While Europe has been keeping a generally optimistic facade ahead of the coming cold winter, signaling that it has more than enough gas in storage to make up for loss of Russian supply even in a “coldest-case” scenario, behind the scenes Europe’s largest economy is quietly preparing for a worst case scenario which include angry mobs and bankruns should blackouts prevent the population from accessing cash.

As Reuters reports citing four sources, German authorities have stepped up preparations for emergency cash deliveries in case of a blackout (or rather blackouts) to keep the economy running, as the nation braces for possible power cuts arising from the war in Ukraine. The plans include the Bundesbank hoarding extra billions to cope with a surge in demand, as well as “possible limits on withdrawals”, one of the people said. And if you think crypto investors are angry when they can’t access their digital tokens in a bankrupt exchange, just wait until you see a German whose cash has just been locked out.

Officials and banks are looking not only at origination (i.e., money-printing) but also at distribution, discussing for example priority fuel access for cash transporters, according to other sources commenting on preparations that accelerated in recent weeks after Russia throttled gas supplies.

The planning discussions involve the central bank, its financial market regulator BaFin, and multiple financial industry associations, said the Reuters sources most of whom spoke on condition of anonymity about plans that are private and in flux.

Although German authorities have publicly played down the likelihood of a blackout and bank runs – for obvious reasons  – the discussions show both how seriously they take the threat and how they struggle to prepare for potential crippling power outages caused by soaring energy costs or even sabotage. They also underscore the widening ramifications of the Ukraine war for Germany, which has for decades relied on affordable Russian energy and now faces double-digit inflation and a threat of disruption from fuel and energy shortages.

As everyone familiar with the recent history of the Wimar Republic Germany knows, access to cash is of special concern for Germans, who value the security and anonymity it offers, and who tend to use it more than other Europeans, with some still hoarding Deutschmarks replaced by euros more than two decades ago.

According to a recent Bundesbank study, roughly 60% of everyday German purchases are paid in cash, and Germans, on average, withdrew more than 6,600 euros annually chiefly from cash machines.

And here is the punchline: a parliamentary report a decade ago warned of “discontent” and “aggressive altercations” in case citizens were unable to get their hands on cash in a blackout. Translation: in case of cash withdrawal halts, German society may very well tear itself apart.

Indeed, there was a rush for cash at the beginning of the pandemic in March 2020, when Germans withdrew 20 billion more euros than they deposited. That was a record, and it worked generally without a hitch.  But a potential blackout raises new questions about possible scenarios, and officials are intensively revisiting the issue as the energy crisis in Europe’s largest economy deepens and winter nears.

If a blackout struck, one option for policymakers could be to limit the amount of cash individuals withdraw, said one of the people. Needless to say, that would be a very bad option for Germany, and for fiat in general (after all, if the FTX bankruptcy is a black eye for crypto, what can one say about fiat if one of the world’s most advanced economies limits access to cash). The Bundesbank processes cash moving through Germany’s shops and economy, removing fakes and keeping circulation orderly. Its massive stocks make it ready for any spike in demand, that person said.

One weakness that planning exposed involves security firms that transport money from the central bank to ATMs and banks. The industry, which includes Brinks and Loomis is not fully covered by law guiding priority access to fuel and telecommunications during a blackout, according to the industry organization BDGW.

“There are big loopholes,” said Andreas Paulick, BDGW director. Armoured vehicles would have to line up at petrol stations like everyone else, he said. The organization hosted a meeting last week with central bank officials and lawmakers to press its case.

“We must preventively tackle the realistic scenario of a blackout,” Paulick said. “It would be totally naive to not talk about this at a time like now.”

How bad could it get? Well, more than 40% of Germans fear a blackout in the next six months, according to a survey last week published by Funke Mediengruppe. And since at least one blackout is virtually assured in the coming months, that means a stampede for the nearest ATM, something the local financial infrastructure will unlikely be able to handle.

As a result, Germany’s disaster office said it recommended people keep cash at home for such emergencies (surely this will inspire confidence).

