Authored by James W. Carden via American Committee For US-Russia Accord,

Days ago marked 50 years since the signing of the Paris Peace Accords which effectively ended American participation in the Vietnam war. One of the consequences, according to Georgetown University international affairs scholar Charles Kupchan, was that an “isolationist impulse” made a “significant comeback in response to the Vietnam War, which severely strained the liberal internationalist consensus.”

As the Cold War historian John Lamberton Harper points out, President Jimmy Carter’s hawkish Polish-born national security adviser, Zbigniew Brzezinski, scorned his intra-administration rival, the cautious, gentlemanly secretary of state Cyrus Vance as “a nice man but burned by Vietnam.” Indeed, Vance and a number of his generation carried with them a profound disillusionment in the aftermath of the Vietnam War. And for a short time, the “Vietnam Syndrome,” (shorthand for a wariness and suspicion of unnecessary and unsupportable foreign interventions) occasionally informed American policy at the highest levels and manifested itself in the promulgations of the Wienberger and Powell Doctrines which, in theory anyway, represented a kind of resistance on the part of the Pentagon to unnecessary military adventures.

But such resistance didn’t last long. Only hours after the successful conclusion of the First Gulf War, President George H.W. Bush declared, “By God, we’ve kicked the Vietnam syndrome once and for all.” And kick it Bush did: In the decades following his 1991 pronouncement, the United States has been at war in one form or another (either as a belligerent or unofficial co-belligerent—as is the case with our involvement in Saudi Arabia’s grotesque war on Yemen) for all but two of the 32 years that have followed.

Yet the atmosphere that now prevails in Washington makes it exceedingly difficult to believe such a thing as a “Vietnam Syndrome” ever existed. Indeed, President Joe Biden’s handling of the war in Ukraine has been met with rapturous approval from the Washington establishment, winning plaudits from all the usual suspects.

But can the Biden policy truly be credited as a success when the entire ordeal might have been avoided by judicious diplomatic engagement? Are we really to believe that the war which so far has resulted in 8 million refugees and roughly 200,000 battlefield deaths has been worth a promise of NATO membership for Ukraine?

While the war has seemingly ground to a stalemate, the legacy media and various and sundry think-tank-talking-heads have been busy issuing regular assurances of regime change in Moscow and steady progress in the field with victory soon to come:

• Writing in the Journal of Democracy this past September, political scientist and author of The End of History and The Last Man Francis Fukuyama exulted: “Ukraine will win. Slava Ukraini!”
• Washington Post reporter Liz Sly told readers in early January that “If 2023 continues as it began, there is a good chance Ukraine will be able to fulfill President Volodymyr Zelensky’s New Year’s pledge to retake all of Ukraine by the end of the year—or at least enough territory to definitively end Russia’s threat, Western officials and analysts say.”
• Also in early January, the former head of the U.S. Army in Europe, Lt. General Ben Hodges told the Euromaidan Press that, “The decisive phase of the campaign…will be the liberation of Crimea. Ukrainian forces are going to spend a lot of time knocking out or disrupting the logistical networks that are important for Crimea…That is going to be a critical part that leads or sets the conditions for the liberation of Crimea, which I expect will be finished by the end of August.”
• Newsweek, reporting in October 2022, informed readers by way of activist Ilya Ponomarev, a former member of the Russian parliament, that “Russia is not yet on the brink of revolution…but is not far off.”
• Rutgers University professor Alexander J. Motyl agrees. In a January 2023 article for Foreign Policy magazine titled ‘It’s High Time to Prepare for Russia’s Collapse’ Motyl decried as “stunning” what he believes is a “near-total absence of any discussion among politicians, policymakers, analysts, and journalists of the consequences of defeat for Russia…considering the potential for Russia’s collapse and disintegration.”
• And this week comes word, courtesy of Jacob Heilbrunn, editor of the once realist National Interest magazine, that “The German decision to send tanks to Ukraine is a turning point. It is now clear that Vladimir Putin signed the death warrant of his regime in invading Ukraine.”

As Gore Vidal once quipped: “There is little respite for a people so routinely—so fiercely—disinformed.”

Conspicuous by its absence in what passes for foreign policy discourse in the American capital is the question of American interests: How does the allocation of vast sums to a wondrously corrupt regime in Kiev in any way materially benefit everyday Americans? Does the imposition of a narrow, sectarian Galician nationalism over the whole of Ukraine truly constitute a core American interest? Does the prolongation of a proxy war between NATO and Russia further European and American security interests? If so, how?

RAND Corporation identifies chief “impediment” to ending the Ukraine war: “The centrality of Western assistance”

Causing misperceptions similar to what prolonged World War I, they say

An amazing acknowledgment from the Pentagon’s in-house Think Tank, but will be largely ignored pic.twitter.com/xk0aO42hnx

— Michael Tracey (@mtracey) January 29, 2023

In truth, the lessons of Vietnam were forgotten long ago. The generation that now populates the ranks of the Washington media and political establishment came of age when Vietnam was already in the rearview mirror. The unabashed liberal interventionists who staff the Biden administration cut their teeth in the 1990s when it was commonly believed that the U.S. didn’t act often enough, notably in Bosnia and in Rwanda. As such, and almost without exception, the current crop of foreign policy hands now in power have supported every American mis-adventure abroad since 9/11.

The caution which, albeit all-too-temporarily, stemmed from the ‘Vietnam Syndrome’ is today utterly absent from the corridors of power in Joe Biden’s Washington. 

