Sports Illustrated has been busted using AI-generated journalists to ‘write’ AI-generated articles, and then freaked out and deleted the evidence after one of their webdevs dropped the dime on them.

According to an in-depth investigative report by Futurism;

There was nothing in Drew Ortiz’s author biography at Sports Illustrated to suggest that he was anything other than human.

“Drew has spent much of his life outdoors, and is excited to guide you through his never-ending list of the best products to keep you from falling to the perils of nature,” it read. “Nowadays, there is rarely a weekend that goes by where Drew isn’t out camping, hiking, or just back on his parents’ farm.”

The only problem? Outside of Sports Illustrated, Drew Ortiz doesn’t seem to exist. He has no social media presence and no publishing history. And even more strangely, his profile photo on Sports Illustrated is for sale on a website that sells AI-generated headshots, where he’s described as “neutral white young-adult male with short brown hair and blue eyes.”

It wasn’t just ‘Drew Ortiz’ either… The outlet used multiple AI-generated ‘journalists,’ according to a person involved in the creation of the content who asked to remain anonymous.

“There’s a lot,” said the source. “I was like, what are they? This is ridiculous. This person does not exist.”

“At the bottom [of the page] there would be a photo of a person and some fake description of them like, ‘oh, John lives in Houston, Texas. He loves yard games and hanging out with his dog, Sam.’ Stuff like that,” the said, adding “It’s just crazy.“

‘Alien’ AI writing

A second whistleblower involved in the creation of the AI content told Futurism that it’s not just the headshots – entire articles were churned out using AI as well.

In one instance of Ortiz’s writing described by Futurism as ‘alien,’ the article warns that volleyball “can be a little tricky to get into, especially without an actual ball to practice with.”

What?

“The content is absolutely AI-generated,” said the second source, adding “no matter how much they say that it’s not.”

After Futurism reached out to Sports Illustrated publisher, The Arena Group, all of the AI authors mysteriously disappeared.

Damage control

Arena, after initially ghosting Futurism‘s inquiries, blamed a 3rd party contractor.

Today, an article was published alleging that Sports Illustrated published AI-generated articles. According to our initial investigation, this is not accurate. The articles in question were product reviews and were licensed content from an external, third-party company, AdVon Commerce. A number of AdVon’s e-commerce articles ran on certain Arena websites. We continually monitor our partners and were in the midst of a review when these allegations were raised. AdVon has assured us that all of the articles in question were written and edited by humans. According to AdVon, their writers, editors, and researchers create and curate content and follow a policy that involves using both counter-plagiarism and counter-AI software on all content. However, we have learned that AdVon had writers use a pen or pseudo name in certain articles to protect author privacy — actions we don’t condone — and we are removing the content while our internal investigation continues and have since ended the partnership.

As Futurism notes, however, “It sounds like The Arena Group’s investigation pretty much just involved asking AdVon whether the content was AI-generated, and taking them at their word when they said it wasn’t. Our sources familiar with the creation of the content disagree.”

The statement also never addresses the core allegation of our story: that Sports Illustrated published content from nonexistent writers with AI-generated headshots. The implication seems to be that AdVon invented fake writers, assigned them fake biographies and AI-generated headshots, and then stopped right there, only publishing content written by old-fashioned humans. Maybe that’s true, but we doubt it.

Regardless, the AI content marks a staggering fall from grace for Sports Illustrated, which in past decades won numerous National Magazine Awards for its sports journalism and published work by literary giants ranging from William Faulkner to John Updike.

But now that it’s under the management of The Arena Group, parts of the magazine seem to have devolved into a Potemkin Village in which phony writers are cooked up out of thin air, outfitted with equally bogus biographies and expertise to win readers’ trust, and used to pump out AI-generated buying guides that are monetized by affiliate links to products that provide a financial kickback when readers click them.

Hilariously, after Sports Illustrated scrubbed ‘Drew Ortiz’ from the site entirely, his profile picture redirected to another AI generated bio – of one “Sora Tanaka.”

There’s no evidence of Sora outside this profile, but ‘her’ picture is for sale on the same AI headshot marketplace as Ortiz!

Tanaka too eventually disappeared, replaced by another profile with no headshot at all – which was then deleted too.

Other Arena Group outlets doing it too?

The rabbit hole goes even deeper, according to Futurism, which also reports that similar AI-generated authors and articles have been found on The Street.

Take TheStreet, a financial publication cofounded by Jim Cramer in 1996 that The Arena Group bought for $16.5 million in 2019. Like at Sports Illustrated, we found authors at TheStreet with highly specific biographies detailing seemingly flesh-and-blood humans with specific areas of expertise — but with profile photos traceable to that same AI face website. And like at Sports Illustrated, these fake writers are periodically wiped from existence and their articles reattributed to new names, with no disclosure about the use of AI.