Meanwhile, another Reuters source notes that German financial regulators worry that banks are not fully prepared for major power outages and view it as a new, previously unforeseen risk. Banks consider a full-scale blackout “improbable”, according to Deutsche Kreditwirtschaft, the financial sector’s umbrella organization. But banks nevertheless are “in contact with the relevant ministries and authorities” to plan for such a scenario, especially since anything banks say is “improbable” tends to happen rather regularly. It said finance should be considered as critical infrastructure if energy is rationed.

At times politics can get in the way of blackout planning. In Frankfurt, Germany’s banking capital, one city council member proposed requiring it to present a blackout plan by Nov. 17. The politician, Markus Fuchs of the right-wing AfD party, told the council it would be irresponsible not to plan for one. But the other parties rejected the proposal, accusing Fuchs and his party of inciting panic.

Fuchs later said in a phone interview: “If we found a solution for world peace, it would be rejected.” The issue also underscores the dependence of commerce on technology, with transactions increasingly electronic, and where most cash machines have no emergency power source.

Cash would be the only official payment method that would still work, said Thomas Leitert, chief of KomRe, a company that advises cities on planning for blackouts and other catastrophes.

“How else will the ravioli cans and candles be paid for?” Leitert said. Well, there is that whole crypto thing, but the 2nd biggest Democratic donor did a bang up job there…

Authored by Lance Roberts via RealInvestmentAdvice.com,

With the midterm elections behind us, does the market outlook improves given a now gridlocked Congress? Historically speaking, such is the case. As noted by Michael Cannivet via Forbes:

“Before you hit the panic ‘Sell Everything’ button, though, it’s worth considering at least one bullish catalyst on the horizon—voters head to the ballot box on November 8th.

The data is clear: Midterm elections are historically bullish for the stock market.”

While garnering less attention than a presidential election, midterm elections are important because they could lead to a change in control of the U.S. Senate and House of Representatives. Such can significantly impact policy, laws, and foreign relations. Historically, markets tend to favor “gridlock” in Washington as it dramatically reduces the risk of an adverse policy change regarding taxation, geopolitical conflict, or substantive changes to spending and debt.

Since 1950, there have been 18 midterm election cycles, and in the twelve months following each of those cycles, the stock market has had positive returns. Over the subsequent 12 months, stocks delivered an 18.56% average annualized gain compared to just 10.6% over all other years.

Over a more extended 24-month period, stocks returned an average of 33.7% after a midterm election.

However, while the data above goes back to 1958, the last time the S&P 500 produced a negative return over the 12 months following a midterm election was 1939. Of course, there was a massive economic contraction and uncertainty at that time as the U.S. battled the Great Depression and World War II began in Europe.

Another period of interest is the late 1960s and 1970s, marked by slow economic growth, high unemployment, rising energy prices, and significant inflation. Given the similarities currently, the bearish pre-midterm market returns and an un-accommodative Federal Reserve, the outlook, while bullish, is less clear.

Getting Back To Even Is Not The Same Thing

There are a couple of caveats to this analysis that must be considered. The first is that while returns tend to be positive post-midterm elections, several times, it coincides with when the midterm elections fell. The chart below shows the S&P 500 with the years of midterm elections marked and significant events.

For example, in 1966, 1970, and 1974 the midterm elections coincided with the bottom of the three recessionary bear market cycles. Coincidence? Probably. More importantly, on a longer-term basis, returns on a “buy-and-hold” basis were negative as the secular bear market continued. We see the same effect between 1998 and 2014, midterm elections yielded positive short-term results, but long-term returns were near zero.

The second caveat to the historical data is the difference between making money and getting back to even. While the mainstream analysis suggests investors should buy the midterm elections for positive 12-month returns, most are already invested. In a year where the midterm elections fall in the middle of a bear market, like 1974, 2002, or 2022, most investors used those returns to “get back to even.”

The chart below shows the S&P 500 for 2022, starting at 4796. It will require a return of 26% over the next 12 months for investors to break even. Notably, that does not include the rate of return necessary to meet their financial goals. For example, if your financial plan requires 6% annualized returns, the 26% advance still leaves you another 12% short of your annual return goals (6% for 2022 and 2023). Given the average yearly return post-midterm elections is 18.6%, investors will fall short of their goals.

While I am not discouraging you from taking advantage of a robust post-midterm election rally, there is a vast difference between “getting back to even” and “making money.”

