Don’t Bring a Drone to Gunfight. Message Received?

Note the damaged prop blades:

As reported by Just Security, at the time of the intercept, the Reaper was flying ~60 km (~35 miles) southwest of the Crimean Peninsula, Ukrainian territory that Russian lawfully annexed in 2014.

In this regard, the Russian Ambassador to the United States, Anatoly Antonov, declared, “American aircraft have no business being near the Russian border.”

It is universally accepted that aircraft, including military platforms, enjoy the right of high seas overflight. This right is codified in Article 2 of the 1958 Convention on the High Seas, to which the United States is Party, and Article 87(1)(b) of the 1982 Law of Sea Convention (UNCLOS), to which it is not.

Russia is Party to both.

Despite UNCLOS non-Party status, the United States recognizes its navigational provisions as reflecting customary international law. Indeed, the DoD Law of War Manual and the U.S. Navy/Coast Guard/Marine Corps Commander’s Handbook on the Law of Naval Operations both emphasize the right of military aircraft to conduct operations over the high seas (§ 13.2.3.1 and § 2.6.3, respectively).

As to the mission, Ambassador Antonov correctly noted that the Reaper is “a multipurpose [drone], with strike capabilities of up to a 1,700 kilograms explosive payload.”

The Reaper is also used for reconnaissance which, in this case, was actively supporting a belligerent in a war zone making it a belligerent performing an “internationally wrongful act” (Articles on State Responsibility, art. 2) in the form of a neutrality law violation.

The DoD’s Law of War Manual states that, during an international armed conflict, “[t]he principal duties of a neutral State are to abstain from any participation in the conflict and to be impartial in conduct towards contending parties” (§15.3.2). Intelligence sharing with one of the belligerents can certainly run afoul of this principle.

During an armed conflict, belligerents may create “operational zones” to prevent interference with their operations.

In fact, this is the claimed justification for the Russian intercept. According to Ambassador Antonov, the Reaper “was moving deliberately and provocatively towards the Russian territory with its transponders turned off [and] violated the boundaries of the temporary airspace regime established for the special military operation, which was communicated to all the concerned users of international airspace in accordance with international norms.”

United States legal doctrine recognizes operational zones for both aerial and naval operations. For instance, the DoD Law of War Manual (§ 14.7) provides,

During armed conflict, States may establish airspace zones and associated procedures intended to prohibit aircraft from entering or flying in designated areas, including areas in international airspace. Such zones may be established for a variety of purposes, including to decrease the risk of inadvertent attack of civil or neutral aircraft, to control the scope of the conflict, or to enhance the predictability and effectiveness of ongoing operations.

The United States claims it may establish such a zone in the “immediate area or vicinity” of naval operations “to ensure the security of its forces and its right to conduct hostilities without interference from neutrals” (id.).

Some other States active in maritime operations expressly agree (see, e.g., U.K. Law of Armed Conflict Manual, §13.8; Australia, Law of Armed Conflict, ¶ 6.16; Germany, Commander’s Handbook, ¶ 303).

The “immediate” area or vicinity “is that area within which hostilities are taking place, or belligerent State forces are actually operating” (§ 13.8.1).

As to the consequence of violation, the DoD Manual cautions that “[a]ny transmission to an opposing belligerent State of information concerning military operations or military forces is inconsistent with the neutral State’s duties of abstention and impartiality and renders the neutral State’s vessel or aircraft making such a communication liable to capture or destruction (§ 13.8.2; see also Commander’s Handbook, § 7.8).

This would apply if the Reaper was transmitting intelligence to Ukrainian forces — directly or indirectly.

If the Reaper was supporting Ukrainian operations as it most certainly was, it would seem to qualify as a “military objective” (see Additional Protocol I, art. 52(2), which reflects customary law).

Turn off your drone’s transponder, head into a bear’s den, and poke it, and bears may just poke back.

BTW, here’s warships from the Black Sea Fleet recovering the Reaper

Which brings us to Simplicus’s take on things (https://simplicius76.substack.com/p/sitrep-31623-reaper-developments) who provides some context.

First thing’s first, some important updates on the ‘drone incident’. The US has now released their version of the footage, which can be seen here: VIDEO 1.

They appear to still be tenuously clinging to the claim that the plane ‘struck the drone’s propeller’, yet that is not evident in the video at all. Much more likely the plane merely bucked the drone from sheer turbulence and jet-wash, causing it to flip over—but I’m not discounting that the prop was clipped. It is strange that the drone camera continues to ‘malfunction’ each time the planes come close. Is the turbulence jostling the camera electronics too much, or the Su-27’s giving off some type of jamming signals at such proximity? Hard to know.

Some have pointed to this before and after shot, showing what appears to be like a deformed prop blade after the Russian fuel dump. However, props can look that way on cameras depending on the sync between the camera framerate and propeller speed, and there’s a chance that the propeller changed speed (perhaps due to slight throttling down by the operator, etc.) causing it to appear differently at that point on video. Maybe there are some better video experts that can chime in. But perhaps a chance exists that the ‘heavy’ fuel load ricocheting off the propeller at such squirted speeds caused it to deform. This would lead to eventual catastrophic failure of the prop due to vibratory forces in the uneven distribution of weight/aerodynamics, etc.

What we do know now however is that the MQ-9 Reaper is from one of the latest and most advanced Blocks, equipped with a highly advanced/sensitive ‘Gorgon’s Stare’ electronics suite.

Along with the Gorgon Stare, the drone had a variety of sensors which could do everything from record pinpoint video footage, thermal footage, Synthetic Aperture Radar snapshots of Russian bases/assets, record electronic emissions and signal data from Russian command HQ’s (C3), radar sites, and their positions. The Gorgon Stare itself, if you read the supplied wiki article, is run through a devious DARPA A.I. program called Mind’s Eye, which does all the things I once described in this article—basically: neural-network ‘smart’ analysis of recorded ground data where the AI can track/locate/assess/transmit targets on its own, all while geo-tagging them with various meta-data, etc. With these tools the drone is said to transmit many gigabytes of data per minute.