Sometimes TheStreet’s efforts to remove the fake writers can be sloppy. On its review section’s title page, for instance, the site still proudly flaunts the expertise of AI-generated contributors who have since been deleted, linking to writer profiles it describes as ranging “from stay-at-home dads to computer and information analysts.” This team, the site continues, “is comprised of a well-rounded group of people who bring varying backgrounds and experiences to the table.” -Futurism

Read the rest here…

Meanwhile, shares of Arena plunged 21% on Tuesday.

By Michael Wilson, Bloomberg markets live reporter and strategist

USD/JPY won’t be able to sustain any bid it may gain from this week’s Ministry of Finance intervention data.

The data, due between now and month-end, is likely to again confirm that Japanese authorities did not step in to currency markets in November. When that happened at the end of October, USD/JPY saw a quick 100-pip rally to a fresh one-year high of 151.72, as it was interpreted by investors as tacit approval of yen weakness.

The knee-jerk reaction may be similar this time, but the background context is extremely different. For a start, the report in October came on the same day as a BOJ meeting which disappointed those speculating on a more hawkish policy shift. Second, the US 10-year Treasury yield was ~50 basis points higher and the spread to JGBs was almost 400 bps then, instead of ~365 today.

Ultimately, USD/JPY is always and everywhere a derivative of US yields, and so its level by Friday’s close will depend much more on the US data set and Powell comments, rather than any local excitement on MOF data.

US home prices are at or near record highs, making them less affordable compared to income and mortgage rates than they were during the peak of the 2006 housing bubble. 

Buyers have been on the sidelines, waiting for home prices to fall. Sellers won’t sell because most of them locked in the lowest mortgage rates in a generation before the Federal Reserve unleashed the most aggressive rate hiking cycle in four decades. 

With the housing market ‘struck,’ demand has been reduced because of high mortgage rates, and supply is at the most severe levels since the underbuilding woes more than a decade ago, relative to population growth.

With that being said, Goldman’s Susan Maklari published a note to clients on Tuesday that included a chart pack of the US housing industry. Combing through the report, Maklari focused attention on the issue of affordability.

Here’s what she found:

In the charts below, we highlight the four most and least affordable housing markets according to the National Association of Home Builders’s Housing Opportunity Index (NAHB HOI), within the top 25 MSAs by 2022 closings.

 In 3Q23, Indianapolis, Minneapolis, Chicago, and Washington DC ranked highest with 75%, 59%, 49%, and 43% of homes affordable relative to median income, respectively.

The lowest-ranked MSAs were led by Los Angeles, Miami, New York, and Riverside, with 3%, 11%, 12%, and 13% of homes affordable for the median income, respectively.

The bad news for prospective buyers is that the most affordable housing markets are located in crime-ridden metro areas run by Democrats who refuse to enforce ‘common sense’ law and order. Even some of the least affordable areas are run by radical progressives, too. 

Authored by Jonathan Turley,

A Houston attorney, Ronald Lewis, 77, is facing criminal charges over an allegation that he brought drug-laced papers into a jail that later caused the death of two inmates.

We have previously discussed charges of attorneys for criminal conduct in jails, but few have reached this level of culpability.

Lewis is currently facing two charges of having a banned substance in a correctional facility.

However, it is possible, if not likely, that additional charges will be brought later.

Drugs are often smuggled into prison on papers.

In the classic case, a page or a word in a book is saturated in a drug like LSD or Ecstasy and the inmates told about the spot. It is then digested or sold in the prison.

Lewis, a retired lawyer, is accused of saturating whole pages (marked as legal papers) with ecstasy and synthetic marijuana.

The material was brought into the Houston County Jail.

According to police, the sheets could sell for between $200 and $500 a sheet.

Lewis was shown to have visited 14 inmates between July 2023 until November 2023.

Police recovered approximately 154 sheets of paper believed to be laced with narcotics. Police are now testing 11 sheets of paper found in his possession.

Even assuming that the 154 sheets were the only drug-saturated pages introduced into the jail (as opposed to the unused sheets), that could fetch as much as $77,000 on the prison black market.

Lewis posted a $7,500 bond after his arrest.

If the sheets in his possession test positive, it is hard to see a defense absent coercion.  Even that defense breaks down due to the ability to seek police protection.

If convicted, the sentence is likely to be harsh despite his age. 

As an officer of the court and member of the bar, Lewis could face significant enhancement of the sentence.