The Vietnam Syndrome is indeed kicked: Dead and buried.

But we may soon come to regret its passing.

Authored by Jack Phillips via The Epoch Times (emphasis ours),

Microsoft co-founder and billionaire Bill Gates again responded to questions about his relationship with sex offender financier Jeffrey Epstein, saying that “there was never any relationship.”

“I had dinner with him and that’s all,” Gates said in response to a question from an Australia Broadcasting Corporation reporter. When pressed further, Gates said that “there never was any relationship of any kind” after being asked if there is a connection between Epstein and the Gates Foundation.

The reporter, Sarah Ferguson, asked if he regretted the relationship, saying that it went against the wishes of his ex-wife, Melinda. “You’re going way back in time. But yeah, I will say for the, you know, over [the] hundredth time that I shouldn’t have had dinners with him,” Gates said in the interview, published Jan. 30.

Ferguson noted that Epstein was involved in “sexually compromising people” and asked whether his ex-wife warned him about that. “No,” Gates said.

Tucker drops shocking new footage of Bill Gates in PANIC after Jeffrey Epstein relationship called out on LIVE TV pic.twitter.com/VVy4qzdhbc

— Benny Johnson (@bennyjohnson) January 31, 2023

Gates, one of the wealthiest people in the world, was asked in 2021 by PBS NewsHour anchor Judy Woodruff about whether he had a connection to Epstein or not. Gates at the time provided similar answers but stated that he had “dinners” with Epstein, whereas in Australian TV interview, he said that he had “dinner” with him.

“What did you know about him when you were meeting with him, as you said yourself, in the hopes of raising money?” Woodruff asked Gates

“You know, I had dinners with him. I regret doing that,” he replied. “He had relationships with people he said, you know, would give to global health, which is an interest I have. You know, not nearly enough philanthropy goes in that direction.”

Gates conceded at the time that “those meetings were a mistake.”

“You know, that goes back a long time ago now, so there’s nothing new on that,” Gates added.

Pressed further by Woodruff, the Microsoft mogul asserted: “You know, I’ve said I regretted having those dinner, and there’s nothing … absolutely nothing new on that.”

Melinda French Gates, his former wife, told CBS in 2022 that she wasn’t happy that he had meetings with Jeffrey Epstein. “I wanted to see who this man was, and I regretted it from the second I stepped in the door,” she said at the time. “He was abhorrent. He was evil personified. I had nightmares about it afterwards. My heart breaks for these young women.”

Before the CBS interview aired, Bill Gates told news outlets that his meeting with Epstein “was a mistake that I regret deeply” and was “a substantial error in judgment.”

Gates told The Times of London in May that those dinners were a part of efforts to fundraise but “didn’t result in what he purported, and I cut them off.” He added, “At the time, I didn’t realize that by having those meetings it would be seen as giving him credibility. You’re almost saying, ‘I forgive that type of behavior,’ or something.”

Epstein Details

Epstein, who was convicted in 2008 after pleading guilty to soliciting a prostitute who was a minor, died in August 2019 while he was awaiting trial on sex trafficking charges. Officials found him hanged inside his Manhattan jail cell, triggering widespread speculation about his cause of death.

The New York City Medical Examiner’s office at the time ruled that Epstein, 66, committed suicide by hanging himself with his bedsheets. But in early 2020, Michael Baden, a forensic pathologist who previously worked for the same medical examiner’s office, alleged Epstein’s death was “more indicative of homicide” after graphic photos of his death were made public.

A former associate and girlfriend of Epstein, Ghislaine Maxwell, was found guilty in 2021 of child sex trafficking in connection to the former financier. She was sentenced in 2022 to 20 years in prison and is currently serving time in Florida’s low-security FCI Tallahassee prison.

During a recent phone interview with a British television show, Maxwell suggested that Epstein didn’t kill himself.

“I believe that he was murdered,” Maxwell said in a Talk TV interview published on Jan. 23. “I was shocked. Then I wondered how it had happened because as far as I was concerned, he was going to—I was sure he was going to appeal.”

Over the years, Epstein was reportedly known to have powerful friends and acquaintances, including politicians, business magnates, celebrities, and high-powered lawyers—further adding to the speculation around his jailhouse death.

President Biden’s 70-person social media team tweeted a photo of the president in the new Hummer EV. They celebrated the president’s push to ‘electrify and greenify’ America.

On my watch, the great American road trip is going to be fully electrified.

And now, through a tax credit, you can get up to $7,500 on a new electric vehicle. pic.twitter.com/n3iZ9etL4A

— President Biden (@POTUS) January 30, 2023

The president has signed an Executive Order that sets a new target to make about half of all new vehicles sold in 2030 zero-emissions vehicles. The main idea behind the EV push is to “cut emissions,” according to the Executive Order. 

Though there’s a dirty side to clean energy, one of these inconvenient truths is the very EV the president is sitting in pollutes more than a typical gasoline-powered sedan, according to the American Council for an Energy-Efficient Economy (ACEEE). 

ACEEE revealed the inconvenient truth about the Hummer EV in a report last year: 

Emissions per mile driven are lower for EVs than for similarly sized gasoline-powered cars, but they are not zero. The Chevy Bolt EV is responsible for about 92 grams of carbon dioxide (CO2) per mile when accounting for emissions from the electric grid. (The CO2 calculations are based on the national average, but electric grid emissions vary considerably across the country.) The gasoline-powered Chevy Malibu causes over 320 grams per mile. Comparing larger vehicles, the original Hummer H1 emits 889 grams of CO2 per mile and the new Hummer EV causes 341 grams, demonstrating that behemoth EVs can still be worse for the environment than smaller, conventional vehicles.