“The spy mission here is not even 100% visible, but 1000%. This is tactical reconnaissance – a fairly powerful high-resolution video camera and equipment that allows you to record the frequencies of radio stations, missile guidance stations, radar stations, determine the location of air defense systems, air defense systems, determine the location of headquarters, command posts and, due to visual reconnaissance, take pictures of a sufficiently high permission, ” explained Knutov.

Getting their hands on this Gorgon suite would be a huge boon for Russia. Which is why they have now positioned their ships and as of this writing are getting ready to lift the drone from what is said to be 900m depth.

American drone MQ-9 found at a depth of 900 meters. Above it, the duty of the Black Sea Fleet ships was established in order not to let anyone near the crash site. The issue of its rise is being resolved.

There is a ship in the Black Sea Fleet that is capable of doing this – the legendary “Kommuna” built in 1913. Rebuilt many times and having a huge track record of underwater work (including the recovery of several submarines, as well as aircraft and ships), it has deep-sea vehicles capable of operating at a depth of up to 1 km.

By the way, Kommuna has experience in lifting foreign equipment. In 1928, it raised the sunken British submarine L-55 in the Baltic, which was blown up by mines while evading Soviet destroyers.

The US however has claimed that they’ve done a ‘remote wipe’ on the Reaper’s data. This is questionable for a variety of reasons. Firstly, wiping data just once will never delete it, recovery specialists, particularly Russian ones which are likely the best in the world, can easily recover the data. But full industrial data-stripping takes many recurring passes of data writes to the memory chip over and over for it to be truly irrecoverable. But this takes time—time that the drone likely didn’t have as it was going down into the sea, at which point its batteries would have been flooded and likely any ‘data wipe’ operation stopped. So, the verdict is: data is probably recoverable unless the US has a special detonating self-destruct device planted on the data chip just for these types of circumstances.

To save face, John Kirby tried to pretend that US still has the ability to recover the drone. He hemmed and hawed and temporized when asked during a press conference if the drone can be recovered, stating that US “isn’t sure it can do it” in that region and at that depth, veiling the fact that the Russian fleet has already positioned itself entirely above the site and US isn’t even allowed to bring warships through the Bosporous as per the Montreaux Convention.

Satellite images of ships of the Black Sea Fleet of the Russian Navy near the crash site of the American MQ-9 Reaper UAV in the Black Sea.

Speaking of which—one very intriguing oddity should be mentioned. For the many months that US has flown its drones over the Black Sea, it has always strangely had to ‘go around’ Turkish territory.

Notice how the direct flightpath is always broken up by a necessary rerouting to the north into Bulgaria, just around the tip of Turkish territory near the Bosporous. It’s clear that Erdogan does not allow US war assets to bypass his territory enroute to monitor Russian SMO.

Now onto other things. One update as regards the last report about the purported Russian Kinzhal strikes on NATO assets. There is some chance that the drone incident is related.

As others have keenly noted, there is a strangely linked series of events which began with Russia’s very large missile strikes last week. There was something particularly painful and special about these strikes as several Ukrainian ministers/sources referred to the strikes with uncommonly strong words, some stating they were the most powerful strikes since the start of the SMO. Even Zelensky called it a ‘very strong signal to Ukraine’.

Then, as explained in our last report, we got word that 6 Kinzhals were used, and that a NATO HQ was possibly hit with 40+ dead. What is intriguing is, those strikes occurred on March 10th. Immediately following them on March 12th, the US sent an extremely provocative message by simulating a nuclear bombing run on St. Petersburg when they sent a B-52 bomber directly towards St. Pete in an unprecedented maneuver.

The nuclear-capable bomber cut away just before the Russian maritime border, down into Estonia. Why would they send such a direct and obvious message right after the March 10 attacks? It seems to me, those 6 confirmed Kinzhals were not sent in vain, or against unimportant targets. This likely confirms that 40+ NATO/CIA officers were infact liquidated as reports suggest, and the US deepstate is extremely bothered by this.

The US Air Force’s B-52H Stratofortress strategic bomber, capable of carrying nuclear weapons, developed the training for launching missiles into Russian territory, according to Military Observer.

About two hours ago, the plane entered a missile launch position in St. Petersburg in the region of the island of Gotland, located at a distance of about 200 km from the northern capital.

After this maneuver, the American bomber made a sharp turn and departed in the direction of Estonia. The plane is now entering Lithuanian airspace, the source said.

Only a day after that, they now suddenly send one of their most advanced drones directly toward Crimea/Sevastopol in another extremely aggressive and angst-ridden ‘message’.

They’ve never taken such a trajectory before, AND in darkmode with transponders turned OFF. Once again—it’s clear that the March 10th strikes really burned them badly and they are desperate to escalate or strike out like a wounded animal.

The logical explanation is that, there were some ‘unspoken’ agreements or red lines between the two Great Powers. And Russia finally broke that red line with the sextuple Kinzhal sneak attack.

A Tale of a Progressive Money Laundry

Now that we filled in some blanks, let’s add some color, courtesy of ZH

Gavin Newsom Kept SVB Ties Secret While Lobbying For Bailout

Multimillionaire California Governor Gavin Newsom failed to disclose his ties to Silicon Valley Bank while lobbying the White House and the Treasury Department over a pending bailoutThe Intercept reported on Tuesday.

The White House “acted swiftly and decisively to protect the American economy and strengthen public confidence in our banking system,” Newsom said in a statementWhat Newsom didn’t mention is that it also protected his own companies if they held over $250,000 in deposits.

CADE, Odette, and PlumpJack, three wineries owned by Newsom, are listed as clients of SVB on the bank’s website. Newsom also maintained personal accounts at SVB for years, according to a longtime former employee of Newsom’s who handled his finances, and who requested anonymity to avoid professional reprisal.

