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Yesterday’s post covered the Inter-Korean Summit, which took place on April 27, 2018 and resulted in the Panmunjom Declaration between the two nations (great photos here and here).

Today’s looks at the Singapore Summit between the US and North Korea, which took place on Monday, June 12, 2018 at the Capella Hotel, Sentosa Island.

President Trump understands the complexity of negotiations with North Korea, because China controls that country. Graphic below courtesy of The Conservative Treehouse (CTH):

Consider the magnitude of the events of this year, so far. This was Dilbert’s Scott Adams’s take early in April:

After the Inter-Korean Summit, Trump was careful to remember China’s Xi:

After six decades, the Korean War is finally ending. Trump was a little boy when the last shot was fired. Even CNN acknowledged that he’s been instrumental in making it happen, although he humbly tweeted (emphases mine):

KOREAN WAR TO END! The United States, and all of its GREAT people, should be very proud of what is now taking place in Korea!

This was the scene in South Korea after the two Korean leaders met:

Trump spoke with South Korea’s Moon and Japan’s Abe with a view to US talks with North Korea.

Although military-industrial sector stocks dipped, on Monday, April 30, President Moon said that Trump should win the Nobel Peace Prize. From Reuters:

South Korean President Moon Jae-in said U.S. President Donald Trump deserves a Nobel Peace Prize for his efforts to end the standoff with North Korea over its nuclear weapons program, a South Korean official said on Monday.

“President Trump should win the Nobel Peace Prize. What we need is only peace,” Moon told a meeting of senior secretaries, according to a presidential Blue House official who briefed media.

Conservative commentator Charles Payne took a Twitter poll: 83% agreed with Moon.

As a US trade delegation headed to China, Trump toyed with the idea of holding the US-North Korea summit at Peace House, where the Inter-Korean Summit took place.

On May 3, the South Koreans were still thinking about their president’s words on Trump’s deserving the Nobel Peace Prize:

If only Trump were as highly regarded in his own country …

The following day, North Korea switched to South Korea’s time zone in a significant step towards reunification:

Meanwhile, John Bolton met with South Korea’s national security office director Chung Eui-Yong about the Inter-Korean Summit as well as plans for President Moon’s trip to the White House on May 22.

On May 9, Trump held a cabinet meeting:

On May 10, North Korea released three American hostages. They returned to the United States, where President Trump and First Lady Melania Trump were on hand to greet them and Mike Pompeo, who had secured their release.

The next day Pompeo pledged American help to North Korea, under certain conditions:

Pompeo also met with South Korea’s Foreign Minister Kang Kyung-wha at the White House that day. She was the one who told CNN’s Christine Amanpour that President Trump deserved much credit for the Inter-Korean Summit.

On May 12, news circulated that North Korea would dismantle its nuclear site on May 23, with rumours that only journalists from selected countries could cover the event. Trump tweeted:

On May 15, a North Korean statement put the Singapore Summit into doubt:

This was Trump’s response:

On May 17, CTH offered this analysis:

President Trump met with NATO Secretary General Jens Stoltenberg at the White House today for a bilateral meeting on EU security and trade issues. During the Oval Office press availability both made remarks but president Trump took the opportunity to have an impromptu presser on other current issues …

It was not coincidental the stompy-feet assertions of Kim Jong-un and the DPRK were timed at the exact moment Chinese Vice-Premier Liu arrived in the U.S. for important trade talks. Once again Chairman Xi Jinping is using his proxy province of N-Korea to leverage economic benefits

POTUS Trump knows exactly what Chairman Xi is doing. Xi is leveraging the N-Korea talks for a better trade outcome.

On May 21, a commemorative coin to mark the Singapore Summit appeared:

President Moon arrived at the White House as scheduled, on May 22. CTH offered this analysis:

An important meeting today in the Oval Office between U.S. President Donald Trump and South Korean President Moon Jae-in. Obviously the primary discussion was over the issues of North Korea nuclear program, and the possible denuclearization summit between President Trump and North Korean Chairman Kim Jong-un …

After a second meeting with Chinese Chairman Xi Jinping, the voices behind Chairman Kim Jong-un changed their tone in media presentations and and became more hostile toward the goal of a denuclearization summit. This example showcase Beijing exerting control over the DPRK to gain strategic trade and economic benefits.

Trump and Moon held a press conference. Trump answered a question on trade with China:

… President Xi and I have a great relationship, as President Moon can attest. But there is no deal. We will see what happens. We are discussing deals. We’re discussing various deals. We can do a 301. We can do — where we don’t need China, where we can just say, look, this is what we want, this is what we think is fair. That’s always a possibility if a negotiated deal doesn’t work out.

As I said, we lost $500 billion a year for many years. And then it varied from $100 billion to $500 billion. When you’re losing $500 billion a year, you can’t lose in terms of a negotiation. It’s really easy to win. But I want this to be a great deal for the United States, and I want it to be a very good deal for China, too, if that’s possible. It may not be possible

On May 24, Kim Jong-Un cancelled the Singapore Summit.

Trump responded in writing. The last two paragraphs are absolutely brilliant — and personal. The AP said that national security adviser John Bolton dictated the text of the letter:

CTH had this take:

Ultimately the decision to withdraw is an outcome of changes in posture initiated strategically by China and Chairman Xi Jinping. China hoping to leverage a U.S. trade outcome by playing the strings on DPRK Chairman Kim Jong-un.

The timing of the meetings between China and DPRK, mirrors the changes in posture by the DPRK and reflects a transparency. Communist Beijing is engaging with the Trump administration in traditional dragon-mode their zero-sum outlook. In response, President Trump drops the Panda approach and confronts the manipulation directly.

Likely President Trump will immediately increase sanction enforcement and reposition again for a pending naval blockade.

Earlier that day, North Korea blew up its nuclear test site. No inspectors were present, and the White House said that was the reason for Trump’s letter:

Secretary of State Mike Pompeo said he received no North Korean response to earlier requests about setting up meetings during the summit. From the Daily Mail:

The North Korean government completely ignored the Trump administration’s efforts to nail down details of a planned June 12 nuclear arms summit in Singapore, effectively disappearing in the middle of pre-meeting protocol negotiations.

Secretary of State Mike Pompeo had met personally in April with Kim Jong-un in Pyongyang, sketching out the contours of the face-to-face that President Donald Trump canceled Thursday morning.

In testimony during a Senate Foreign Relations Committee hearing, Pompeo said there was no chance of ‘a successful outcome,’ in some part because Kim’s team was AWOL when it counted.

‘Over the past many days we have endeavored to do what Chairman Kim and I had agreed, [which] was to put teams, preparation teams together, to begin to work to prepare for the summit,’ he told senators. ‘And we had received no response to our inquiries from them.’

