The First Refugee Resettlement Program, Medina

Posted on February 12, 2016February 12, 2016 by Denise Simon

Medina—The First Muslim Refugee Resettlement Program

Kilpatrick ~CrisisMagazine: With all the talk about the Syrian refugees, one point is often overlooked. Much of the debate focuses on the question of whether or not the refugees can be reliably vetted. If they can be certified as one hundred percent terrorist-free, then, presumably, the resettlement can safely proceed.

But even if every terrorist could be excluded from the ranks of the refugees, a problem would remain. Many analysts are concerned that the resettlement program might facilitate the growth of terrorist-tolerant communities in America. By “terrorist-tolerant” I don’t mean that its members are thinking every minute about what they can do to support jihad, but rather that they have come to take for granted things that aren’t assumed in other societies.

Terror, for instance. Nonie Darwish, a former Muslim who grew up in Egypt, puts it this way:

One of the reasons that the so-called moderate Muslims have become irrelevant … is that over the centuries they have become tolerant of Islamic terrorism and considered it as part of normal life.

“Life under Sharia itself is a life under terror,” observes Darwish. And that daily low-level terrorism accustoms Muslims to view it as something “like a natural disaster or part of life that must be tolerated.”

So, although a Syrian refugee may have no personal taste for terror, he can be surprisingly tolerant of it. A 2007 public opinion poll of Syrians revealed that 75 percent of those polled supported financial aid for Hamas, Islamic Jihad, Hezbollah, and “Iraqi fighters” (at that time, mostly al-Qaeda). Need it be mentioned that all these groups are designated as terrorist organizations by the U.S. government? A more recent poll of 1,365 Syrians found that one out of five considered ISIS to be a positive influence on the country. And living in the West doesn’t seem to change these attitudes. A 2014 opinion poll showed that 27 percent of the French population in the 18-24-year-old demographic supported ISIS. Assuming a random sample, and assuming that the majority of pro-ISIS respondents were Muslim, that would mean that the vast majority of young French Muslims support ISIS.

That kind of supportive environment is a factor that’s often overlooked in the debate over Syrian refugees. As defenders of the resettlement program like to point out, terrorists can get into the U.S. by other means than by mingling with refugees. But once here, they need a network to support them and give them cover. And the network itself can only function if the larger community is willing to look the other way.

Europe is now dotted with such networks—in the Paris suburbs, in the Brussels borough of Molenbeek, in the Neukölln district of Berlin, and in numerous other places. There is evidence that similar networks already exist in nascent form in the U.S. Beyond the question of whether terrorists will mix in with refugees lies a larger question about the refugee resettlement program. Will it contribute to a strengthening of our society, or will it lead instead to the strengthening and expansion of terror-supportive networks?

Whether or not a particular group of refugees has been infiltrated by ISIS, there remains the fact that many refugees subscribe to the same general worldview held by members of the Islamic State. After all, they’ve been steeped in the same cultural-religious milieu that produced the terrorists. Many of them will take it for granted that Islam is the supreme religion, that Muhammad was the perfect man, and that Jews and Christians are unclean. They may be averse to committing violence, but they may find it perfectly understandable if other Muslims resort to violence in order to avenge a real or perceived insult to Islam. Although that mindset is alien to us, it shouldn’t be incomprehensible. At the time that a death fatwa was issued against the author Salman Rushdie, I remember talking with several Catholics who felt quite sympathetic to the Ayatollah Khomeini (who issued the fatwa), and rather unsympathetic to Rushdie and his “blasphemous” attitude toward religion.

Given their cultural background, it’s reasonable to expect that Sunni Muslim refugees will bring with them a set of beliefs and attitudes conducive to the incubation of terrorism. Even if there were a foolproof method for excluding active terrorists from their midst, there is no way of vetting for future terrorists—young Muslims who at some point in their development decide that ISIS or some similar movement is the logical conclusion of all they have been taught.

This “conversion” to radical Islam can come quite suddenly. Mohamed Abdelslam, the brother of two of the Paris terrorists, told reporters that his brothers began to change roughly six months before the attack, when they, “stopped drinking and started praying.” Likewise, the radicalization of Mohammod Youssuf Abdulazeez, the Chattanooga jihadist who killed five servicemen, could not easily have been forecast. To his classmates and teachers, he seemed like a normal American boy, and if he had problems, they were of the normal young American male variety—pot-smoking, heavy drinking, and fast driving. Unlike other young Americans, however, he would have been exposed—either at home or on Islamist websites—to the belief that one can wipe out one’s sins by an act of martyrdom.