Newsom also failed to mention his wife’s professional ties to the bank. In 2021, SVB gave $100,000 to a charity founded by Jennifer Siebel Newsom, the California Partners Project, at the request of Newsom. SVB Capital President, John China, sits on the Board of Directors of the charity.

On Monday, Newsom said that he had “been in touch with the highest levels of leadership at the White House and Treasury.”

“Governor Newsom’s business and financial holdings are held and managed by a blind trust, as they have been since he was first elected governor in 2018,” said Newsom spokesman Nathan Click.

Of note, when asked during his 2018 campaign whether he would divest from his companies which might pose an ‘ethics challenge,’ Newsom reportedly replied: “These are my babies, my life, my family. I can’t do that. I can’t sell them.”

Instead, he announced the blind trust, which would be controlled by family friend and attorney, Shyla Hendrickson – an arrangement under which Newsom’s sister, Hillary Newsom, would retain her role as president of PlumpJack Group – a Newsom owned company which includes hotels, restaurants, wineries, bars and liquor stores.

Our “Best in Class Eurotrash”: CS

CS dove 15% to hit a record low.

No surprise, swaps on five-year debt rose to 450 basis points on €10,000 of CS’s senior debt against default for a year.

Wanna graph?

Got ya covered.

How’s that for going ballistic?

For context, here’s the index spread.

Unlike Silicon Valley, Eurobank balance sheets tend to be diversified with high loan to asset ratios and regulatory liquidity coverage ratios.

All that said, as Senator Connolly said of the dollar in 1971 at the G-10 after Nixon closed the gold window, “The dollar is our currency and your problem.”

While CS took it on the chin today, lots of Eurotrash right there with CS:

  • UniCredit -9%,
  • Deutsche bank a Raiffaisen -7%,
  • KbW -12%,
  • Sabadell -10%,
  • Santander -8%

ZH does a nice breakdown of the day’s festivities (https://www.zerohedge.com/markets/big-trouble-little-banks-bailout-sparks-buying-panic-bonds-bitcoin-bullion)

Credit markets blew out today (on a spread basis), exceeding (relatively) the shift in equity risk…

Source: Bloomberg

Bonds were aggressively bid across the curve with the short-end a massive outperformer over the last three days.

Source: Bloomberg

On the day, the 30Y yields ended unchanged with 2Y down over 50bps..

Source: Bloomberg

The 2Y yield is down almost 100bps in the last three days, dropping back below 4.00% – its lowest since Sept 2022…

Source: Bloomberg

…the biggest yield drop since ‘Black Monday’ in 1987…

Source: Bloomberg

The yield curve steepened dramatically with 2s30s up over 50bps today to their least inverted since mid-Nov…

Source: Bloomberg

Well, Powell is officially Volcker: the 2s10s just steepened at the fastest pace since the Volcker economic crematorium unleashed the worst recession since World War 2

Source: Bloomberg

The market’s inflation expectations (1Y CPI Swaps) plunged…

Source: Bloomberg

Bond volatility (MOVE) exploded today to its highest since June 2009…

Source: Bloomberg

Shorter-term, the decoupling between VIX and MOVE from late Feb is starting to unwind, but equity risk has a long way to go…

Source: Bloomberg

The dollar dumped down to three-week lows…

Source: Bloomberg

As alternative-currencies were sought as safe-havens, sending bitcoin soaring higher (above $24,000)…

Source: Bloomberg

And gold spiked above $1900…

Oil prices puked overnight, with WTI down to a $72 handle before bouncing back, but late on, it started to slide again, ending down over 3%…

Finally, systemic risk indicators are starting to flash red with FRA-OIS spiking (signaling stress in the banking system)…

Source: Bloomberg

And global dollar liquidity is drying up fast…

Source: Bloomberg

But “10% for the Big Guy” Biden said “the banking system was safe”

Our money is still on CS for “Best in Class Eurotrash” – our canary in the mine.

The Night They Drove Ole’ $SIVB Down

Got it?

Whether it’s Bailey Bros Savings & Loan or Silicon Valley Bank, the fastest way to trigger a bank run is when the word gets out you are illiquid.

The duration gap is a financial and accounting term used to measure their risk due to changes in the interest rate. This is one of the mismatches that can occur and are known as asset–liability mismatches.

Another way to define Duration Gap is the difference in the price sensitivity of interest-yielding assets and the price sensitivity of liabilities (of the organization) to a change in market interest rates (yields).

Risk management 101.

You can get a gap a lot of ways — your credit losses can rise (the GFC scenario), your unrealized losses can rise from interest rate hikes (the current banking sector scenario).

The Lehman death scenario – funding long-term liabilities with short-term assets.

The duration gap measures how well matched are the timings of cash inflows (from assets) and cash outflows (from liabilities).

When the duration of assets is larger than the duration of liabilities, the duration gap is positive. In this situation, if interest rates rise, assets will lose more value than liabilities, thus reducing the value of the firm’s equity. If interest rates fall, assets will gain more value than liabilities, thus increasing the value of the firm’s equity.

Conversely, when the duration of assets is less than the duration of liabilities, the duration gap is negative. If interest rates rise, liabilities will lose more value than assets, thus increasing the value of the firm’s equity. If interest rates decline, liabilities will gain more value than assets, thus decreasing the value of the firm’s equity.

By duration matching, that is creating a zero duration gap, the firm becomes immunized against interest rate risk. Duration has a double-facet view. It can be beneficial or harmful depending on where interest rates are headed.

Some of the limitations of duration gap management include the following:

  • the difficulty in finding assets and liabilities of the same duration
  • some assets and liabilities may have patterns of cash flows that are not well defined
  • customer prepayments may distort the expected cash flows in duration
  • customer defaults may distort the expected cash flows in duration
  • convexity can cause problems.

