National Intelligence Bulletin for 18 January 2019

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

  • Rock Stone Mountain II still scheduled for 02 February
  • House Democrats acting like activists, not legislators
  • The fundamental political battle of the culture war
  • Senior Trump official: I hope the shutdown lasts a long time
  • Game plan for investigating Trump, Inc.
  • Warren calls for D.C. statehood
  • Beto questions viability of the Constitution
  • Bannon: Trump will appoint four SCOTUS justices
  • DOJ preparing for legal showdown on the border
  • Fed explores effects of student loan debt
  • Bank of England sees USD as losing reserve status
  • Economic/Financial Watch commentary

 

ADMIN NOTE: Would you be interested in having access to an audio version of this report? If there’s enough interest, then we can produce this report each week in an audio feed, if that makes it more consumable for you. If interested, please email us directly: fostaff@fostagingwcdev.wpengine.com.


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?

Major Trends:

  • Ongoing political instability due to high stakes political warfare
  • Removal of political guardrails increases risk of reaction
  • Polarization risks future election integrity
  • Simmering social grievances based on race, class, and political ideology contributing to sporadic violence
  • Ongoing culture war features information operations and economic warfare

 

Rock Stone Mountain II still scheduled for 02 February

Agitators on both the Alt-Right and Alt-Left are creating fervor over the “Rock Stone Mountain II” rally set to take place on 02 FEB 2019 just outside Atlanta at Stone Mountain, Georgia. Antifascist groups in multiple cities have called for mobilization against the rally. Facebook comments from Alt-Right-affiliated individuals are being seized upon as proof of violent intent (e.g. “looks like a good place for a .308″). Atlanta-based antifascists have also seized the opportunity to doxx (publish personal details online) the organizers of the event and send out hundreds of mailers and fliers. Alt-Right groups intend to move forward with the rally despite being denied a permit for the event due to safety concerns. Alt-Right groups involved in the rally indicate that they are aware of the growing protest movement against them, resulting in memes that read “Aiming for Antifa on February 2nd”, featuring soldiers in Confederate uniforms preparing and firing weapons. (Analyst Comment: We’re following this event and additional information will be posted in Alt-Observer reporting.)

Nunes: House Democrats acting like activists, not legislators

This week freshmen House Democrats, including Rep. Alexandria Ocasio-Cortez, marched into Sen. Mitch McConnell’s office to give him a petition demanding that he re-open the government. [source] During an interview, Rep. Devin Nunes (R-CA) said, “It’s totally bizarre that this is the type of behavior that we have here, and it’s a little scary. But this is what the new members seem to be doing. It’s almost like they’re activists instead of members of Congress… It’s like their activists marching through the Capitol like a bunch of nutcases.” Nunes called on House members, instead, to negotiate with the Senate to pass a government funding bill. (Analyst Comment: Americans elected a handful of Leftist activists to Congress — including two of whom were openly members of the Democratic Socialists of America. Instead of forming a trend, this could represent a response to President Trump, which will fade once Trump is gone. My concern is that, even after Trump, liberal and progressive districts continue to elect young activists to Congress. If it becomes the case that younger liberals and progressives select representatives for their political activism, then the trend will accelerate increased incivility — such as “We’re going to impeach the m*****f****r”, according to democratic socialist representative Rashida Tlaib (D-MI) — and lead to destabilizing political norms and potentially political violence. It may be Nancy Pelosi’s party right now — she’s a partisan but steady hand — but activist Democrats like Ocasio-Cortez are being described by many Democrats as the future of their party.)

The fundamental political battle of the culture war

In a Washington Post opinion piece, Paul Waldman described the Trump administration’s efforts to add a citizenship question to the census as part “of a broader effort on the part of Republicans to put a thumb on the electoral scale in every way they possibly can, whether it’s extreme gerrymandering, voter suppression efforts targeted at minorities, or the use of the census to make Republican victories just that much more likely.” [source]

I don’t agree with all the conclusions there, but the premise is fundamentally true. It’s time that we all recognize the undeniable truth: the GOP is in a fight for survival at this point.

The citizenship question on the census is designed to identify how many illegals and citizens currently reside in America. The side effect is that it could change the number of representatives a state receives based on that state’s number of citizens, as opposed to total residents. States with large illegal populations, like California, could conceivably lose some representation and federal funding.

Waldman describes this process as promoting white supremacy, but it’s really about survival. If the Trump administration is not successful in appealing a judge’s recent decision that the question is illegal, then Democratic states will continue to enjoy disproportionate representation based on their illegal residents. In this case, it’s not Republicans ‘putting their thumb on the electoral scale,’ it’s Democrats.

