National Intelligence Bulletin for 19 April 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

  • Colorado becomes 15th state to pass “red flag” gun laws
  • Hatzius: Trump favorite to win 2020
  • Mueller report fallout: what’s next
  • More on the American political realignment
  • Far Left Roll-Up
  • Economic Financial Watch

 

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?

Colorado becomes 15th state to pass “red flag” gun laws

Last Friday, Colorado passed a “red flag” gun law, which states that a gun owner’s firearms may be temporarily confiscated if law enforcement or family members suspect that the gun owner is a threat to himself or society. Over half the state’s county sheriffs lobbied against the law, which is set to be enacted on 01 January, 2020; and at least 11 county sheriffs have said they will go to jail before they enforce the law. (Analyst Comment: This represents a significant point of contention in 2020 and beyond. Oregon, Washington, California, Illinois, Indiana, Florida, Maryland, Vermont, New Jersey, New York, Rhode Island, Massachusetts, and Connecticut have similar laws. My concern going forward is that once Democrats get back into power in D.C., gun rights activists and new restrictions will again take center stage in the culture war, setting up potentially violent encounters over how these laws are enforced.)

Hatzius: Trump favorite to win 2020

Goldman Sachs chief economist Jan Hatzius predicts that the 2020 general election will be a “close call”, but adds that “President Trump is more likely to win a second term than the eventual Democratic candidate is to defeat him.” (Analyst Comment: The prevailing wisdom says that Trump is the favorite in 2020 right now.

Mueller report fallout: what’s next

Now that the redacted Mueller report has been released to the public, we’ve find out just how serious House Democrats are about pursuing impeachment. Yesterday, House Majority Leader Steny Hoyer (D-MD) said, “Based on what we have seen to date, going forward on impeachment is not worthwhile at this point. Very frankly, there is an election in 18 months and the American people will make a judgement.”

And House Speaker Nancy Pelosi (D-CA) maintains that she’ll avoid impeachment talks unless they have bi-partisan support, which is to say impeachment looks very unlikely over what we know now. Even House Judiciary Committee chairman Jerry Nadler (D-NY) said that it’s “too early to reach those [impeachment] conclusions.”

(Mia Culpa: I thought that Mueller would make a case for obstruction of justice. Last year, I said that, based on those findings, Democrats would ‘almost certainly’ pursue impeachment. I was surprised to read that even through ten ‘episodes’ of attempted obstruction, Mueller did not arrive at a conclusion; especially since Trump clearly intended to end the Russia investigation.)

My major takeaway from this is further proof that officials in the Trump administration seem to often ignore his orders and demands. Mueller pointed to several instances in which President Trump ordered officials to end the investigation, none of whom complied. Mueller described these instances as the reasons why he couldn’t arrive at a conclusion on obstruction, because there may not have been any clear obstruction. Pundits jumped on this, saying that an attempt to obstruct was still a crime, regardless of outcome. That’s something that Congress will take up.

House Democrats announced they’ll be issuing subpoenas for both special counsel Mueller and Attorney General Bill Barr to testify before House committees. Like we find out on Groundhog Day, expect to have six more weeks of Mueller.

ADDENDUM: Lastly, you should know more about the Trump ‘f–ked’ comment. Here’s the quote from the Mueller report, in which President Trump complains to then-attorney general Jeff Sessions: “Oh my God. This is terrible. This is the end of my Presidency. I’m f–ked.” CNN ran with the quote, which at least two pundits described as implying admission of guilt… but they completely removed the second part of this exchange which makes the first part clear:

“Everyone tells me that if you get one of these independent counsels it ruins your presidency. It takes years and years and I won’t be able to do anything. This is the worst thing that has ever happened to me.” Trump is clearly not admitting collusion guilt in the first comment when we add in the rest of the quote for context.

More on the American political realignment

Over the past several months, I’ve dedicated a fair amount of space to the what’s likely a generational political realignment. My concern is that the Great Recession heavily affected the Millennial generation, and the next recession, or period of financial and/or economic turmoil, will affect Generation Z. As I wrote in December 2018:

Like Millennials, Generation Z are likely to experience a bottleneck in their formative economic years that will negatively impact their lifetime earnings, which will lower their lifetime savings and investments. We’ve seen the data on Millennials’ economic setbacks due to the 2008 financial crisis, and Generation Z could very well experience those effects themselves. Nearly a decade of near-zero interest rates and middling economic strength (until recently) have lead to lower rates of savings and asset ownership than in previous generations. The average Millennial has orders of magnitude more debt than savings or assets.