ACEEE continued:

The environmental impact of EVs isn’t just about the electricity generated to power each mile. The manufacturing process also causes the release of greenhouse gases at several stages, known as the embodied emissions of the vehicle. EVs in particular—with heavy battery packs—use minerals that need to be mined, processed, and turned into batteries.

The pursuit of greater driving range and larger vehicles require increasing battery size, also increasing embodied emissions. Mining the minerals used for batteries has a significant impact on the environment and can have negative social impacts, including the well-documented human rights abuses surrounding the mining of cobalt, an important mineral for many EV batteries. More-efficient EVs need less battery to have the same range, which means fewer emissions and fewer of the problems associated with mining the minerals.

Perhaps the people in power aren’t that bright after all … there’s an inconvenient truth to EVs, especially larger ones, such as the Hummer.

And by the way, there’s a lot of disconnect between what the average working-class person can afford. Most folks can’t afford a $100k EV. 

Authored by Conor Gallagher via NakedCapitalism.com,

Russia, Iran, and India are speeding up efforts to complete a new transport corridor that would largely cut Europe, its sanctions, and any other threats out of the picture. 

The International North-South Transport Corridor (NSTC) is a land-and sea-based 7,200-km long network comprising rail, road and water routes that are aimed at reducing costs and travel time for freight transport in a bid to boost trade between Russia, Iran, Central Asia, India.

For Russia, the “sanction-proof” corridor provides a major export channel to South Asia without needing to go through Europe. But Brussels and Washington, frustrated by their losing in Ukraine and inability to put much of a dent in the Russian economy, could lead them to take more desperate measures.

Read MoreLately, Estonia, which has a population smaller than Russia’s armed forces, has been making noise about causing problems in the Gulf of Finland, Estonian Minister of Defense Hanno Pevkur is talking about how Helsinki and Tallinn will integrate their coastal missile defense, which he says would allow the countries to close the Gulf of Finland to Russian warships if necessary. Estonia is also floating the possibility of trying to inspect Russian ships. From Asia Times:

 It is unlikely Estonia can carry out any inspections given that it only has two patrol vessels (EML-Roland and EML-Risto) and no other warships except some mine layers. But if Estonia even tried, it would create another friction point that Russia could exploit if it chose.

There is also a strategic element. With Finland joining NATO and already a de facto member, the Gulf of Finland becomes significantly more hostile for Russia and there will be growing pressure on Russian political leaders to take action against a rising threat to Russian security.

While Ukraine is far away, the Russians see NATO’s “ganging up” on Russia as a key issue for Russian security and stability. This brings the Baltic region into sharper focus because Russians see NATO trying to surround them and undercut their economic and military advantages.

It’s hard to take Estonia’s bluster seriously but equally difficult to put anything past the neocons in Washington and their adherents in the Baltics. Regardless, Russia would prefer a trade route with India that saves time and money and avoids Europe.

©Peter Hermes Furian

While NATO’s war against Russia has sped up the cooperation between Moscow, Tehran, and New Delhi, India and Iran are coming under various types of pressure that could delay full implementation of the corridor. And Azerbaijan, a key nexus in the INSTC, is a wildcard as it grows increasingly confrontational with both Iran and Armenia.

First the recent developments on the INSTC:

• India is helping to develop the Shahid Beheshti Terminal at Iran’s Chabahar Port in cooperation with the Iranian government.

• Iran and Russia recently signed a contract for Russia to build a cargo vessel for Iran to be used at the Caspian port of Solyanka, which is being developed jointly by the two nations as part of efforts to strengthen the Caspian Sea transportation network.

• RZD Logistics, a subsidiary of Russian railway monopoly RZD, has begun regular container train services from Moscow to Iran to serve growing trade with India by transloading.

• Rezaul Hasan Laskar, the foreign affairs editor at Hindustan Times, says the strategic Chabahar Port in  southeastern Iran has “become more important following its growing use” but that “it needs to be connected to Iran’s railway network.” Iran has accelerated that project, and with an investment boost from Russia, is speeding up the completion of the Astara-Rasht-Qazvin railway, another transport corridor that will connect existing railways of Russia, Azerbaijan and Iran to the INSTC.

In the meantime, most of the goods that Russia normally transported across the Baltic Sea to reach the North Sea port of Rotterdam now sail instead to India. Oilprice reports:

Russian crude oil loadings from Baltic ports are on track for a 50% hike from December to January, Reuters reports, citing its own data combined with trader insights.

Russian Urals and KEBCO crude oil loadings specifically from the ports of Primorsk and Ust-Luga will experience the increase, Reuters said, adding that the bulk of those loadings (some 70%) will head to India.

In December, Russia loaded 4.7 million tonnes of Urals and KEBCO from the Baltic ports, Reuters said, citing Refinitiv data.Russia now accounts for approximately 25% of India’s crude purchases, while some sources put it closer to 30%.

The increased trade with Russia is a primary driver bringing New Delhi and Tehran closer together – largely a result of Europe severing itself from Russia. According to Reuters, at the end of November Moscow sent India a list of more than 500 products it wants India exporting to Russia, “including parts for cars, aircraft and trains.” The report added:

Indian imports from Russia have grown nearly five times to $29 billion between Feb. 24 and Nov. 20 compared with $6 billion in the same period a year ago. Exports, meanwhile, have fallen to $1.9 billion from $2.4 billion, the source said. India is hoping to boost its exports to nearly $10 billion over coming months with Russia’s list of requests, according to the government source.