By May 25, the talks were on again, with a North Korean statement. CTH reported:

Within minutes of President Trump withdrawing from the June 12th summit, Beijing realized all of their trade leverage was just wiped out. Playing deceptive panda isn’t going to work this time …

This is a battle, a massive economic battle, between U.S. President Trump and Chinese Chairman Xi. Period.

Whenever this geopolitical economic trade confrontation is resolved; that’s when Chairman Xi will instruct Chairman Kim to take the knee. Not a moment before.

Until the U.S. -vs- China economic confrontation is solved, Xi will continue to use the DPRK threat as his principle leverage in the negotiations.

CTHTheLastRefuge — had more on Twitter. From May 25:

Kim’s back in Beijing for next set of instructions. LOOK=>: “A high-ranking North Korean official appears to be visiting Beijing, a source with knowledge of the matter said Thursday, as the country has been bolstering ties with China.”…

Finally, at least one media outlet — Fox News — understood:

By May 26:

On May 27, CTH reported:

President Trump has announced via Twitter the U.S. advance team has arrived in North Korea to position for a possible June 12th summit between President Trump and North Korean Chairman Kim Jong-un.

Yesterday South Korean Prime Minister Moon Jae-in and North Korean Chairman Kim Jong-un held an impromptu summit/meeting in the DPRK to display their unified smiles.

Trump gave a bit more detail:

We have put a great team together for our talks with North Korea. Meetings are currently taking place concerning Summit, and more. Kim Yong Chol, the Vice Chairman of North Korea, heading now to New York. Solid response to my letter, thank you!

On May 29, Kim Yong Chol flew to Beijing first, then on to New York. Pompeo was his host:

On June 1, Kim Yong Chol went to the White House to meet with President Trump and deliver a large, mysterious envelope:

Kim Yong Chol arrived in North Korea on June 3. Interestingly, North Korea replaced their top three military officials the same day.

On June 5, Trump was looking forward to the Singapore Summit. On June 7, he tweeted that he was looking forward to meeting his ‘good friend’, Japan’s Shinzo Abe, at the G7 to discuss trade and North Korea.

Trump left the G7 early for the Singapore Summit:

Air Force One landed in Crete for refuelling. Meanwhile, Air China provided Kim Jong Un with an Airbus A330 to get him to Singapore. Kim received a cordial welcome when he arrived (motorcade photo here).

China sent best wishes:

Pompeo was already conducting preliminary meetings:

The White House issued a statement saying that discussions were going very well indeed, ‘more quickly than expected’.

North Korea’s state media was also positive:

Here’s the historic handshake between Trump and Kim (a photo here of the room beforehand):

This composite video of the two leaders at the summit marks pivotal, historic moments for both countries and the world:

Trump and Kim met privately. This is what happened on the way:

They also made brief statements:

They took a walk after lunch:

Bilateral meetings also took place:

This is worth noting:

Talks went so well that Trump was able to leave Singapore earlier than expected.

Who would have expected these results only a few months ago?

Kim also pledged to finally return the remains of Americans who died in the Korean War.


Incidentally, here is a bit more about the large, mysterious letter Kim Yong Chol delivered to the president on June 1. On June 11, just before the Singapore Summit began, the Straits Times reported:

According to South Korean daily Joongang Ilbo, citing a source in Singapore, Mr Kim has invited Mr Trump to North Korea to hold a second summit in July.

The invitation was in a letter written by Mr Kim to Mr Trump and hand delivered by Mr Kim’s right-hand man, General Kim Yong Chol, to the White House on June 1.

While Mr Trump has not revealed what was written in the letter, he seemed happy to get it. He told reporters then it was “a very nice letter” and “a very interesting letter”.

Although Trump flew back to Washington after the Singapore Summit, Pompeo’s work was far from over:

In closing, the impact of the Singapore Summit was not lost on the world.

In India:

In Los Angeles:

Amazingly, in North Korea:

This is a very exciting time for not only North Korea, South Korea, Asia and the United States — but also for the world.

It will be interesting to see how North Korea develops, particularly since the nation is sitting on trillions of dollars of mineral resources.

Post-Summit analysis to follow next week.


The Singapore Summit took place in June 2018.

Before then, the historic Inter-Korean Summit took place on April 27.

How far things progressed over the past six months!

This post covers the events and negotiations that led to the Inter-Korean Summit.

On December 28, 2017, President Trump tweeted his disappointment that China was ‘allowing oil to go into North Korea’.

Who can forget this tweet from the New Year in 2018?

Four days later:

A week later, Trump rightly took the Wall Street Journal to task for misquoting him:

… I said “I’d have a good relationship with Kim Jong Un,” a big difference. Fortunately we now record conversations with reporters…

Then he began consulting with geopolitical veterans, including Henry Kissinger:

On March 5, Reuters reported (emphases mine):

Feeling the pressure of sanctions, North Korea seems “sincere” in its apparent willingness to halt nuclear tests if it held denuclearization talks with the United States, President Donald Trump said on Tuesday as U.S., South Korean and Japanese officials voiced skepticism about any discussions …

Word of possible talks was delivered by a South Korean delegation on its return from a first-ever meeting with North Korean leader Kim in Pyongyang on Monday.

The following day, the AP reported that talks between North and South Korea would be scheduled for April:

Chung Eui-yong, the South Korean official who spoke after participating in talks with Kim in Pyongyang, also said the North Korean dictator had agreed to meet with South Korea’s president at a border village in late April.

North Korea didn’t announce what South Korea on Tuesday described as agreements between the rivals. But the North’s state media earlier reported Kim had “openhearted” talks with South Korean envoys, expressed his willingness to “vigorously advance” North-South relations and made a “satisfactory” agreement on the inter-Korean summit talks.

On March 7, the AP featured a timeline article on progress, including this:

South Korea also said North Korea has agreed to halt tests of nuclear weapons and missiles if it holds talks with the United States on denuclearization.

The Conservative Treehouse (CTH) said that this had been in the works since at least August 2017 — when Charlottesville occurred — and that other countries, particularly China, were involved:

All of this was generally under-reported and took place months before President Trump arrived in Asia last year.  The U.S. media was busy pushing racism and Charlottesville narratives.  More importantly this quiet activity took place while President Trump directed US Trade Rep Robert Lighthizer to begin a section 301 trade investigation (Intellectual Property theft) into China.

President Trump was ramping up the economic pressure on Chinese President Xi Jinping; but more specifically Lighthizer’s action was targeting Beijing’s command and control economy along with the behavior of North Korea.

China -vs- U.S. moves have been taking place in Europe, Russia, Afghanistan, Pakistan, Cuba, Venezuela, India, Libya as well as Mexico, Canada and ASEAN nations.  When dragon puts a footprint in Mexico, eagle puts a footprint in Vietnam.   When eagle puts a print in India, dragon puts a print in Pakistan…. this has been going on for well over a year, well beyond the media horizon, and almost no-one’s paying attention.