Elon Musk showcased the power of Community Notes on social media platform X to tackle disinformation by fact-checking Alex Soros, George Soros’ 30-something-year-old ‘woke’ son, who re-posted a progressive media outlet’s report titled “Where Are Murder Rates Actually Higher? Not in progressive cities.”

Elon Musk stated that those who can’t handle reality will leave the platform because of Community Notes. He said, “The public will increasingly come to realize that X is the best source of truth, causing our user numbers to rise as they abandon the less accurate sources of information.” 

Musk quoted a post from X user The Rabbit Hole, which shared two images:

First Picture: Soros getting hit by Community Notes for misrepresenting the reality of crime in America.

Second Picture: Soros getting ratio’d by a random bunny account under the same post.

Musk also replied to the post, saying, “Facts are facts!” 

Facts are facts!

— Elon Musk (@elonmusk) November 28, 2023

The crowdsourced fact-checking program on the social media platform countered Soros’ post by revealing that five cities, including St. Louis, Baltimore, New Orleans, Detroit, and Cleveland, had some of the highest murder rates and were run by Democrats. 

Some of these Democrat-controlled metro areas have leaders in Ciy Halls who fail to enforce ‘common sense’ law and order, along with Soros-linked prosecutors. 

Remember earlier this month when Musk revealed how Soros ‘hijacked‘ US cities without changing any laws… 

Elon Musk explains how Soros hijacked our system without changing a single law: pic.twitter.com/D1eNsfyF9E

— End Wokeness (@EndWokeness) October 31, 2023

For some context, here’s a sheriff, just outside of crime-ridden Baltimore City, who recently dropped some truth bombs about radical progressive lawmakers that are imploding American cities. 

Man, you talk about tragic, listen to American patriot and Sheriff of Wicomico County, Maryland, Mike Lewis @WicoSheriff talk about what #BLM and open border Democrats have done to his state and our country! When is enough going to be enough? #TrumpWasRight #SaveAmerica!

Law &… pic.twitter.com/nrAHdEOMTS

— Ben Bergquam – Real America’s Voice (RAV-TV) News (@BenBergquam) October 31, 2023

Besides Community Notes, citizen X journalists also fact-checked the son of the rogue billionaire.

Here’s what they said:

Soros funded democrat politicians destroy every city they run.
Proof:
Left, is republican run Huntsville Alabama.
Right, is democrat run Birmingham Alabama. pic.twitter.com/U1XrCUrbTg

— Dr. Interracial 🇺🇸 (@billysandytodd) November 27, 2023

Maximum cope.

Just admit your experiment has failed. You can save hundreds, maybe thousands of lives by stopping the progressive DA madness now.

— Parker Thayer (@ParkerThayer) November 26, 2023

how is it possible to be this disconnected from reality?

— Joel Heyman (@JoelHeyman) November 28, 2023

From “The Floyd Effect:” https://t.co/zhNvWH3oCF

Of the 25 counties with the most total homicides in 2018-2021 according to the CDC, all 25 voted for Biden. Homicide victimization rates are highest in the blackest counties: pic.twitter.com/vdeWfkWC2O

— Steve Sailer (@Steve_Sailer) November 27, 2023

Alex should tell us why the Soros fund the democrats politicians, DA’s, and judges that are destroying the black communities and committing black genocide.

— Dr. Interracial 🇺🇸 (@billysandytodd) November 27, 2023

Why would you compare cities to rural areas unless you were trying to hide the real impact of policies?

Comparing liberal-run cities to conservative-run cities would be valid. Same for counties. Anything else comes off as trickery, no matter which side does it.

Also, non-murder… https://t.co/4nNpiCRI6l

— Scott Adams (@ScottAdamsSays) November 27, 2023

Leaving fact-checking to corporate media, think tanks, mega-corporations (cough cough, Pfizer and Moderna), and the government (cough cough again, FBI) has been a disaster for society as elites distort reality for their own political gain. 

How the tables have turned: Average working poor folks are fact-checking the political elites. 

And what is the elites’ response? Ban ‘free speech’ because it is considered ‘hate speech.’ 

Authored by Charles Hugh Smith via OfTwoMinds blog,

What’s no longer affordable is eventually jettisoned, including high-rent homes and apartments.

Recency bias can stretch back 40 years. It’s been over 40 years since the U.S. experienced a deep recession (what I call a “real recession”) which is characterized by elevated inflation, interest rates, yields, unemployment, defaults and bankruptcies, none of which can be reversed with air-drops of “free money” because higher inflation, rates and yields all limit central bank money-printing and fiscal “free money” via deficit spending.

Without air-drops of trillions of dollars in “free money”, the accumulated excesses of the economy have to sort themselves out the hard way via defaults, bankruptcies, insolvencies, layoffs, tightening credit and reduced spending / consumption.