This “sudden conversion syndrome” to more radical forms of Islam is increasingly common among Muslim youth. But, as I said, it’s not easy to predict. If you’re a government official whose job it is to vet refugees, how can you know if the smiling fourteen-year-old boy standing in front of you and surrounded by his polite and pleasant family is going to go radical three years down the line?

Absent other information and unfair as it may seem, his family’s culture has to be taken into account. To some extent, we are all creatures of our culture, and Islamic cultures seem to produce a disproportionate number of terrorists. Contemporary Western culture, on the other hand, seems to produce a disproportionate number of naïve egocentrics who are incapable of imagining that other cultures may be radically different from their own. Their tendency is to automatically project their own values and attitudes on to all they see.

But, as should now be clear to anyone willing to look, Islamic culture is not simply a colorful variation of our own. In those places where traditional Islam is the governing principle—whether in the Islamic State, or in parts of Pakistan, Indonesia, or Nigeria—the same disdain for non-Muslims and their religions can be found. This attitude is common not just among terrorists, but also among ordinary Muslims. By all accounts, the fifteen Muslim migrants who threw twelve Christians overboard during a Mediterranean crossing were not terrorists, they were simply Muslims who took offense when some of the Christians began to pray. Some of the Muslims who attacked Christians in European refugee camps appear to have been members of ISIS, but others were not. Blind to the differences in culture, European officials initially put Christian and Muslim migrants together in the same camps. With a bit more cultural awareness under their belts, they came to the politically incorrect conclusion that the two groups had to be housed separately. A less violent example of Islamic contempt for other cultures was provided by the Turkish soccer fans who booed and chanted when, during a Turkish-Greek soccer match, a moment of silence was requested for the victims of the Paris massacre.

As concerns the Syrian refugee crisis, Christians are regularly reminded that the Holy Family were once refugees in Egypt. Yes, but the culture brought into the world by the Holy Family is worlds apart from the one introduced six centuries later by Muhammad.

Let’s not forget that the Holy Family were once refugees. But in regard to the present crisis there’s another and perhaps more appropriate analogy to consider: Muhammad and his followers were also once refugees. He and his group of about 100 men, women, and children had long overstayed their welcome in Mecca. According to Muslim chroniclers, they had to flee in order to avoid persecution. Fortunately for Muhammad, the more “enlightened” citizens of Medina extended an invitation to the Muslims to come and live in their city. It is not recorded whether or not they held up large “welcome refugees” banners as is now the custom at European train stations, but they soon enough experienced the kind of regrets that Europeans are now having. Muhammad gradually acquired wealth and converts, and within a half-dozen years he was the master of Medina. Those Medinans who were not exiled or slaughtered were thoroughly subjugated. Muhammad then used Medina as the launching pad for his conquest of all Arabia. Within a century of his death, his followers had conquered nearly half of the civilized world.

The relevant analogy for our society is not the flight to Egypt, but the flight to Medina and the subsequent colonization of that city by the Muslims. A similar process of cultural conquest by migration is now underway in Europe. Citizens of the United States would be well-advised to monitor the situation over there before embarking on their own ill-considered experiment in welcoming the stranger.

Russians Working at Islamic State Gas Plant

Posted on February 12, 2016February 12, 2016 by Denise Simon

Why Are Russian Engineers Working at an Islamic State-Controlled Gas Plant in Syria?
Moscow says it’s at war with the jihadist group — but both sides aren’t opposed to cutting economic deals amid the bloodshed.

FPM: Officially, Syrian President Bashar al-Assad’s government and his Russian allies are at war against the Islamic State. But a gas facility in northern Syria under the control of the jihadi group is evidence that business links between the Syrian regime and the Islamic State persist. According to Turkish officials and Syrian rebels, it is also the site of cooperation between the Islamic State and a Russian energy company with ties to President Vladimir Putin.

The Tuweinan gas facility, which is located roughly 60 miles southwest of the Islamic State’s de facto capital of Raqqa, is the largest such facility in Syria. It was built by Russian construction company Stroytransgaz, which is owned by billionaire Gennady Timchenko, a close associate of Putin. The company’s link to the Kremlin is well-documented: The U.S. Treasury Department previously sanctioned Stroytransgaz, along with the other Timchenko-owned companies, for engaging in activities “directly linked to Putin” amidst the confrontation over Ukraine.