On March 9, reported that Trump and Kim were to meet in May:

North Korean dictator Kim Jong Un and Donald Trump plan to meet in May for nuclear disarmament talks …

It would have been an unthinkable suggestion just a few months ago, when the insults were at their peak — Mr Trump was a “senile dotard” and Mr Kim was “Little Rocket Man”.

Trump officials had received a briefing in Washington from the South Koreans beforehand.

Even normally critical media pundits acknowledged that Trump’s ‘madman approach’ to North Korea was working.

The South Koreans issued an affirmative statement. The South China Morning Post reported:

South Korea’s national security adviser Chung Eui-yong made the announcement of Kim’s offer in Washington on Thursday (Friday morning Hong Kong time).

Chung said Kim was “committed to denuclearisation” and would refrain from any further nuclear and missile tests.

He said Kim wanted to meet Trump as “soon as possible” and that Trump said “he would meet Kim Jong-un by May to achieve permanent denuclearisation” of the Korean peninsula.

The White House posted Chung Eui-yong’s full statement, including this:

Kim pledged that North Korea will refrain from any further nuclear or missile tests. He understands that the routine joint military exercises between the Republic of Korea and the United States must continue

The Republic of Korea, along with the United States, Japan, and our many partners around the world remain fully and resolutely committed to the complete denuclearization of the Korean Peninsula. Along with President Trump, we are optimistic about continuing a diplomatic process to test the possibility of a peaceful resolution.

The Republic of Korea, the United States, and our partners stand together in insisting that we not repeat the mistakes of the past, and that the pressure will continue until North Korea matches its words with concrete actions.

A video of his announcement can be found here.

That Sunday, March 11, the news shows were abuzz with analysis of the upcoming US-North Korea talks, including perspectives from John Bolton and Mike Pompeo.

Even the anti-Trump Independent in the UK had praise for the American president:

… during a recent, daily grumble about The Donald, I got thinking; if you look past the ridiculous Twitter pronouncements, and the President’s general veneer – what has he actually done? How bad has the 45th President of the United States actually been for the country?

The answer, it might surprise you, is not that bad at all.

Stock market up, unemployment down. After plateauing for much of 2015 and 2016, numbers of manufacturing jobs have been on the rise since Trump’s inauguration …

On foreign policy, he’s been brash and unpredictable, but successful. He can’t take full credit for the defeat of Isis in their traditional strongholds, but they have been defeated. He can’t take full credit for defusing tensions with North Korea – but under President Trump, Kim Jong-un is becoming more receptive to talks with South Korea, and even sent a team to the Winter Olympics. His “quirky” style of diplomacy has led to, in the past few days, talk on the denuclearisation of the Korean peninsula and the closest thing to a peaceful North Korea we’ve seen in years. On Friday it was even announced that Trump will be meeting with Kim Jong-un

On Wednesday, March 14, news emerged that North Korea was involved with Syria. The Washington Free Beacon reported:

Regional reports have begun to surface indicating North Korea has neared completion of the construction of an underground military base located near Qardaha in Syria, the hometown of embattled Syrian President Bashar al-Assad.

“According to … satellite images and a military source the underground facility has been under construction for seven years, started by the beginning if the Syrian revolution in March 2011,” Zaman Al Wasl, a Syrian news outlet, reported earlier this month. “The high level of secrecy and tight guard in the North Korean base raise speculations whether it’s a nuclear facility or overseas depot for North Korean weapons.”

U.S. officials told the Washington Free Beacon they are monitoring these reports and efforts by North Korea to help Assad rebuild Syria’s chemical weapons factories.

“We are aware of reports regarding possible DPRK [Democratic People’s Republic of Korea] assistance to Syria to rebuild its chemical weapons capabilities,” a State Department official, speaking on background, told the Free Beacon. “We take these allegations very seriously and we are working assiduously to prevent the Assad regime from obtaining material and equipment to support its chemical weapons program.”

The Trump administration has been engaged in efforts to counter North Korea’s proliferation in Syria, particularly its efforts to supply Assad with chemical weapons.

On Friday, March 23, Legal Insurrection reported that Trump signed the Omnibus Bill with North Korea — and Iran — in mind:

Why the need for government funding for at least 6 months? That could have waited for another short term funding bill, some more muddling through, perhaps even muddling through until the November elections.

What was the rush to sign a bill with increases in authorized military spending NOW?

While Trump ran as someone who wasn’t looking at foreign policy as his reason for election, his presidency and attention increasingly are turning to foreign potential conflicts. In the next couple of months Trump will be dealing with two major potential conflict areas: North Korea and Iran.

As to North Korea, Trump is gearing up for talks with “Little Rocket Man.” As to Iran, Trump is facing fights both with the Europeans and the Iranians as to whether Obama’s Iran Nuclear deal survives. Trump already has made moves to strengthen the U.S. posture. Adding John Bolton as National Security Advisor sends a get-tough signal, a message that Trump will not repeat the appeasement mistakes of Obama-Kerry.

As Trump approaches potential conflict with North Korea and Iran, he could spend the prior months rolling through one “shutdown” after another, one-month spending bills, an inadequate military budget held hostage by Democrats, and the prospect of months more such turmoil at least through the midterm elections.

Alternatively, Trump could approach the North Koreans and Iranians with government funding in place including substantial increases for the military.

Do you think the North Koreans and Iranians care about the domestic spending fights that now occupy media coverage? I doubt it. I do think they care about a Trump focused on rebuilding the military and a U.S. military which has just been given additional resources. Trump wants to be the strong horse, a dramatic change from the Obama administration posture. Add to this increased military aggressiveness by Russia and China.

Elsewhere, speculation returned to a soundbite from the end of 2017 about ‘freeing 25,000,000 slaves worldwide’. Was it about human trafficking or was it about North Korea, as Q commented? (Image below courtesy of Reddit’s Q-oriented GreatAwakening)

On March 28, Trump tweeted:

Press Secretary Sarah Sanders had this to say:

That day, the KORUS trade agreement between the US and South Korea was agreed upon in principle:

On March 29, the AP announced that a highly historic summit between North and South Korea would take place on April 27:

Summit meeting will be only the third time leaders of the divided Koreas have met in the 65 years since the end of the Korean War.

On April 9, WND interviewed Peter Schweitzer, author of Secret Empires: How Our Politicians Hide Corruption and Enrich Their Families and Friends, who said that China was a huge part of the North Korea picture:

“My view has always been that absent China skirting the rules and going fast and loose with commercial ties, North Korea would be on the brink of collapse,” Schweizer told WND in an interview.