As for gerrymandering, that’s a case that could change, as well. The 2011 redistricting process, which followed the 2010 census, is widely recognized as having benefited Republicans because state legislatures and governors control that redistricting process. In 2011, Republicans controlled 29 governorships, compared to 20 for Democrats. It’s too early to tell the numbers for 2021, but as of 2019, Democrats have fared slightly better: 27 to 23.

Last week, I wrote about former Obama attorney general Eric Holder’s efforts to redistrict the state houses and the House of Representatives in 2021. Specifically, Holder said that Democrats will “do just fine [in elections]” if he’s successful, and noted that “demography is trending our way”. Holder also wants to flip the state houses of Wisconsin, Ohio, and North Carolina from majority Republican to majority Democrat through those redistricting efforts. Wisconsin and North Carolina have Democrat governors. Holder’s plan, according to his own website, is to use the network of Organizing for Action, which was previously Obama’s election street team named Organizing for America, to build a grassroots movement to achieve some parity in the redistricting process. Cumulatively, this is part of a plan to re-establish Democratic dominance (which is to say ‘progressive’ dominance) at both the federal and state levels.

Meanwhile, Rep. Alexandria Ocasio-Cortez has an undeniable sphere of influence, yet the freshman Democrat is virtually powerless in Congress. Still, she said some interesting things this week. As noted above, she’s sometimes described as the future of the Democrat Party, so it’s important to note that she described the GOP as “patriarchal” and “rooted in [white] supremacy” in a recent Washington Post puff piece interview. She continued: ” I think that [Republicans are] protecting themselves from this kind of, like, fall. They see that the country is changing and they interpret change to be negative, whereas we interpret change to be positive.” What are those changes? Like Eric Holder says, demographics. [source]

Hold onto your hats… It took me a long time to come to grips with this, but one of the main reasons why Democrats so often pursue “white supremacy” as a line of attack against Republicans is because it’s slightly true. More accurately, it’s not supremacy for the sake of race, but supremacy of political ideology. Whites are generally evenly split on leaning Republican or leaning Democrat. Blacks and Hispanics overwhelmingly vote for Democrats; numbers poll somewhere around 85 and 65 percent, respectively. The declining white population, which is expected to be a majority-minority group by 2044, means fewer Republican voters, less political representation, and ultimately more Democratic power, which is to say progressive and democratic socialist power. Ocasio-Cortez: “I don’t think [Republicans] see that they’re losing the war. They’re making all these battles, but they’re losing the war.”

The other reason why Democrats pursue the “white supremacy” line of attack is not just for today’s elections, but future elections where minorities will make up a larger percentage of the country’s voters. If the Democrats are successful in continuing to paint the GOP as the party for “old, rich, white men,” then they gain a larger advantage in every passing election cycle as that demographic comparatively dwindles.

The only way the GOP survives through another generation (or through the next 25 years) as a national party is by adding minorities in droves, which is why funding is being poured into young Republican groups like TurningPoint USA which runs the “Walk Away” movement targeting blacks to leave the Democratic Party. It’s why Hispanic outreach is a growing part of the Republican election strategy. Trump’s 2016 victory was largely achieved by winning over white working class voters. That winning strategy won’t last forever. It may not last through 2020.

If the census question fails, if courts continue to reject voter identification laws, and if the National Democratic Redistricting Committee is successful in their aims, then Democrats are setting themselves up to reap substantial headwinds in 2024 and beyond. That’s why my baseline SHTF scenario is the next Leftist-controlled White House and Congress, which will pursue its agenda with far greater speed than the Trump administration.

(Analyst Comment: As an aside, the media completely overlooks black and Hispanic supremacists. At the risk of sounding crass, there are many who merely want to replace what they perceive as “white supremacy” with minority supremacy. Their mentality: “It’s our turn.”)

Senior Trump official: I hope the shutdown lasts a long time

The Daily Caller published an opinion piece, penned anonymously by a senior Trump administration official but whose identity was confirmed. In addition to claiming that only 15 percent of his colleagues in government were “exceptional patriots,” the author went on say, “I hope [the shut down] lasts a very long time, till the government is changed and can never return to its previous form.” He added that he hopes the shut down will weed out saboteurs who make up about five percent of the Trump administration. In conclusion, the author wrote that the result of the shutdown should include provisions that non-essential employees find work outside of government, that border security is bolstered, and that savings are passed onto the taxpayer. [source]

Game plan for investigating Trump, Inc.

“Those people who are expecting some kind of Hollywood movie here are going to be disappointed because it is going be very orderly,” said Rep. Jim Himes (D-CT) a senior member of the House Intelligence Committee tasked with investigating potential wrong-doing. Those investigations are reaching into President Trump, his businesses, his campaign, his associates, and his family, but according to Himes, the House Intelligence investigations may be more limited than what was previously reported. “I would not expect the committee to announce an omnibus investigation,” he said. [source] A reporter for the New York Times, which is covering the Trump investigations with baited breath, writes, “The real battle has yet to begin. With Democrats now in charge of the House, the special counsel believed to be wrapping up his investigation… and the first articles of impeachment already filed, Mr. Trump faces the prospect of an all-out political war for survival that may make the still-unresolved partial government shutdown pale by comparison.”