The story of the controversial plant involves the Assad regime, Russian-Syrian businessmen, the Islamic State, and moderate Syrian groups, which together tried to activate the facility for the financial and logistical benefits it could provide for them.

The Syrian government originally awarded the contract to construct the Tuweinan facility to Stroytransgaz in 2007. The construction utilized a Syrian subcontractor, Hesco, which was owned by Russian-Syrian dual national George Haswani. Last November, the Treasury Department sanctioned Haswani for allegedly brokering oil sales between the Islamic State and the Assad regime, charges he denies.

The partnership between Hesco and Stroytransgaz goes far beyond this one deal. The companies have worked in joint projects in Sudan, Algeria, Iraq, and the UAE since 2000, according to Haswani’s son-in-law, Yusef Arbash, who runs Hesco’s Moscow office.

Construction continued slowly until a coalition of Syrian rebel groups seized the facility in a joint operation with the al Qaeda-affiliated al-Nusra Front in January 2013. Abu Khalid, a member of the Qwais al-Qarani brigade, which was a part of the rebel coalition, said that when they entered the area, Russian engineers and advisors had already fled, leaving Syrian employees behind. “We decided to protect this plant; we thought it is belonging to Syrian people since it was owned by the Syrian state,” he said.
The Islamic State has been in control of the facility since early 2014.

A senior Turkish official said that after its seizure, Stroytransgaz, through its subcontractor Hesco, continued the facility’s construction with the Islamic State’s permission.

Syrian state-run newspaper Tishreen published a report appearing to corroborate this claim. In January 2014, after the facility was captured by the Islamic State, the paper cited Syrian government sources, saying that Stroytransgaz had completed 80 percent of the project and expected to hand over the facility to the regime during the second half of the year. The article didn’t mention that the facility was under the control of the Islamic State.

According to David Butter, an associate fellow at London-based Chatham House, who has seen a letter written by George Haswani explaining the details of the project, the facility’s first phase of production started towards the end of 2014, and it became fully operational during 2015. “Some of the natural gas goes to the Aleppo power station, which operates under the Islamic State’s protection, and the remainder is pumped to Homs and Damascus,” he said.

Abu Khalid said that Russian engineers still work at the facility, and Haswani brokered a deal with the Islamic State and the regime for mutually beneficial gas production from the facility. “IS allowed the Russian company to send engineers and crew in return for a big share in the gas and extortion money,” he said, using an acronym for the Islamic State and attributing the information to Syrian rebel commanders fighting the Islamic State in the area. “Employees of the Russian company were changing their shifts via a military base in Hama governorate.”

Haswani has rejected the Treasury Department’s allegations that he worked as a middle man in oil deals between the Islamic State and the Assad regime. But he has never denied Hesco’s continued work on the gas facility after the Islamic State captured it.

The details of the Tuweinan deal brokered between the Islamic State and Hesco was first reported by the Syrian media collective Raqqa Is Being Slaughtered Silently in October 2014. The group claimed that Hesco signed an agreement with the Islamic State promising to leave a larger chunk of the profit to them. In October 2015, the Financial Times reported that the gas produced in the plant was sent to the Islamic State-held thermal power plant in Aleppo. The deal provides 50 megawatts of electricity for the regime, while the Islamic State receives 70 megawatts of electricity and 300 barrels of condensate. The engineers who worked at the plant told the Financial Times that Hesco also sends the Islamic State roughly $50,000 every month to protect its valuable equipment.

While Syria remains politically fractured, the deal at the Tuweinan gas facility shows that the rival parties are still cutting economic agreements amid the war. Aron Lund, editor of the Carnegie Endowment for International Peace’s website Syria in Crisis, said that similar gas and oil arrangements exist all over Syria. “You have them between the IS and the regime, but also between IS and rival Sunni Arab rebels, between the Kurds and the regime, Kurds and rebels, the rebels and the regime, and so on,” he said. “You have lots of informal trade connections that emerge among armed groups, smugglers, or private business to fill the gaps between the various sides as the country falls apart, while national institutions, infrastructure, and much of the economy will necessarily remain shared.”

Finally Listing ISIS Leaders Terrorists?