“I think that’s the opportunity that Trump has, to go to the Chinese and say: ‘Look, the bottom line is you need to deal with this. You need to cut off trade, you need to cut off commercial ties to help us deal with North Korea. Nobody else is in the position to do it the way that you are.’”

Schweizer said critical sectors such as minerals and energy “are what keeps North Korea bumping along while the people are starving.”

“You take that stuff away and the regime has a massive, economic problem,” he said.

On April 17, just days before the summit between the two Koreas, CNBC reported:

North and South Korea are in talks to announce a permanent end to the officially declared military conflict between the two countries, daily newspaper Munhwa Ilbo reported Tuesday, citing an unnamed South Korean official.

Ahead of a summit next week between North Korean premier Kim Jong Un and South Korean President Moon Jae-in, lawmakers from the neighboring states were thought to be negotiating the details of a joint statement that could outline an end to the confrontation

Pyongyang and Seoul have technically been at war since the 1950-1953 Korean conflict ended with a truce — and not a peace treaty. Geopolitical tensions have occasionally flared up since the armistice, although to date both countries have managed to avoid another devastating conflict.

CTH’s TheLastRefuge — aka Sundance — pointed out the change in 12 months:

That day, Trump welcomed Japan’s prime minister Abe to Mar a Lago along with a delegation. CTH told us:

The formal bilateral meeting began shortly before 4 p.m. POTUS Trump and PM Abe together with translators and delegations. The U.S. side: Deputy Secretary of State John Sullivan, Chief of Staff John Kelly, National Security Adviser John Bolton, US Ambassador to Japan William Hagerty and National Security Council Asia director Matthew Pottinger.

Prime Minister Shinzo Abe said their one-on-one meeting was productive. On North Korea, “for the first time in the history of the world there will be a summit meeting between the United States and North Korea”, Abe said. Prime Minister Abe said “Trump has applied maximum pressure on the North and credited it for leading to the direct talks.”

Trump described their meeting as ‘great’.

The next day, we found out that Mike Pompeo had already been in North Korea on secret talks:

The White House declined further comment.

On April 19, South Korea’s president Moon Jae-in was optimistic about the upcoming summit. NBC reported:

Moon said big-picture agreements about denuclearization, establishing a peace regime and normalization of relations between the two Koreas and the United States should not be difficult to reach through summits between the North and South, and between the North and the United States.

“I don’t think denuclearization has different meanings for South and North Korea,” Moon said during a lunch with chief executives of Korean media companies. “The North is expressing a will for a complete denuclearization.”

“They have not attached any conditions that the U.S. cannot accept, such as the withdrawal of American troops from South Korea,” he continued. “All they are talking about is the end of hostile policies against North Korea, followed by a guarantee of security.”

On April 21, Yonhap News Agency reported:

North Korean leader Kim Jong-un has announced that the country will suspend nuclear and missile tests and shut down a nuclear test site in the northern area, state media said Saturday.

From April 21, North Korea will stop nuclear tests and launches of intercontinental ballistic missiles,” the Korean Central News Agency said.

Trump was delighted.

Even CNN had to acknowledge this was yuge news — ha ha — on Wolf Blitzer’s show no less. Mediaite has a report and video:

CNN’s Will Ripley, one of the few journalists who regularly reports from the repressive Hermit Kingdom, phoned in to Wolf Blitzer’s show on Friday night to cover the breaking news …

“Wolf, I have to say, I am really almost speechless here at the pace at which North Korea has done this U-turn,” Ripley reacted. “This all started with Donald Trump agreeing to sit down with a summit with Kim Jong Un.”

Meanwhile, Mike Pompeo was able to guarantee North Korea’s release of three American citizens that day. They returned home on May 10.

On April 22, Treasury secretary Steven Mnuchin met with the South Koreans:

Productive discussion with South Korean DPM KIM Dong-Yeon. The US remains committed to the complete denuclearization of the Korean Peninsula.

That day, we found out more about Mike Pompeo’s secret trip to Pyongyang from the Korean Noon news agency:

Mike Pompeo met with KJU 3-4 times during his 3-day stay in Pyongyang per Asahi Shimbun. KJU reportedly said he’s on the same wavelength with Pompeo: “This is the first time I’m meeting someone who has the same fire in the belly as I do” (loose translation)


Per Asahi, KJU conveyed to Pompeo NK could “completely denuclearize” and that USFK would not have to leave. KJU wants full diplomatic relations with US and easing of UNSCR & bilateral sanctions in return. Pompeo went with 5 CIA staff and was aided by NIS

Pompeo first met with Kim on April 1:

The meetings were very successful per Asahi. Pompeo first met KJU on April 1 and that’s when he was told about “complete denuclearization”. Pompeo was aided by NIS chief Suh Hoon, who has formed working relationships with both Pompeo and NK’s Kim Yong-chol

Not everything was 100% successful:

But there are still differences: Asahi says while KJU may have expressed “willingness to denuclearize,” he was reluctant to include specific, time-based clauses as part of summit agreement, while calling for diplomatic relations and easing of sanctions.

Noon also told us of an ongoing CIA presence in North Korea:

CIA employees in Pyongyang? You don’t have to travel that far down the memory lane to realize this happened before: Avril Haines and Michael Morel were both in Pyongyang in 2012 during Obama’s term but they didn’t get to meet KJU. But they’ve had contacts

Pompeo was finally confirmed as Rex Tillerson’s replacement at State on April 26:

The historic Inter-Korean Summit between the two Korean leaders took place as planned on April 27 (videos here, here and here):

Kim walked across the border to South Korea for the summit, which was held in Panmunjom in the DMZ.

Kim wrote this message in the guest book at Peace House:

‘new history starts now; age of peace, from the starting point of history’

The leaders issued a joint statement:

The description for that video reads, in part:

During the Friday summit, the first between the two Koreas’ leader in more than a decade, Kim was accompanied by his sister and confidante, Kim Yo-jong, and the 90-year-old nominal head of the North Korean state, Kim Yong-nam.

During the meeting, the South Korean president expressed hope for achievement of a “bold agreement.”

The White House sent this message:

On the occasion of Republic of Korea President Moon Jae-ins historic meeting with North Korean leader Kim Jong Un, we wish the Korean people well. We are hopeful that talks will achieve progress toward a future of peace and prosperity for the entire Korean Peninsula. The United States appreciates the close coordination with our ally, the Republic of Korea, and looks forward to continuing robust discussions in preparation for the planned meeting between President Donald J. Trump and Kim Jong Un in the coming weeks.

By the end of the day (full video here):

The Korean leaders then shared dinner together.

