higher is an obvious motivation to hang on to empty houses.

The top 10% who collect roughly half the income and own over 90% of all stocks own 44% of the nation’s real estate wealth. The bottom 50% who own a meagre 2.6% of the nation’s financial wealth own 11% of the real estate wealth. The middle class–the 40% between 50% and 90%–own about the same percentage (45%) as the top 10%.

How do we explain this concentration of real estate wealth in the top 10%? Of course the wealthy own more expensive homes, but this alone cannot account for the outsized share of real estate wealth held by the top 10%: the top 10% own the lion’s share of second homes, STVRs, privately owned rentals and “land-banked” homes that are empty or lightly used.

Unsurprisingly, real estate wealth is concentrated in the older generations, with Boomers and older holding over half and Gen X (ages 44 to 60) with 30%–all together, a massive 82% of the nation’s real estate wealth.

The winners and losers when the housing bubble pops are clear: the younger generations win, the older generations lose, and those who counted on the phantom wealth of bubbles lasting forever will lose while those who didn’t enter the speculative bubble will win.

All bubbles pop, and assets fall to levels that everyone at the top of the bubble agrees are “impossible.” The Federal Reserve socialized the housing market starting in 2010 to arrest the deflation of the 2006-07 housing bubble by buying trillions of dollars of mortgage backed securities (MBS). This is visible in the chart of the Case-Shiller National Home Price Index:

This time around, the Fed may not be able to “save” the bubble from a complete round-trip deflation, which history suggests might decline by 50%. Yes, yes, we’re millions of housing units short of demand, etc., but speculation has driven hoarding to levels that are not easy to measure. Once the credit bubble pops, all assets driven higher by speculative credit will pop, including housing.

Yes, a 50% decline is “impossible.” But let’s check back around 2032 to see what’s possible and impossible then. As I often note, if we own a house free and clear and have no interest in using it as a speculative gamble or collateral for extracting phantom wealth via a home equity line of credit (HELOC), then the market value is of no concern. Whether the house is worth $10,000 or $10 million doesn’t matter; what matters is its utility value as shelter we own and control.

*  *  *

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Ukraine’s military has for the first time openly acknowledged it is using US-provided HIMARS rocket systems to attack Russia and destroy its major infrastructure, especially bridges, inside its own territory.

Ukraine’s Special Operations Forces made the admission in a Wednesday Telegram post to its official account, writing: “Where do Russian pontoon bridges ‘disappear’ in the Kursk region? Operators … accurately destroy them.”

“The statement said U.S.-manufactured HIMARS rocket systems were used,” Reuters described of the post. What’s more is that Ukraine’s military published footage of US HIMARS being used to target several key bridges in Kursk in a new video montage…

This marks the first such official public disclosure from Kiev that its forces are using the US Army’s M142 High Mobility Artillery Rocket System to strike inside sovereign Russian territory. These units can be outfitted with either mid-range or long-range missiles 

Starting late last week, Russian officials began accusing Ukraine forces of using the American-supplied weapon, after at least two bridges were destroyed. By the weekend, a third strategic bridge was taken out as Ukraine forces tried to solidify their hold in Kursk.

Reuters comments this week that “Ukraine has damaged or destroyed at least three bridges over the Seym River since Kyiv launched a major assault into western Russia on Aug. 6 advancing up to 28-35 kilometres (39.15 miles).

RIA additionally has reported that other Western arms have been used in the ongoing assault: “Samples of small arms manufactured by the United States and Sweden have been seized at the liquidation site of a Ukrainian sabotage group near the village of Kremyanoe in the Kursk region,” the report said.

Forbes has meanwhile proclaimed that Ukraine is busy blowing up bridges in Kursk as fast as Russia can rebuild them. “The effect, six days into the river campaign, is that a huge swathe of Kursk—and any Russian troops there—is effectively cut off from overland supplies and reinforcements,” the publication writes.