Let’s try an example.

{\displaystyle Duration\ gap=duration\ of\ earning\ assets\ -\ duration\ of\ paying\ liabilities\ \times \ {\frac {paying\ liabilities}{earning\ assets}}}

When the duration gap is zero, the firm is immunized only if the size of the liabilities equals the size of the assets. In this example with a two-year loan of one million and a one-year asset of two millions, the firm is still exposed to rollover risk after one year when the remaining year of the two-year loan has to be financed.

Got it now?

So, what’s going on?

A lot of stuff like this as Lew Ranieri just posted (Lew of the South Ozone Park, Queens Ranieri’s — not to be confused with the Greenwich Ranieri’s).

And as Lew observes, that’s NOT the first floor.

And this

And Signature Bank just announced they’re closed by state authority.

Here’s the pre-crash story — a lot of uninsured depositors appropriate to a business backed with high-end individuals.

Deposits are a smaller fraction of the portfolio

With a growing fraction of long-dated assets.

The dough had to go somewhere — so they went to long-dated securities like government paper — and then insanely held them to maturity as the Fed started raising interest rates.

Like climbing out on a limb while Jay Powell spins up a chain saw to cut the branch.

Here’s the effect of Jay’s cutting — AOCI starts piling up unrealized losses.

As Jay cut, the blood flowed all through 2022 while NOBODY did anything.

SVB was posting long-dated assets to back short term loans as the value of those assets plunged.

Duh!

Here’s SVB in the context of others from The_Real_Fly’s tweet

How did we get here? Let’s go to the tape.

Got it?

SVB was getting a slug of cash from Federal stimulus deposits over the last few years.

But, now the Congressional paydays are done and that cash is disappearing along with VC money — just like George Bailey when “Mr. Potter stole the drunk’s dough”

Normally, you would have a Chief Risk Officer with quant skills sufficient to anticipate these dynamics, and capable of advising how best to head them off.

Well, SVB’s last CRO left a year ago as the rats were starting to jump, leaving risk management in the hands of this thing — someone who could give you her pronouns before she could spell convexity:

I once had to work for a couple of unskilled “here are my pronouns” people at a company that went insanely woke. Fortunately, I worked for them for just for a short time.

Too long a story how it happened but it began with a class-act president leaving, replace by a wokester, my boss retiring, and well, you get the picture.

I saw the handwriting on the wall early but hung around to see what would happen. It was a surreal experience.

“Go ask Alice – when she’s 10-feet tall.”

Anyway, let’s go to the 2 minute “elevator pitch version” of what has happened and is currently happening, graciously provided by my trusted Mexican risk advisory

Clear enough?

SVB was full frontal woke, managing their portfolio on ESG, watching their unrealized losses pile up on their Treasuries as Powell drove interest rates back into the historic normal band.

As Jay hiked, SVB saw their deposits plunge as the Federal welfare wagon slowed.

And they did nothing.

Let’s recall the Clown Car exec team asleep at the switch — or sitting in DEI conferences 24×7:

  • CEO: Greg Becker (Director at San Francisco Fed)
  • CFO: Daniel Beck (former analyst at Freddie Mac)
  • Chief Admin Officer: Joseph Gentile (Arthur Andersen -> CFO Lehman Bros – > SVB)
  • Chief Risk Officer: Kim Olsen (led credit ratings in 2007 at Deutsche)
  • Chief Legal Officer: Michael Zuckert (General Counsel at Citibank in 2008)
  • Over the last 2 weeks, management sold nearly $5 million in stock.

Here’s Greg “Fearless Leader” Becker speaking at the “you’re fired/thanks for the memories” call (note the Gleneagles logo on his jacket – a primo golf resort in Scotland)

How about the ratings agencies? Where were they? Any “early warning”?

Nope – investment grade all the way up to the moment the FDIC stepped in, halted the bleed, and delivered the merciful kill-shot.

Let’s put this all in context by reviewing the week just ended:

  • $200 billion collapse of Silicon Valley Bank in 24 hours
  • Crypto market lost over $100 billion
  • Bank stocks lost $100 billion in value
  • Mortgage demand hit 30 year low
  • Fed said 2 million people will lose jobs

Who’s now at risk of a haircut or worse. Well, everyone with SVB balances over $250K are uninsured.

That includes:

  • Circle: $3.3 billion
  • Bill․com: $670 million
  • Roku: $487 million
  • BlockFi: $227 million
  • Roblox: $150 million
  • Sunrun: $80 million
  • Ginkgo Bio: $74 million
  • iRhythm: $55 million
  • Rocket Lab: $38 million
  • Sangamo Thera: $34 million
  • Lending Club: $21 million
  • Huuuge Inc: $24 million
  • Payoneer: $20 million
  • Ambarella: $17 million
  • Protagonist Thera: $13 million
  • Oncorus: $10 million
  • Eiger Bio: $8 million
  • Repare Thera: $7 million

Anybody you know?

And these are the only companies REPORTING exposure so far – ~$4 billion.

Yet SVB has $170 billion in uninsured deposits.

50% of all VC-backed startups in the U.S. have exposure to SVB.

97% or so of the deposits uninsured.

But there is a bright side — chatter has it Harry and Meghan had a lot of dough in cash in SVB along with Oprah.

We can dream, can’t we?

Clearly, the shareholders are wiped out. A lot of vendors stiffed. And, with haircuts all around, depositors will scramble to deal with their payments issues, take their haircuts, and move on.

So how does the US banking sector look this Sunday afternoon?

But, as our Mexican risk advisory said, “don’t panic” — Auntie Janet says there will be no bailout – just a “Special Monetary Operation” in the form of an SPV that looks like a bailout, smells like a bailout, and quacks like a bailout.

After all, a lot of California money on the table – that’s a lot of Progressive political power with substantial “value at risk”.