Posted on February 12, 2016February 12, 2016 by Denise Simon

Treasury Sanctions Key ISIL Leaders and Facilitators Including a Senior Oil Official
2/11/2016

Treasury Designations Intensify Pressure on ISIL in Advance of Joint Meeting between the Financial Action Task Force and the Counter ISIL Finance Group

WASHINGTON – The U.S. Department of the Treasury today announced the designations of senior ISIL oil official Faysal al-Zahrani, foreign fighter facilitator Husayn Juaythini, and senior ISIL official Turki al-Binali pursuant to Executive Order (E.O.) 13224, which targets terrorists and those providing support to terrorists or acts of terrorism. These designations support President Obama’s strategy to degrade and destroy ISIL. These designations also further Treasury’s efforts to attack ISIL’s finances and disrupt its ability to profit from illicit oil sales within its territory in Iraq and Syria by inhibiting these individuals from accessing the international financial system. They also support work by the broader counter-ISIL Coalition, including Operation Tidal Wave II, which consists of deliberate targeting and precision airstrikes in Iraq and Syria to disrupt ISIL’s control of oil-related resources. As a result of today’s actions, any property or interest in property of the individuals designated by Treasury within U.S. jurisdiction is frozen. Additionally, transactions by U.S. persons involving the designated individuals are generally prohibited.

al Binali

“Treasury and our partners worldwide are aggressively targeting ISIL’s ability to earn and make use of its money, and we are making progress on many fronts,” said Adam J. Szubin, Acting Under Secretary for Terrorism and Financial Intelligence. “Today’s action targets key ISIL leadership figures responsible for oil and gas production, foreign terrorist fighter recruitment and facilitation, and other financial facilitation.”

In a speech on Monday at Chatham House in London, Assistant Secretary for Terrorist Financing Daniel Glaser highlighted the recent progress that the U.S. government has made in weakening ISIL’s ability to generate wealth and disrupt its ability to make use of the money it raises.

The Treasury Department announces this action in advance of the first-ever joint session of the Financial Action Task Force (FATF) and the Global Coalition to Counter ISIL’s Counter ISIL Finance Group (CIFG), which is taking place on February 14 in Paris. The CIFG is co-chaired by Italy, Saudi Arabia, and the United States and has 37 participating member states and organizations. The group focuses on enhancing international collaboration to disrupt the financial and economic activities of ISIL. The FATF is the international standard-setting body for combating money laundering and terrorist financing. It develops recommendations and promotes effective implementation of key anti-money laundering and countering the financing of terrorism measures that deprive terrorist groups, like ISIL, of access to the international financial system. The purpose of the FATF-CIFG joint session is to bring together the leading international bodies focused on ISIL financing to more effectively share information and coordinate efforts. The session will focus on recent ISIL financial activity, ongoing efforts to deny ISIL access to the international financial system, strategies to prevent ISIL from financing its branches or foreign fighters, and recent United Nations Security Council Resolutions that facilitate efforts to disrupt ISIL’s finances.

Faysal Ahmad ‘Ali al-Zahrani

Treasury designated Faysal Ahmad ‘Ali al-Zahrani for acting for or on behalf of ISIL and for providing financial support to ISIL. In July 2014, al-Zahrani joined ISIL’s natural resources ministry, which oversees ISIL’s trade in oil and gas. As of May 2015, al-Zahrani was the ISIL oil and gas division official for Al Barakah Governorate, Syria, serving directly under ISIL oil and gas emir for Syria Fathi Awn’ al-Murad la Tunisi, also known as Abu Sayyaf, who was killed by Coalition special forces in a raid in eastern Syria that same month. Prior to Abu Sayyaf’s death in May 2015, al-Zahrani regularly transferred funds to him. As of June 2015, al-Zahrani supervised the daily activities of the workforce of an ISIL-managed oil production plant in Rukaybah, al-Hasakah Province, Syria, and by August 2015 was in charge of all ISIL oil and gas activities in al-Hasakah Province, which included supervising oil auctions to local merchants. Following the May 2015 death of a separate ISIL oil official, who previously oversaw a vehicle-borne improvised explosive device (VBIED) production site on the Rukaybah oil production plant compound, al-Zahrani assumed control and oversight of VBIED production. As of December 2015, al-Zahrani remained responsible for ISIL oil and gas activities in the areas around Shaddadi, al-Hasakah Province, Syria.