“And don’t expect large-scale aerial resupply: Ukrainian forces have made the air over Kursk extremely inhospitable to Russian helicopters,” Forbes adds. However, some Russian sources have said the invasion is currently being rolled back, and all the while Russian gains in the Donbass continue to come at rapid pace.

S&P Global’s Flash PMI data for August signals the continued divergence between US manufacturing (slump) and Services (survive).

• Flash US Services Business Activity Index at 55.2 (July: 55.0) – 2-month high.

• Flash US Manufacturing Output Index at 47.8 (July: 50.5) – 14-month low.

• Flash US Manufacturing PMI at 48.0 (July: 49.6) – 8-month low.

And all that as ‘hard’ macro data is collapsing…

Source: Bloomberg

Commenting on the data, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:

“The solid growth picture in August points to robust GDP growth in excess of 2% annualized in the third quarter, which should help allay near-term recession fears. Similarly, the fall in selling price inflation to a level close to the pre-pandemic average signals a ‘normalization’ of inflation and adds to the case for lower interest rates.

“This ‘soft-landing’ scenario looks less convincing, however, when you scratch beneath the surface of the headline numbers. Growth has become increasingly dependent on the service sector as manufacturing, which often leads the economic cycle, has fallen into decline. The manufacturing sector’s forward-looking orders-to-inventory ratio has fallen to one of the lowest levels since the global financial crisis.

“At the same time, service sector growth is constrained by hiring difficulties, which continue to push up pay rates and means overall input cost inflation remains elevated by historical standards.

“The policy picture is therefore complicated, and hence it’s easy to see why policymakers are taking a cautious approach to cutting interest rates. However, on balance the key takeaways from the survey are that inflation is continuing to slowly return to normal levels and that the economy is at risk of slowing amid imbalances.”

Finally, as the chart at the top shows, we’ve seen this kind of divergence before and it did not end well for Services.

The Italian Coast Guard has confirmed the recovery of the bodies of British tech entrepreneur Mike Lynch, Morgan Stanley chairman Jonathan Bloomer, his wife Judith Bloomer, Clifford Chance lawyer Christopher Morvillo, and his wife Neda Morvillo from the wreckage of the Bayesian superyacht, Sky News reported. The yacht was hit by a tornado and capsized early Monday. 

AFP News and Reuters have also reported that Lynch’s body had been recovered from the wreckage. Authorities are continuing the search for Lynch’s 18-year-old daughter. 

All five bodies (names noted above) were recovered from the sunken superyacht on Wednesday. 

‘He was an inspiring figure for many.’

Mike Lynch’s legacy “should be celebrated”, says his friend, Brent Hoberman, following his death.

Mr Lynch has been named as one of five victims recovered from the sunken superyacht.https://t.co/PAiZ4D1jU3

📺 Sky 501 pic.twitter.com/TRqcIlGrMm

— Sky News (@SkyNews) August 22, 2024

Sky News spoke with Giovanni Costantino, CEO of The Italian Sea Group, Bayesian’s shipbuilder, who said the superyacht’s design and construction were flawless. He said the superyacht Lynch was on was “unsinkable.” 

He suggested human error was likely responsible for the sinking: “The ship sank because it took on water. From where? Investigators will have to say.” 

On Tuesday, the Italian daily newspaper La Stampa posted footage of the superyacht being engulfed by what appears to be a microburst, or as some say, a waterspout or tornado. 

Naufragio del Bayesian, al vaglio le telecamere di case e negozi. In un video il veliero che affonda: “Scomparso in 60 secondi” https://t.co/IiyXDAfiOo

— La Stampa (@LaStampa) August 20, 2024

Climatologist Luca Mercalli, president of the Italian Meteorological Society, told The Independent that waters around the superyacht were 30 degrees Celsius (86 Fahrenheit) at the time of the incident. He said, “This creates an enormous source of energy that contributes to these storms.”  

