14 OCT 16 – Executive Intelligence Summary – Forward Observer Shop

14 OCT 16 – Executive Intelligence Summary


[wcm_nonmember]In this EXSUM (3178 words)…

  • Systems disruption & the rise of cyber mercenaries
  • Russia & China Situation Reports
  • DOJ to reduce observers stationed at polling places
  • HSBC Analyst: Red alert for falling markets
  • Goldman Sach’s outlook on gold prices
  • And more…


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ADMIN NOTE:  There will not be an EXSUM published for 28 October, two weeks from today.  I will be taking some personal time that week, however, I will send out a link to watch a lecture I’ve recorded on local intelligence gathering.  In this lecture, I discuss the four primary intelligence disciplines we should be focusing on at the local level — Open Source, Imagery, Signals, and Human Intelligence.  I’ll introduce you to some collection methods and some commercial-off-the-shelf gear that you can employ during a SHTF situation.  An EXSUM will be published next Friday, 21 October, and then I will resume publishing EXSUMs on Friday, 04 November, just ahead of the general election.


Bottom Line Up Front:  As progressives are already trumpeting the defeat of Donald Trump at the polls next month, many of them fail to realize that it’s leaving millions of Americans angry once again that a progressive is leading the nation.  (Remember that even if Trump loses, he’s still expected to garner the support of around 40% of voters; a sizeable chunk of America, many of whom are ideologically committed to Trump’s stance on the establishment and current government.)  And if the Republican Party fails to rebuild itself and earn back the trust of party members in the wake of a Trump defeat, it’s going to leave millions without effective political representation through which to channel that anger.  I don’t know if that’s an intended or unintended consequence, but it could be the reality within a couple months to years.

In previous EXSUMs, I’ve talked about why some members of the Movement for Black Lives have resorted to violence: they feel ignored and marginalized, and are disillusioned that the political process is the venue for problem solving.  Feeling that there are no other options, they commit violence as a last resort to make known what they perceive as their unheard frustrations.

Alt-Right thought leader Stefan Molyneux recently stated that ‘democrats have nothing [of substance] to offer poor Americans, so they sell the American Dream to foreigners.’  And as the Democrat Party continues to elevate the immigrant (especially those here illegally) above hard-working, tax-paying, law-abiding Americans, and focus on providing the American Dream to immigrants at the expense of the American Dream of citizens, I believe that many current and former Republicans are going to arrive at some of the same conclusions as Black Lives Matter.  The Obama administration has done all it can to marginalize the concerns of this section of America.  We’re angry at the direction of our nation, and we’re a heavily politicized base looking for answers.

I do believe that this nation is heading towards a domestic conflict.  If a Clinton administration is able to push through amnesty and turn certain states blue, especially Texas, then George W. Bush may be the last Republican president we’ll ever see.  And when governments marginalize the concerns of a well-established and angry population, especially a population so rich with the tradition of resistance to tyranny, those governments rightly earn themselves civil unrest.  That’s exactly how civil wars begin.  Once conservatives realize that there’s no room in the political process to save their nation, then we’re going to see this idea of regime change picking up steam.  And that’s exactly why, based on our current trajectory, I believe we could see a domestic conflict within the next five to ten years.


Priority Intelligence Requirements:

PIR1: What are the current indicators of systems disruption that could lead to a SHTF event?

PIR2: What are the current indicators of an outbreak of global conflict?

PIR3: What are the current indicators of military, government, political, or social-related instability or violence that leads to widespread domestic conflict?

PIR4: What are the current indicators of economic, financial, or monetary instability that leads to civil unrest?

PIR1: What are the current indicators of systems disruption that could lead to a SHTF event?

Explosive drones poses new security challenges

This week, Kurdish fighters reported that they had successfully shot down one of the drones that the Islamic State has been using to deliver explosive payloads in the conflict, which is not a new development.  As the Kurds were recovering the drone to examine it, the payload detonated, killing two, which may be the first case of a successful drone attack by the Islamic State.  The immediate reporting was unclear as to whether or not the drone-IED was designed to target first responders who recovered the drone, or if Kurdish handlers had accidentally detonated it.  As we’ve reported in previous EXSUMs, US officials are also concerned that similar methods could be used against critical infrastructure.