In his role as head of ISIL’s oil and gas division in Al Barakah, Syria, al-Zahrani oversaw the activities of seven ISIL oil and gas officials and, as of January 2015, held control of at least five oil fields. Based on the profits generated from oil fields in Al Barakah governorate, al-Zahrani sent the ISIL treasury tens of millions of dollars in oil and gas revenues between September 2014 and March 2015.

Husayn Juaythini

Treasury designated Husayn Juaythini for providing support and services to ISIL by facilitating communications and the movement of foreign terrorist fighters and conducting financial activities in support of ISIL. Juaythini travelled to Syria in September 2014 to pledge allegiance to ISIL and was tasked to return to Gaza and establish a foothold for ISIL there. Juaythini was the link between ISIL leader and U.S.- and UN-designated Specially Designated Global Terrorist (SDGT) Abu Bakr al-Baghdadi and armed groups in Gaza, and had money that he was using to build an ISIL presence in Gaza.

Juaythini not only maintains ties with ISIL, but as of mid-2014 was deputy head of the extremist group and U.S.-designated SDGT Mujahidin Shura Council (MSC). In 2013, Juaythini attempted to acquire supplies for the MSC in the environs of Jerusalem to conduct attacks against Israel and help the group overcome financial difficulties. He also worked with a Libya-based facilitator, who served as the primary money and weapons facilitator for Juaythini’s activities in Gaza. As of January 2015, Juaythini was instrumental in fostering connections between Gaza- and Libya-based terrorists, and facilitating their travel to Syria.

Turki Mubarak Abdullah Ahmad al-Binali

Treasury also designated Turki al-Binali for acting for or on behalf of ISIL as early as May 2015. Binali is a recruiter for ISIL foreign fighters, and provides literature and fatwas for ISIL training camps and has written several pamphlets to recruit more fighters to ISIL, including the first call for Muslims to pledge allegiance to ISIL leader Abu Bakr al-Baghdadi as caliph. As of March 2014, Binali led an ISIL support network actively recruiting Gulf nationals to join ISIL in Syria.

Further, in November 2014, Binali was appointed to the post of chief religious advisor for ISIL. In late June 2015, Binali announced on social media that ISIL’s next attack, following its bombing of a Shia mosque in Kuwait days earlier, would be in Bahrain.

On January 31, 2015, the Bahraini government revoked Binali’s citizenship.

***

Counter Terrorism Designation

2/11/2016

Page Content

OFFICE OF FOREIGN ASSETS CONTROL

Specially Designated Nationals List Update

The following individuals have been added to OFAC’s SDN List:

AL-BINALI, Turki Mubarak Abdullah Ahmad (a.k.a. AL BINALI, Turki Mubarak Abdullah; a.k.a. AL-BENALI, Turki; a.k.a. AL-BIN’ALI, Turki; a.k.a. AL-BIN’ALI, Turki Mubarak; a.k.a. “ABU DERGHAM”; a.k.a. “AL-ATHARI, Abu Human”; a.k.a. “AL-ATHARI, Abu Human Bakr ibn ‘Abd al-‘Aziz”; a.k.a. “AL-ATHARI, Abu-Bakr”; a.k.a. “AL-BAHRAYNI, Abu Hudhayfa”; a.k.a. “AL-MUDARI, Abu Khuzayma”; a.k.a. “AL-SALAFI, Abu Hazm”; a.k.a. “AL-SULAMI, Abu Sufyan”); DOB 03 Sep 1984; POB Al Muharraq, Bahrain; nationality Bahrain; Passport 2231616 (Bahrain) issued 02 Jan 2013 expires 02 Jan 2023; alt. Passport 1272611 (Bahrain) issued 01 Apr 2003; Identification Number 840901356 (individual) [SDGT] (Linked To: ISLAMIC STATE OF IRAQ AND THE LEVANT).

AL-ZAHRANI, Faysal Ahmad ‘Ali (a.k.a. AL ZAHRANI, Faysal Ahmad Bin Ali; a.k.a. ALZAHRANI, Faisal Ahmed Ali; a.k.a. “AL-JAZRAWI, Abu-Sara”; a.k.a. “AL-SAUDI, Abu Sarah”; a.k.a. “AL-ZAHRANI, Abu-Sarah”; a.k.a. “ZAHRANI, Abu Sara”); DOB 19 Jan 1986; alt. DOB 18 Jan 1986; nationality Saudi Arabia; Passport K142736 (Saudi Arabia) issued 14 Jul 2011; alt. Passport G579315 (Saudi Arabia) (individual) [SDGT] (Linked To: ISLAMIC STATE OF IRAQ AND THE LEVANT).