Lynch, once described as ‘Britain’s Bill Gates,’ spent much of his time defending his name in court against fraud allegations stemming from the 2011 sale of Autonomy to Hewlett-Packard for $11 billion. In early June, a federal court jury in San Francisco found Lynch not guilty following an 11-week criminal trial. 

By Michael Every of Rabobank

We need it like a Jackson Hole in the head

Unlike the key BLS revisions to April 2023-March 2024 payrolls estimates, at -818K the largest drop since the Global Financial Crisis, today’s Global Daily was released at the same time to all – nobody can call to get it early. Losing an average 68K from each monthly jobs report changes the macro picture; subtracting ‘migrant encounters’ starting in October 2020 as proxy for illegal immigration, the peak in cumulative post-Covid net payrolls growth was 7.23m in February 2023, then drifted lower, to just 6.38m as of July; or, does the BLS revision not matter because illegal arrivals are doing the jobs off book rather than US workers? But tell that to the US workers, if so.

Either way, I wear my “DM = EM” (developed markets = emerging markets) T-shirt and wish those thinking they know what’s going on in the US economy from looking at Bloomberg ‘good luck’. I’ve lived in and covered many EM, with eccentricities, conspiracies, and oddities: let’s see how those who’ve only lived in and covered DM cope if/as this structural shift continues.

Which includes the Fed. Their latest minutes show the vast majority of the FOMC opened the door to a rate cut in September, and a few were prepared to do it in July. Our Fed watcher Philip Marey has slightly revised his call ahead of tomorrow’s Jackson Hole central bank Powell-wow (which he previews). Philip still expects the Fed to start cutting in September, which he was saying while the market was screaming months randomly starting from “JANUARY!”. He still expects four 25bp cuts. However, he now thinks these will be in September, November, December, and January rather than stretched out until mid-2025. This is still due to “stag”, not “flation”. We were one of the first banks to forecast a US recession and remain one of the last to keep a mild recession pencilled in. Yet assuming Trump wins the election, the inflationary impact of his economic policies would force the FOMC to stop cutting at 4.50%. Most in the market are screaming lower Fed Funds levels randomly, starting from the figure which pushes asset prices up, or assuming the Fed will do it for them.

As the Financial Times asked yesterday, ‘Whatever happened to the wisdom of the bond market?’ While FX trades like an ADHD toddler who just ingested a 2-litre bottle of soda and a box of hard candy, and equities like a love-struck teenager who thinks a happy ending always looms, bonds are supposed to trade like a boring professor with a pipe. Yet due to algos, the 1987-2020 Greenspan of market time, and the post-2008 ego-trip where, like ugly politicians, bonds were surrounded by adoring crowds for the first time, now rates markets are all “RATE CUTS!”

In pandering to that, the Fed have arguably helped transmogrify the US from industrialised, with a vast middle class, vast open land, vast strategic strength, low public debt, and a low cost of living to financialised, with a shrunken middle class, unaffordable housing, fading strategic strength, high public debt, and a high cost of living. Likewise, the BLS changed from one that accurately measured payrolls (and other series) and knew how to release embargoed data on time, to one that doesn’t do either.

Meanwhile, in a US election cycle with eccentricities, conspiracies, and oddities word has it RFK, Jr. will drop out of the race and endorse Trump on Friday, boosting his odds. Wags have it for a senior admin role like the NIH or even the CIA(!) My suspicion is DM analysts will end up doing what good EM analysts have to re: such political machinations – a version of Fawlty Towers “Don’t mention the war!” But the key is still to understand what’s going on, even if it isn’t written about.  

Yet in the EM Middle East, war must be mentioned. Days ago, DM market headline-writers were saying an Israel-Hamas ceasefire and hostage deal “was close”. Those who know the players and their motivations were saying it wasn’t; and at time of writing, it’s still more likely that these talks collapse than succeed. At which point, a regional escalation in the war is likely.