Both generations are more liberal than previous generations, and economic hardship is likely to push them to greater support of social welfare policies. In fact, each generation since at least the Silent Generation is more liberal than the last. This is simply a generational realignment, until the next generational realignment swings back to the Right, if or when that happens.

Last week, Washington Monthly contributor and noted Leftist David Atkins had a thread on what he sees shaping up. In summary, he writes, “The right still harbors this fantasy that they have a silent majority being overwhelmed by illegally voting immigrants. The reality is they have an overrepresented shrinking minority of old white racists with lots of gerrymandering/electoral college affirmative action. Unless [Republicans] institute an authoritarian fascism, these folks have already lost [the political majority] without a single new immigrant ever coming into the country.” [source]

Atkins is writing about what is likely the coming political realignment. I’ve pointed out the racial aspects before: whites are split about 50/50 between leaning liberal and leaning conservative. As whites are set to become a majority-minority within the next 25 years, the overall number of white conservatives — a majority of the Republican Party — will also decline, while the Democratic Party will likely increase in numbers. Unless the Republican Party can begin converting minorities in greater numbers, the Republican Party — and more specifically the conservative base — is likely to dwindle to the point that they’re no longer nationally competitive. That will relegate the Republican Party to a regional party, which is likely to be a driver of Balkanization, if that’s to occur. Throughout U.S. history, political parties have come and gone (Federalist, Whig, Bull Moose, etc.) as the nation has changed. The current modern political era will be no exception. This is a matter of when, not if.

UCP interdicts 200 migrants on New Mexico border

United Constitutional Patriots, a militia actively patrolling the US-Mexico border, interdicted some 200 illegal aliens this week before releasing them to Border Patrol. The American Civil Liberties Union (ACLU) is encouraging the New Mexico governor and attorney general to investigate the group. Officials from New Mexico say that border vigilante groups “should not attempt to exercise authority reserved for law enforcement.” In other news, the next migrant caravan has reached 10,000 people and is currently located in southern Mexico, according to Mexican news outlets.

 

Far Left Roll-Up

Over the weekend, CBS released a promo for the latest season of a show called “The Good Fight.” In it, a black man is walking through what appears to be a riot and says:

“Is it alright to hit a Nazi unprovoked? I was always taught to never throw the first punch, never instigate. You can defend but don’t attack. But then I saw a video of the white nationalist Richard Spencer being punched in the face during an interview and I realized Spencer was in a pressed suit, wearing a tie, being interviewed like his opinion mattered, like it should be considered part of the conversation, like neo-Nazism was just one political point of view. And then I realized there’s no better way to show some speech is not equal. Some speech requires a more visceral response. It’s like Overton’s Window. That’s the term from which ideas are tolerated in public discourse. Well, Overton’s Window doesn’t mean sh*t unless it comes with some enforcement. So, yeah, this is enforcement. It’s time to punch a few Nazis.”

[Analyst Comment: The promo is problematic because the term “Nazi” is used so loosely by the Left. The term “Nazi” has been applied to mainstream conservatives who are in no way affiliated with Nazism, but who merely hold an opposing political point of view. The video is clearly promoting political violence as CBS tries to do some shifting of Overton’s Window themselves. CBS later deleted the video, but you can watch it here. (Fair Warning: This link goes to the Twitter account of a white nationalist, and the comments there are typical of what you’d find in those circles.)]

House Speaker Nancy Pelosi chided “democratic socialists” during a 60 Minutes interview, saying that socialism is “not the view” of the Democratic Party. “I do reject socialism as an economic system. If people have that view, that’s their view. That is not the view of the Democratic Party.” Pelosi maintained that the way forward for Democrats was in the mainstream, adding that “we have to hold the center” for upcoming elections. [source] (Analyst Comment: Pelosi is trying to stem the level of influence that socialists have in the Democratic Party, and she likely fears that the often extreme and ill-advised comments made by the socialists are hurting Democrats’ chances in 2020.)