JUAYTHINI, Husayn (a.k.a. ALJEITHNI, Hussein Mohammed Hussein; a.k.a. AL-JU’AITNI, Abu Mu’ath; a.k.a. AL-JU’AYTHINI, Husayn Muhamad Husayn; a.k.a. AL-JU’AYTHINI, Husayn Muhammad; a.k.a. AL-JU’AYTHINI, Husayn Muhammad Husayn; a.k.a. JU’AYTHINI, Husayn Muhammad Husayn); DOB 03 May 1977; POB Al-Nusayirat refugee camp, Gaza; Passport 0363464 (individual) [SDGT] (Linked To: ISLAMIC STATE OF IRAQ AND THE LEVANT).

China banks may lose 5 times US banks’ subprime losses

Posted on February 12, 2016February 12, 2016 by Denise Simon

Yellin’s testimony includes China as the big worry.

China is big concern

Yellen didn’t mince words about China: its economy is slowing down and uncertainty is rising about how much China will devalue its currency, the yuan.

A weak yuan has major implications for global trade. Yellen firmly blames the uncertainty of China’s currency for the rise in global growth fears.

“This uncertainty led to increased volatility in global financial markets and, against the background of persistent weakness abroad, exacerbated concerns about the outlook for global growth,” Yellen said.

Add in spooky dude, George Soros:

Bass: China banks may lose 5 times US banks’ subprime losses in credit crisis

CNBC: A Chinese credit crisis would see the country’s banks rack up losses 400 percent larger than the hit U.S. banks took during the subprime mortgage crisis, storied hedge fund manager Kyle Bass has warned in a letter to investors.

“Similar to the U.S. banking system in its approach to the Global Financial Crisis (GFC), China’s banking system has increasingly pursued excessive leverage, regulatory arbitrage, and irresponsible risk taking,” Bass, the founder of Dallas-based Hayman Capital, wrote in the letter dated Wednesday.

“Banking system losses – which could exceed 400 percent of the U.S. banking losses incurred during the subprime crisis – are starting to accelerate.”

China’s banking system has grown to $34.5 trillion in assets over the past 10 years, from a base of $3 trillion, wrote Bass, who is famed as one of the few major investors to correctly call the U.S. subprime housing collapse that kicked off the 2008 global financial crisis. That prescience earned him a mention in Michael Lewis’ book “Boomerang,” which was about the European credit crisis.

This expansion in the banking system’s asset base was fueled largely by rapid credit expansion, Bass wrote, that helped fund the huge, and often inefficient, infrastructure spending program that has propped up China’s growth.

“China’s [banking] system is even more precarious when we realize that, even at the biggest banks, loans are not made to borrowers based on their ability to repay,” he wrote. “Instead, load decisions are political decisions made by the state.”

Add to this the danger posed by China’s shadow banking system – made up of instruments Bass claimed the country’s banks used to subvert restrictions on lending – and the upshot was there were “ticking time bombs” in China’s banking system, the hedge fund manager explained.

“Chinese banks will lose approximately $3.5 trillion of equity if China’s banking system loses 10 percent of assets,” Bass wrote. “Historically, China has lost far in excess of 10 percent of assets during a non-performing loan cycle.”

He noted that U.S. banks lost about $650 billion of their equity throughout the global financial crisis.

The letter said that the Bank for International Settlements (BIS) estimated that Chinese banking system losses from the 1998-2001 non-performing loan cycle exceeded 30 percent of gross domestic product (GDP).

“We expect losses in this cycle to exceed prior cycles. Remember, 30 percent of Chinese GDP approaches $3.6 trillion today,” he warned.

Bass wrote that he expected the massive losses to force Beijing to recapitalize Chinese banks and sharply devalue the yuan.

“China will likely have to print in excess of $10 trillion worth of yuan to recapitalize its banking system,” he said. “By the time the loss cycle has peaked, we believe the renminbi will have depreciated in excess of 30 percent versus the U.S. dollar.”

The hedge fund manager didn’t return an email sent outside office hours requesting comment on the investor letter, which the Wall Street Journal reported was the first he had sent in two years.

Bass’ sentiments on the yuan aren’t new, with the Wall Street Journal reporting earlier this month that he was among the money managers making bearish bets on the currency.