Israel says it has effectively defeated Hamas in Rafah, but it and Hezbollah are already launching larger attacks on each other deeper into new territory even as they wait for the official conclusion of the ceasefire talks one way or the other. Iran is also still waiting to launch its delayed retaliatory strike on Israel, and some are not ruling out Israel pre-empting that with an attack of its own. Of course, we’ve heard similar calls before of late, and it’s possible both sides might extend and pretend a while longer. Ultimately, however, this is not a geopolitical problem that can be solved with the strategic equivalent of “RATE CUTS!” That’s not how real life works; and eventually real life comes to bite those who rely on “RATE CUTS!” as solutions.

With global energy markets focused on sagging Chinese demand, it’s possible even a Middle East war might not have a lasting upwards impact on oil prices unless Iranian and Saudi supply, or the Straits of Hormuz, become involved. That’s not an immediate risk, but were a wider war to start, it’s not going to necessarily stop within a geography that pleases markets. That’s something DM analysts who have experienced little EM geopolitical ‘sharp end’ tend to be slow in pricing for.

To summarise, as DM central bankers meet up at Jackson Hole, they are unsure of the labor market outlook, with risks looking more in one direction – down.

They are unsure of the inflation outlook, with risks perhaps in both directions – up and down. They are unsure of the stability of financial markets after the recent lunatic swings prompted by just a 15bps move from the BOJ.

Moreover, they are unsure of the geopolitical outlook, which informs all of the aforementioned.

They will notice that China just opened an anti-subsidy probe into EU dairy and pork in retaliation for looming EU tariffs on Chinese EVs: welcome to how global trade now ‘works’! More of this to come: much more.

They must also have noticed the ultra-normcore WEF warning: “Make no mistake – the US-driven post-Cold War era ended a while ago (and realistically America’s 2024 election won’t change this). Enduring global leadership, democratic ideals, globalization and liberal values have all been notably challenged and superpowers are overstretched. This is a global legitimacy crisis… This period of muddling through means anything can happen in our post-pandemic era. Look for global risks to be further exacerbated by unexpected, destabilizing shock events.”

As such, any messaging from Powell that can be taken as either synonym or homonym for “RATE CUTS!”, prompting further volatility and financialisation-over-real-economy activity, is something we need like a Jackson Hole in the head.

Russian President Vladimir Putin on Thursday accused Ukraine of attempting to attack the Kursk nuclear power station, which is one of the three biggest nuclear power plants in Russia, and which has recently come under threat by the nearby incursion of Ukraine’s armed forced into Kursk territory.

“The enemy tried to strike the nuclear power plant at night, the International Atomic Energy Agency has been informed,” Putin said in a televised meeting of ministers, though without presenting any specific evidence. He said it happened in an overnight attack and that Moscow has briefed the UN nuclear safety watchdog on the situation.

According to Reuters, “Alexei Smirnov, acting governor of the Kursk region, told Putin at the same meeting that the situation at the Kursk nuclear power station was stable.”

This hasn’t been the first accusation by Russia of Ukraine’s operation endangering the Kursk nuclear plant. On Saturday foreign ministry spokesperson Maria Zakharova first revealed the Kremlin’s belief that a dangerous plot was in the works and the facility is under threat.

“According to the incoming information, the Kiev Regime has started the preparation of an attack on the Kursk Nuclear Power Plant,” Zakharova told a briefing.

“The purpose of this provocation is to accuse the Russian Federation of ‘self-attacking’ the plant to create grounds for strikes on Ukraine’s nuclear energy facilities,” the allegation continued.

The Kursk Nuclear Power Plant (NPP) lies about 25 miles west of the city of Kursk, which is the administrative center of the oblast by the same name. The plant continues to be a major electricity producer for Russia. Kremlin officials fear that Ukraine may seek to use some major provocation to draw its backers in NATO deeper into the conflict.

