5 AUG 16 – Executive Intelligence Summary 🔒

EXECUTIVE INTELLIGENCE SUMMARY – 05 August 16

[wcm_nonmember]In this EXSUM…

  • Implications of voter ID laws
  • Cybersecurity in November’s elections
  • Russia showing signs of deescalation?
  • Black Lives Matter releases policy platform
  • And more…

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Analyst Comment: It’s time that we set aside EMPs, nuclear war, and overnight economic collapse for a second, and realize that, no matter who wins this election, we’re going to get our first taste of SHTF this year.  Should Hillary win, we should dig in for at least another eight years of Obama’s progressive policies writ large on the political landscape of the nation.  While most liberals and some (#NeverTrump) conservatives breathe a collective sigh of relief, I do believe that the end is in sight for this nation as we know it.  Obama set the new standard for power in the Executive Branch and, using those powers and given the opportunity, Hillary is going to turn the nation into a full-blown socialist state.  Hillary will finish Obama’s fundamental transformation.  And as for getting us into World War III, the next president faces the worst of the 2011 Budget Control Act, which has pared down military spending, and I don’t know where she’s going to get the money for it.  Meanwhile, if Trump is elected, I think we should prepare for one of the toughest economic times since Carter, if not the Great Depression, because Wall Street thinks that Trump’s going to start a trade war with China.  During the last recession, the “Bernanke put” propped up the US and global markets because then-Federal Reserve Chairman Ben Bernanke understood that the psychology of investors determined whether or not the wheels stayed on the tracks.  As long as the market was up, investors and middle-America was happy.  But with what economists are referring to as Trump’s isolationist and protectionist economic plan (whether it is or not), I think we’re staring economic contraction in the face.  In all fairness, it might not matter if Hillary is elected, either.  And I’m not stating a political case here; just laying out some of the trends that I see and how I think the future is likely to unfold.

One last thing to consider… every four years we’re reminded that a Republican president has never been elected without winning Ohio.  Until Thursday, Trump’s been running an abnormally small staff there, in a state with the very unfriendly John Kasich as governor.  As of Friday morning, despite Trump having put both feet in his own mouth this week, Clinton leads by only 0.8 points.  It’s the state to keep an eye on.

 

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? (Russia, China, Middle East)

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?

Voter identification laws & Election 2016

In the past two weeks, five courts have issued five rulings that strike down voter ID laws in five states, just three months before the general election.  Those states include Texas, Kansas, North Dakota, Wisconsin and North Carolina.  For Texas, it should be obvious: an objective of the Obama administration has been to turn the state purple, if not blue, through unlimited immigration.  With the second-most electoral votes (38) behind California (55), Texas has been reliably conservative and has played a substantial role in putting Republicans into the Oval Office.  Texas is strategically important because a Republican who can’t win Texas is not likely to win the presidency.  And that’s why we can expect continued pushes to dilute the electorate here until Texas is blue.  Should Hillary Clinton win and she’s able to pass a “path to citizenship” bill then Texas is going to have a major problem with being slowly turned.  I think that’s as good a case as any for the burgeoning secession movement.  But if the Clintons do turn Texas, then I think it’s a few generations before we see a Republican president, if the Republican Party even lasts that long.  As Texas goes, so goes the Republican Party.

Wisconsin (10) and North Carolina (15) are election year swing states, and both are important achievements towards 270 electoral votes.  In the Wisconsin ruling, the judge scoffed at the GOP’s “preoccupation with mostly phantom election fraud”.  In the North Carolina case, the judge also mocked concerns over voting fraud, saying that the voter ID laws “impose cures for problems that did not exist.”  In all five cases, the judges warned that voter ID laws disenfranchise minorities, particularly African Americans.  (The North Dakota case was more concerned about Native Americans.)

In October 2015, and again in February 2016, Barrack Obama said he believes that Trump won’t be president.  Given the largely uncorrected cases of voter fraud in the previous two general elections, I’m willing to take Obama at his word this time.  For eight years, Obama has built a castle in the Executive.  I don’t expect him to sign over the gate guards to Trump.