Here’s Auntie:

Translation — my “Special Monetary Operation” is a bailout.

For one thing, Jennifer Newsom has some “dough at risk”.

So Gavin says: “Mi problemo es tu problemo.”

After all, in the People’s Republic of California with $568 billion in debt, recall that 1% of the population pays most of the taxes. And a lot of that tax dough is — or was — parked in SVB.

Meanwhile, in the real world, notes the Treasury dumping since the Biden Regime unlawfully seized power.

Not expecting the bank runs will do much to head this all off. And with China brokering peace between Iran and Saudi Arabia, any surprise China is no buying oil in Chinese yuan?

And the contagion risk is rising — HTM and AOCI are bleeding as interest rates rise, even as that portion of bank balance sheets gets bigger.

52 regional banks lost >10% market value last week with a combined market cap of $369 billion.

FDIC says the US banks are sitting on ovr $620 billion in unrealized losses.

As Winston Zeddemore famously said: “That’s a big Twinkie.”

Now, in fairness, some people did call this.

BTW, I want one of these shirts — I’m expecting to see a lot of these in the next few months in a wide variety of colors and logos.

It’s going to be a great week, kids. Lots of entertainment all around.

Cue up The Band — “it’s not like it used to be”

The Night They Drove Ole’ Credit Suisse Down

First came the bankrun about a month ago triggered by guidance that losses would continue.

A couple weeks later came the next drop after chatter hit the street that regulators were digging into what Axel Lehmann (Board Chair) knew about the run and when he knew it.

So it’s like on schedule that CS stock craters 7% to a record low, following some bad press, courtesy of Reuters and Bloomberg.

For those scoring this game, recall CS has a book per share of ~15.25 and tanking fast.

Lords knows what’s in that pile of toxic waste charmingly labelled “held to maturity.”

So, no surprise, Reuters reports CS is frantically buying deposits at any price – offering 6.5-7% annual rate on new three-month deposits of $5 million+ for one-year deposits. 

That’s a Big Twinkie – 100 to 200 bps above JPM, UBS and Citi.

Hilariously, new deposits cost CS more — per Reuters higher than Credit Suisse’s lending rates in Asia.

Do they plan to make it up in volume? Old joke, just kidding

Per Bloomberg, dozens of CS “scalp hunters” have bailed out since September “and are likely to take at least a quarter of the funds they manage to their new employers, rising to as much as 60% in some cases, according to people familiar with the hires.”

Cue up the night they drove ole’ CS down?

“Not like it used to be” — no kidding.

Bakhmut Last Stand

As reported by Donbass Devuska, the PMC Wagner “Musicians” secured the Stupki microdistrict in Artemovsk (Bakhmut) to the east of Yahidne.

Fighting continues in the Ilyinovka area as they advance on the AZOM plant

All supply and retreat roads are under the fire control of Russian artillery.

30,000 AFU soldiers are now in a “Mariupol Cauldron”

Russian drone over Bakhmut

UN Security Council re Nordstream

ZeroHedge: https://www.zerohedge.com/geopolitical/russia-tells-un-ukraine-crisis-war-west-survival

Russia Tells UN That Ukraine Crisis Is A “War With The West For Survival”

BY TYLER DURDEN

FRIDAY, FEB 24, 2023 – 06:55 AM

In two days of United Nations special sessions this week related to Ukraine as well as the Nord Stream pipeline sabotage, Russia mounted a robust defense, arguing that it sees its ongoing military action in Ukraine is a matter of “survival”. 

Russia’s Permanent Representative to the UN Vasily Nebenzya voiced the stark perspective on Wednesday, casting the war as one against the collective West. “As for our country, we see all of this as a war with the West for survival, for the future of our country, for our children, for our identity,” he said.

He stated that “Ukraine is nothing but a bargaining chip in this plot” – part of a broader plan which was long in implementation, going back to 2014.

The Russian diplomat’s words followed a surprise admission by NATO Secretary General Jens Stoltenberg, who in a Feb.14 press conference in Brussels described that “the war didn’t start in February last year. The war started in 2014.”

The day prior to Nebenzya’s remarks, the UN Security Council had convened at the urging of permanent member Russia to consider fresh allegations surrounding the Nord Stream sabotage. Nebenzia during that session called for establishing an independent investigation. 

He specifically invoked Pulitzer Prize winning journalist Seymour Hersh’s bombshell report which said the pipelines were bombed as part of an elaborate covert CIA operation involving the US Navy and help from the Norwegians: 

“This journalist is telling the truth,” Nebenzia said at the meeting. “This is more than just a smoking gun that detectives love in Hollywood blockbusters. It’s a basic principle of justice; everything is in your hands, and we can resolve this today.”

Crucially, China immediately backed the call. “As the most authoritative and representative international organization, the UN can play an active role in conducting an international investigation and ensuring the security of transboundary infrastructure,” the Chinese ambassador told the Security Council.

But US Ambassador John Kelley slammed what he called Moscow’s attempts to obfuscate and deflect blame from its aggression in Ukraine, saying that “today’s meeting is a blatant attempt to distract” from the forthcoming emergency meeting of the General Assembly. The US at that upcoming meeting is expected to rally in favor of a scathing UN condemnation of Moscow to mark one-year since Moscow’s Feb.24 invasion.

“That is what our focus should be on,” Kelly said. “Russia desperately wants to change the subject.”