The Difference This Time May Be The Fed

While the history following midterm elections is bullish, there is a difference this time that could produce a less-than-optimistic outcome. That difference is Fed and their current fight against inflation. We have previously discussed the “lag effect” of monetary policy and its impact on economic growth and earnings. To wit:

“As the Fed continues to hike rates, each hike takes roughly 9-months to work its way through the economic system. Therefore, the rate hikes from March 2020 won’t show up in the economic data until December. Likewise, the Fed’s subsequent and more aggressive rate hikes won’t be fully reflected in the economic data until early to mid-2023. As the Fed hikes at subsequent meetings, those hikes will continue to compound their effect on a highly leveraged consumer with little savings through higher living costs.

Given the Fed manages monetary policy in the “rear view” mirror, more real-time economic data suggests the economy is rapidly moving from economic slowdown toward recession.”

Currently, the Fed is still tightening monetary policy to further slow economic growth. As shown, when the Fed has previously stopped hiking rates, forward stock returns tended not to be robust.

Another difference is that previous market lows, which coincided with bear markets and midterm elections, were low valuations. Despite the market decline in 2022, valuations remain elevated relative to historic market bottoms.

Given the more extreme negative market sentiment, a substantial rally is undoubtedly possible through year-end and early 2023.

However, we suspect following that, the market environment will become more challenging. Particularly as the Fed’s monetary tightening becomes more evident in slower economic activity, declining inflation, and slower earnings growth. If that is the case, asset prices, and ultimately valuations, will need to drop before the final market low.

There are no guarantees in the financial market. While history certainly supports the bullish outlook, it should not be considered gospel. Bull markets happen in bear markets. However, many factors could negatively impact returns over the next 12- to 24 months. As such, investors should measure and manage their risk accordingly.

The good news is the negative backdrop will pass, and longer-term returns will become evident. Of course, to participate in the next bull market, you must ensure you survive the bear market.

This returns me to my main point. Spending the next bull cycle “getting back to even” is not the same as making money.

By Tsvetana Paraskova of OilPrice.com

The lowest oil inventories in developed economies since 2004 are set to combine with the upcoming EU embargo on Russian oil imports to further tighten the oil market and the already “exceptionally tight” diesel markets, the International Energy Agency (IEA) said on Tuesday.

“Oil markets remain finely balanced going into the winter months, with OECD stocks trending at the lowest levels since 2004,” the IEA said in its closely-watched Oil Market Report (OMR) for November published today.

“The approaching EU embargoes on Russian crude and oil product imports and a ban on maritime services will add further pressure on global oil balances, and, in particular, on already exceptionally tight diesel markets. A proposed oil price cap may help alleviate tensions, yet a myriad of uncertainties and logistical challenges remain,” said the international agency.

According to the IEA, global observed inventories fell by 14.2 million barrels in September as OECD and non-OECD stocks plunged by 45.5 million barrels and 19.3 million barrels, respectively. The decline in stocks, however, was partially offset by a surge in stocks of oil on floating storage of 50.6 million barrels, the IEA said. OECD industry oil stocks fell by 8 million barrels, while government stocks drew by 37.4 million barrels in September. OECD total oil stocks fell below 4 billion barrels for the first time since 2004, per IEA estimates.

Those low inventory levels and the embargo on EU imports of Russian crude oil and products as of December 5 and February 5, respectively, will disturb the currently finely balanced market, the agency says.

However, the very tight diesel market and high prices will lead to additional demand destruction next year. The IEA raised its global oil demand growth estimate by nearly 200,000 barrels per day (bpd) to 2.1 million bpd for this year, but slightly cut the 2023 demand growth estimate to 1.6 million bpd from 1.7 million bpd growth expected in the October report.

As the global recession starts to accelerate, we are seeing not only mass layoffs…

… first mostly among tech companies and soon everywhere else…

… but also companies realizing that demand they have budgeted for 2023 will not materialize. We just saw earlier today with Target which plunged after slashing its guidance and warning of a sharp slowing in consumer spending in recent weeks, and moments ago we saw that in an entirely different industry, when chipmaking giant Micron Technology said it was slashing capex by reducing DRAM and NAND wafer starts by about 20% versus 4Q 2022 in response to market conditions.