The last time this burn-off of excesses could no longer be pushed forward occurred in 1980-82, the deepest downturn since the Great Depression in the 1930s.

Few remember the 1980-82 recession and even fewer think a recurrence is even possible. The dead-wood of excesses never get burned off, they just pile higher with each central bank-fiscal bailout / “free money” air-drop.

Recessions which burn off excesses act as catalysts for profound social, financial and economic shifts. Up until the recession, everyone assumes the current situation is permanent and forever. This is the equivalent of assuming a forest piled high with deadwood will never catch fire.

By way of example, consider that the relatively mild dot-com implosion recession of 2000-02 led to 100,000 residents of the San Francisco Bay Area moving away to lower-cost climes because once the layoffs swept through the dot-com bloat, people could not longer afford the high rents and cost of living.

The situation now is far more precarious due to the spread of high rents from a few urban areas to virtually the entire nation. As a percentage of net income, the cost of living is far higher than it was in 2000. Given the nonsensical manner that official inflation is calculated (owners equivalent rent, etc.), statistics are untrustworthy measures. An apples-to-apples comparison of purchasing power of wages (i.e. what percentage of wages are required to pay rent, taxes, insurance, transportation, childcare, food, etc.) is the only accurate measure of the true impact of the soaring cost of living.

The consensus holds that soaring rents are the result of housing shortages. In other words, the demand for housing is so strong that landlords can charge a premium.

So what happens to the strong demand for rentals and the resulting high rents if millions of renters vacate their apartments and move in with other single households? This is precisely what happens in a recession in which millions lose their jobs (or have to take lower income work) and can no longer afford stratospheric rents.

The facts suggest that instead of a housing shortage, we have an enormous quantity of housing that is currently occupied by a single person–housing that could easily accommodate more occupants per unit.

To sketch out how this scenario could play out, let’s start with some basic facts about America’s housing stock, the age of the occupants and the number of single-person households. As shown on this chart courtesy of the Federal Reserve, there are 145 million housing units in the U.S.–85 million owner-occupied homes and condos, 44 million rented houses and apartments, and 16 million unoccupied dwellings, of which 7+ million are 2nd homes / vacation homes. The remaining 9 million unoccupied homes may be in the process of being sold or held off the market for various reasons, or they’re abandoned or no longer livable due to obsolescence / decay.

Some might be in areas with poor employment options and so the demand is so low that vacancies abound.

Next, let’s look at home ownership and one-person households. According to the Census Bureau, “There were 37.9 million one-person households, 29% of all U.S. households in 2022. In 1960, single-person households represented only 13% of all households.” (There are about 132 million households in the U.S.)

The Census Bureau also reported that 46.4% of U.S. adults are single–that’s 117.6 million unmarried Americans, “nearly every other adult aged 18 and over. This includes those who are divorced or widowed as well as those who have never married.”

About 11% of these one-person households are 65 years of age or older, or about 14.65 million people.

As you might imagine, homeownership is skewed to the older population, as is ownership of homes without mortgages, i.e. homes owned free and clear.

According to How the Demographics Are Shaping the Housing Market, older Americans own almost 90% of all housing: The Silent Generation (78 and older) own 11.3%, Boomers (ages 59 to 77) own 43.5% and Gen X (ages 43 to 58) owns 32.5%. Some break the Boomers into Boomers I (ages 69-77) and Boomers II (ages 59-68).

We can thus project that a substantial percentage of individuals age 65 and older who are living alone own their own homes. It required a much more modest down payment and percentage of net income two or three generations ago to buy a home, and so it’s to be expected that home ownership is heavily skewed to older cohorts who were able to buy homes with median incomes–something that is no longer possible for younger generations.

There are also millions of renters who live alone, some percentage of which might be persuaded to accept a roommate if their income/finances deteriorate. Of the 38 million single-person households, how many would welcome another occupant? Retirees with limited income might welcome paying boarders, and single elderly might offer free housing to younger family members in exchange for help around the house.

How many Boomers and Gen X homeowners would accept an adult child or grandchild moving home if financial conditions preclude any other option? Anecdotally, I see grandparents hosting a grandchild and her daughter, and I hear accounts of an elderly parent deeding their home to the adult child who moves back home and cares for the parent.

It is well within the realm of possibility that 10% of the roughly 40 million single-person households could vacate their rentals and move in with another single or into a large empty-nest home owned by parents are grandparents should conditions change and high rents are no longer affordable. That would leave about 10% of the rental housing unoccupied.

