The National Intelligence Bulletin is a weekly look at threats to social, political, economic, and financial stability in the United States, and provides early warnings and indications of America’s volatile future. This report is available each week for Intelligence subscribers.
In this National Intelligence Bulletin…
- InFocus: Forward Observer’s Warning Service
- Ramadan could bring terror attacks
- McKibben: The climate strikes are coming
- Milken Institute Conference: Class warfare is coming
- FBI ‘disrupts’ potential attack on U.S. border
- Economic dislocation continues
- Trump admin stonewalls the House, adds to political instability
- Far Left Roll-Up
- Economic Warning Matrix
- Elites: Cyber attacks will take down the financial system
- Gallo: Central Banks are destroying capitalism
- Economic Financial Watch
InFocus: We’re about 10-20 days from launching a new membership platform on the Forward Observer website. With those changes, we’ll also be re-naming our Intelligence subscription to Warning so that we can offer you a much better product.
Later this month, a few things will change. Here’s what you’ll be receiving as a part of your new Warning subscription:
- Early Warning (Mon-Fri), which covers the day’s top events and indicators of national-level instability.
- Tactical Warning (Fri), which will replace this report with an overview of significant events (what you’re already receiving), but will include a look ahead to next week’s events. Instead of a primarily backwards-looking report, we’ll be trying to provide ‘tactical warning’ of events up to 10 days out.
- Strategic Warning (Monthly), which will provide an overview of the month’s significant events, plus a look ahead to the next month and potential events for up to six months out. That will include a webinar-style brief and conference call held on the last Thursday of each month.
This new line up of reports is designed to be forward-looking. I’ll be bringing back the National Early Warning Matrix to be included in each week’s Tactical Warning report.
Specifically, you’ll be receiving better intelligence regarding structural fault lines, accelerators, and triggers of potential systems disruption, or events we may colloquially refer to as ‘SHTF’. We’ll be monitoring threats to political, economic, and social stability, as well as threats to critical infrastructure, and the potential for catastrophic or mass casualty events.
We can’t predict things like cyber or terror attacks, but we can accurately gauge the potential for political violence, protests and riots, and economic instability, among other conditions and events.
Our mission is to ‘scan the horizon’ and keep readers informed of upcoming events, plus accurately gauge current conditions and provide our assessments and outlook for the future.
One last note: We’ll also be launching some regional forums for a ‘crowdsourced’ approach to more local intelligence.
Thank you for being patient as we make these upgrades. This is going to be an all-around better product, and it will be more useful and actionable for you.
Priority Intelligence Requirements:
PIR1: What are the new significant indicators of disruptive political, social, or cultural conditions or events?
PIR2: What are the new significant indicators of threats to economic or financial stability?
PIR1: What are the new significant indicators of disruptive political, social, or cultural conditions or events?
Ramadan could bring terror attacks
Ramadan begins on Sunday, 05 May and has historically been used by jihadi groups to time terror attacks. Given the situation with the recent terror attacks on Christian, Jewish, and Muslim houses of worship, it’s certainly possible that we could see another large scale attack in the next month. Ramadan ends on Tuesday, 04 June.
McKibben: The climate strikes are coming
Environmentalist Bill McKibben appeared on KQED to discuss climate change. He specifically warned of, or maybe predicted, coming unrest, saying, “We’ve seen these climate strikes and walk outs from school. Our job, now, is to do what those kids have asked and back them up. We’ll be calling for adult climate strikes in the near future. We need to disrupt business as usual.” [source] (Analyst Comment: It sounds as if McKibben is calling for adults to conduct strikes by walking off their jobs or perhaps disrupting the fossil fuel industry. It’s unclear exactly what he means, but climate change protests, including direct action against pipelines and other oil infrastructure, will persist under the Trump administration. As an aside, the International Monetary Fund’s Christian Lagarde was asked about her criticism of capitalism recently. Her response: “We will not be talking about that [capitalism’s problems] in 20 years’ time when the planet is completely gone.”)
Milken Institute Conference: Class warfare is coming
The Milken Institute Conference is attended by some of the world’s financial elites, and, like I do with the annual Davos conference, I pay attention to the sentiment coming out of these panels and interviews. And, just like Davos, the elites continue to be worried about class warfare.
Ray Dalio continued his warnings of class conflict, saying, “If you have a population where there’s a large wealth gap and you have an economic downturn, it’s almost reliably there is conflict.” Dalio foresees this conflict happening likely within a few years.