The company said that it is “these reductions will be made across all technology nodes where Micron has meaningful output” and added that Micron is also working toward additional capex cuts. In calendar 2023, Micron now expects its year-on-year bit supply growth to be negative for DRAM, and in the single-digit percentage range for NAND.

“Micron is taking bold and aggressive steps to reduce bit supply growth to limit the size of our inventory. We will continue to monitor industry conditions and make further adjustments as needed,” said Micron President and CEO Sanjay Mehrotra. “Despite the near-term cyclical challenges, we remain confident in the secular demand drivers for our markets, and in the long term, expect memory and storage revenue growth to outpace that of the rest of the semiconductor industry.”

The chipmaker elaborates that recently, “the market outlook for calendar 2023 has weakened” and adds that “in order to significantly improve total inventory in the supply chain, Micron believes that in calendar 2023, year-on-year DRAM bit supply will need to shrink and NAND bit supply growth will need to be significantly lower than previous estimates.”

The news hammered MU stock, which dropped as much as 6% before rebounding modestly.

Nvidia and Advanced Micro Devices were among semiconductor companies that were dragged lower in sympathy; both NVDA and AMD slid as much as -2.4% as realization the coming recession will further cripple demand across the semis space.

US Industrial Production unexpectedly fell 0.1% MoM in October – the biggest drop since Dec 2021 and less than the expected 0.1% MoM jump. Additionally, September’s 0.4% MoM rise was revised drastically lower to just 0.1% MoM.

That is the 4th monthly decline in the last 6 months and the slowest YoY rise since January.

Source: Bloomberg

Manufacturing output rose 0.1% MoM (half the expected 0.2% rise).

• Utilities fell 1.5% in Oct. after falling 1.7% in Sept.

• Mining fell 0.4% in Oct. after rising 0.7% in Sept.

Notably, Capacity Utilization dropped back below 80% (79.875%)…

Not exactly the “strong as hell” recovery we were told about.

The fallout from Sam Bankman-Fried’s massive farce continues as crypto brokerage Genesis suspends withdrawals from its lending business.

On Oct 10th, Genesis trading revealed that its derivatives business had around $175 million worth of funds locked away in an FTX trading account (hit by its exposure to bankrupt crypto hedge fund Three Arrows Capital, to which it had made a $2.4 billion loan).

On Nov 10th, Genesis trading announced that it will receive an additional equity infusion of $140 million from its parent company, Digital Currency Group. According to the company, this decision was made to “strengthen its balance sheet” and boost its “position as a global leader in crypto capital markets.”

Genesis sent letters to clients stating that it had obtained an additional equity infusion of $140M from parent company, Digital Currency Group. Genesis, with $175 million locked in FTX, is also the largest creditor to Three Arrows Capital Babel Finance. pic.twitter.com/d77QCODdsf

— Wu Blockchain (@WuBlockchain) November 11, 2022

However, it doesn’t appear to have helped stem the tide of pain amid the FTX farce as Bloomberg reports that Genesis is suspending redemptions and new loan originations at its lending business after facing what it described as “abnormal withdrawal requests.”

Chief Executive Officer Derar Islim admitted that withdrawal requests exceeded current liquidity at Genesis Global Capital, the lending arm; but made it clear that Genesis’s spot and derivatives trading and custody businesses “remain fully operational.”

Genesis also reassured its clients that it doesn’t have “an ongoing lending relationship with FTX or Alameda.”

As Bloomberg notes, Genesis is one of the oldest and most well-known cryptocurrency brokers, offering trading and custody services to professional investors in digital assets. Over the past few years it had also established itself as one of the largest cryptocurrency lenders, allowing funds or other market makers to borrow dollars or virtual currencies to leverage their trades.

The contagion of Genesis lending issues has already hit one large firm, as Gemini Trust Co., the cryptocurrency platform run by the Winklevoss brothers, has halted withdrawals from its Earn program:

“We are aware that Genesis Global Capital, LLC (Genesis) – the lending partner of the Earn program – has paused withdrawals and will not be able to meet customer redemptions within the service-level agreement (SLA) of 5 business days. We are working with the Genesis team to help customers redeem their funds from the Earn program as quickly as possible. We will provide more information in the coming days.”