But also addressing the council as outside experts were American economist Jeffrey Sachs and Ray McGovern, a former CIA analyst and author Ray McGovern. They made compelling cases during their presentations, saying that the Hersh report is accurate also on account of recent statements from US officials. Those presentations before the UN body be viewed below:

Putin’s Speech, 02/21/2023

Initial translation – will update when the Tass publishes the official transcript

  • “I am speaking at a difficult, milestone time for the country, at a time of cardinal irreversible changes in the world.
  • Putin: Since 2014, Donbass has been fighting for the right to live on its own land, to speak its native language under constant shelling. He believed and expected that Russia would come to the rescue
  • .Putin: The Western rulers’ claim of peace, as we can see, was a hoax. The West increasingly encouraged the Ukrainian regime to carry out terrorist actions in the Donbass. The United States deployed its bases near the borders with Russia. They prepared Ukraine, enslaved by them, for a big war. They admit it openly.
  • We defend not only our positions. In the modern world there should be no division into “civilized” countries and all the rest. We were ready for a constructive dialogue with the West. But in response they received a hypocritical reaction – the expansion of NATO, missile defense systems, the deployment of military contingents. Neither side has hundreds of military bases around the world like the US does. The whole planet is covered.
  • In December 2021, we sent the West a security guarantee agreement, but all positions were refused. The incoming information said that by February everything was ready for another punitive action in the Donbass, against which Kyiv threw artillery, planes, and tanks.
  • They started the war, and we use force to stop it.
  • The next target after the Donbass was an attack on the Crimea and Sevastopol. They are now talking about it openly. We protect our home, and the goal of the West is unlimited power. The West spends $150 billion on the war, and $60 billion on supporting poor countries.
  • Endless accusations against Russia were heard at the Munich Conference. The feeling that this was done so that everyone would forget what the West has been doing in recent decades. And they plunged entire regions into chaos, released gin and bottles. Because trillions of dollars are at stake under the guise of democracy.
  • In the 1930s, the West opened the way for the Nazis to power in Germany. In our time, they made Anti-Russia out of Ukraine. The project is not new. It goes back to the 19th century. It was cultivated in Austria-Hungary, Poland in order to tear the historical regions away from our country. Nothing new. Everyone repeats. The West accelerated this project by supporting the anti-state anti-constitutional coup in 2014 in Kyiv. Russophobia was planted with ideologies.
  • The Armed Forces of Ukraine use Nazi symbols, do not hide whose heirs they are. The West doesn’t give a damn who to bet on in the fight against Russia. The main thing is to fight against us. So, you can use at least terrorists, at least neo-nazis, at least a bald trait. And in the 1930s and now the idea is the same: to kindle a hotbed of war in the East.
  • The people of Ukraine have become a hostage of the occupational pro-Western regime, which has been plundering its state for decades. Nobody cares about people. They are prepared for slaughter, turned into consumables. Sad, scary to talk about it, but true. The responsibility for the escalation lies with the West and the Kiev regime, for which its own people are a stranger.
  • The more long-range systems fall back on Ukraine, the further we will be forced to push the threat away from our borders.
  • The elites of the West want to turn a local conflict into a global confrontation. It is about the existence of our country. But they understand that it is impossible to defeat Russia on the battlefield. Hence the information attacks, lies, distortion of historical facts, attacks on the Russian Orthodox Church, culture.
  • I would like to tell the West – look at the main books of world religions. It says that the family is the union of a man and a woman. But even these sacred values ​​are questioned. The British Church is considering the idea of ​​a gender-neutral God. Forgive me Lord, they don’t know what they’re doing. The elites of the West are going crazy, leading people to disaster. And we will protect our children from degradation and degeneration.
  • The West is trying to undermine our society. But traitors will be held accountable. We will not arrange a witch hunt for those who have abandoned their homeland. Let them live with it. The main thing is that the citizens of Russia gave them a moral assessment. We are proud that the Russians understood our actions in Donbas and supported us. This is a manifestation of patriotism, a feeling that is historically inherent in our people.
  • I want to thank our people for their courage and determination. Thank the fighters, volunteers, patriots. I would like to apologize for not being able to name everyone during the speech. When I was preparing the performance, I wrote a long list of heroic units, then took them out, because it was impossible to name them all. I was afraid not to name someone.
  • Low bow to the families of those who defend Donbass, doctors, builders, rural workers, teachers, cultural figures, volunteers, journalists. Especially those who work on the front lines. I thank the military priests, civil servants and entrepreneurs who fulfill their professional civil and human duty. 
  • Special words of gratitude to the residents of the DPR, LPR, Kherson and Zaporozhye regions. You yourself made your choice in conditions when there were military actions nearby. But you decided to be with Russia, with your Motherland.
  • Special words of gratitude to the residents of the DPR, LPR, Kherson and Zaporozhye regions. You yourself made your choice in conditions when there were military actions nearby. But you decided to be with Russia, with your Motherland.
  • We will implement infrastructure projects in new regions of Russia. Build roads, as they did in the Crimea, which now has a land connection with Russia. We will do everything so that the long-awaited peace returns to our land, the safety of people is ensured. For this, for their ancestors, for the future of children and grandchildren, for the reunification of peoples, fighters, our heroes, fight. I ask you to honor the memory of the soldiers who gave their lives for this, the civilians who died at the hands of neo-Nazis and punishers…
  • I understand how hard it is for the families of the fallen soldiers. Our duty is to support them. Help them raise their children, give them education and a profession. The family of each member of the NWO should be surrounded by care and honor. Their needs must be addressed immediately. 
  • I propose to create a special state fund for targeted personal assistance to the families of those killed and injured during the SVO. He will coordinate the support presentation. I ask the government and the State Council to resolve the issue as soon as possible. Each veteran should be assigned a personal health worker, a coordinator who will solve emerging issues in personal communication. As early as this year, the fund’s structures should be deployed in all regions of the Russian Federation.
  • Every fighter should have the opportunity to visit family.
  • The programs for the development of the armed forces should be based on real combat experience. He is priceless. Officers and sergeants who have shown themselves to be competent commanders will be sent to military educational institutions as a priority. and should be in demand both in the army and in civilian life. The Motherland will appreciate their contribution to the defense of the Fatherland.