And with all the increased trade, New Delhi and Moscow are looking for more efficient supply lines. A study, conducted by the Federation of Freight Forwarders’ Associations in India, showed that INSTC will be 30 percent cheaper and 40 percent shorter than the existing routes. And according to the Russian Journal for Economics, freight traffic on the NSTC could reach 25 million tons by 2030, a 20-fold increase. For these reasons the NSTC is of vital importance to Russia, as well as a source of frustration for the neocons in DC and their foot soldiers in Europe.

Strangely enough, even if they found a way to sever the Russia-India link, Europe would have to find a new seller of oil. For months India has been getting Russian oil at a discount and selling it to the EU at substantial profits. According to Michael Tran, global energy strategist at RBC Capital Markets:

India is buying record amounts of severely discounted Russian crude, running its refiners above nameplate capacity, and capturing the economic rent of sky-high crack spreads and exporting gasoline and diesel to Europe. In short, the EU policy of tightening the screws on Russia is a policy win, but the unintended consequence is that Europe is effectively importing inflation to its own citizens. This is not only an economic boon for India, but it also serves as an accelerator for India’s place in the new geopolitically rewritten oil trade map. What we mean is that the EU policy effectively makes India an increasingly vital energy source for Europe. This was historically never the case, and it is why Indian product exports have been clocking in at all-time-high levels over recent months.

It’s not hard to see why India has steadfastly refused to join the sanctions parade on Russia despite pressure from the west and continues to pursue the NSTC.

Indian Prime Minister Narendra Modi is now dealing with a major infrastructure crisis, however.

The Adani conglomerate, which is led by Asia’s richest man who has very close ties to the Modi government, has lost billions in recent days following a report from New York City-based Hindenburg Research, which specializes in short-selling overhyped stocks. Adani owns everything from ports to coal mines and is heavily involved in all types of Indian infrastructure, which means the fallout could affect all corners of the economy – and Modi. Adam Tooze writes at Chartbook:

But what if the biggest promoter-political-capitalist of all were to come under unsustainable pressure? It is not only inequality and power imbalances that are at stake, but the financial stability of the Indian economy. …

Were Adani to find itself in real trouble, there can be little doubt that the real anchor would be the state. Adani’s rise and the fortunes of Modi and the BJP are closely tied. ..

A more serious risk is that the panic spreads from Adani throughout the financial markets, forcing the Modi administration to make painful choices. As Bloomberg reports the shock and anxiety is catching especially amongst global investors who may swiftly reevaluate their weighting of Indian assets.

It wasn’t exactly a secret that the Adani conglomerate was on shaky ground. As Tooze notes, Credit Suisse warned all the way back in a 2015 “House of Debt” report that “the Adani Group was one of 10 conglomerates under ‘severe stress’ that accounted for 12 percent of banking sector loans. Yet the Adani Group has been able to keep raising funds, in part by borrowing from overseas lenders and pivoting to green energy. ”

The widely cited Hindenburg investigation doesn’t just go after Adani, but it also argues his success is tied to the government (and Modi) supporting him nearly every step of the way. Modi is already dealing with the headache of the recently-released BBC documentary about the 2002 Gujarat riots that highlights a previously unpublished, two-decades-old British Foreign Office report claiming Modi was “directly responsible” for that communal riot during his tenure as Gujarat’s chief minister. Andrew Korybko, a Moscow-based political analyst believes the documentary is part of efforts to pressure Modi and writes: 

It’s suspicious that the previously unpublished British Foreign Office report was highlighted by state-run BBC over two decades after it was written, shortly after the New York Times (NYT) implied that externally exacerbating communal tensions will be the West’s Hybrid War means of punishing India for [defying the West on their anti-Russian sanctions], and around the time that India secured its rise as a globally significant Great Power. These observations suggest that the documentary’s timing wasn’t coincidental.

Modi remains highly popular, and a weak and divided opposition isn’t considered much of a threat, but the fallout from the Adani affair could change that. Just two weeks ago Adani was enjoying Davos and having discussions with Azerbaijan President Ilham Aliyev about petrochemical and mining projects in Azerbaijan. The West has also recently taken a great deal of interest in Azerbaijan’s energy future. From The Cradle:

On 7 December, 2022, the World Bank released a report titled “Azerbaijan: Towards Green Growth” in which the authors stated that the:

“Global transition towards a low-emissions economic model offers opportunities for Azerbaijan to be globally and regionally competitive. To make the best of it, Azerbaijan needs to focus on decarbonizing and diversifying the economy, bolstering innovation, and natural and human capital development.”

From this Green New Deal agenda, Azerbaijan would certainly receive funding, but in doing so, it would be handicapped from developing its vast resources or playing a positive role in either the Middle Corridor or the INSTC.

Five days later, the World Bank agenda was re-emphasized by USAID at a conference co-sponsored with the Azerbaijan-US Chamber of Commerce, the White House, and the Embassy of Azerbaijan.

Azerbaijan, which is a key nexus of the NSTC, is threatening to throw a wrench in the plans as relations between Baku and Tehran deteriorate.