Ambassador Chris Hill summed up the first day as follows:

President Trump sent his congratulations. The South Korean foreign minister remembered Trump in an interview with CNN’s Christine Amanpour:

South Korea’s Foreign Minister tells me in Seoul that “clearly credit goes to President Trump” for bringing North Korea to the negotiating table. “He’s been determined to come to grips with this from day one,” Kang Kyung-wha says.

The Straits Times published the full text of the Panmunjom Declaration for peace, prosperity and unification of the Korean Peninsula which resulted from the Inter-Korean Summit. Excerpts follow:

1) South and North Korea affirmed the principle of determining the destiny of the Korean nation on their own accord and agreed to bring forth the watershed moment for the improvement of inter-Korean relations by fully implementing all existing agreements and declarations adopted between the two sides thus far.

2) South and North Korea agreed to hold dialogue and negotiations in various fields including at high level, and to take active measures for the implementation of the agreements reached at the summit.

3) South and North Korea agreed to establish a joint liaison office with resident representatives of both sides in the Gaeseong region in order to facilitate close consultation between the authorities as well as smooth exchanges and cooperation between the peoples.

4) South and North Korea agreed to encourage more active cooperation, exchanges, visits and contacts at all levels in order to rejuvenate the sense of national reconciliation and unity.

5) South and North Korea agreed to endeavour to swiftly resolve the humanitarian issues that resulted from the division of the nation, and to convene the Inter-Korean Red Cross Meeting to discuss and solve various issues, including the reunion of separated families.

6) South and North Korea agreed to actively implement the projects previously agreed in the 2007 October 4 Declaration, in order to promote balanced economic growth and co-prosperity of the nation.

The two leaders agreed, through regular meetings and direct telephone conversations, to hold frequent and candid discussions on issues vital to the nation, to strengthen mutual trust and to jointly endeavour to strengthen the positive momentum towards continuous advancement of inter-Korean relations as well as peace, prosperity and unification of the Korean Peninsula.

In this context, President Moon Jae In agreed to visit Pyongyang this fall.

Tomorrow’s post will feature analysis and the events that led to the Singapore Summit, which President Trump attended after the G7 in mid-June.

On Saturday, January 6, 2018, Newsbusters posted an article about a BBC interview with Michael Wolff, author of Fire and Fury, which is about President Donald Trump.

Incidentally, the book is currently available for free online. As such availability likely violates copyright law, I have not posted the link.

Nicholas Fondacaro’s article, ‘Wolff Touts Book “Will Finally Bring Down…This Presidency”’ recaps a BBC interview Wolff gave to the BBC’s Nick Robinson last Saturday. Excerpts follow (emphases in the original):

In an interview with BBC Radio on Saturday, Michael Wolff, the author of the dubiously sourced gossip book targeting President Trump, boasted to host Nick Robinson that “the story” that he told, “will finally end…this presidency” once and for all …

Now, all of this is fascinating, it’s an insight, it’s gossip some of it, it may not be enough to stop him from being president. Whereas, the allegations about Russia may be,” Robinson prefaced. “Do you believe that anything in the book will actually change the chances of the allegations of collusion with Russia being found to be true and therefore leading to the impeachment of the President?

Wolff said:

You know, I think one of the interesting effects of the book so far is a very clear emperor-has-no-clothes effect. That, the story that I have told seems to present this presidency in such a way that it says he can’t do his job. The emperor has no clothes. Suddenly everywhere people are going: ‘Oh my God, it’s true, he has no clothes.’ That’s the background to the perception and the understanding that will finally end this – that will end this presidency.

As retired courtroom lawyer Lionel says, such talk is potentially dangerous:

Incredibly, Wolff told Robinson that Trump hardly has any staff and that he will do little as president. Despite stellar economic results in 2017, Wolff said:

The economy is booming possibly because you’ll have someone who’s not capable of actually implementing any policies or regulation.

In a way, that makes no sense.

In another, such a statement implies that the economy does better with less government interference.

Trump’s insistence on rolling back Obama era regulations has helped the economy improve. Trump was also busy last year negotiating various trade initiatives, such as coal.

In June, the New York Post published an article on coal by Salena Zito, who does an excellent job of covering small town life in Pennsylvania and Ohio.

‘Don’t be so quick to dismiss Trump’s coal mining initiative’ is an eye-opener. For the first time in a decade, a new coal mine opened in Acosta, Pennsylvania. Trump sent his congratulations via video shown to local residents (emphases mine below):

The Acosta Deep Mine in Somerset County marks a dramatic upturn for the area. And while President Trump cannot claim that he brought the industry back here personally (this new mine was already being developed before the election), he is an effective cheerleader for folks who’ve been discounted by the political elite.

“We will begin by employing 70 to 100 miners and we hope to open a total of three new mines in the next 18 months — and that will mean additional hiring,” said George Dethlefsen, CEO of Corsa Coal, which owns the mine.

More than 400 people applied for the first wave of jobs that will pay from $50,000 to $100,000, Dethlefsen said.

In a region where the median household income is $29,050, and nearly 12 percent of the population lives below the poverty line, the economic injection is huge.

It also creates a ripple effect: For every new job generated by the mine, even more jobs like waitresses, hotel workers, barbers or grocery workers are needed to support the community.


Furthermore, the coal mined in Acosta is being used for steel production:

The coal from this mine is not going to be used for energy — instead, it will be used for the production of steel for the next 15 years. (According to the World Steel Association, coal is used to make 70 percent of the steel today.)

Every single one of us relies on steel in our daily lives. It’s found in our cars, bikes and public transportation. Those wind turbines so loved by environmentalists? Made of steel. The utensils we use to eat? Steel. Medical devices used to save lives? Steel.

Roads, bridges, appliances and even iPhones and computers all contain steel.


This is a great move.

And there is more good news on the coal front. In July, The Conservative Treehouse reported on the increase in American coal exports. This came as news to me:

U.S. EIA data shows a gain of 60.3% so far this year in exports of both steam coal (used to generate electricity) and coking coal (metallurgical coal used for steel manufacturing) as a direct consequence of President Trump’s common sense energy policy.

Interestingly, the largest destinations for the growth in American coal export are the U.K. (+175%) and a doubling of tonnage to both France (+100%), and Asia (+100%). High transport costs to ship coal to the EU are being offset by U.S. coal manufacturing efficiencies and improvements in mining productivity.

Reuters has more:

“Simply to know that coal no longer has to fight the government – that has to have some effect on investment decisions and in the outlook by companies, producers and utilities that use coal,” said Luke Popovich, a spokesman for the National Mining Association.

Shaylyn Hynes, a spokeswoman at the U.S. Energy Department, said: “These numbers clearly show that the Trump Administration’s policies are helping to revive an industry that was the target of costly and job killing overregulation from Washington for far too long.”

Coal could also be a major economic weapon used against North Korea, one of China’s principal coal suppliers.