The IMF’s Christine Lagarde warned that “Globalism is not going away,” in response to a question on how to fix capitalism. She continued, “I don’t think that it can continue in a sustainable way with the level of inequality that we have around the world… [I]f those issues of inequality are not addressed, at multiple levels… then the system is going to be under threat on a continuous basis.”
And Guggenheim’s Alan Schwartz cut right to the chase when he said, “If you look at the rightwing and the leftwing, what’s really coming is class warfare. Throughout centuries what we’ve seen when the masses think the elites have too much, one of two things happens: legislation to redistribute the wealth… or revolution to redistribute poverty. Those are the two choices historically and debating it back and forth, saying ‘no, it’s capitalism; no, it’s socialism’ is what creates revolution.”
FBI ‘disrupts’ potential attack on U.S. border
FBI officials may have discovered plans for anti-fascist protestors to “stage an armed rebellion at the border” that “planned to disrupt U.S. law enforcement and military security operations at the US/Mexican border.” The FBI information report — not finished intelligence — was published by the San Diego Union-Tribune. One of the men named in the report was listed as an “instigator” and was also present during the spates of violence at the Tijuana border crossing back in November 2018 and January of this year. [source]
Economic dislocation continues
Since 2016, I’ve been writing about “low intensity conflict,” an warfighting concept of conflict below the threshold of conventional war but above routine, peaceful competition. That’s what our ‘civil war’ looks like now, even though I prefer to use the term ‘domestic conflict.’ Buzzfeed recently profiled a great example of low intensity conflict: economic dislocation.
An activist group called SumOfUs has successfully pressured MasterCard to end payments and services to fringe right wing groups, including white nationalists. “Spreading hate involves spending money. Whether it’s paying for online advertising or organising violent rallies, white supremacist groups need financial services from companies like Mastercard.” [source]
MasterCard will put a policy change up to a shareholder vote on whether or not the company will pursue social activism against white nationalist groups. If passed, MasterCard will join a host of other financial institutions, like Chase Bank, who have refused to do business with right wing groups and individuals. That’s economic dislocation, and it’s absolutely a tactic of low intensity conflict. But the problem won’t only be for white nationalists. Once the Democrats get back into power in D.C. and they have the ability to apply direct pressure to these financial institutions, you can expect greater economic dislocation against conservatives, as well.
And more recently, Facebook and Instagram banned Alex Jones, Paul Joseph Watson, InfoWars, and a few other right wing figures from their platforms. According to a statement released by Facebook, “We’ve always banned individuals or organizations that promote or engage in violence and hate, regardless of ideology.”
There are still anti-fascist and black nationalist groups which remain on Facebook, although those groups have called for violence in the past. There are still Islamist groups who preach Islamic supremacy. There are still revolutionary communist groups and accounts on Facebook. The unequal application of Facebook’s policies is a clear sign that banning Alex Jones and others was a partisan move.
Being banned from Facebook and Instagram will severely limit the social reach of InfoWars, thus harming the company as a business. This is a great example of economic dislocation, especially for Jones, who remains a staunch supporter of President Trump.
Trump admin stonewalls the House, adds to political instability
Attorney General Bill Bar refused to testify before a House committee yesterday over objections on the questioning format. Later in the day, House Speaker Nancy Pelosi accused AG Barr of lying to Congress. “What is deadly serious about it is the attorney general of the United States of America was not telling the truth to the Congress of the United States. That’s a crime,” Pelosi said.
Some Democrats are calling for AG Barr to be held in contempt of Congress over Barr’s refusal to release the full, unredacted Mueller report. “We will have no choice but to move quickly to hold the attorney general in contempt if he stalls or fails to negotiate in good faith,” said Rep. Jerry Nadler (D-CA), chairman of the House Judiciary Committee. According to Nadler, Barr as “one or two more days” before contempt proceedings begin.
Previously, President Trump vowed to fight all subpoenas and resist cooperation with partisan House investigations. “We’re fighting all the subpoenas. These aren’t, like, impartial people. The Democrats are trying to win 2020,” Trump said last month.
These issues are set to go to the courts next, if the Democrats pursue recourse for noncompliance. To reiterate, contempt of Congress is considered a ‘stain’ on one’s record but there’s no real punitive effect. Should, however, Democrats take the Trump administration to court, then they’ll be seeking a court order to enforce compliance with their subpoenas.
Democrats’ pursuit of compliance is not an existential threat to President Trump or those in his periphery. And impeachment remains unlikely, according to Pelosi. This may play out in the courts, and then Trump officials can decide what to do if or when a judge issues an order to appear before House committees. That could take months or years. But I still believe the largest actual risk to the Trump presidency is playing out in the Southern District of New York, where the state attorney general’s office is reportedly investigating ‘Trump, Inc.’ with a fine-tooth comb.