“I think ‘Abolish ICE’ is a call to action on several levels. One is the literal interpretation of all abolishing ICE, which I support…I don’t believe that an agency that systematically & repeatedly violates human rights — I don’t think that agency can be reformed.” – Rep. Alexandria Ocasio-Cortez (D-NY)

“Honestly I’ve never felt more Palestinian than I ever felt in Congress… I’m more Palestinian in the halls of Congress than I am anywhere in the country, in the world. And that just tells you just the fact that they weren’t ready for us. They really weren’t.” – Rep. Rashida Tlaib (D-MI)

“White people. Nobody likes giving up power. And they never see the writing on the wall. The new day arrives and no one has the heart to tell them they and their old tired privileged ways are over.” – Michael Moore

“The larger problem of which our criminal justice system is just a part, is the very racist foundation of this country, the fact that the wealth of the USA…was built literally on the backs of those kidnapped in their home countries, transported in the middle passage.”- Robert Francis “Beto” O’Rourke

“We come from a broken family, we are a little unsettled. Sometimes you spend the weekend with divorced dad. That feels like fun but then you get sick. That is what America is going through. We are living with divorced dad.” — Michelle Obama, saying that President Trump is “divorced dad”

“We won this election, it wasn’t in districts like mine, or Alexandria’s… But those are districts that are solidly Democratic — this glass of water would win with a D next to its name in those districts.” – House Speaker Nancy Pelosi (D-CA)

“Apparently it’s not criminal to help foreign agents carry out their plans to disrupt an election. I wish instead of just relitigating the past we would spend some time crafting laws to prevent this in the future.” – Robby Mook, former Hillary Clinton campaign manager

“You know, there’s so many movements that we’re all part of. It won’t take us getting them information from the subpoena only. You know what it’s going to take? Movements outside of the halls of Congress, movements outside of [the] White House… I want you all to shut [ICE] down. We can shut them down. Don’t wait for this Congress to act. Shut ’em down.” – Rep. Rashida Tlaib (D-MI)


 

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

Economic/Financial Watch

Commercial real estate continues to suffer from an acceleration of store closures. This year alone, nearly 6,000 brick and mortar stores have closed, compared to 5,864 in all of 2018. Store closings continue to outpace store openings by 3,353 this year. (Analyst Comment: From a local perspective, consider the potential impact of economic blight in retail-heavy areas, not only as more retail shopping shifts online, but also as financial troubles emerge for shopping malls and other retail complexes during a potential 2020 or 2021 recession.)

In an interview with Maria Bartiromo (Fox Business) on Thursday, JP Morgan Chase CEO Jamie Dimon said of the US economy: “It seems it’s just a little slowdown. Other than trade, I’m not sure what’s going to stop it in the next year or two. There’s no law that says we won’t have growth for another couple years.”

Laurie Logan, an official from the New York Federal Reserve, warned on Wednesday that the Fed would likely have to expand its balance sheet to manage interest rates. While pointing out that bank reserves were healthy now, she added that, in the future, the “[U.S. Treasury] purchases will need to be larger than similar pre-crisis operations,” she said. [source] (Analyst Comment: For those scratching your heads, this means that the Fed’s previous plan to wind down their balance sheet — quantitative tightening — is officially over, and quantitative easing is back. In fact, quantitative easing, the policy of flushing the economy with cash to spur economic growth, is now expected become a permanent policy.)

Proof of the startup bubble? The Economist (magazine) takes aim at unicorns this week: “[A] dozen unicorns that have listed [initial public offerings], or are likely to, posted combined losses of $14bn last year. Their cumulative losses are $47bn.” [source] One central question is ‘How can “unicorns” — startups valued at $1bn or more — continue to lose so much money?’ This process is often referred to as “blitz-scaling,” wherein companies spend as much money as possible to scale very rapidly. They’re focused on attracting customers and growing top line revenues, as opposed to turning a profit. Through blitz-scaling, companies are able to develop million dollar revenues in a matter of months, instead of years (the old-fashioned way), and can then focus on becoming profitable. But how much longer will this model be sustainable?

Marketing and business guru Gary Vaynerchuk recently used a keynote speech to address what he sees as the core problem: many startups are grossly overvalued. During the next recession, he says, these massive startups won’t be able to secure bridge loans at their current valuations, and many will go bankrupt as a result. And I share Gary’s concerns that today’s venture capital climate is a result of easy money policies, low interest rates, and economic growth. Turn off the economic growth and the scheme eventually fails. Do we have a startup bubble? Yes, I believe so and I expect it to be every bit as painful for many startups as the Dot Com bubble.

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.

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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