“We call on the international organizations – in particular, the United Nations and the [International Atomic Energy Agency] IAEA – to immediately state their condemnation of the provocative actions begin prepared by the Kiev regime,” Zakharova continued in her Saturday comments. 

She said this is “to prevent a violation of nuclear and physical security of the Kursk NPP, which may result in a large-scale man-made disaster in Europe.” Putin’s fresh Thursday allegations follow all of this.

Also on Thursday, Ukrainian President Volodymyr Zelensky traveled to border areas of Ukraine’s Sumy region, just across from Kursk region where Ukrainian troops are still conducing their cross-border operations. “I visited the border area of the Sumy region and held a meeting with Commander-in-Chief (Oleksandr) Syrsky and the head of the Sumy regional military administration,” Zelensky announced on social media.

Zelensky made his first known visit to the border area of Sumy region, where his troops launched the invasion of Kursk. He said he met with Ukraine’s Commander-in-Chief Syrskyi and head of the Sumy Military Administration. They reported more POWs & fewer Russian shelling attacks. pic.twitter.com/oM7VWx3X8x

— Christopher Miller (@ChristopherJM) August 22, 2024

He again hailed the fact that Ukraine had captured hundreds of Russian troops, which he said “replenished the exchange fund” – meaning that they can be traded in swaps to get Ukrainian troops back at a future date.

He said he further discussed with his commanders “steps taken to strengthen the defence toward Toretsk and Pokrovsk” in the Donbas, where by all accounts Kiev forces haven’t been doing as well. In Kursk, there have been widespread reports that Ukraine’s advance has been halted or at least slowed, but there remain conflicting accounts amid the fog of war.

Initial jobless claims continues to drift along in the same range it has been in for three years (with NSA claims literally near record lows)…

Source: Bloomberg

The decline in SA and NSA claims appears driven by the normalization of Texas claim post-Beryl…

Source: Bloomberg

But we note that continuing jobless claims remains at its highest since Nov 2021…

Source: Bloomberg

With all the attention piled on to initial claims to support bullish-narrative-supporting thesis, how the hell can The Fed then turn around and cut rates to ‘save the labor market’ before it’s too late?

Via Middle East Eye

The Israel Diamond Exchange has reported a drop in its exports and membership in 2024, according to Israel media outlet Ynet news.

The exchange president, Nissim Zuaretz, said that for the first time in its history, the annual number of retirees has exceeded the exchange’s new members. “In the best years of the industry, we received 200 new members a year, in the past year only 30,” Zuaretz said.

The Israel Diamond Exchange, in the city of Ramat Gan, is the world’s largest, encompassing about 3,100 members. The country is the fifth largest global exporter of cut and uncut diamonds.

In 2024, Israel’s net exports of rough diamonds saw a six percent decrease compared to the same period in 2023, while the export of polished diamonds in the first seven months of 2024 dropped by 33 percent compared to the corresponding period in 2023.

In July 2024 alone, exports decreased by almost half compared to the previous year.

In February, the former Diamond Exchange president, Boaz Moldawsky, cited Israel’s ongoing war in Gaza and a global downturn that predated 7 October as factors driving the slump.

He said that in the weeks following October 7, the diamond market in Israel was “completely paralyzed,” but that it then returned to normal operations.

However, amid Israel’s ongoing Gaza war, buyers stopped visiting Israel, with the annual International Diamond Week in Israel, scheduled for early April, cancelled. 

But according to the Rapaport Group, the slump is mainly driven by a slowdown in sales to the US and China, and collapsing diamond prices in 2023, which tumbled about 20 percent due to slowing consumer demand.

Moldawsky estimated that 80 percent of the trade’s difficulties were due to the global slump, and 20 percent to the war on Gaza.

The 1 million square foot office building just blocks from City Hall at 18th & Market streets in Philadelphia, saw its appraisal value crushed 25% from $282.1 million in 2021 to $211.3 million this year, according to a new report from Bisnow.