  • We will strengthen guarantees for labor collectives. I propose launching a special program to create preferential rental housing for defense industry workers. The rental rate will be lower than the market rate, as part of the payment will be taken over by the government. We will start building such housing, primarily in defense cities.
  • The West has also deployed an economic front against us. But the organizers of the sanctions are punishing themselves. Provoke rising prices, closure of enterprises, energy crisis. And they say that the Russians are to blame. They tried to break ties with Russian companies, disconnect them from financial communication channels, disconnect them from the markets. This is the theft of our foreign exchange reserves. Attempts to collapse the ruble and provoke destructive inflation. Their goal is to make our citizens suffer. Such humanists.
  • In March, a program to support the economy for 1 trillion rubles was adopted. We were predicted an economic downturn of up to 10%. But GDP fell by 2.2%. Despite the fact that in February-March they predicted a collapse for us. Russian business has rebuilt logistics, changed partners to reliable ones. Settlements in rubles doubled and amounted to a third of all. and with the currencies of friendly countries – more than half. We will continue to form a stable, secure system of settlements independent of the Western system and currencies.
  • Defense is a priority. But we are not going to destroy the country’s economy. Thus, the basic sectors of the economy increased their performance. The delivery of housing has exceeded 100 million square meters. Agriculture showed a two-fold growth, for which we bow to them.
  • We have every opportunity to make a breakthrough in other areas as well. We have achieved a reduction in unemployment. Before the pandemic, we had 4.7% unemployment, and now it is 3.7%.
  • You have reached a new level of economic development – the production of goods with high added value. This year, a solid demand for domestic producers is forecast. Our companies are ready to occupy the niches vacated after the withdrawal of Western companies.
  • I draw your attention to the fact that the meaning of our work is not to adapt to current conditions, but to bring the economy to new frontiers. Now everything is changing very quickly. This is a time of opportunity.
  • We will build new logistics links. Build roads to the East, develop a dig. We will pay special attention to the international North-South corridor. This will open up opportunities for cooperation with India, Iran, the countries of Southeast Asia. Our plans include building up the capabilities of the Trans-Siberian Railway, the Northern Sea Route. The infrastructure of the regions will receive a powerful impetus. In 2024, at least 85% of regional roads will be brought to a standard condition. We will continue the free gasification program and expand it to social facilities. For citizens, such a program will operate on an ongoing basis.
  • We have been investing trillions of rubles in housing and communal services for 10 years.
  • We will expand the preferential industrial mortgage program. In industrial clusters, the tax burden has been reduced. They receive long-term orders and subsidies.
  • I ask the government to lend a shoulder to business, provide support measures, including tax incentives.
  • Starting this year, companies can reduce income tax payments if they purchase domestic IT products. I propose extending the exemption for the purchase of domestic high-tech products.
  • There will be new sources of investment financing. Banks work stably and steadily. Last year, the volume of loans to the industrial sector grew by 14%. This is more than in 2021 without any SVO. Development is underway. The banking sector worked with a profit of 203 billion rubles. This is also an indicator of Russia’s financial stability. Inflation for the quarter will approach the target of 4%, while in some EU countries up to 17%.
  • Loans for the real sector should become more accessible. Long-term savings are sources of financing loans. I ask the government to launch a state program to attract savings and guarantee the safety of citizens’ finances.
  • Separate solutions are needed for high-tech business. For them, we will provide for the placement of shares on the domestic market. The most important element of economic sovereignty is private business. He knows how to adapt to changing conditions.
  • It is necessary to revise the norms of criminal legislation regarding economic crimes. We need to move towards decriminalization. We need government measures to deoffshorize. Business must operate in Russian jurisdiction – this is a basic principle.
  • After the collapse of the USSR, its planned system in conditions of chaos, the country created a market economy. Western countries serve as an example. It would seem to just copy. But something happened – our national economy became oriented towards the West. as a source of raw materials. The reasons are also clear – the new emerging Russian business was aimed at making a profit. Fast and easy. Therefore, more complex sectors of the economy developed poorly. It took years, massive changes and investments to break the trend. And there is a result.
  • Technologies and equipment were bought in the West. And instead of buying domestic, the money was spent on estates, yachts, foreign real estate. Especially at first. And where there is wealth, there are children, their education, their life and future. Recent events have shown that a safe haven abroad is an illusion. The West robbed, took away even legally earned money.
  • None of the ordinary citizens of the country felt sorry for those who lost their capital in foreign banks, who lost their yachts and palaces. And in conversations in the kitchen, they probably remembered both the privatization of the 1990s and the ostentatious luxury of the new elites.
  • The West has provoked conflicts, used means of economic deterrence all these years. And big business is responsible for the strategic enterprises of thousands of teams. This means that when the leaders and owners of such a business are dependent on the West, it is a danger to the country. Such a situation cannot be tolerated.
  • Everyone has their own choice. You can stay in your arrested castle with arrested accounts. But you have to understand that they are second class there. But there is another choice: to be with your Motherland, to work for compatriots. Open new businesses, change the life around you. We have many such real entrepreneurs-fighters. Behind them is the future of domestic business. The sources of well-being and the future should be only here, in Russia. Then we will create a solid economy.
  • The capital earned here must remain here. It is pointless to run and humiliate yourself before the West, begging for your money. Do not try for the past, try to sue something. We need to change our lives and work. Especially since you are strong people, I am addressing business representatives. Launch new projects, earn money and invest in Russia. Help schools and universities, science and healthcare, culture and sports. So multiply capitals, and earn the gratitude of people. And the state will support you. Let’s take this as a guide to business.
  • This civilization was passed down to us by our ancestors. And we must save and pass on. We will develop relations with friends, but first of all we will rely on our own potential, traditions and values. Our people have always been distinguished by generosity and mercy. Russia knows how to be friends. Always came to the rescue. For example, in the case of earthquakes in Syria and Turkey. The people are the source of power. Rights are inviolable and guaranteed by the Constitution. Despite the threats, we will not retreat from them.