“The past week has been an incredibly challenging and stressful time for our industry. We are disappointed that the Earn program SLA will not be met, but we are encouraged by Genesis’ and its parent company Digital Currency Group’s commitment to doing everything in their power to fulfill their obligations to customers under the Earn program. We will continue to work with them on behalf of all Earn customers. This is our highest priority. We greatly appreciate your patience,” the statement said.

However, the Winklevi make it clear that this does not impact any other Gemini products and services, reassuring clients that Gemini is a full-reserve exchange and custodian -“all customer funds held on the Gemini exchange are held 1:1 and available for withdrawal at any time.”

Bitcoin prices slipped lower on the headlines…

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

The Bank of England is bailing out U.K. pension funds. The Bank of Japan uses excessive monetary policy to protect its currency and cap interest rates. China encourages its banks to buy stocks. The dollar, the world’s currency, is on a tear, interest rates are surging, and the financial world is fracturing.

Unlike any other currency, the U.S. dollar drives the global economy and financial markets. Because of the dollar’s status as the world’s reserve currency, the Fed’s monetary policy actions play a critical role in steering the U.S. economy and all global economies and financial markets.

To foresee the next crisis, it is imperative to understand the dollar’s role in global finance and economics and the resulting role that the Fed plays in influencing international monetary policy. To do so, we start with insight from Triffin Warned Us, an article we published in 2018.   

These “cliff notes” for the article lay the groundwork for Part 2. Following this article, we will discuss the risks investors face as the Fed attempts to quell inflation.

The Bretton Woods Agreement

In 1944, the United States and many nations forged a significant financial arrangement in Bretton Woods, New Hampshire. The agreement has paid enormous economic dividends to the United States. However, it has a flawed incongruity with a dear price that is rearing its ugly head today.

Per the terms of the 1944 Bretton Woods Agreement, the U.S. dollar supplanted the British Pound to become the world’s reserve currency. The agreement assured a large majority of global trade would occur in U.S. dollars, regardless of whether the United States was participating in such trade. Additionally, it set up a system whereby other nations would peg their currency to the dollar. This arrangement is akin to the global currency concept made popular by John Maynard Keynes. Keynes’s brainchild was Bancor, a supranational currency.

Within the terms of the agreement was a supposed remedy for one of the abuses that countries with reserve currency status typically commit, running continual trade and fiscal deficits. The pact discouraged such behavior by allowing participating nations to exchange U.S. dollars for gold. Therefore, other countries that were accumulating too many dollars, the side effect of American trade deficits, could exchange their excess dollars for U.S.-held gold. As a result, a rising price of gold, indicative of a devaluing U.S. dollar, would be a telltale sign that America was abusing her privilege.

London Gold Pool

The agreement started fraying shortly after. In 1961, the world’s leading nations established the London Gold Pool. The objective was to fix the price of gold at $35 an ounce. The action was an attempt to maintain the Bretton Woods status quo. By manipulating the price of gold, an important gauge of the size of U.S. trade deficits was broken. Therefore, there was less incentive to swap dollars for gold.

Seven years later, France broke the ranks. France withdrew from the Gold Pool and demanded large amounts of gold in exchange for dollars. As a result, in 1971, President Richard Nixon, fearing the U.S. would lose its gold, suspended the convertibility of dollars into gold.

From that point forward, the U.S. dollar was a floating currency. There was no longer the discipline imposed upon it by gold convertibility. Nixon’s actions essentially annulled the Bretton Woods Agreement. 

The following decade saw double-digit inflation, persistent trade deficits, and weak economic growth. These were signs that America was abusing its privilege as the reserve currency. The first graph below shows that, like clockwork, the U.S. began running annual trade deficits in 1971. The second graph highlights how inflation picked up markedly after 1971.

By the late-1970s, Fed Chair Paul Volcker raised interest rates from 5.875% to nearly 20.00% to break inflations back decisively. While economically painful, Volcker’s actions not only ended ten years of persistently high inflation and restored economic stability but, more importantly, satisfied America’s trade partners. The now floating rate dollar regained the integrity required to be the world’s reserve currency. This was despite lacking the checks and balances imposed upon it by the Bretton Woods Agreement and the gold standard.

Our article The Fifteenth of August discusses how Nixon’s “suspension” of the gold window unleashed the Federal Reserve.