Recall that China’s president Xi Jinping met with Trump at Mar a Lago on April 6 and 7, 2017. On April 11, Reuters reported:

Following repeated missile tests that drew international criticism, China banned all imports of North Korean coal on Feb. 26, cutting off the country’s most important export product.

To curb coal traffic between the two countries, China’s customs department issued an official order on April 7 telling trading companies to return their North Korean coal cargoes, said three trading sources with direct knowledge of the order …

The Trump administration has been pressuring China to do more to rein in North Korea, which sends the vast majority of its exports to its giant neighbor across the Yellow Sea …

North Korea is a significant supplier of coal to China, especially of the type used for steel making, known as coking coal.

To make up for the shortfall from North Korea, China has ramped up imports from the United States in an unexpected boon for U.S. President Donald Trump, who has declared he wants to revive his country’s struggling coal sector.

Eikon data shows no U.S. coking coal was exported to China between late 2014 and 2016, but shipments soared to over 400,000 tonnes by late February.

This trend was exacerbated after cyclone Debbie knocked out supplies from the world’s top coking coal region in Australia’s state of Queensland, forcing Chinese steel makers to buy even more U.S. cargoes.

I digressed from Wolff. However, he and his fellow ilk in the media deserve to have their collars felt by the authorities. What Wolff is doing with his book and what the media have been doing with fake news could be construed as advocating the overthrow of government, or, as Lionel tweeted, sedition.

On Friday, November 10, 2017, President Trump left China for Vietnam. First Lady Melania Trump remained in China for another day:

Mrs Trump visited Joint Base Elmendorf-Richardson in Anchorage for the Month of the Military Family Celebration. She then returned to Washington DC.

The US president spent two days in Vietnam before flying to the Philippines:

At the zoo, a group of schoolchildren greeted Mrs Trump. She had a gift for every child:

For anyone wondering:

Lucky children. They were able to tour the zoo with her:

Mrs Trump expressed her thanks for being able to see GuGu the panda:

Then it was time for her final destination:

The Conservative Treehouse gives us background on the tour:

First Lady Melania Trump visited the Mutianyu section of the Great Wall in China as the sun was starting to settle low on the horizon. It was windy and slightly cold as our First Lady signed a guest registry and was presented with a scroll from atop one of the seven wonders of the ancient world.

A state official said that Yukun Zhang, chairman, Mutianyu Great Wall Travel Service Co., Ltd, received the first lady after the ride up on the cable car. After signing the guest registry Mrs. Trump made her way up a short flight of stairs to the Great Wall.

Mrs Trump wore flats:

Meanwhile, the US president landed at Da Nang International Airport:

Trump met US veterans who chose to live in Vietnam after the war. They met at the Hyatt Regency Da Nang Resort and Spa. This transcript has his address and exchange with the retired soldiers. An excerpt follows:

Our accountability efforts in Vietnam are very, very important to all of us. We will not rest until all of the 1,253 missing veterans are returned home. I want to thank the government of Vietnam for their assistance in our efforts.

Today, I’m signing a proclamation to honor the veterans of the Vietnam War. This is part of the ongoing 13-year commemoration of their sacrifice for freedom. And I just want to thank these seven very brave people for being here. I got to know them for a few minutes upfront, and they are definitely tough, smart cookies. We like them. I think they like me too. I’m not sure, but I think — (applause) — no, I think they do. I think they do. I think they see what we’re doing for our military.

Would you like to say a few words, any of you guys? Would you like to say something? Huh?


PRESIDENT TRUMP: Come on. Come on up here. Here’s your chance. You can be a big star now.

MR. HOPPER: Well, I’m not sure about that. But just on behalf of many of us standing up in the front of the room today, I just want to say what an honor and privilege it is to be with our President. I so admire what you’re doing for our country.

Thank you for your dedication to our military, our country. And we’re all behind you in making America great again.

PRESIDENT TRUMP: Thank you very much. That’s so nice. Thank you very much.

MR. HOPPER: Thank you. Thank you. (Applause.)

MR. REYNOLDS: It’s an honor to be here. My family is so proud. My wife loves you. (Laughter.) She does. We all love you.

All of the veterans that I represent in my community asked me to say to you: Keep doing what you’re doing. We need to win. We need to make America great again. And we definitely think you are on the right track. So, thank you. It’s honor to meet you, sir.

PRESIDENT TRUMP: We will keep it going, and we will get it done.

MR. REYNOLDS: Absolutely.


MR. REYNOLDS: I believe it. Thank you very much.


MR. MORGAN: Mr. President, from my heart, thank you for your support of the military, and it’s an honor to be here as one of seven Vietnam veterans representing the 58,000 heroes who never made it home.

Thank you so much.

PRESIDENT TRUMP: Thank you so much. (Applause.)

MR. MORGAN: Thank you, sir. Thank you.


MR. GOODE: I am nervous.

PRESIDENT TRUMP: I don’t think so. I don’t think so.

MR. GOODE: I am nervous.

You know, it’s an honor for me to be here today to meet the President of the United States that’s doing such a fine job for America. I’m so proud of him and what he’s doing, and I’m also really proud to represent all those veterans that are back home to be one of seven of these veterans that are here today. It’s such an honor to represent the rest of those veterans in the United States of America.

Thank you.

This is the text of the aforementioned proclamation. This year marks the 50th anniversary of the Vietnam War. Nearly every president since then has made a statement about finding the 1,253 missing veterans. Perhaps Trump will be the one to make that happen.

He also tweeted a 242nd happy birthday greeting to the United States Marine Corps.

Trump then went to the APEC CEO Summit 2017 at the Ariyana Da Nang Exhibition Center.

Trump addressed the summit. Note ‘H.E.’ before his name — His Excellency — in the video below:

The full transcript is here. This is is some of what he said:

This next one is really important:

This is also very important (emphases mine):

Earlier this week, I addressed the National Assembly in Seoul, South Korea and urged every responsible nation to stand united in declaring that every single step the North Korean regime takes toward more weapons is a step it takes into greater and greater danger. The future of this region and its beautiful people must not be held hostage to a dictator’s twisted fantasies of violent conquest and nuclear blackmail

We must also deal decisively with other threats to our security and the future of our children, such as criminal cartels, human smuggling, drugs, corruption, cybercrime, and territorial expansion. As I have said many times before: All civilized people must come together to drive out terrorists and extremists from our societies, stripping them of funding, territory, and ideological support. We must stop radical Islamic terrorism.

So let us work together for a peaceful, prosperous, and free Indo-Pacific. I am confident that, together, every problem we have spoken about today can be solved and every challenge we face can be overcome.

If we succeed in this effort, if we seize the opportunities before us and ground our partnerships firmly in the interests of our own people, then together we will achieve everything we dream for our nations and for our children.