The dollar has already fallen about 5.9 percent against the yuan since August, when a sharp devaluation by the People’s Bank of China (PBOC) roiled markets; the greenback was fetching around 6.5710 yuan on February 5, the last day of trade before China’s markets closed for a week-long Lunar New Year holiday.

The PBOC has introduced a slew of measures to arrest, or at least slow, declines in the currency in the hope of achieving an orderly depreciation.

The central bank has asked banks making yuan loans abroad to set aside more in reserves and has also hoovered up yuan in Hong Kong, a key market where the bearish bets have been made, effectively making it more expensive for traders to borrow the yuan to make these trades.

China’s state-owned publications have also chipped in with stinging editorials admonishing greedy speculators for betting against the currency. Prominent investor George Soros was recently likened to a “crocodile” that had declared “war” on China for suggesting while at the World Economic Forum in Davos, Switzerland, that China’s economy was headed for a hard landing.

In his letter, Bass casts the attacks on Soros as confirmation of his views.

“China’s public reaction in its state media to George Soros’ comments in Davos was in character for a country that is on the precipice of a large devaluation,” Bass said.

While many have pointed to China’s large – albeit shrinking – pile of $3.23 trillion in foreign-exchange reserves as a defensive wall against a crisis, Bass says that’s simply not enough.

He estimates China really only has around $2.1-2.2 trillion in reserves after adjusting for several factors including about $700 billion that could be tied up in China’s sovereign wealth fund CIC. That’s below his estimate of the $2.7 trillion minimum China would need to effect a banking sector bailout.

“China’s liquid reserve position is already below a critical level of minimum reserve adequacy,” he said.

Predictions of a Chinese economic disaster have been circulating for a long time; Gordon Chang’s book “The Coming Collapse of China” was published in 2001.

However, the mainland saw economic growth slow to a 25-year low of 6.9 percent in 2015 amid its transition toward a consumption-driven economy and away from its manufacturing roots.

When it comes to positioning for his expectations of a Chinese bank implosion, Bass wrote that he was thinking broad.

“What happens in China will not stay in China,” he said. “We decided to liquidate the majority of our risk assets.”

He did not appear likely to buy back in to the market any time soon.

“The next 18 months will be fraught with false-starts, risk rallies, and second-guessing,” he wrote.

To be sure, some of Bass’ other doomsday bets haven’t yet come to fruition.

For more than five years, he has called for a collapse in Japan government bonds (JGB) as part of a yet-to-materialize full-blown financial crisis there. That trade, dubbed a widow-maker, has so far backfired spectacularly.

Instead of a collapse in JGB prices, they’ve surged, with the benchmark 10-year seeing negative yields for the first time this week. Bond yields move inversely to prices.

Hayman Capital had returns of about 1.7 percent last year, according to a Bloomberg report.

***

TOKYO (AP) — Japan’s main stock index dived Friday, leading other Asian markets lower, after a sell-off in banking shares roiled investors in the U.S. and Europe.

Tokyo’s Nikkei 225 was down 4.8 percent to 14,952.61 after earlier sinking as much as 5.3 percent. Hong Kong’s Hang Seng fell 1.0 percent to 18,364.14. South Korea’s Kospi gave up 1.4 percent to 1,835.01 and Australia’s S&P/ASX 200 fell 1.2 percent to 4,765.30. Shares in New Zealand and Southeast Asia also fell. Markets in China and Taiwan are closed until Monday for Lunar New Year holidays.

Global stocks have been in a slump since the beginning of the year when China’s market, which had been propped up by government buying, plunged dramatically. Concerns about China, however, are now just one of several factors behind the bloodletting.

NYPD Covertly Tracked Cell Phones

Posted on February 11, 2016February 11, 2016 by Denise Simon

New York police have covertly tracked cell phones, group says

Reuters: New York City’s police have made extensive use of covert devices to track cell phones without obtaining warrants since 2008, a civil liberties group said on Thursday, revealing how frequently law enforcement in the largest U.S. city has employed the technology.

The New York Civil Liberties Union released files that showed the New York Police Department used “cell site simulators” to track nearby cell phones more than a 1,000 times over the past eight years.

The American Civil Liberties Union has identified 60 local, state and federal agencies that have adopted the devices in recent years, but the group has said there are likely far more. The extent of the devices has largely been shrouded in secrecy, as departments and private manufacturers such as Harris Corp have refused to disclose information about their use.