Enter Dr. Triffin

In 1960, 11 years before Nixon’s suspension of gold convertibility and the effective demise of the Bretton Woods Agreement, Robert Tiffin foresaw this inevitable problem in his book Gold and the Dollar Crisis: The Future of Convertibility. According to his logic, the privilege of becoming the world’s reserve currency would eventually carry a heavy penalty for the U.S.  

At the time, few paid attention to Triffin’s thesis. However, he was invited to a congressional hearing of the Joint Economic Committee in December of the same year. 

What he described in his book and Congressional testimony became known as Triffin’s Paradox. Events have played out primarily as he envisioned.

Essentially, he argued the reserve status forces a good percentage of global trade to occur in U.S. dollars. For trade and global economies to grow under such a system, the U.S. must supply the world with U.S. dollars. 

To supply the world with dollars, the United States must consistently run a trade deficit. Running persistent deficits, the United States would become a debtor nation.

Foreign Creditors Enable U.S. Deficits

Foreign nations accumulate and spend dollars through trade. They keep extra dollars on hand to manage their economies and limit financial shocks. These dollars, known as excess reserves, are invested primarily in U.S.-denominated investments ranging from bank deposits to U.S. Treasury securities and a wide range of other financial securities. As the global economy expanded and more trade occurred, additional dollars were required. As a result, foreign dollar reserves grew and were lent back to the U.S. economy.

Making the world even more dependent on the dollar, many foreign countries and companies issue U.S. dollar-denominated debt to better facilitate trade and take advantage of America’s liquid capital markets.

The arrangement benefits all parties involved. The U.S. purchases imports with dollars lent to her by the same nations that sold the goods. Additionally, the need for foreign countries to hold dollars and invest them in the U.S. results in lower U.S. interest rates, further encouraging domestic consumption and providing relative support for the dollar.

For their part, foreign nations benefit as manufacturing shifted away from the United States to their countries. As this occurred, increased demand for their products supported employment and income growth, thus raising the prosperity of their respective citizens.

A Win-Win or a Ponzi Scheme?

While it may appear the post-Bretton Woods covenant is a win-win pact, there is a massive cost accruing to everyone involved.

The U.S. has too much debt. As such, it has become increasingly dependent on low-interest rates to spur debt-driven consumption and to pay interest and principal on existing debt.

Lower than appropriate interest rates lead to unproductive debt, as can be seen with debt outstanding rising at a much faster pace than GDP. Simply the growing divergence between debt and the ability to pay for it, GDP, is unsustainable.

Summary

Triffin’s paradox states that with the benefits of the reserve currency also comes an inevitable tipping point or failure.

As we see with the current instance of rising interest rates and inflation, that point of failure is closing in on the U.S. and the rest of the world.

Part two of this article will focus on the dollar and Fed monetary policy and what it may entail as the Fed continues to push interest rates higher.

In what we’re sure is simply totally a coincidence and nothing more, the grades of attractive female students examined by a new study fell after classes were moved online during the Covid lockdowns. 

A brand new research paper called “Student beauty and grades under in-person and remote teaching” found that “when education is in-person, attractive students receive higher grades”. 

The same study found that “grades of attractive females declined when teaching was conducted remotely” and that “the effect is only present in courses with significant teacher–student interaction.”

The paper had a jury of 74 people rate the looks of 307 engineering students on a scale of 1 to 10. From there, it looked at the data behind the students’ grades prior to, and during, pandemic lockdowns, at the Industrial Engineering Program at Lund University.

“This paper has shown that students’ facial attractiveness impact academic outcomes when classes are held in-person,” the study concluded.

“As education moved online following the onset of the pandemic, the grades of attractive female students deteriorated. This finding implies that the female beauty premium observed when education is in-person is likely to be chiefly a consequence of discrimination,” it continued.

“On the contrary, for male students, there was still a significant beauty premium even after the introduction of online teaching. The latter finding suggests that for males in particular, beauty can be a productivity-enhancing attribute.”

“The pandemic provided us with a great opportunity to disentangle whether this beauty premium is due to discrimination or the result of some productive attribute,” the author of the study, Adrian Mehic of Lund University, told The Times.

You can view the study in all its glory here.