Although few believe it is even in the realm of possibility, in an extended downturn, 8 million renters could vacate now-unaffordable rentals for far more affordable living spaces in other dwellings. As the saying goes, necessity is the mother of invention, which in the case of unaffordable rents in a recession, we can modify to necessity is the mother of radically downsizing expenses by any means available.

Rents tend to be as stubborn as human nature. Landlords tend to believe the highest rent ever received is the “fair price,” and the majority will cling to this fantasy long past the point at which a rational assessment of market conditions would suggest a 25% reduction in asking rent would be the bare minimum to snare a tenant for the vacant flat.

If the 2000-02 recession is any guide, tenants will cling on to their over-priced flats as long as possible, hoping for a job offer that never transpires. The unemployment checks aren’t enough, temp gigs dry up, savings run out and the inability to continue paying sky-high rent finally forces a move.

No one remembers what happens in a deep, prolonged recession, and we’re long overdue to find out what happens. What’s no longer affordable is eventually jettisoned, including high-rent homes and apartments.

*  *  *

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Many jokes have been made at the snail’s pace at which US is refilling the Strategic Petroleum Reserve, which we learned yesterday, added another laughable 300k barrels bringing its total inventory to 351.6 million barrels, yet still down almost 300 million from where it was when Biden entered the White House.

US SPR crude inventories rose by 0.3mb w/w to 351.6mb last week #oott
Sour +1mb to 209.6mb
Sweet -0.7mb to 142.0mb pic.twitter.com/ajm4ruvGqo

— Giovanni Staunovo🛢 (@staunovo) November 27, 2023

And while historically it has been the incompetence of the Biden Department of Energy, under Jennifer Granholm, that was to blame for the incompetent attempts to refill the SPR…

Energy Secretary Jennifer Granholm laughs when asked about Biden’s plans to bring gas prices down.

“Ha ha ha. That is hilarious!”pic.twitter.com/MQ3dMHeKvX

— Cassandra (@CassyWearsHeels) November 5, 2021

… there is now another reason behind the grossly mismanaged process.

According to Bloomberg, efforts to refill the US emergency oil reserve are being slowed, in part, by companies delaying their return of borrowed barrels.

Shell, TotalEnergies and Chevron were among nine companies that borrowed government oil as part of an exchange program the past two years. Though they were due to repay the crude this year and next, the three companies received US approval to delay about 5 million barrels in returns until 2024 and 2025, according to government documents seen by Bloomberg.

The repayment of exchange barrels has been a key part of the Energy Department’s strategy to refill the emergency stockpile, which has been drained to the lowest level since the 1980s.

While the documents don’t cite the reasons for the delays, the postponements are the latest indication that replenishing the reserve will be a panfully slow and halting process, one which will almost certainly never be completed at a price that is below where the SPR oil was sold, somewhere in the mid-90s.

According to the report, only one company, Phillips 66, has completed its repayment so far but, due to a clever accounting move, the transaction didn’t add any barrels to the reserve. The Houston- based fuelmaker instead repaid its loan with government crude it purchased — but had not yet received — from a previous tender, as well as reserve oil originally purchased by Saudi Aramco’s US trading unit. That means the oil it paid back never actually left the emergency stockpile.

Meanwhile, the Energy Department’s attempts to directly purchase crude for the reserve have already been hampered by disagreements over price and quality, with the agency canceling two bids to buy a total of 9 million barrels this year. So far, the US had bought only 7.5 million of the 12 million barrels it planned to purchase this year.

“That means we remain vulnerable in case a hurricane disrupts supplies or geopolitical tensions escalate,” Hunter Kornfeind, an oil market analyst at Rapidan Energy Group, said.

Kornfeind doesn’t expect the energy department will carry out “mass” purchases and will focus on opportunistic ones. Translation: the DOE will keep buying a few hundred barrels (if that) every other week until the next administration finally replaces the current one.

Update(1504ET): More positive developments out of Gaza after Israel and Hamas negotiated to extend the truce deal by at least two more days: 

The Israel Defense Forces says the 12 hostages — 10 Israelis and two Thai nationals — released from Hamas captivity in the Gaza Strip are now in Israeli territory, and are being escorted by special forces and members of the Shin Bet security agency.

“After they undergo an initial medical assessment of their health, our forces will accompany them until they are reunited with their families,” the IDF says.

The IDF asks the public to “demonstrate patience and sensitivity during this time out of respect for the released hostages and their families.”

And on the other side of the deal, 30 more Palestinian prisoners were freed:

More Palestinian child hostages released from Israeli prison arrive.