The rise of cyber mercenaries

One way for nation-states to avoid attribution for cyber attacks is to hire mercenaries; a transaction which builds in some plausible deniability.  Additionally, these cyber mercenaries open up opportunities for nations with less developed capabilities and fewer skilled operators.  As long as cyber exploitation is profitable for criminals, and as long as foreign governments can afford to hire them, cyber mercenaries are expected to proliferate.  That increases the risk of systems disruption in the US, which is why threats to infrastructure remain significant.


PIR2: What are the current indicators of an outbreak of global conflict?

The prospects of global conflict continue to revolve around the usual players: Russia, China, and the Middle East. The ways in which global conflict could cause or contribute to a SHTF scenario in America are myriad and they largely depend on which conflict is initiated. We’re certainly at risk of cyber attack in the event of conflict in any of the three regions. Systems disruption, like the price and availability of fuel, is also a top concern that could cause a SHTF event.

US-Russia Situation Report (SITREP)

Overview – Vladimir Putin continues to make preparations for a conflict with NATO.  Last week, we reported that the creation of the Ministry of State Security (MSS), a merger between Russian state security and foreign intelligence services (nearly the equivalent of the FBI and CIA), would effectively remake the KGB.  This week, a Russian newspaper reported that Putin is laying plans to consolidate control of the MSS and other domestic government offices (to include the newly created Russian National Guard) under the military.  The Russian military’s centralized nature means that military district commanders, in theory, would be able to mobilize numerous arms of domestic entities to meet their military objectives.  This is no less than a plan for national mobilization.  According to the 2015 update of Russian military doctrine, national mobilization is reserved for the largest of conflicts, such as a world war.  It’s safe to say that Putin is planning for — not necessarily to start but to engage in none the less — a very large conflict with the US and NATO.  Much of Russian military planning and deployments have been directed at creating a buffer zone to add a layer of security for Russian national sovereignty.  It’s likely that Vladimir Putin believes a Clinton administration would target Russia for regime change, even if US activities were only directed towards fomenting civil unrest and encouraging and aiding Putin’s political opponents.  Last week, I mentioned that Putin looks to bolster his sea power in the Pacific.  One way for the US to ensure it retains no challenge in that theater would be to disrupt Putin’s plans, and it certainly appears that Putin knows that it’s probable, if not inevitable, that Clinton takes that course of action.

In other headlines this week, the internet freaked out over claims that Putin has ordered all Russian officials to bring back children and family members studying abroad.  It was received and reported as an indicator that war was imminent, however, there’s significant context that’s been glossed over.  Firstly, that Russian children — the children of Russian officials, no less — are studying in schools abroad looks bad for Putin who is trying to re-establish the Russian Empire.  It gives the impression that Russian schools can’t compete with Western education.  The announcement was also reported just after Putin had cancelled his trip to France due to a disagreement over Syria, hence Putin’s desire to remove Russians from French schools.  Could these be indicators of imminent war?  Absolutely.  Is it concerning?  Yes, but compared to other indicators of war I don’t think this report alone is cause to panic just yet.  There are still, however, plenty of reasons to be concerned.  Continuing from last week, I still believe that we’re the closest to war with Russia that we’ve ever been.

Syria & Turkey – The Russian Ministry of Defense (MOD) announced plans to upgrade a permanent military base in Syria, along with restoring a permanent naval installation in Egypt in the husk of a former Soviet base.  This follows the continued military build up in Syria, and illustrates a committed Russian presence there.  If Clinton is elected and should she remain committed to deposing Assad, then we will be at significant risk of engaging in a military conflict with Russia.  A Kremlin spokesman also stated this week that the MOD is considering the deployment of Russian air defense assets to Turkey, which is currently a member of NATO.  That statement seemed to hinge on whether or not Turkey would request them, and is apparently a “commercial issue” should Turkey want to join a cooperative air defense system.