 

Cybersecurity & Election 2016

This week, DHS Secretary Jeh Johnson said, “We are actively thinking about election cybersecurity right now.”  Three months before the election, and DHS is “thinking” and “holding talks” about election cybersecurity.  Johnson admitted that he had not yet approached the States and their 9,000 polling centers about implementing best security practices.  Speaking about cybersecurity and the election, the White House Press Secretary said Wednesday, “There are risks out there, but I think the American people can have quite a bit of confidence in our ability to mitigate those risks.”

Election hacking is a significant vulnerability and one with such strategic consequences.  As a strategic target, I place a wide scale cyber attack against the election process in nearly the same realm as a nuclear attack: you can’t hide your attribution and even if your attack is successful, you’ve just started World War III.  But in an EXSUM from earlier this year, I talked about ‘data integrity’, and the risk that a foreign intelligence service, rather than steal data, just modifies it in place. That could be one of the risks we face.

As we examine Putin’s actions over the past two years, he’s been very good at exploiting Obama’s weakness to the point that a response is necessary, but it’s nothing to start a war over.  (Little, if any, of this would be happening were Obama not so weak and America in such a poor position to respond.)  While the US is fighting two wars in 2008, Putin intervenes in NATO-hopeful Georgia’s conflict in breakaway South Ossetia.  In 2014, Putin catches Obama by surprise and annexes Crimea.  Nearly a year ago, Putin does the unthinkable and starts bombing US “allies” in Syria.  And this year, Russia has been responsible for several US cyber intrusions, one of which gave the DNC a shiner.  In my opinion, small cases of tampering with the US election, which would be harder to prove, might not be out of the question for Putin, as he presses the buttons that carry no risk of grave consequence.

And in the interest of fairness, Russia does have a history of influencing elections.  Most of it’s done through campaign support and air time on pro-Russian television stations and websites in Europe, however, in 2014 Russia allegedly planned to hack Ukrainian elections.  Ukraine’s security service, SBU, discovered malware on servers that hosted the election data, placed there by a Russian hacking group. According to the Kyiv Post, SBU later arrested a group of hackers in Kyiv who had ‘specialized equipment’.  The SBU maintains that the Russian group’s intent was to manipulate election data to promote a pro-Russian candidate.

My overall prognosis is that, like many of the 16 sectors of critical infrastructure, our election process is very vulnerable.  We can expect cases of voter fraud this November.  That’s a probability of 100%.  But a Russian attempt to hack the US elections, given the gravity of the action, right now I would say it’s unlikely, but very, very possible.  We may face a greater cybersecurity risk from political activists.


 

PIR2: What are the current indicators of an outbreak of global conflict? (Russia, China, Middle East)

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.

 

Russia

This week, the Russian defense minister noted that their navy was expanding as scheduled throughout the rest of 2016, which is significant because it did not meet its production objectives for last year.  But by far the most important news to come out of Russia this week is that it appears Russian leaders are trying to open a dialogue with NATO and, more directly, some of its members.  The Defense Ministry said this week that it was open to holding talks with NATO and Scandinavian countries, and wanted to start “consultations with the defense departments of Latvia, Lithuania, Estonia, Poland, Sweden and Finland” over military exercises in the region.  Should NATO members choose to participate, those meetings are expected to begin in Moscow this September.  There was no detail given about the desired outcome of the meetings, other than to ensure that a war isn’t started due to the exercises.  Lastly, Russia is re-opening mid-level government contacts in Latvia, which is home to a sizeable number of ethnic Russians along its eastern border.  The Kremlin previously accused the Latvian government of disenfranchising Russian voters there.

 

China

China continued their rhetoric this week against US intervention in the South China Sea.  The Chinese defense minister called on the People’s Liberation Army, Navy, and Air Force to be ready to go to war in defense of its territory, calling it “a people’s war at sea.”  And Chinese media outlets have beating the war drums, seemingly to rile up the Chinese military against US intervention.  And China’s Global Times warned this week that, “If Australia steps into the South China Sea waters, it will be an ideal target for China to warn and strike.”