On Jan. 27, an attack by a gunman carried out at Baku’s embassy in the Iranian capital left the head of the embassy’s security services dead and two security guards injured. Azerbaijan has now evacuated the diplomatic post. The next day, just as Secretary of State Antony J. Blinken was beginning a visit to Israel and after CIA William J. Burns director just concluded a visit,  Israel launched a drone attack on Iran. Aside from its other implications, the Israeli attack will further strain Azeri-Iranian relations due to Baku’s close military relationship with Israel.

A more than month-long Azerbaijani blockade of ethnic Armenian-controlled territory is also causing concern in Tehran and Moscow as another conflict between Armenia and Azerbaijan would be a major headache for the NSTC – although Russian-Iranian maritime connectivity across the Caspian Sea could bypass Azerbaijan.

Both Iran and Azerbaijan have held major military exercises on the countries’ border in recent months. During recent protests in Iran, Tehran blamed Baku for using ethnic Azerbaijanis in Iran to destabilize the situation, which is something the neocons have long written about doing. The Middle East Media Research Institute, which is run by Israeli and American spooks, wrote as recently as November about using Azerbaijanis in Iran to further their goal of regime change:

In order to bring about regime change at home and contain Iranian expansionism abroad, Iran needs to be weakened from within. The international community therefore must engage Iran more effectively inside its borders through pursuing a “periphery strategy,” i.e., supporting the ethnic minorities found in its border regions. This will achieve two goals. First, ethnic minorities would finally enjoy the freedom and human rights they have been deprived of since the early 20th century. Second, this would deprive Iran of human and natural resources it needs to perpetrate its malign expansionism in the Middle East.

An array of democratic ethno-nations in the periphery of Iran would create a “great wall” around the country. This “wall” would stretch from the Kurdish areas of Northern Khurasan to the Persian gulf in the west including Azerbaijan, Kurdistan and Khuzistan as well as Balochistan in the southeast and would limit Iran’s access to the outside world and consequently end its geostrategic importance regionally and internationally.

For some idea of how this is playing out and the consequences, Responsible Statecraft writes:

The Iranian angle is certainly one of the key reasons behind the hawks’ enthusiasm for Azerbaijan. During the war in 2020, they cherished the dream that Azerbaijan’s military success would galvanize Iran’s sizable Azeri community against the government in Tehran. That naïve hope failed to materialize as Iranian Azeris are part and parcel of Iranian society. However, the anti-Iranian irredentist narratives gained popular currency within Azerbaijan to a degree not seen since the early 1990s. Websites with close links to the regime’s security apparatus and defense ministry issued open calls for “southern Azerbaijanis” to secede from Iran.

That was done in response to some outlandish anti-Azerbaijani remarks allegedly uttered by a retired Iranian diplomat and leaked to a Turkish newspaper. The diplomat in question, however, in no way represented the official position of the Islamic Republic. What followed — a seemingly coordinated incitement of anti-Iranian separatism in Azeri pro-regime media outlets — certainly looked like a massive over-reaction.

Pro-Azerbaijan hawks in Washington may thrive on fomenting such tensions, yet that in no way serves U.S. interests. A military conflict between Azerbaijan and Iran would suck in other countries, such as NATO ally Turkey, which would back Azerbaijan. It would most likely also involve Israel as Baku’s close ties with Jerusalem are seen as a serious threat in Tehran. Israeli officials occasionally behave as if they are keen to add fuel to the fire. The Israeli ambassador in Azerbaijan recently posed with a book of “fairy tales of Tabriz.” Given that Tabriz is the unofficial capital of Iranian Azerbaijan, many Iranians perceived this gesture as an endorsement of the Azeri separatist agenda. A regional vortex involving Iran and Israel would increase pressure from Congress on any U.S. administration to intervene on behalf of Israel.

Baku is closely aligned with Israel and Türkiye, but also maintains strong ties with Russia. Azerbaijan and Türkiye want a direct link across southern Armenia, which alarms Iran. This “Zangezur corridor” that Baku and Ankara want would connect Azerbaijan’s mainland territory to its Nakhichvan exclave that borders Armenia, Iran and Türkiye.

Such a corridor is a red line for Tehran as it would cut off Iran from Armenia and encircle northern parts of Iran by Türkiye and Azerbaijan, which scares Tehran because there are roughly 25 million Azeri-speakers in Northern Iran that might get some pan-Turkic ideas. Iran would also lose its land route through Armenia to the Caucuses.

Therefore, anytime there is fighting between Azerbaijan and Armenia, which many observers think is on the verge of starting again, it threatens a wider war if Azerbaijan and Türkiye try to form their corridor, if Iran comes to the defense of Armenia, or if outside actors use it as an opportunity to pursue other goals.

Russia used to exert a calming influence on the region, but its preoccupation with Ukraine has diminished its willingness to intervene.  According to the Middle East Institute, the pressure on Iran’s government from inside and outside the country is helping lead to Baku and Tehran seeing each other’s actions as a threat and responding with quickly escalating countermeasures:

This self-reinforcing dynamic has created a spiral-like situation and increased the likelihood of conflict. A potential armed clash between Azerbaijan and Iran could have far-reaching consequences for the wider region that would likely draw in other powers, such as Turkey and Russia. It remains to be seen if cooler heads can prevail.

As former Indian diplomat M.K. Bhadrakumar wrote, “Azerbaijan is destined to play a key role in the great game in the period ahead.” It remains to be seen what that role will be. The neocons, who are quite good at manipulating others into quixotic wars, have dreams of using Azerbaijan to help topple the Iranian government, and unfortunately, Azerbaijan’s president has been compared to Sonny Corleone in “The Godfather.”