Far Left Roll-Up
“I want to make sure that those who work in the oil and gas industry, those who work in the fossil fuel industry, are brought along as partners to make sure that we make this transition in the 10 years that we have left to us, as the science and scientists tell us, to make the kind of bold change we need.” – Robert Francis “Beto” O’Rourke
“The greatest threat we face — which will test our country, our democracy, every single one of us — is climate change.” – Robert Francis “Beto” O’Rourke, calling for $5 trillion spending plan to combat climate change
“We need the president to call white supremacy what it is: a global terror threat… The private sector has a role to play — specifically, Silicon Valley, investing the same level of energy and intensity they’ve applied to build products that consumers love. Now they need to ensure that those products keep consumers safe. That means dealing with this issue.” – Jonathan Greenblatt, Anti-Defamation League
“We’re in the middle of a constitutional crisis here. The most important job the Democrats have right now is to uphold the rule of law against a president who thinks the law doesn’t apply to him. We have bigger fish to fry than trying to look like we gave it a shot on infrastructure. This was the play in 2016. It strikes me as a very pre-Trump approach for how to manage.” – Brian Fallon, Demand Justice
“All self-identified white people (no exceptions) are invested in and collude with systematic white racism/white supremacy.” – Johnny Williams, Trinity College professor of sociology
“I think that reparations make sense… But we have to acknowledge that in the United States of America it wasn’t simply that we didn’t like a certain group, we’ve built — no. Not we, they. The government built systems designed to exclude and to diminish the capacity of communities to participate in their own economic survival.” – Stacey Abrams
“Let’s face it, most Americans are not going to read a 400-plus page report. They would much rather see something on TV that they can make conclusions for themselves about. That’s the age we’re living in. It’s almost entertainment.” – Rep. Hank Johnson (D-GA)
“So why should Russia have all the fun? And since Russia is clearly backing Republicans, why don’t we ask China to back us? And not only that, China, if you’re listening, why don’t you get Trump’s tax returns? “I’m sure our media would richly reward you.” – Hillary Clinton, on Rachel Maddow (MSNBC)
“America, as we knew it, is lost… Yes, we may as well say the eulogy for the enigma we assumed was modern America and quickly turn to the truth: No one is coming to save us. No one is coming to restore this country and it won’t self-resurrect.” – Charles Blow, NYT column
“My biggest fear about 2020 is that I think the median American voter may want a boring center-left caretaker, when we need someone who can utterly destroy a far-right, illiberal insurgency.” – Ian Millhiser, ThinkProgress
PIR2: What are the new significant indicators of threats to economic or financial stability?
Economic Warning Matrix
Two of our most pressing economic questions are: 1) When is the next recession or financial crisis, and 2) When will it be? I’ll be updating this at the beginning of each month so we can see how expert forecasts compare with what the alternative economists are saying.
Green indicates that no recession is currently forecast. Orange is an unspecified likelihood of recession, and red is an expressed certainty of recession. The number of months listed below refers to the time until a recession hits.
There were a few changes from last week.
1. Paul Krugman’s recession outlook was pushed back to 2020-2021, which he now says there’s a “pretty good chance” of happening. He previously called for a recession early during the Trump administration.
2. Goldman Sachs CEO David Solomon scaled back his previous outlook on recession, which was a 50 percent chance in 2020, saying that it “feels less than that today.”
3. JPMorgan Chase CEO Jamie Dimon was previously on record as saying there could be a recession around 2020-2021, but last month said that “[Economic expansion] could go on for years… There may be a confluence of events that somehow causes a recession, but it may not be in 2019, 2020, 2021.”
4. Kyle Bass clarified his calls for a 2020 recession last month, saying that it’s “almost inevitable” unless President Trump puts together a trillion dollar infrastructure plan. Bass still sees a “mild” recession in 2020.
5. White House Council of Economic Advisors chair Kevin Hasset previously said that a recession was “not impossible” in 2019. But he more recently said, after positive economic numbers, that a recession before Summer 2020 was “impossible.”
6. Guggenheim’s Scott Minerd was on Bloomberg this week to say that recession was still on the horizon. He didn’t change his outlook on a 2020 recession, however, in a note last month Guggenheim did advise investors: “[W]e expect a severe equity bear market of 40–50 percent in the next recession, consistent with our previous analysis that pointed to low expected returns over the next 10 years.”