We will be blessed with a world of strong, sovereign, and independent nations, thriving in peace and commerce with others. They will be places where we can build our homes and where families, businesses, and people can flourish and grow.

If we do this, will we look at the globe half a century from now, and we will marvel at the beautiful constellation of nations — each different, each unique, and each shining brightly and proudly throughout this region of the world. And just as when we look at the stars in the night sky, the distance of time will make most of the challenges we have and that we spoke of today seem very, very small.

What will not seem small — what is not small — will be the big choices that all of our nations will have to make to keep their stars glowing very, very brightly.

Another fabulous speech by Stephen Miller. What a man he is, blessed by God with a talent for prose.

He also met Vladimir Putin ahead of their meeting on November 11. Men were given silk Vietnamese shirts to wear for the evening’s events (the more formal photo is here):

The two did not meet formally at APEC, although they found time to converse. Reuters reported that they discussed defeating ISIS and confirmed their commitment to Syria’s sovereignty. The Daily Mail has more. Both media outlets say that the Kremlin issued a joint statement, however, the White House offered no confirmation.

The APEC gala dinner followed. Before dinner:

A cultural performance concluded a busy day.

Meanwhile, Mrs Trump was in Alaska and spent time talking with the children attending school at Joint Base Elmendorf-Richardson in Anchorage. The children were decorating paper fish and sculpting Play Doh:

She also spoke with military personnel:

Mrs Trump arrived at the White House late that night.

More on Trump’s second day in Vietnam tomorrow.

As part of their tour of Asia …

… President Donald Trump and First Lady Melania Trump landed in China on Wednesday, November 8, 2017, as guests of President Xi Jinping and Madame Peng Liyuan.

The caption refers to the contrast with Obama’s arrival on September 4, 2016 in Beijing for the G20 summit, as the Telegraph reported:

All the other world leaders appeared to have been welcomed to the eastern Chinese city of Hangzhou in traditional diplomatic style, treading onto a red carpet laid on a rolling airport staircase positioned outside the main exit of the aircraft.

Mr Obama, however, instead used Air Force One’s smaller exit as he arrived on his final tour of Asia, sparking suggestions that he had been snubbed by his Chinese hosts.

The Chinese gave the Trumps a warm welcome, complete with a military honour guard, a marching band and cheering children (start at 12:00):

AP reported that this is highly unusual:

The ceremony accompanying Trump’s arrival Wednesday afternoon was elaborate even by China’s lavish standards. Heads of state are usually given a low-key reception at the airport, with the real pomp and circumstance reserved for his or her arrival at the Great Hall of the People in the center of Beijing.

This was the schedule for the day:

3:30pm / 2:30am THE PRESIDENT and THE FIRST LADY will have tea with President Xi Jinping of the Peoples Republic of China and Madame Peng Liyuan, Forbidden City, Beijing, Peoples Republic of China

3:55pm / 2:55am THE PRESIDENT and THE FIRST LADY tour the Forbidden City and view an opera performance with President Xi and Madame Peng Liyan, Forbidden City, Beijing, Peoples Republic of China.

6:00pm / 5:00am THE PRESIDENT and THE FIRST LADY have dinner with President Xi and Madame Peng, Beijing, Peoples Republic of China

7:05pm / 6:05am THE PRESIDENT and THE FIRST LADY depart the Forbidden City en route their overnight accommodations, Beijing, Peoples Republic of China.

The Forbidden City provided beautiful photo ops. The Hall of Supreme Harmony is in the background:

Someone tweeted:

Nothing says MAGA like tea and opera!


On the MAGA front, AFP reported:

US and Chinese companies signed nearly 20 deals worth a total $9 billion on Wednesday at the start of President Donald Trump’s state visit to Beijing.

US Commerce Secretary Wilbur Ross and Chinese Vice Premier Wang Yang oversaw a signing ceremony at the Great Hall of the People but they did not immediately give details about the 19 deals.

Wang said the agreements were merely a “warmup” before Trump and Chinese President Xi Jinping oversee their own ceremony on Thursday involving bigger deals, including in exports of natural gas and soybeans.

Trump plans to use the three-day trip to press Xi on China’s massive trade surplus with the United States, which slightly fell in October to $26.6 billion, according to official Chinese data released on Wednesday.

The Daily Mail has photos of the Trumps touring other parts of the Forbidden City, including the Conservation Scientific Laboratory, where the elaborate automata clocks intrigued the president.

Then it was time for pleasant entertainment, albeit outdoors. There is no glass on the window where the Xis and the Trumps sat:

Afterwards, the Xis and the Trumps had dinner in the Forbidden City. Several media outlets have reported that no foreign leader has been given this honour since the People’s Republic of China was founded 68 years ago. This is YUGE!

That evening, Trump tweeted:

That tweet is a big deal, because China blocks access to Twitter, Facebook and other Western social media. Reuters reported that not only did Trump manage to evade what is known as the Great Firewall, he also changed his Twitter banner to a photo taken at the opera that evening:

The Twitter banner upload did not go unnoticed by Chinese state media, with state broadcaster CCTV flashing screenshots of the photograph on Thursday.

Trump’s visit was also the third-most talked-about topic on Chinese social media platform Weibo over the last 24 hours, trailing only the birthday of a singer in a Chinese boy band and a weekly Asian pop song chart.

Many people wondered how Trump managed to evade China’s tough internet controls …

Many foreigners log on to virtual private networks (VPNs) to access content hosted outside of China. Another option is to sign up for a data-roaming service before leaving one’s home country.

On the morning of Thursday, November 9, an impressive welcome ceremony took place, which shows what honoured guests the American president and first lady were.

The main American news channels did not broadcast this.

Yet, in China, this was the first time such an event was broadcast on live television.

Everything was more than perfect, from the soldiers’ standing to attention, their formations, to the military band music — which included The Star-Spangled Banner and Hail to the Chief — to the cheering Chinese and American schoolchildren. I’ve never seen such precision:


Afterwards, Xi, Trump and their respective delegations met in Peking’s Great Hall for a series of meetings. The two men met first in a closed door session, then invited their delegations to join them for discussions on trade, finance and security.

Reuters reported that a soybean deal was made. The US has a record crop:

The United States soybean industry has signed two letters of intent with Chinese importers covering a $5 billion purchase of an additional 12 million tonnes of soybeans in the 2017/18 marketing year.

The non-binding agreements, disclosed by the U.S. Soybean Export Council (USSEC) in a statement, are among a series of trade deals announced during the visit of U.S. President Donald Trump to Beijing. China is the world’s top soybean buyer, and the United States is its second supplier after Brazil.

In the first agreement, signed on Nov. 8, the China Chamber of Commerce of Foodstuffs and Native Produce said it intended to purchase 8 million tonnes of U.S. soybeans worth $3.4 billion.