  • Presidential elections in 2023 and 2024 will be held strictly in accordance with the law.
  • I would like to quote Stolypin: “In the matter of defending Russia, we must all unite, coordinate efforts, duties and rights to maintain one historical supreme right – the right of Russia to be strong.”
  • Among the volunteers there are deputies, representatives of authorities of all levels and all parties. Public associations help with the collection of goods in the NWO. Once again, kudos to you all.
  • The education system and culture are important to reinforce our values. The Presidential Grants Fund and other tools will support all forms of creative research. It is necessary to awaken the best human qualities in society. The development of the cultural sphere will become one of the priorities for restoring peaceful life in the Donbass.
  • We must improve the quality of education in schools and universities so that young people can learn more about the history of Russia. We have a young bright generation that is ready to participate in the development of the country. For such active people, the competitions “Leaders of Russia”, “Leaders of Revival” open the doors. The winners and finalists of the competitions volunteered to help establish a peaceful life. Act professionally and courageously.
  • Those who were born and raised in the Donbass, who fought for it, should become the backbone of the development of the territory. Russia is counting on you.
  • We need to give scientists more freedom to be creative. Fundamental science should work for the following areas: transport, energy, housing and communal services, medicine, agriculture, industry.
  • In December, I met with young scientists. Their problem is housing. I instruct the government to determine the reserves for expanding the relevant program. The prestige of secondary education has grown. The demand for college graduates has grown tremendously. We must significantly expand the project of professionalism, within the framework of which educational clusters are being created together with enterprises. The goal is to train 1 million specialists for the electronics, robotics, nuclear and other industries in 5 years. Key to the sovereignty and competitiveness of Russia.
  • There are changes in higher education. I propose to return to the country’s traditional basic training of specialists in higher education. The term of study can be from 4 to 6 years within the same specialty and the university may have different programs depending on the profession, industry and market demand. If the profession requires additional training, then a person can pursue education in the magistracy and postgraduate studies. Postgraduate studies will be separated into a separate structure of education. The transition to the new system should be smooth.
  • Those students who are studying now can continue their education in existing programs. I ask the ONF to take control of all changes in higher education.
  • Spending on supporting families in Russia has increased significantly in recent years. It is the fastest growing section of the budget. Since February 1, mother’s capital has been indexed by 11.9%. Residents of new regions also have the right to this. I propose to provide maternity capital to Donbass families whose children have been born since 2007, when the program began to operate in Russia. We also extended the program to residents of Crimea and Sevastopol.
  • The minimum wage last year was raised twice by 20%. We will continue to raise it, at a rate higher than inflation. From January 1 next year, I offer an additional increase of 10%. The minimum wage will increase by 18.5% and will amount to more than 19 thousand rubles.
  • Since last year, families with 2 or more children have been exempted from taxes when selling a home and buying a larger one. I propose to increase the size of the social tax deduction for the education of children. It is necessary to raise not only the amount of the deduction, but also to increase the demand for it so that it is provided proactively – quickly and remotely.
  • Funds for national projects, which are reserved for 2024, the regions will be able to receive now through interest-free budget loans, and in April next year they will be automatically repaid. We do not need storming and the pursuit of volumes. There must be a high return. This is especially true for the modernization of primary health care.
  • We launched a school renovation program. 3500 schools will be updated in a year. Most of them are in rural areas. Starting in 2025, federal funds for the repair of schools and kindergartens will be allocated on a regular basis to prevent situations when buildings are in an emergency. This year we will introduce 400 new schools.
  • We are additionally allocating 250 billion rubles for the development of transport, utilities and other infrastructure. I instruct the government to allocate an additional 50 billion rubles. They will be used to upgrade the transport system in the regions. I ask you to pay special attention to small towns and rural areas.
  • We have extended the Clean Air program. We will continue the landfill elimination program. We will continue the improvement of Lake Baikal, the Volga, and expand it to the Volga, Neva and other rivers. A draft law on the development of tourism in specially protected natural areas has been prepared. It determines what can be built and what cannot. I ask the State Duma to expedite consideration of the bill.
  • In early February, NATO demanded a return to the implementation of the strategic offensive nuclear arms treaty, including inspections of our facilities. This is a theater of the absurd. The West is directly involved in the attempts of the Kyiv regime to strike at our strategic aviation. And now they also want to inspect our defense facilities. This sounds like bullshit. The West does not allow us to conduct the same inspections. NATO’s goal is to defeat Russia and at the same time they want to visit our facilities? Do they want to poke their nose at our new ground-based centers?
  • NATO actually made an application to become a party to the Strategic Nuclear Arms Treaty. This question is long overdue. After all, NATO consists of the nuclear countries of the United States, France, Great Britain. They develop, improve and are directed against us.
  • The US has withdrawn from the ABM treaty. Our relationship has deteriorated. And this is the merit of the United States, which began to revise the results of the Second World War, to build a world where there is only one owner – the United States. Planned a series of wars around the world to break the architecture of world relations. After the collapse of the USSR, they are striving to fix their dominance.
  • It is unacceptable that the United States is rebuilding the world order exclusively for itself. And now ultimatums are being put forward through NATO: “Follow our demands, and we will do what we want.” This is either the height of hypocrisy and cynicism, or stupidity. Don’t call them idiots.
  •  Russia suspends participation in the strategic offensive arms treaty. It doesn’t exit, it stops. But to return the discussion, we must understand what NATO is counting on.
  • The expiration date of nuclear weapons in the United States. And individuals in Washington are working on new types of nuclear weapons. We must be prepared to test new types of weapons if the US does. Not the first. No one should be under the illusion that global nuclear parity can be destroyed.
  • Cohesion manifested itself from the first days of the NWO. Hundreds of thousands of volunteers came to the military registration and enlistment offices to fight for truth and justice. They fight shoulder to shoulder. All of them are for the Victory, for comrades-in-arms, for the Motherland