The US has transitioned from more than a decade of quantitative easing to more recent quantitative tightening. QT will remain until the Federal Reserve is finished squashing inflation. However, such a massive paradigm shift in markets might result in a period of deleveraging among highly levered firms that were able to flourish during the QE era. 

New Bloomberg data shows large companies (at least $50 million of liabilities) filing for bankruptcy topped 20 this month, the highest in any other January dating back to 2010. Back then, 25 filings were seen as the economy was still reeling from the aftermath of the GFC.

There is no doubt after more than a decade of the Fed unleashing trillions of dollars of credit into the economy via QE, a generation of zombie companies is in the midst of a painful deleveraging event as credit is harder to come by in QT. 

QE has been one of the “biggest distortions came from keeping companies alive on life support that otherwise would have disappeared into insolvency,” research firm Porter & Co. wrote on our contributor blog (read: “The Hidden Debt Bubble You Didn’t See Coming”). 

This month’s surge in large firm bankruptcies is set to continue, according to Damian Schaible, co-chair of the restructuring group at law firm Davis Polk & Wardwell, who spoke with Bloomberg. He said:

“I think we’re going to see continued increased filings in 2023.

“From a broader market perspective, it’s pretty simple: We have a market filled with companies with historically high leverage — thanks to the easy money policies of the past decade — and a not-insignificant portion of that debt is floating rate.”

This year, some of the most notable bankruptcy filings have been festive retailer Party City Holdco Inc, mattress maker Serta Simmons Bedding LLC, and cryptocurrency lender Genesis Global Holdco. 

There could be turmoil in the lowest-rated — CCC-rated credit space and hidden risks if a bankruptcy wave takes off from here. As shown below, distress debt is piling up. 

Even though some investors don’t believe a hard landing is in the cards this year. The latest surge in large firm bankruptcies is an ominous sign of trouble ahead. 

By Ye Xie, Bloomberg Markets Live reporter and analyst

Despite the world-beating rally in Chinese assets, positioning data show a clear dichotomy among investors’ views on the nation.

While hedge funds have boosted their exposure to Chinese stocks to near an all-time high again, mutual funds – which tend to have a longer-term investment horizon — remain significantly underweight, according to Goldman Sachs. Such a divergence shows that Chinese assets are viewed only as a three-month “trade,” rather than a three-year “investment.”

China’s manufacturing and services survey data Tuesday confirmed that the economy is bouncing back. The International Monetary Fund also raised China’s growth forecast this year by 0.8 percentage point to 5.2%, making it one of few major economies that may see growth accelerate this year.

With the economy healing, it’s not surprising that foreign investors are scooping up Chinese stocks hand over fist. The inflow into equities via the stock connect in January reached a record $21 billion, already exceeding the influx for the whole year of 2022.

But a closer look under the hood suggests a deep split between different types of investors. Hedge funds, who tend to be nimble, have increased their net exposure to Chinese stocks to 13%, from about 7% late last year, according to data from Goldman Sachs’s Prime Services unit. That isn’t far away from a peak of 15% in 2020, just before Beijing started cracking down on tech companies.

In comparison, while global mutual funds’ holding of Chinese stocks has increased to 8% from 6%, they still are  underweight China by 420 basis points relative to their benchmarks, as of December. The current position ranks in the 19th percentile over the past decade, analysts including Sunil Koul wrote in a note.

There’s also a divergence between investors in different regions: the further away from China, the more cautious they are.

The divergence, perhaps, comes down to cyclical versus structural views. After all, China can only “re-open” once. It’s a nice trade that fast money is willing to chase. But as life returns to normal, Beijing needs to grapple with the same long-term problems, including a bloated real estate industry, a shrinking population and increasing geopolitical tensions.

On Tuesday, Bloomberg reported that Ontario Teachers’ Pension Plan has halted direct investing in private assets in China. Separately, the Biden administration is considering cutting off Huawei Technologies from all of its American suppliers.

Hedge funds are enjoying the reopening party, for now. For deep-pocketed, long-term investors, though, China remains “uninvestable.”

Following two major recent terrorist attacks which targeted Chinese nationals in Kabul, the Chinese government is desperately appealing to the Taliban to provide better security protection for its citizens in Afghanistan. The past week has seen multiple reports emerge saying that Beijing is even offering the Taliban advanced weaponry in order to bolster counter-terror efforts in the capital. 

The US national security website 19fortyfive writes that “Rather than subsidize education or develop the country, it now appears that the Taliban will use its limited cash to purchase or otherwise acquire Blowfish drones from China.”

The source describes the China-produced drones as follows: 

The Blowfish is a potentially devastating platform. The mini-helicopter can fire machine guns, launch mortars, and throw grenades. Artificial Intelligence imbues them with the ability to determine who lives and who dies on the battlefield with minimal human input. The Pentagon has already expressed fears that Blowfish exported to the Middle East could end up in the wrong hands. 

China is also said to be concerned about the security situation as it has its eye on expanding Belt and Road initiative projects in the AfPak region:

Chinese officials also fear for the security of projects related to the China-Pakistan Economic Corridor (CPEC), which have faced several attacks in the provinces of Khyber Pakhtunkhwa and Balochistan in Pakistan.

Both these provinces are adjacent to Afghanistan and officials in Pakistan have alleged that Baloch groups fighting for the freedom of Balochistan and the Tehreek-i-Taliban Pakistan (TTP) operate from bases across the Durand Line with the active co-operation of the Afghan Taliban.