They are so happy ✌️ #Elon_go_to_gaza #ElonGoToGaza pic.twitter.com/zcpREb0btX

— HK (@HKX07) November 28, 2023

Attacks on US bases in Syria & Iraq have largely ceased during truce period…

Elsewhere in the region, the Iran-aligned militant groups which previously carried out dozens of drone and rocket attacks on US bases in Syria and Iraq appear to have ceased. These attacks by and large grew silent after the truce went into effect last Friday.

To me the reason is fairly obvious. Hamas wants to drag this on for as long as possible, keep leverage until the end, and is thus purposefully separating families, and keeping the hostages with the most “emotional charge” (particulary the 10-months-old Bibas baby) for the end -… https://t.co/Qp7wofYT03

— Michael A. Horowitz (@michaelh992) November 28, 2023

* * *

Talks are still underway to extend the Hamas-Israel truce yet further, after both sides agreed Monday to initially extend it by two days. But it’s widely expected that Israel will restart its ground and aerial assault at some point soon, also given the Israeli military has already said Hamas has violated the terms of the pause in fighting.

“The Israel Defense Forces says a number of soldiers are lightly hurt after being attacked by Hamas in the northern Gaza Strip, in what appears to be the first serious violation of the ceasefire,” Times of Israel reports Tuesday. “Hamas accuses the IDF of violating the ceasefire first.”

Specifically multiple IEDs were said to have been set off near Israeli forces, also accompanied by gunfire from Hamas position. Thus the ongoing ceasefire is tenuous to say the lest.

As recently as Monday, Prime Minister Benjamin Netanyahu reiterated that Israel won’t waiver from its goal of completely destroying Hamas.

But Washington has begun to voice new objections amid the soaring Palestinian death toll, which has reportedly reached 15,000 – according to Palestinian sources. The Israeli government has disputed these figures, and President Biden himself has been on record as suggesting the Palestinian side has exaggerated civilian deaths. In late October he said:

“I have no notion that the Palestinians are telling the truth about how many people are killed,” Biden replied. “I’m sure innocents have been killed, and it’s the price of waging a war.”

The Biden administration has reiterated its warnings that Israel must be more surgical in its airstrikes. The US has also told Israel that the kind of mass civilian displacement that happened in the northern half of the Strip over the past seven weeks must not be replicated in the south.

The New York Times has called the warnings and restrictions the strongest from the White House to date concerning Israel’s next phase of fighting: 

The United States has warned Israel that it must fight more surgically and avoid further mass displacement of Palestinians in its war against Hamas to avoid a humanitarian crisis that overwhelms the world’s ability to respond, according to senior Biden administration officials.

The White House has told Israel that replicating the scale of its bombardment in northern Gaza as it makes an expected push into southern Gaza once the recent pause in fighting ends would produce a crisis beyond the capacity of any humanitarian support network, the officials said on Monday night. The United Nations has said the fighting has already displaced most of Gaza’s population of 2.2 million.

Per the reporting, the White House wants Israel to agree to not attack “areas of deconfliction” – especially UN shelters, which have previously been hit by bombardments.

“You cannot have the sort of scale of displacement that took place in the north, replicated in the south,” a US official was reported as saying to Israeli counterparts on a phone call. The IDF has previously warned it will open full operations even in the South, and has dropped leaflets in certain southern towns telling Gazans to evacuate.

⚡️Hamas publishes footage of the release of the fourth batch of Israeli detainees in the Gaza Strip as part of the humanitarian truce pic.twitter.com/wPf8fs1pyO

— War Monitor (@WarMonitors) November 27, 2023

Pressure and scrutiny have increased on President Biden as he heads into the election next November. As we detailed previously, The New York Times reported Saturday that Israel is killing Palestinian civilians in Gaza at a historic pace. The huge civilian death toll in Gaza is explained by the scale of the bombing campaign and Israel’s willingness to drop US-provided 2,000-pound bombs on densely populated areas that are packed with civilians.

Of course, there’s absolutely nothing “surgical” of about these US-supplied heavy bombs at all – and yet the US administration has still refused to place ‘conditions’ on Israel’s usage of supplied weaponry. However clearly the discussions have at least begun over potential new conditions. 

Authored by James Rickards via DailyReckoning.com,

How do the wars in Ukraine and Gaza impact global economic growth and the U.S. economy in particular?

Both wars are ongoing and cataclysmic impacts may yet be felt. Here’s where events stand at the moment. Let’s start with the war in Ukraine…

From a strategic perspective, the situation in Ukraine resembles a smaller-scale version of the situation in Europe in late 1944. At that point, the Allies had successfully completed the D-Day invasion and liberated Paris.

On the Eastern Front, the Russians had annihilated the combined armies of the German Wehrmacht and were advancing through Poland toward Berlin.