U.S. Representative Jason Chaffetz of Utah, a Republican, has introduced a bill to require warrants for the use of cell site simulators.

The documents released on Thursday were obtained by the NYCLU through a Freedom of Information Law request.

The NYPD does not have a written policy on using the surveillance devices and does not obtain warrants when doing so, according to the NYCLU.

Instead, the department seeks “pen register” orders, which have been used for decades to gather information on specific phone numbers. The orders are issued by judges but require a lower standard than the probable cause needed for warrants.

The NYPD’s practice is less stringent than the one adopted last year by the U.S. Department of Justice, which calls for warrants except in emergency situations.

“We still have concerns that this military equipment is being used in a civilian context,” said Mariko Hirose, an NYCLU attorney. “At the very least, they should be using warrants and with a strict privacy policy that is written.”

The NYPD did not immediately respond to a request for comment.

The devices mimic cell towers and intercept signals from nearby phones to gather information. That data can include locations of calls, numbers that are called or texted and even the content of communications, the NYCLU said.

The simulators can also sweep up information from nearby “bystander” phones.

The documents do not indicate what data police collected. The simulators were used to investigate a wide range of crimes, including murder, rape and drug trafficking.

No New York court has yet tackled the question of whether the warrantless use of such devices is constitutional, Hirose said.

She said the NYCLU could have difficulty establishing the legal standing to bring such a challenge, which would probably have to come from a criminal defendant specifically targeted by a simulator.

Yikes, there is more:

Intercept: The NYPD has used cell-site simulators, commonly known as Stingrays, more than 1,000 times since 2008, according to documents turned over to the New York Civil Liberties Union. The documents represent the first time the department has acknowledged using the devices.

The NYPD also disclosed that it does not get a warrant before using a Stingray, which sweeps up massive amounts of data. Instead, the police obtain a “pen register order” from a court, more typically used to collect call data for a specific phone. Those orders do not require the police to establish probable cause. Additionally, the NYPD has no written policy guidelines on the use of Stingrays.

Stingrays work by imitating cellphone towers. They force all nearby phones to connect to them, revealing the owners’ locations. That means they collect data on potentially hundreds of people. They are small enough to fit in a suitcase, or be mounted on a plane.

When they were originally developed in 2003, Stingrays were designed for military use. But in the past decade, they have increasingly been purchased by law enforcement agencies. According to the ACLU, Stingrays are used by at least 59 police departments in 23 states, and at least 13 federal agencies, including the DEA, FBI, and the IRS. Because most departments withhold information about Stingrays, these numbers likely underrepresent the total.

In December, The Intercept published a secret U.S. government catalogue of cellphone surveillance technology, including Stingrays and “dirt-boxes.” The advertisements boast that many of the items can spy on “up to 10,000 targets.”

Stingrays have long been a topic of concern for privacy activists. “Cell-site simulators are powerful surveillance devices that can track people, including in their homes, and collect information on innocent bystanders,” said Mariko Hirose, a senior staff attorney at the NYCLU. “If they are going to be used in communities the police should at minimum obtain a warrant and follow written policies.”

Instead, law enforcement agencies have fought to keep Stingrays secret, even dropping criminal cases to avoid disclosing anything about them. The FBI has forced local police agencies to sign Stingray-related non-disclosure agreements, claiming that criminals and terrorists who know about Stingrays could take countermeasures against them.

The increasing use of Stingrays, coupled with the lack of transparency, has alarmed civil liberties groups. “I think it’s critical to have transparency about the use of technology like Stingrays,” said Faiza Patel, an attorney with the Brennan Center for Justice. “That’s what allows courts, the public, and our elected officials to weigh in on the proper rules.”

In September, the Department of Justice issued guidelines requiring its officers to seek probable cause warrants before using a Stingray. But the guidelines only applied to federal law enforcement agencies, not to state and local police, who have fought such a change. In one ongoing court case, the state of Maryland has argued that anyone who turns on their phone consents to having his or her location tracked.

In November, Senator Ron Wyden, D-Ore., and Rep. Jason Chaffetz, R-Utah, introduced the GPS Act, a bill that would extend the Department of Justice’s guidelines to all law enforcement agencies. “Buying a smartphone shouldn’t be interpreted as giving the government a free pass to track your movements,” Wyden said.

See the government catalogue here:

Top photo: “nypd” by Nick Allen, used under CC BY 2.0/ cropped and color corrected from original.

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