Ukraine – According to Ukraine secret services, there are over “700 Russian battle tanks, 1250 artillery systems, 1000 armored carriers and 300 multiple launch rocket units,” reports Ukraine Today.  That’s more tanks than the German Army has, claims Ukraine president Petro Poroshenko. (Germany is reported to have around only 400 tanks.)  According to some reports, the Russian offensive in Ukraine has stalled, even though the fighting continues.


South China Sea SITREP

China – China continues the status quo in the South China Sea to challenge US naval dominance, to include launching three more corvette-class ships which are expected to be in service by this time next year.  I’ve not seen any reporting to indicate a significant increase in the likelihood of conflict this week.  That said, this week China was suspected of hacking into Australian government computers to steal documents, which is a not an uncommon occurrence.

Philippines – This week, Filipino president Duterte ordered the 28 joint military exercises with the US to cease, over his claims that he’s not being treated fairly by the US.  Duterte’s chief complaint is that the US isn’t arming the Filipinos to keep pace with China’s military developments in the region.  Taken as a sign that the US is not committed to defending the Philippines against a vastly superior Chinese military, Duterte is long past having second thoughts about his relationship with the US.  If Duterte is learning from North Korea, which regularly crosses so-called “red lines” and then adjusts their behavior in return for humanitarian aid, Duterte could be setting himself up for a windfall relationship with the next US president, after the reward of military equipment is the price to pay for Filipino relations.  But Duterte also threatened, “Do not treat us like a doormat because you’ll be sorry for it. I will not speak with you. I can always go to China.”  And that’s certainly what it appears Duterte is doing, as he leads an entourage of 350 business leaders to China next week.  Over the past several years, China has been considered a hostile nation to the Philippines, however, in the wake of souring relations with the US, now is a great opportunity for China to challenge US influence with Duterte.  Because the Philippines are such a strategic part of US foreign policy, especially in the South Pacific, I expect Duterte to milk both nations for all he can.


PIR3: What are the current indicators of military, government, political, or social-related instability or violence that leads to widespread domestic conflict?

Former Senator Russ Feingold floats Hillary executive actions for gun control

A Project Veritas video shows former Wisconsin Senator Russ Feingold at a California fundraiser, explaining that Clinton might use executive orders to push through gun control, especially if Democrats fail to win both the Senate and the House.  In the video, a Democrat fundraiser and friend of Hillary’s says, in so many words, that the Clinton strategy is to bring back the assault weapons ban and prevent Americans from purchasing “unlimited bullets.”  Should Hillary Clinton be elected, which at this moment I believe she will, we’re likely to see another frenzy of “panic buying” of firearms and ammunition.  Going forward, there’s no better time than right now to do just that.


DOJ to begin collecting quarterly police-involved shooting data

The Department of Justice (DOJ) is moving away from its previous system of voluntary reporting of police-involved shooting data, and moving to a mandatory system of reporting due each quarter.  Every law enforcement agency is expected to comply with the new requirement, which includes reporting the names of the officers involved in shootings, the suspect/victim name and demographic data, and circumstances of the shooting, among other information.  Agencies not in compliance will be at risk of receiving 10% less federal funding.

The new reporting requirement will provide data not previously accessible to DOJ.  And it’s going to allow DOJ to highlight the need for federal oversight or control over local law enforcement agencies.  In March 2015, DOJ announced a pilot program currently taking place in six US cities that partners federal advisers with local police departments.  The program, National Initiative for Building Community Trust and Justice, is aimed at providing training for law enforcement personnel to reduce conflict and build trust in their communities.  Being that this is just a “pilot program,” we can likely expect the program to expand to other cities in the future as the federal government takes additional steps towards exercising greater control over local law enforcement or introducing a national police force.


DOJ to reduce observers stationed at polling places

Blaming a 2013 Supreme Court decision, the federal government is scaling back the number of federal observers stationed in polling places ahead of next month’s election.  This comes as 13 states still have Voter ID laws, including swing state Ohio.  US Attorney General Loretta Lynch is already citing an inability to ‘protect’ voters who may suffer from ‘discrimination’ and ‘disenfranchisement’.  “In the past, we have . . . relied heavily on election observers, specially trained individuals who are authorized to enter polling locations and monitor the process to ensure that it lives up to its legal obligations.  Our ability to deploy them has been severely curtailed.”  This year, federal observers will only be in five states (Alabama, Alaska, California, Louisiana, and New York).