Citing Morningstar, the report notes that Shorenstein Properties’ office space, about 80% occupied, has been in special servicing for a year, with another property at 1700 Market St. added earlier this year.

A Kroll Bond Rating Agency report reveals Philadelphia’s office market had a 52% stress rate in Q1, the fourth-highest in the nation.

David Putro, a senior vice president at Morningstar, told Bisnow: “We’re seeing New York, Chicago and San Francisco’s offices with 70% drops from the original appraisal over time to the reappraisal. So, it’s not the end of the world.”

Mike Brotschol, a managing director at KBRA Analytics, however, said: “We have concern with the future performance of roughly 52% of the $4.77B in Philadelphia office CMBS.” 

Bisnow continued, writing that Chicago leads in CMBS office stress at 75%, followed by Denver at 65% and Houston at 57%. The stress rate reflects loans in default or at high risk of default.

Philadelphia’s 1818 Market isn’t the only troubled office property on the city’s main business corridor. Others face challenges, with varying prospects for recovery, according to the report. 

1515 Market St. and 1500 Market St. have fallen to 73% occupancy and into receivership, respectively. 1515 Market St. is on a loan watchlist as Temple University, which occupies a quarter of the space, decides on renewal.

Putro concluded: “In those spaces, financial services, professional services like those, tend to be the ones that are really evaluating their space needs. So it’s not a particular tenant, but it’s sort of just the evolution of what is ‘back to work’ as a whole.”

Speaking about 2400 Market St, which remains 99% occupied, Putro added: “That building’s 2023 net cash flow was off by about 2% from the time [its loan was] underwritten. I think most office owners at this moment would love to have a building that’s only 2% down over three years.” 

Authored by Paul Craig Roberts,

We can add Richard Medhurst to Tulsi Gabbard, Scott Ritter, Amb. Craig Murray, Julian Assange, and many others who are harassed, arrested, imprisoned by police state authorities in the US, UK, EU, and Canada for practicing the disappearing profession of journalism.

When Richard Medhurst can be arrested in a London airport for “expressing an opinion or belief that is supportive of a proscribed organization,” we know freedom is dead and journalism no longer exists. All that Western journalists are permitted to do today is to support the official lies in the official narratives that are used to construct the false reality in which we live.

We no longer have the BBC, the New York Times, the London Times, ABC, NBC, CBS to hold government accountable. What we have are propaganda ministries that support official narratives.

The job of the Western media is to lie to the people in behalf of the establishment that rules them.

As the growing intimidation of alternative media makes clear, the ability to express truth is rapidly disappearing in the Western world. Soon we will be locked into The Matrix, only there will be no superhuman opposition.

It has been years since we could believe one word that we hear from the New York Times, Washington Post, NPR, CNN, Fox News, ABC, CBS, NBC, the London Times, Telegraph, The Guardian, or the main European media sources.

The notion that the West is free is a joke. When there is no free expression there is only tyranny. And that is what the Western world is. A tyranny.

The reason the Western governments have no difficulty supporting the Nazi governments in Ukraine and Israel is that they are Nazis themselves.

Medhurst describes his arrest. It reminds me of Franz Kafka’s book, The Trial, a story of a man who is arrested by an unaccountable authority who prosecutes him without ever revealing the crime for which he is being punished. This is what happened to Julian Assange who lost a decade of his life to pure tyranny, tyranny supported by American conservatives who are so utterly stupid that they were convinced by official narratives that he was a Russian spy against America.

How does a people this stupid survive. They don’t. The police state that they fell for is now closing around them.

Here is Richard Medhurst to tell you about it:

I Was Arrested at Heathrow Airport as a “Terrorist” for My Journalism

August 20, 2024

I was arrested at Heathrow Airport under the Terrorism Act, Sec 12 because of my reporting.