(Analyst Comment: The House Intelligence investigations may be limited, but the House Oversight and Ethics committees will likely be more nosy. According to reports, Speaker Pelosi is personally overseeing the Oversight Committee’s investigations. As for impeachment proceedings, Pelosi has continued to say that any movement would need bipartisan support. That likely means House Democrats have to find something legitimate. Between the 85-100 investigations House Democrats will launch into Trump Inc., and the Mueller report, I still expect Democrats to make a sustained case for impeachment, potentially for something as little as firing James Comey, which Democrats say is an abuse of authority. Now, Democrats are focusing on the interpreter during President Trump’s 2017 meeting with Russian president Vladimir Putin. House Intelligence Committee chairman Adam Schiff says he will work “to obtain notes or testimony from the interpreter”.)

Warren calls for D.C. statehood

In addition to calling for statehood for Puerto Rico, Sen. Elizabeth Warren (D-MA) is now calling for statehood for the District of Columbia. Last Friday, the Warren 2020 campaign sent out an email saying that D.C. residents deserve statehood because they federal pay taxes, serve in the military, live under our national laws, and are more populace than Wyoming or Vermont. [source] (Analyst Comment: They also vote overwhelmingly for Democrats, and statehood would provide two reliably Democrat senate seats — a sign that Democrats are intent on flipping the Senate.)

Beto questions viability of the Constitution

In a recent interview with the Washington Post, former U.S. Representative and likely presidential hopeful Robert Francis (“Beto”) O’Rourke asked, “Does this still work? Can an empire like ours with military presence in over 170 countries around the globe, with trading relationships … and security agreements in every continent, can it still be managed by the same principles that were set down 230-plus years ago?” (Analyst Comment: This quote is part of an alarming trend of prominent Democrats tiptoeing around fundamentally transforming the structure of government. From abolishing the Senate to granting Washington D.C. statehood, to asking whether America ‘still works’ by the same principles outlined the Founders, Democrat presidential hopefuls are expressing farther Left ideas and asking questions that pose a threat to the Constitution.)

Bannon: Trump will appoint four SCOTUS justices

In a speech at the World Affairs Council of Philadelphia this week, former Trump advisor Steve Bannon predicted that President Trump would end up appointing four justices to the Supreme Court and that Justice Clarence Thomas may retire so that President Trump can pick his replacement. (Analyst Comment: Presumably, Justice Ruth Bader Ginsburg’s replacement would be Trump’s third pick, and Justice Thomas, his fourth. Trump’s third pick would set up an already contentious Senate for another Kavanaugh-like confirmation battle, and force Senate Majority Leader Mitch McConnell to push through another simple majority vote after what could be another drawn-out television spectacle likely to further poison the political process.)

DOJ preparing for legal showdowns on the border

The Justice Department recently published a job posting for two attorneys based in McAllen and Brownsville, Texas. The two attorneys will be providing support to “border wall civil litigation” for the DOJ in South Texas — a signal that President Trump might pursue the national emergency option to seize property to build the wall. [source]


 

PIR2: What are the new significant indicators of threats to economic or financial stability?

Major Trends:

  • Trade war with China poses risk to U.S. farmers and manufacturers, emerging markets
  • Slow in global economic growth poses risk to emerging and developed economies
  • Unsustainable national debt to increase due to trillion dollar budget deficits
  • High potential for an economic recession around 2020 that causes significant financial disruption
  • Rising interest rates are moderating economic growth, housing strength

 

Fed explores effects of student loan debt

In a new publication entitled, “Consumer & Community Context,” the Federal Reserve draws two important conclusions: student loan debt is lowering rates of home ownership among Millennials and creating a “brain drain” effect in rural communities. The most important statement: rural America is being left behind by better jobs in the cities and better outcomes for those paying back student loan debt.  [source]

(Analyst Comment: A financial planner I spoke with last year described what he saw as a potential effect of an economic slowdown or recession: jobs in rural areas would begin to dry up, and the most and best jobs would remain in urban areas. Right now I’m still looking at just how bad things could get, however, if you’re planning for a major financial crisis or a significant and painful recession, then you must begin planning for higher unemployment rates in rural areas than in urban areas.)

Bank of England sees U.S. Dollar as losing reserve status

One of the slow developing threats to the U.S. economy and the country’s financial health is the loss of the dollar as the world reserve currency — if it can even be called that anymore. With some countries in the Middle East wanting to price oil on gold (and trade on currencies other than just the U.S. dollar), China’s renminbi being added to the International Monetary Fund’s basket of reserve currencies, other countries following suit and diversifying, and other events and data points, the case against the U.S. dollar is stacking up.