Hard fighting remained. The Allies had to fight the Battle of the Bulge in December 1944, and the Russians encountered stiff German resistance in Poland even though they had superiority in numbers, supplies and weapons.

Still, no one doubted that the tide had turned, and Germany was on its way to defeat.

Russia Is Winning on Two Fronts

Likewise, the Russians are clearly defeating the Ukrainians despite the fact that a lot of hard fighting remains. Ukraine’s so-called spring offensive that began in early June was a complete and utter failure.

Nearly six months after it began, Ukraine only captured a few pinprick villages it was expected to take within the first few days.

Casualties are horrendous and Ukraine is reduced to calling up young teenagers, women and old men. The average age of a Ukrainian soldier is 43.

Russia has also demonstrated that NATO weapons systems are hardly wonder weapons.

Russian mines, drones and artillery have destroyed the most advanced German Leopard and U.K. Challenger tanks. The U.S. has held back on letting Ukraine use its Abrams tanks for fear they’ll end up burning on the battlefield like the Leopards and Challengers.

On the economic front, the Russian victory is even more clear-cut than on the military front.

U.S. economic sanctions have failed across the board. The Russian economy is expected to grow at a 5% annualized rate in the fourth quarter of 2023. The best estimate for the U.S. economy in Q4 is 2%, although one can expect that rate to drop as the quarter progresses.

The Russian ruble has withstood Russia’s ejection from global payments networks; it is trading only about 25% lower than when the war began after holding its level against the U.S. dollar over the first 15 months of the war. Inflation in Russia is low.

The Russian economy is on a complete war footing. There are even labor shortages as Russians take jobs in the weapons factories or enlist in the military.

Morale is high, and Putin’s approval rating is above 80% (compare that with Joe Biden’s approval ratings, which are about 37%). To the extent that Putin is unpopular, it’s mostly because many complain he’s not pursuing the war aggressively enough.

Meanwhile, Russian energy sales are at all-time highs. Russia simply sold to India and China any oil and gas that Europe did not want. Meanwhile, Germany is in deep recession even as Russia booms.

Russia’s Also Winning on the Technological Front

Russian technology has proved superior to Western technology on the battlefield. The Russian Kh-47M2 Kinzhal hypersonic missile has destroyed U.S. Patriot anti-missile batteries (about $1 billion each) and has proved unstoppable against Western air defenses.

Russia has also dramatically expanded drone production since the war began. Russia’s even developed advanced drones equipped with AI, which enables coordinated swarm attacks on enemy tanks and armored vehicles.

Russian jamming devices have disabled the GPS systems on the U.S. HIMARS precision artillery systems, which has dramatically impacted their effectiveness.

Russian tech advances have not been confined to weaponry. They’re moving quickly in the areas of semiconductor manufacturing, aeronautics, telecommunications and robotic manufacturing.

So U.S. sanctions have not only failed to stop Russia, but they have also prompted Russia to become a formidable competitor to the collective West.

I said in early 2022 right after the war began that U.S. sanctions would not only fail against Russia, but they would also boomerang and hurt the U.S.

The forecast has proved exactly right.

An Economic Blunder of Epic Proportions

As if Russian advances on the battlefield and Russian economic success were not enough, the U.S. may be about to commit the greatest economic blunder in history, one that could accelerate the flight from the U.S. dollar and destroy confidence in the U.S. Treasury securities market.

Here’s the backstory:

After several weeks of chaos in October, the House of Representatives finally elected a new speaker of the House, Mike Johnson, a mild-mannered but solidly conservative and relatively new member from Louisiana.

He got off to a good start by separating financial support for Israel from support for Ukraine. Both bills will probably pass, but by separating them, Johnson avoided the trap of having to vote for Ukraine in order to support Israel.

Many members support the latter but oppose the former, and now they can make their voices heard with separate votes. So far, so good.

Now Johnson has committed a blunder so egregious that it could rock the global financial system and cause a financial panic. Unfortunately, Johnson’s lack of experience in international monetary affairs has left him blind to the dangers.

Pure Stupidity

Right now, the U.S. holds about $300 billion of Russian assets that were frozen after the Ukraine war broke out in February 2022. Most of those assets came from the Central Bank of Russia and consist of U.S. Treasury securities.

Technically, those assets have not been converted to U.S. ownership. They have merely been frozen and still belong to Russia even though Russia cannot use them.

Now, Johnson wants to convert those assets to U.S. ownership and use the proceeds to pay for the war in Ukraine. Johnson said, “It would be pure poetry to fund the Ukrainian war effort with Russian assets.”

Pure stupidity is more like it. Such an action would amount to a default on U.S. government debt since the securities were legally owned by Russia. Nations around the world would take note and accelerate their dumping of Treasury securities and their flight from the U.S. dollar.