There’s obviously a potential for the regime and the media to exploit cases of voter intimidation, whether real or perceived, in this election.  Based on the current political climate, I remain concerned that the losing candidate will protest the election results, which could lead to domestic instability.  Frankly, America loses this election no matter which candidate is elected.  There’s certainly potential for instability that leads to political violence.


PIR4: What are the current indicators of economic, financial, or monetary instability that leads to civil unrest?

HSBC Analyst: Red alert for falling markets

A note published by HSBC this week reads, “With the U.S. stock market selling off aggressively on October 11, we now issue a RED ALERT.  The possibility of a severe fall in the stock market is now very high.”  A separate HSBC analyst also noted this week that,  “We think markets are pretty vulnerable.”  In previous EXSUMs, I’ve reported that investors expect the market to sour on a Trump win next month.  Price to earnings ratios in the S&P 500, however, have only been this high (24.91) during two periods in the past 13 years, which typically means that stock prices are too high.  For months, we’ve reported that investors expect volatility in the markets, and several high profile investors have been warning about a significant sell-off for months.  It’s unlikely that the next market correction will lead to the economic collapse that many have expected, however, be prepared to hear the usual blogs and talking heads again say that the sky is falling for good this time.  Just like last time.  The Federal Reserve since Ben Bernanke has been committed to propping up the markets, so while the upcoming correction is healthy, I don’t expect the Fed to let the markets go into free fall mode.  Still, there could be some panic associated with a significant market correction.


Deutsche Bank update

Since last week’s EXSUM, there have been a few developments for the financial risk of a Deutsche Bank collapse.  German Chancellor Angel Merkel renewed the government’s commitment to not bail out DB, which is exactly what Deutsche executives had been hoping for.  In addition to a hiring freeze, Deutsche officials were told that the bank would need to release 10,000 employees, or nearly 20% of the bank’s workforce, in order to cut costs going forward.  Meanwhile, it’s top investors, members of the Qatari royal family, remain concerned that they may need to partially fund a Deutsche bailout.  It’s uncertain whether or not they be willing, especially since Europe is likely to face another banking crisis soon.  And that’s the  most significant risk right now to the next leg of the global financial crisis.


Goldman’s outlook on gold prices

Last week, I wrote that Goldman had their eye on a ‘strategic buying opportunity’ once gold passed below $1250/ounce, but that they could revise that price downward.  This week, they revised the downside to $1211 to $1200/ounce, and say that we could see that downside price should gold break below its $1250 support line.  As of Friday afternoon, gold prices had momentarily dropped to a low of $1248 before rebounding.  As of Friday afternoon, gold was trading around $1251.


JEC explains the Obama economy’s non-recovery from recessions

The chart below was published the the US Congress’ Joint Economic Committee (JEC) and shows the explosive bounce back years following three major recessions, and then the lackluster Obama recovery.  Economic research finds that the greater the recession, the greater the recovery because eventually pent up economic potential is again met and causes a substantial bounce back.  But, as the chart shows, that hasn’t happened in the years following the 2008 recession for a few reasons.


One, due to Obama’s tax increases, household incomes declined and never recovered, which caused defaults on debt and weighed on overall economic spending.  Two, the US has one of the highest effective corporate tax rates in the world, which hurt the corporate spending and capital investment that typically helps drive recovery from recession.  And finally, the Obama administration posted the greatest number of ‘major rules’ and regulations (of any administration) which inhibited economic growth.  In conclusion, the Obama administration is entirely to blame for our non-recovery from recession.  You can read the entire JEC analysis here.



Mike Shelby is a former military intelligence NCO and contract intelligence analyst. He spent three years in Iraq and Afghanistan and is now the intelligence and warfare researcher at Forward Observer.

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