This month, the Bank of England Governor Mark Carney faced facts and said, “I think it is likely that we will ultimately have reserve currencies other than the U.S. dollar.” Carney said that half of global trade was priced in dollars — the common currency that allows, say, South Korea to do business with Brazil — but that the U.S. share of international trade was just ten percent. [source] That imbalance is part of what’s driving the move away. Disagreements over U.S. foreign policy, starting around the time of the invasion of Iraq, and a growing economic challenger in China are two more reasons. (Analyst Comment: Many rightly worry about the domestic effects of the loss of the dollar’s supremacy. At the end of World War II, when the U.S. dollar overtook the British pound as the world’s reserve currency, the Pound lost around 37 percent of its value versus the dollar in a little over three decades. Right now, the dollar accounts for about 62 percent of world reserves, down from about 70 percent ten years ago. Just like foreign countries moved away from the GPB to the USD, we now run the same long term risk as demand for dollars falls.)

 

Economic/Financial Watch

For what it’s worth, three GDP-forecasting models are consistent in their results that 2018’s Q4 annualized growth rate will come in at the range of 2.4 percent (Oxford Economics), 2.48 percent (New York Federal Reserve), 2.6 percent (Bloomberg Consensus), and 2.7 percent (Atlanta Federal Reserve’s GDPNow). Bloomberg Consensus has downgraded its forecast for 2019 Q1 to 2.16 percent, which is expected and is likely to go lower. The general feeling among financial analysts is that 2019 will see an economic slowdown, but remain well short of a recession. [18 Jan]

China’s chief negotiator Liu He is headed to Washington later this month to discuss an end to the trade war. The consensus among watchers is that the two sides are more likely to strike a deal than not. As the Chinese economy slows, and both imports and exports are dropping, China’s Xi Jinping is probably eager to bring an end to the war. (The Chinese central bank just ‘printed’ a record $84 billion, or 570bn renminbi, to boost lending and liquidity, and stave off the economic slowdown.) As I’ve mentioned before, an end to the trade war would be a positive step for the economy, markets, and U.S. farmers, especially; but enforcement of new rules is another issue entirely. (Kind of like how some Chinese corporations continue to trade with North Korea, despite international sanctions.) I hate to beat a dead horse but here’s the bottom line: China’s economy is partially predicated on $300-600 billion of intellectual property theft from the U.S. each year, and substantial changes are probably not an option for the Chinese Communist Party now that its own economy is on the rocks. Something tells me that a grand bargain with China will include some smoke and mirrors. [17 Jan]

On another note, embattled Huawei remains a sticking point. The news this morning is that U.S. authorities may soon indict the Chinese tech firm for allegedly stealing trade secrets from T-Mobile and other U.S. companies. Until the entire world works toward isolating China, their private corporations, and their state-owned enterprises for their bad behavior, this widespread economic and industrial espionage won’t end until there’s nothing of value left to steal. [17 Jan]

For a change of news, the Chief Investment Officer of Oppenheimer Funds was on CNBC on Monday and said that he doesn’t foresee a recession for the next five years. “There’s no recession imminent. I think five more years is what we’re talking about.” [16 Jan]

Out today: Earnings reports for JP Morgan Chase and Wells Fargo. These numbers are largely seen as a barometer of corporate and economic health. JP Morgan reported a rise in profits but missed earnings expectations. Wells Fargo numbers weren’t published at the time of this report. [15 Jan]

In a recent panel discussion, DoubleLine Capital’s Jeff Gundlach repeated calls that U.S. economic growth is artificial. “I’m not looking for a terrible economy [in 2019], but an artificially strong one, due to stimulus spending. We have floated incremental debt when we should be doing the opposite if the economy is so strong.” [source] [15 Jan]

We’re officially in corporate earnings season and are about to see how U.S. corporations fared in the last quarter. By Wednesday, we should hear from major banks and financial institutions, including Citibank (today), JPMorgan Chase, Wells Fargo, Bank of America, BlackRock, and Goldman Sachs. Higher-than-expected earnings may ward off some recession talk, while poor earnings will drive recession fears. (UPDATE: Citigroup misses revenue expectations but beats earnings expectations.) [14 Jan]

Finally. New data from China shows some real cracks forming in their trade battle with President Trump. December imports dropped 7.7 percent and exports dropped 4.4 percent (year over year), putting more pressure on Chinese president Xi Jinping to cut a deal to stop the trade war. Analysts were surprised because they expected a 2.0 percent increase in exports and 4.5 percent increase in imports. The latest numbers show that not only are the Trump tariffs hurting Chinese exports, but also that Chinese domestic demand is weakening, evidenced by falling imports. [14 Jan]

 

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.

 

// END REPORT

S.C.

Samuel Culper 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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