Last month, the UN ruled against China’s territorial claims in the South China Sea, although the ruling is essentially unenforceable short of war.  Since then, the US Navy has stepped up its presence in the region to ensure freedom of navigation, as China is well-known to bully its much smaller neighbors.  The situation feels stable but fragile right now.  US policy is to keep a naval presence in the area and remain undeterred against Chinese threats, essentially putting the proverbial ball in China’s court.  The US has to show its Asian allies that freedom of navigation will be upheld, however, what China does from here is yet to be determined.  It’s difficult to see them starting a war that they might lose, but China likely sees the US Navy as being stretched too thin to win a quick, decisive conflict.  That opens up the window for China to start and win a quick, decisive conflict of their own before additional help arrives.  What’s most likely is that China continues to pick on its neighbors, namely its favorite targets in Vietnam and the Philippines, by denying area access to fishing boats.  Vietnamese and Filipino fishing boats are easy punching bags for China, especially when they encourage both countries to pursue these problems in the Chinese court system.  And lastly, this week the Japanese Defense Ministry said that their air force set a new record as they scrambled 199 fighter jets to deal with Chinese airspace incursions between April and June.  China has a growing confidence in their advancing military — much like Putin’s confidence in his military — which leads to pushing the envelope in the region.

 

North Korea

On Wednesday, North Korea fired two intercontinental ballistic missiles (ICBM), violating an unenforceable UN resolution.  US Strategic Command reported that one missile exploded shortly after launch, and the other landed in Japan’s exclusive economic zone in the Sea of Japan.  It’s likely that the launches were intended to intimidate and frustrate their neighbors, as is often the case with North Korean military activity.

Meanwhile the Terminal High Altitude Area Defense (THAAD) missile system is still on track to deploy to South Korea, despite protests from some South Koreans fearing economic reprisal from China.  Others in the region — namely China and Russia — are concerned over the US missile deployment because the THAAD’s X-band radar capability is able to track aircraft all across China and southeastern Russia.  And there are some questions about whether or not the THAAD could actually serve its purpose of defending the South against North Korean missile attacks.  North Korean missiles that might be launched against the South have a 20-30km flying altitude, which is lower than the THAAD’s 40-150km interception altitude (hence it’s name, High Altitude Area Defense).  The decision to deploy a THAAD missile system came after North Korea tested a nuclear weapon earlier this year.

 

European Civil War

After Brexit and a host of terror attacks, some European leaders are warning that the European Union will eventually break up, and European nations could wind up in civil wars, either against themselves or Muslim populations.  France, for instance, has had 14 terror attacks in the past two years, resulting in over 800 casualties (240 killed, 600 injured).  On Thursday, French President Hollande created the French National Guard to help respond to terror attacks.  The force of 15,000 reserve soldiers will be available this summer to deal with attacks.  And German Chancellor Angel Merkel echoed a similar desire to curb terrorism when she warned that: “Tens of thousands of people of fighting age who haven’t been properly registered are in our country. Of many of them, the state neither knows their proper name, nor their right age, nor their current place of residence.”  Merkel also admitted that Germany was now in “a struggle, or a war, if you like” with the Islamic State.

The situation in Germany, France, the UK, Sweden and much of Europe is dire.  The people are losing faith in their leaders to protect Europe from terror attacks while their government continues to import Islamic immigrants by the tens of thousands.  The next French presidential election is the spring of 2017, followed by the German federal elections in the fall.  Given that Hollande and Merkel have both enabled Islamic terror in Europe by being refugee- and immigrant-friendly, and they both are losing support of members of their own parties, we may see Europe continue to turn to the right next year.  If leaders buckle down on Muslim populations, then Europe likely faces igniting additional resentment which will increase radicalization, which will lead to more terror attacks that could spiral into a civil war.