Treasury Secretary Janet Yellen on Sunday announced the US will sanction a transnational network that’s been illicitly supplying Russia with military technology to support its war in Ukraine.

She identified that 14 individuals and 28 entities will fall under the sanctions, following widespread allegations particularly against Iran and North Korea. In the former case, advanced Iranian-manufactured suicide drones have been observed used with greater frequency by Russian forces on the Ukraine battlefield. Tehran has since admitted to selling Moscow drones; however, Iranian officials have claimed this was done before the invasion and the deal had nothing to do with the Ukraine conflict.

“This is part of our larger effort to disrupt Russia’s war effort and deny equipment it needs through sanctions and export controls,” Yellen, who is currently attending the Group of 20 summit in Bali, Indonesia with President Joe Biden, said. Notably she had said earlier that she would refuse to attend the G20 if Putin is also in attendance. 

More details are expected via the US Treasury website on Monday. Upon the initial announcement, Yellen didn’t specifically name the entities being targeted. 

Previewing a central focus of discussion this week at the Bali G20, Yellen called ending the war in Ukraine the top priority for the global economy. “Ending Russia’s war is a moral imperative and the single best thing we can do for the global economy,” she said.

Managing soaring fuel and food prices is a key topic under discussion among world leaders at the summit. While Putin is not in attendance, the Kremlin sent Foreign Minster Sergei Lavrov to represent Moscow.

Yellen said Friday at the G20, “Russia’s officials, including those participating in this session, should recognize that they are adding to the horrific consequences of this war through their continued support of the Putin regime,” She was addressing G20 finance ministers and central bank heads.

Anti-government protests have continued raging in Iran since they started in mid-September, following the death in police custody of 22-year-old Mahsa Amini for alleged non-compliance with the country’s strict Islamic dress code. 

The protests have at times gotten violent, with buildings across various cities burned down, and also with live fire used by security services to quell the unrest. Last week hardliners in parliament demanded that authorities take a harsher stance in order to finally halt the so-called “anti-hijab” demonstrations.

A majority of the members of Iran’s parliament last week formally requested that the judiciary “deal decisively with the perpetrators of these crimes [the protests] and with all those who assisted in the crimes and provoked rioters.”

This as the death toll has grown into the hundreds – though the government says the police and security services side has suffered scores of casualties. The BBC reports that “At least 326 protesters, including 43 children and 25 women, have been killed in a violent crackdown by security forces, according to Iran Human Rights.”

But it seems the judiciary has taken the criticism from parliament to heart, as it has handed down its first execution sentence for alleged protest-related crimes. According to Al Jazeera: 

The Iranian judiciary said late on Sunday that an unnamed individual has been sentenced to execution for “setting fire to a government center, disturbing public order and collusion for committing crimes against national security” in addition to “moharebeh” (waging war against God) and “corruption on Earth”.

Five more unnamed people, who authorities described as “rioters” – a word the government uses to describe the ongoing protests and those participating in them – were handed between five and 10 years in prison on national security-related charges.

More such extreme penalties are expected, given that Tehran officials have long accused the protest movement of being fueled by Iran’s enemies such as Israeli and US intelligence, hence the charge of “collusion for committing crimes against national security.” 

John Bolton, who spearheaded Trump’s policies towards Iran for years, insists to BBC Persian that Iranian protesters are armed. He adds that he’s seen images of Kurdish forces that have been trained & armed in Iraq & says they are making a big difference in the current protests. https://t.co/69rxcm5Y2c

— Sina Toossi (@SinaToossi) November 7, 2022

President Biden and the White House have spurred on the protests, saying that the US stands on the “side of the Iranian people”.

Early this month at a Democratic campaign event in California, Biden said, “Don’t worry, we’re gonna free Iran. They’re gonna free themselves pretty soon.” Iranian officials have meanwhile taken these and similar statements as evidence of an externally driven regime change operation.

Following news of an Iranian court issuing a death sentence for a demonstrator, the White House condemned the disturbing development, with Jake Sullivan stating from the G20 in Bali, “We are deeply concerned about reports from Iran of mass arrests, sham trials, and now a death sentence for protesters voicing legitimate demands against a government that systematically denies basic dignity and freedom to its people.”