This would increase interest rates in the U.S. and hurt everyone from homebuyers to everyday consumers. It would make U.S. debt permanently more difficult to sell and less desirable to hold.

It would introduce a new risk premium on U.S. debt over and above the existing inflation premium. At its worst, it could trigger a dollar panic and full-scale flight from the dollar.

Johnson is playing with fire and has no idea what he is doing. Let’s hope he receives some sound advice before he goes too far.

Hamas and Israel

The war between Israel and Hamas in Gaza has been more contained from a global economic perspective, but it also has potential to spin out of control and rock the global economy.

The potential for economic calamity in Gaza is not the fighting in Gaza itself but the possibility of escalation.

Israel faces an enemy 10 times more powerful than Hamas in the form of Hezbollah, which is located in Lebanon on Israel’s northern border, and which is heavily subsidized by Iran in terms of money, weapons and intelligence.

In addition to Hezbollah, the Houthi rebels in Yemen are firing missiles at Israel. The Houthis are a direct Iranian proxy intended to threaten Saudi Arabia, but are equally capable of threatening Israel.

If Hezbollah and Houthi attacks on Israel escalate, Israel will not limit their response to those two groups. They are likely to launch attacks on Iran itself going to the root of the problem. At that point, Iran may fire missiles at Israel and close the Straits of Hormuz.

$150 Oil

In anticipation of that, the U.S. has moved two aircraft carrier battle groups to the Eastern Mediterranean and stationed one Ohio-class nuclear submarine in the Red Sea. The idea is to deter Iran from attacking Israel, but they can be used to attack Iran if the war escalates to that level.

Russia is watching on the sidelines and will support Iran if necessary.

Saudi Arabia and Qatar, two of the world’s largest energy producers, are caught in the middle.

If those escalation scenarios play out even in part, expect oil prices to go to $150 per barrel or higher. That would put the U.S. and Western Europe in a recession worse than 2008 and the earlier oil shock of 1974.

In the 1974 recession, the Dow Jones index fell 45%. That would equate to a crash of over 15,000 Dow points from today’s levels.

I’m not making a hard prediction that this scenario will occur, but don’t rule it out.

It’s a good time to reduce your exposure to stocks, keep a lot of cash on hand and get your hands on physical gold and silver.

The ‘buy now, pay later’ (BNPL) craze is sweeping across America as debt-ridden consumers tap another credit lifeline that has propelled record sales for Black Friday and Cyber Monday. This trend has become another financial crutch for consumers hooked on spending beyond their means. 

Data from Adobe Analytics showed that more Americans than ever relied on short-term loans, allowing installments over weeks and/or months for purchase items on Cyber Monday. 

Online consumer spending skyrocketed 9.6% from $11.3 billion yesterday, surpassing Adobe’s initial expectations of a 6.1% increase to around $12 billion. 

The report noted consumers purchased over $940 million worth of goods through BNPL services. This was a 42.5% jump compared to figures last year and far exceeded Adobe’s earlier estimate of 18.8%. 

“The 2023 holiday shopping season began with a lot of uncertainty … The record online spending across Cyber Week, however, shows the impact that discounts can have on consumer demand, especially with quality products that drove a lot of impulse shopping,” Vivek Pandya, lead analyst at Adobe Digital Insights, said, who was quoted by Reuters. 

For the five days, from Thanksgiving Day to Black Friday to Cyber Monday, internet sales topped $38 billion, exceeding Adobe’s forecast of $37.2 billion. 

We first noted the emergence of the BNPL craze on Monday while referring to record online Black Friday sales of $9.8 billion. It was pointed out that BNPL is popular because consumers are balancing other debt, such as student loans or credit cards, amid the highest interest rates in a generation. These short-term loans allow consumers to make installments over a short period. 

According to the Federal Reserve Bank of New York, younger consumers struggling with access to credit cards are frequently turning to buy-now, pay-later options. 

Over the past 30 days, “buy now pay later” Google searches soared beginning last Thursday 

Google searches for “buy now pay later Best Buy” also erupted to the highest level in at least five years. 

Also, searches for PayPal’s BNPL service rocketed to five-year highs. 

News of struggling consumers resorting to BNPL services led Jefferies to upgrade Affirm to hold from underperforming, citing the rapid adoption of BNPL services. Also there have been signs wealthy Americans are cutting back on spending… 

The rise in BNPL services should not be a cause for celebration for surging holiday sales, but instead signals a worrying trend in the financial health of consumers, deteriorating quickly under the era of failed ‘Bidenomics.’ 

We asked the question: Is The American Consumer Tapped Out?