 

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

Black Lives Matter lays out policy platform

Trying to put to rest the question that most Americans have — What is it exactly that Black Lives Matter wants? — the movement released their six core policy issues this week.  I very painstakingly took the time to read over the entire platform for you. Here’s a summary of its six policy objectives:

  1. “End the War on Black People”: End over-criminalization of black youth, shut down prisons and detention centers, get police out of the schools, and use the money from disciplinary practices to fund restorative services.  Demilitarize the police and bring an end to any way that violence can ever be perpetrated against blacks.  (They even call for the removal of police body cameras.)
  2. Reparations: Provide (1) free access to public and community colleges, along with vocational training, for life; (2) a guaranteed minimal livable income for blacks; and (3) presumably cash payments for the exploitation of black communities. (The platform doesn’t mention the word “cash” or “direct payments” with regard to benefits; instead, it uses the term “reparations” with little specificity as to what that actually is.)
  3. Investment & divestment: Divest money and control from prisons, police, and fossil fuels, and invest that money in the health and safety of black communities, as determined by black communities.  Provide universal healthcare for blacks.  Cut military spending and use that money to invest in critical infrastructure projects in black communities.
  4. Economic justice: “[E]nsure a radical and sustainable redistribution of wealth” by (1) restructuring tax codes, (2) getting blacks into federal and state jobs programs, (3) ending the Trans-Pacific Partnership, (4) overturning the Glass-Stegall Act and breaking up the big banks, (5) providing financial support to black institutions, and (6) provide protection for black workers.
  5. Community control: End private education because it takes away the best teachers from public schools.  Provide equal funding for black schools, and return “democratic control” to black communities, so they can determine and control education policies at the local level.
  6. Political power: Release all political prisoners of black political parties, and end super political action committees (PACs).  Enact universal voter registration and voting day holidays, and allow undocumented and incarcerated people to vote.  Enact net neutrality and ensure universal access to the internet.  Increase funding to historically black colleges, black cultural and media outlets, and black social and political institutions.

 


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

Money managers: buy gold and land

The artist Christopher Wool has a word painting, ‘Sell the house, sell the car, sell the kids.’ That’s exactly how I feel – sell everything. Nothing here looks good,” said Doubleline Capital CEO Jeffrey Gundlach, who manages over $100 billion in investments.  “The stock markets should be down massively but investors seem to have been hypnotized that nothing can go wrong.”

And revered investor, Bill Gross, who founded and formerly lead PIMCO, the world’s largest bond asset management firm, said, “I don’t like bonds; I don’t like most stocks; I don’t like private equity. Real assets such as land, gold, and… equipment at a discount are favored asset categories.”  He continues: “Banks, insurance companies, pension funds and Mom and Pop on Main Street are stripped of their ability to pay for future debts and retirement benefits [with continued low interest rates].  Central banks seem oblivious to this dark side of low interest rates. If maintained for too long, the real economy itself is affected as expected income fails to materialize and investment spending stagnates.”

 

Goldman: Stay away from stocks

In a note to investors on Sunday, a Goldman Sachs investment strategist warned that stocks could dip ten percent in the next three months, and suggested that investors lock in gains by selling now.  In the note, Goldman remained neutral overall on stocks for the next twelve months, warning that uncertainty would contribute to market volatility.  A Goldman note from June warned that the market looked fragile.

 

European banks signal trouble ahead

The European banking crisis may be taking a breather, but it’s not over yet.  As of Wednesday, the stock market value of Europe’s major banks is only 70% of its book value, meaning that investors sense a disconnect between the current purported value of the banks and the value after they write off their losses for the year.  And if what US banks did during the last banking crisis is any indicator, European banks are likely inflating the value of their holdings, which also means inflated book values.  If investors are correct, that could mean (right now) a 30% loss, which will further dampen the European market and economic outlook.  I still think that we’ll see the European economies collapse before our own, so this is an indicator of potentially the next leg down for Europe.


Appendix:

EMP: Electromagnetic Pulse

EU: European Union

ICBM: Intercontinental Ballistic Missiles

NATO: North Atlantic Treaty Organization

THAAD: Terminal High Altitude Area Defense

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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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2 Comments

  1. “If leaders buckle down on Muslim populations, then Europe likely faces igniting additional resentment which will increase radicalization, which will lead to more terror attacks that could spiral into a civil war.” Yup. A middle eastern blogger thinks that the Moslem extremists are trying for this. They’re the experts at pressing people’s fear buttons. And it looks like they’re succeeding.

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