In a fresh Tuesday report, Newsmax also writes that China is “planning to fortify its economic position in Afghanistan by providing lethal drones to the Taliban.”

Demonstration of the Blowfish copter drone dropping small bombs from the Chinese manufacturer: 

Other sources, including the Jamestown Foundation, have alleged a China-Taliban security ‘quid pro quo’ based on drone and other weapons sales; however, there’s been nothing in the way of official statements from either side, or clear confirmation.

Likely, Beijing would view publicizing such a deal as somewhat embarrassing given both the radical Islamic nature of the Taliban regime, as well as its current inability to provide adequate security protection to Chinese businessmen and diplomats in Kabul.

By SpotGamma

Summary:

Into the FOMC meeting and minutes Feb 1st, we believe the market is approaching a near term ceiling and downside opportunity exists in individual names which have recently been high performing or speculative (by buying put spreads).

Rationale for ceiling:

• We believe the market has front-run a policy shift by the Fed
• We have near term resistance at 4100 at our Call Wall with peak resistance at 4200
• With current IV levels being low, and also under equivalent measures of realized vol, there is reduced fuel for a squeeze

Full note on implied volatility compression here.

Downside opportunity:

• Specific names like ARKK and TSLA have had very strong recent runs
• The entire QQQ complex is up 10% in January, fueled by short-covering and 0DTE options

Additional Context:

Implied volatility compression (1 month IV

Along with sharp moves higher in tech, we’d also highlight that “value” stocks are back to all time highs.

Last week, IV further compressed as strong treasury auctions led to the MOVE index collapsing, which likely persuaded the VIX to touch 1 year lows of 18 on Friday. Note, too,  the MOVE Index is now at 100 – the same level it was into the August highs. It was then at Jackson Hole wherein a hawkish Powell marked a major interim high.

Linked to this, its clear that put demand is reflecting a much more sanguine environment ahead.

Our conclusion here is that if markets want higher out of FOMC, there may be a fairly limited rally due to the sharp moves already made YTD. At the end of the day, interest rates are ~4% higher than 1 year ago which should reduce equity valuations year over year, making upside over 4300 uncompelling.

We also believe that traders are positioned to expect this bullish impulse out of FOMC, which can drain upside momentum.  We therefore think that the best risk/reward positioning here into FOMC is to own puts/put spreads in the speculative/tech names which have rallied the most YTD. Any neutral to negative sentiment from the FOMC would likely hit those names asymmetrically.

More from Spotgamma here

The Columbia Journalism Review (CJR) has issued a scathing indictment of the New York Times for yellow journalism during the Trump-Russia saga.

In short, the hyper-partisan ‘paper of record’ was operating in bad faith.

It’s wasn’t just the Times either. CJR’s findings accurately reflect what most objective thinkers have known this whole time – they were all operating in bad faith.

The @CJR review of post-2016 reporting is long, but important.

The TL;DR conclusion:

corpo media knowingly suppressed facts that cut against popular narratives,

ignored denials,

eagerly laundered partisan attacks via “anonymous sources,”

and refuses to reflect on mistakes. pic.twitter.com/PW27ztjxfi

— Edward Snowden (@Snowden) January 31, 2023

That said, CJR aimed the majority of criticism towards the NYT.

“No narrative did more to shape Trump’s relations with the press than Russiagate. The story, which included the Steele dossier and the Mueller report among other totemic moments, resulted in Pulitzer Prizes as well as embarrassing retractions and damaged careers,” wrote CJR executive editor Kype Pope in an editor’s note.

The findings were published in a lengthy, four-part series. The first section begins with a story about then-New York Times executive editor Dean Baquet’s reaction when he found out Special Counsel Robert Mueller didn’t plan to pursue Trump’s ousting, telling his staff “Holy s—, Bob Mueller is not going to do it.”  –Fox News

“Baquet, speaking to his colleagues in a town hall meeting soon after the testimony concluded, acknowledged the Times had been caught ‘a little tiny bit flat-footed’ by the outcome of Mueller’s investigation,” according to Jeff Gerth – the author of CJR’s lengthy retrospective.

“That would prove to be more than an understatement,” he continued. “But neither Baquet nor his successor, nor any of the paper’s reporters, would offer anything like a postmortem of the paper’s Trump-Russia saga, unlike the examination the Times did of its coverage before the Iraq War.”

According to Gerth, the Times destroyed its credibility outside of its “own bubble.”

I highlighted a few parts last night from this series – the only real attempt by corporate media, apart from a few @ErikWemple columns, to grapple with their serial Russiagate misconduct and lying. They’ll ignore it even though it’s from @CJR and by Gerthhttps://t.co/TxLItPJrkh

— Glenn Greenwald (@ggreenwald) January 31, 2023

What’s more, the Times appeared to legitimize former British spy, Christopher Steele, who was indirectly paid by the Clinton campaign to fabricate the infamous ‘dossier’ that so much of the Russiagate coverage – and the DOJ’s sham investigation, was based on.

The Times appeared to legitimize Christopher Steele, the ex-British spy who authored the infamous dossier, claiming he had “a credible track record” while Steele’s so-called “primary” source was telling the FBI that Steele “misstated or exaggerated” in his report and that information stemming from Russia was “rumor and speculation.”

Part three offered examples of the Times’ slight-of-hand coverage against Trump in comparison to other hostile outlets. For example, Trump explained his decision to fire FBI Director James Comey, mentioning the “Russia thing” as being a “made-up story” to NBC’s Lester Holt but acknowledged the firing would likely “lengthen out the investigation.”