Elites: Cyber attacks will take down the financial system
Two new warnings on cyber attacks are worth highlighting. First, in his annual letter to shareholders, JP Morgan Chase CEO Jamie Dimon warns that cyber attacks “may very well be the biggest threat to the US financial system.” JP Morgan Chase joins Goldman and Bank of America warning of the financial system’s vulnerability to dedicated and sophisticated hackers.
Speaking at the Milken Institute Conference this week, Prudential Global Investment Management’s David Hunt warned, “If I were looking for the thing that worries me the most, it would be an actual [cyber] attack on the infrastructure of the financial markets that really bursts into it and creates a shutdown of the major pipes we use to do business.”
Gallo: Central Banks are destroying capitalism
Alberto Gallo had a good piece over at Bloomberg Opinion, in which he accused central banks, like the Federal Reserve, of destroying capitalism. But what I want to focus on is a small portion of the article. Gallo writes:
“It’s clear that our growth model centered on credit and central bank support is broken, and the fix isn’t more money printing…
Private debt outgrew gross domestic product by four times in the U.S. since the 1960s. The Institute of International Finance says global debt stands at $243 trillion, more than three times worldwide gross domestic product…
Debt-driven growth, corporate entrenchment, lack of investment and rising inequalities have turned capitalism into a short-sighted game of kick-the-can. [source]
(Analyst Comment: Gallo prescribes three solutions which can be debated outside this report. I want to point out he seems to warn that our current system is unsustainable.)
The global economic recession is being pushed back after the Euro Zone published its Q1 economic growth at 0.4 percent, which is, believe it or not, the fastest pace in three quarters, and the unemployment rate fell to 7.7 percent. [30 Apr]
Is America at risk of imminent decline and collapse? Consider this: the U.S. is still a top destination for the world’s millionaires as they leave China and Russia in droves. That suggests to me that millionaires see greater safety and security in the U.S. than they do in the East. [01 May]
The Federal Reserve wraps up its 2-day meeting today with a decision on interest rates. Fed watchers expect no change to the Federal Funds Rate, despite President Trump’s strong desire for the Fed to cut interest rates for greater economic growth
“China is adding great stimulus to its economy while at the same time keeping interest rates low. Our Federal Reserve has incessantly lifted interest rates, even though inflation is very low, and instituted a very big dose of quantitative tightening… Yes, we are doing very well at 3.2% GDP, but with our wonderfully low inflation, we could be setting major records &, at the same time, make our National Debt start to look small,” President Trump tweeted out yesterday afternoon.
White House economic advisor Larry Kudlow is also calling for the Fed to cut rates as long as inflation remains below the Fed’s target of 2 percent. Why? Because this is part of the “Trump put”. From day one, Trump’s bet was that he could grow the economy out of the coming fiscal tsunami. (For additional information, refer to the 23 March 2018 National Intelligence Bulletin.) [01 May]
JPMorgan had a cheery note today. “Today, the global economy’s outlook appears much brighter. Fiscal stimulus measures kept China’s growth on track, and a resolution to trade disputes seems imminent… A recent shift in US monetary policy may prolong the expansion at home… This policy is intended to promote growth and prolong the business cycle, as well as give the Fed more leverage to stimulate the economy during a downturn. If interest rates stay lower for longer, the expansion could have considerable room to run.” [source] [02 May]
Bridgewater’s Ray Dalio recently described Modern Monetary Theory (MMT) as “inevitable”. MMT says that governments, like the U.S., who print their own currency can do so indefinitely as long as inflation doesn’t rise too quickly. Dalio describes a monetary policy future where the Federal Reserve uses MMT doctrine to print money to fund deficit spending without having to auction Treasury bonds. [source] (Analyst Comment: I’ve been writing about MMT since last year because it’s clearly gaining traction as a monetary policy theory. If or when adopted, it’s going to transform how the Federal Reserve manages our money supply. I do have concerns about the downsides of moving to MMT.) [02 May]
Both of President Trump’s picks for the Federal Reserve Board have now withdrawn. Herman Cain bowed out last month, and Stephen Moore withdrew his nomination yesterday. That’s two strikes for putting Trump loyalists on the Fed Board, as several Senate Republicans voiced opposition. That means two things: Trump still has no control or influence on Fed policies (like rate cutting), and the Federal Reserve, which is itself supposed to be an independent body, retains its independence from the president. [03 May]
These economic/financial briefs appear each morning in the Early Warning intelligence report. You can sign up for this email on your My Account page.