6 police officers were waiting for me at the entrance of the aircraft.

I was held for almost 24 hours and questioned.

I believe I’m the first journalist to be arrested under this… pic.twitter.com/pbf6q5dXIf

— Richard Medhurst (@richimedhurst) August 19, 2024

My name is Richard Thomas Medhurst.

I am an internationally accredited journalist from the United Kingdom.

On Thursday, as I landed in London Heathrow airport, I was immediately escorted off the plane by 6 police officers who were waiting for me at the entrance of the aircraft.

They arrested me—not detained—but arrested me under Section 12 of the Terrorism Act of 2000 and accused me of allegedly “expressing an opinion or belief that is supportive of a proscribed organization” but wouldn’t explain what this meant.

One officer took my bags, and when I asked why he was still back in the aircraft, I was told “look mate, you can get nicked right here in front of everyone, or in there. Your choice.”
I was taken to an adjacent room, patted down, my phone confiscated.

I was not allowed to inform my family.

Despite being calm and cooperative, I was handcuffed with something that placed my shoulders in an awkward position, and my wrists on top of, rather than next to each other. The handcuffs were extremely tight. Despite the police loosening them, they left marks on me for two days.

The police took me down onto the runway and put me in a police van; essentially a mobile cage and informed me everything was being recorded.

The van was cramped. I had to struggle the entire time to keep my balance and try not to fall over as we drove to the police station.

Once inside the station, they searched me again for the 2nd time in 10 minutes.

I was told to sit on a bench, remove my shoes; remove my socks. I was told to turn my socks inside out and hold them up for the officers to inspect.

They also made me hold up my feet for them to check.

The officers took me to a room with UV lights, which they told me is used to catch burglars sprayed with something—I have no idea why they did this, since they just removed me off a plane.

My suitcase was then opened in the lobby and ransacked; all my journalistic equipment and devices were seized, including phones, sim cards, wireless microphones, microphones and headphones. Even my shoelaces.

They later took my DNA, fingerprints, palmprints, and photographed me.

I was placed in solitary confinement, in a cold cell that smelt like urine. There was barely any light, and the bed—if you can even call it a bed—was a small concrete ledge, with a paper thin mattress.

The cell had no windows. No heating. No toilet paper.

I was recorded 24/7, with audio and video— even when going to the toilet.

I had to eat food with a piece of cardboard, that you’re supposed to fold in two in order to scoop up the meal.

The police said I have the right to inform someone I’m locked up. So I said, ok I want to call my family. And then they’d go: “well, your calls are withheld because of the nature of the alleged offense”.

I tried to ask: well what’s the point of a right if you can randomly withdraw it? Why tell me that I have this right at all?

And one of them said something along the lines of: “well it’s not an absolute right. It can be waived”.

Similarly, they said I had the right to know why I was being detained. So I asked (again), and the police would say something like: “we’re just the arresting officers, we don’t really know”, or, “this will be explained to you during the interview”, or some other generic response.

Despite the police officers’ civility and cheerfulness, I felt the whole process was designed to humiliate, intimidate, and dehumanize me; to treat me like a criminal, even though they must have been aware of my background and that I am a journalist.

I was under surveillance almost the entire time, from the moment I was arrested until I was released, be it in the police van, the station, the cell—all of it. No privacy whatsoever.
Many of my requests were also delayed or outright ignored.

When I was detained, I asked for water several times. The police would always say “sure”, but I ended up waiting hours for a tiny cup of water.

I asked if I could have my own clothes because I was in a t-shirt, it was cold and couldn’t sleep. They said they’d give me a pullover but never did. Although one guard did give me a 2nd blanket.

See, you have to nag and nag for the most basic things. This is why I was afraid they weren’t even going to call a solicitor for me.

I was able to see the nurse on one occasion. But on three other occasions when I asked to see the nurse, they’d say “yes”, then nothing.

For many hours, no one in the world knew what had happened to me or where I was.