“The media focused on the ‘Russia thing’ quote; the New York Times did five stories over the next week citing the ‘Russia thing’ remarks but leaving out the fuller context. The Post and CNN, by comparison, included additional language in their first-day story,” Gerth wrote.

In another instance, the Times avoided covering some of the more damning texts from Peter Strzok, who wrote “there’s no big there, there” shortly after the appointment of Special Counsel Robert  Mueller, something Gerth noted was covered by the Wall Street Journal and the Washington Post.  -Fox News

In closing, Gerth concluded that “the erosion of journalistic norms and the media’s own lack of transparency about its work” is responsible for the broad distrust in the media.

No kidding.

“In January 2018, for example, the New York Times ignored a publicly available document showing that the FBI’s lead investigator didn’t think, after ten months of inquiry into possible Trump-Russia ties, that there was much there. This omission disserved Times readers. The paper says its reporting was thorough and ‘in line with our editorial standards,” wrote Gerth. “Another axiom of journalism that was sometimes neglected in the Trump-Russia coverage was the failure to seek and reflect comment from people who are the subject of serious criticism. The Times guidelines call it a ‘special obligation.’ Yet in stories by the Times involving such disparate figures as Joseph Mifsud (the Maltese academic who supposedly started the whole FBI inquiry), Christopher Steele (the former British spy who authored the dossier), and Konstantin Kilimnik (the consultant cited by some as the best evidence of collusion between Russia and Trump), the paper’s reporters failed to include comment from the person being criticized.“

By Rachel Premack of FreightWaves,

Demand and output for cardboard boxes and other packaging material fell sharply in the fourth quarter of 2022, according to data released by the American Forest & Paper Association and Fibre Box Association on Friday.

It’s the latest indicator that consumer demand is eroding following the pandemic. Dwindling savings, inflation, rising interest rates and fears of a recession may all be swaying consumers to spend less. 

Such pressures would show up in the humble box industry, which serves as an excellent barometer for the larger economy. Practically everything we consume and use spends some time in a box, ranging from online orders to food sent to grocery stores.

U.S. box shipments fell by 8.4% in the fourth quarter, according to the Fibre Box Association. KeyBanc’s Adam Josephson, who leads the bank’s analysis of the packaging industry, wrote in a Sunday note that this was “the most severe quarterly decline since the Great Financial Crisis (2Q09).”

U.S. box operating rates fell to 80.9%, the Fibre Box Association said, which was also a low last seen in the first quarter of 2009. This means nearly 20% of the U.S. capacity to produce boxes was stagnant last quarter. Supply of containerboard, which is used to make corrugated boxes, stood at 4.3 weeks, according to the American Forest & Paper Association. That’s down from last quarter, but still historically high. 

The American Forest & Paper Association reported that another type of packaging material called boxboard had its lowest operating rate in its five-year record during 2022’s final quarter. Boxboard is typically thinner than cardboard and lacks air pockets.

Box bloodbath? Cardboard crisis?

Box demand normally sees modest upticks of 1% to 2% each year. But government stimulus and the shift from service to goods demand through 2020 and 2021 shocked box demand into some of its fastest growth in history. Prices rose as much as 55% through this time, Josephson said. 

A hangover after a yearslong cardboard carnival would be in order — and this one looks nasty.

To Josephson, the end of 2022 in the packaging world had “echoes of the Great Financial Crisis everywhere one looks,” he wrote in the Sunday note. What’s more, significant capacity — that is, more facilities that produce packaging materials — is set to enter the market through the next several years. It’s a tricky time for more packaging production to open up, given the shaky outlook for demand and falling consumer spending.

“Inflationary pressures on the consumers have also added to the problem by reducing the consumers’ discretionary spending capabilities,” said Thomas Hassfurther, executive vice president of corrugated products at WestRock, in a Thursday call to investors. WestRock is the No. 2 largest packaging company in the U.S.

“In addition, consumer behavior changed very quickly as we exited the extreme COVID period, resulting in more of a preference towards travel, entertainment and experience versus that of tangible goods,” Hassfurther said. “Containerboard and box demand continues to be negatively impacted from the deterioration in U.S. and global economic conditions, rising interest rates and a cooler housing market.”

However, WestRock executives maintained that demand in 2023 still appeared “healthy” compared to pre-COVID times. On the Thursday call, they forecast shipments to be 6% higher in first-quarter 2023 compared to the same period in 2019, on a per-day basis.

What goes up must come down … and down …

Many of the industries that saw wild demand during the pandemic are now crashing, like container shipping, used cars and home building. 

A downturn after a wild upswing isn’t particularly shocking. What’s troublesome is that executives grew or made plans to grow in response to this unprecedented demand. An increase in supply will further drive down already-plummeting prices.

In the cardboard world, for example, more than 2 million tons per year of additional containerboard output is coming to the North American market. Ocean carriers expect to add a record-breaking number of new container ships through the next two years. And nearly 60 real estate firms, most of which expanded payrolls during the pandemic, have already had to lay off more than 13,000 workers through 2022 and 2023, according to Insider.

It’s not all doom and gloom. Outbound requests for truckload services were slightly up in late January 2023, compared to the same period in 2019 and 2020. That’s a chipper indicator for goods demand. The Fed’s offensive on inflation has appeared to slow the rate of price increases without halting an unusually strong job market. Payrolls across the U.S. remain historically strong, with an unemployment rate of just 3.5%.