Only the police could call a solicitor for me. I had to ask 4-5 different guards for several hours until I finally received a call.

Some of my solicitor’s calls did not get through or were not answered. One of the calls, my solicitor was told would be monitored and so they simply refused to take it.

I asked to speak to them afterwards when that happened but was not allowed to.

In total, I spent almost 24 hours in detention. At no point, whatsoever, was I allowed to speak to a family member or friend.

After waiting 15 hours, I was finally interviewed by two detectives. The interview lasted just about an hour, an hour and a half.

So there was clearly no need to hold me there this entire time.

But I believe that this was done on purpose to try to rattle me psychologically.

That failed.

I categorically and utterly reject all the accusations by the police.

I am not a terrorist. I have no criminal record.

Prior to this incident, I’d never been detained in my entire life.

I’m a product of the diplomatic community and I’m raised to be anti-war.

Both my parents won Nobel Peace Prizes for their work as United Nations peacekeepers. They had a tremendous effect on my worldview and outlook, and instilled in me the importance of diplomacy, international law and peace.

I myself, am a victim of terrorism. When I attended the British school in Islamabad, the Egyptian embassy adjacent to my school was blown up in a double bombing.
I categorically and unequivocally condemn terrorism.

I am a Medhurst. My family goes back 1000 years in this country. I come from a long line of public servants. My father served in the London Metropolitan Police, before entering the UN. He is an expert and an authority on counterterrorism who taught me much. My grandfather was in the Royal Air Force during WWII, and his father before him in the British Army in WWI.

I perhaps don’t have the same career paths as them, but I consider my journalism to be a public service and my way of doing my bit for the country, by providing a counterweight to mainstream media.

I love my country and respect its laws and legal institutions.

I get the feeling, nevertheless, that those like myself who are speaking up and reporting on the situation in Palestine are being targeted.

I had booked my ticket to London on the same day. Yet an entire team of police were mobilized to arrest and question me. This is why I felt that it was a pre-planned, coordinated arrest.

Many people have been detained in Britain because of their connection to journalism. Sometimes under the Terrorism Act, sometimes not.

I think of Julian Assange, Craig Murray, Kit Klarenberg, David Miranda, Vanessa Beeley.

However, as far as I’m aware, I’m the only journalist to have been arrested, and held for up to 24 hours under Section 12 of the Terrorism Act.

Keep in mind the conditions I outlined previously: the psychological element that you’re made to wait endlessly, you’re not told what you’re accused of, nor when you’ll be questioned.
Despite being released unconditionally, I do not feel that my bail is truly unconditional.

I am effectively in limbo, not knowing if I will be charged in 3 months, or if I will go to prison.

Journalism is my livelihood. I have an ethical and moral responsibility toward the general public to inform. But I feel that a muzzle has been placed on me.

I simply do not know if or how I can work at all during the next months. Palestine—the humanitarian crisis in Gaza— remain the most pressing news story in the world, however, it seems that any statement, no matter how innocent, factual, and well-intentioned, can be skewed and twisted into an offense of the highest order.

This is precisely the danger and absurdity of the Terrorism Act that I have always sought to impress upon the public, long before I ever became a victim of it myself.

It is out of control and has no place in a democracy.

Counter terrorism laws should be used to fight actual terrorism, not journalism.

We cannot call ourselves a democracy as long as reporters are dragged off of planes and detained and treated like murderers.

I am disgusted that I am being politically persecuted in my own country.

As I do not know if I can still report as a journalist for the next months, I kindly ask for your support during these times.

Freedom of the press, freedom of speech really are under attack. The state is cracking down and escalating, to try and stop people from speaking out against our government’s complicity in genocide.

Please stand not just with me, but with the others who are still inside. I know what they are going through, and the best relief is to know that people on the outside are rooting for you, and doing everything they can to get you out.

Thank you.

Richard Medhurst