A second agreement will be signed on Thursday between grains trader ADM and China’s COFCO for intent to purchase 4 million tonnes of soybeans worth $1.6 billion, said the USSEC.

LNG — liquid natural gas — was also on the agenda, as CNBC reported:

Despite the recent gains and the agreement with Trump, Chinese buyers are still only purchasing U.S. LNG from third parties in short-term spot trades. And there is currently only one company, Cheniere Energy, capable of exporting large shipments of LNG from the United States.

Cheniere CEO Jack Fusco and Texas LNG Chief Operating Officer Langtry Meyer are joining the Trump delegation. The companies did not respond to questions about their agenda in China, but energy research firm Wood Mackenzie said securing commitments is likely at the top of Trump’s list.

“The fact that Trump will arrive in Beijing with a large business delegation in tow, including a sizeable contingent from the energy sector, indicates that the White House is looking to secure concrete commercial agreements from the upcoming trip,” Kerry-Anne Shanks, head of Asia gas and LNG at Wood Mackenzie, said in an email briefing on Tuesday.

While meetings took place, Madame Pen Liyaun took Mrs Trump on a tour of China’s Art and Design School in Beijing:

That afternoon, the two leaders held a joint press conference in the Great Hall.

The Conservative Treehouse summarised Trump’s remarks (emphasis in the original):

President Trump followed President Xi’s remarks with a speech as deliberate and unambiguous as the internal audience would ever fathom hearing.  President Trump respectfully pulled no punches in his direct and emphatic style; stating that China needed to engage in, well, to use China’s familiar wording, “correct thinking” on a variety of issues – including trade and their necessary responsibility toward North Korea.

No-one else could pull this off, except Trump. Not that way. The best part is always the emphatic part at the end.  President Trump gives the look saying: well, that’s that then; that’s all I’ve got to say about that... smiles bigly, and the diplomatic opponent tries not to look smaller than they were ten minutes earlier. [key word, ‘tries‘] …

Also note Trump’s alpha male handshake:

That evening, President Xi and Madame Peng Liyuan hosted a state dinner in the Trumps’ honour. Like the welcome ceremony, films of the two men from prior meetings were shown beforehand. The optics were clear — Xi clearly respects Trump. As the original video posted was withdrawn, I had to swap to a less detailed one:

After the film clips, Xi gave a speech, followed by Trump.

Xi recalled President Richard Nixon’s trip to China 45 years ago during the Cold War. He spoke of the two countries’ continuing partnership and co-operation to better mankind. He then offered a toast. Trump smiled broadly, raising his glass (soft drink).

Then, it was Trump’s turn to speak. A flourish of trumpets preceded his speech. He thanked Xi for his ‘generous words’ and warm hospitality ‘from the moment we arrived’. He spoke of their tour of the Forbidden City. He said their meetings presented an ‘incredible opportunity’ to spread ‘peace and prosperity’ around the world. He spoke of the historic characteristics that the US and China share, including venturing into the unknown. He spoke of achieving a ‘more just, fair and peaceful world for our children’. He looked forward to ‘a friendship that will grow stronger and stronger’. He then offered a toast.

President Xi — and the rest of the room — gave Trump a standing ovation.

After a film of Trump’s granddaughter Arabella Kushner (Ivanka’s daughter) sang all the verses of a folk song — My Good Mother — in Mandarin, which the Xis clearly loved. Peng Liyuan, a former folk singer, sang along softly. Arabella began by addressing Xi and Peng as ‘grandpa’ and ‘grandma’ — a child diplomat!

Then, dinner was served. Afterwards, entertainment was provided in the form of a cultural performance.

On the subject of fair trade and how China has taken advantage of the United States for so many years, Trump said:

Trump had a tremendous visit:

CNBC reported that 37 major trade deals have been signed:

The dollar value of those deals is in excess of $250 billion. Caterpillar, Boeing, and Goldman Sachs are just some of the notable names on the list of companies that made deals with China, the full list of which is below.

See the article for more details.

More to follow tomorrow. Mrs Trump stayed in China for another day while President Trump flew to Vietnam.

What a week and it’s only Tuesday! Lots of news to cover in the days ahead.

On Monday, November 28, 2016, Cardinal Joseph Zen, a former bishop of Hong Kong, warned that Pope Francis:

may not know the Communist persecutors who have killed hundreds of thousands.

The Guardian reported that the Pope is working on an agreement whereby Chinese officials could have a hand in approving Catholic bishops.

Zen criticised the move, pointing out that it would be:

a surrender


betraying Jesus Christ.

Zen made his remarks at the Salesian English School in Hong Kong, where, at age 84, he is still a teacher. He added:

Maybe the pope is a little naive, he doesn’t have the background to know the Communists in China. The pope used to know the persecuted Communists [in Latin America], but he may not know the Communist persecutors who have killed hundreds of thousands.

It’s amazing that anyone the Pope’s age would not know the statistics and nature of Chinese Communists, but perhaps the Cardinal was being charitable.

Currently, Chinese Catholics are free to worship at state-approved churches. The state-controlled China Catholic Patriotic Association appoints their bishops.

However, an underground network of Catholic churches also exists, thought to attract many more Catholics than the state churches.

Why does the Vatican seek this new agreement? Zen explained:

With “fake freedom” under a proposed deal, priests could more easily preach and more churches would open, Zen predicted, but “it’s only the impression of freedom, it’s not real freedom, the people sooner or later will see the bishops are puppets of the government and not really the shepherds of the flock.”

“The official bishops are not really preaching the gospel,” Zen added “They are preaching obedience to Communist authority.”

That brings to mind the warning from Jeremiah about leading one’s flock astray. The Pope and clergy agreeing with him on this subject might have a lot to answer for one day.

Oddly, some Chinese Catholics welcome the proposed Vatican agreement, still under negotiation for the foreseeable future:

“If they could really strike a deal, not only would us Catholics be happy, but all of the Chinese people should rejoice,” said Zhao, 36, who has been a Catholic for 20 years and works at the oldest Catholic church in China, close to Tiananmen Square in Beijing. He declined to give his full name because of the sensitivity of discussing religion.

“Chinese society needs faith right now,” he added, saying a warming of ties would increase the number of Catholics, “which is a benefit to all society”.

The Guardian says that China has an estimated 10m Catholics and 90m Protestants. The New York Times gives a more conservative estimate of 60m Christians.

Protestant churches are also required to be registered with the Chinese state and operate within government rules.

Unregistered Protestant churches are actively vandalised by the state:

a recent campaign by authorities in eastern China has seen more than 1,200 crosses removed from buildings and churches demolished.

The New York Times has more on vandalism and arrests concerning the Salvation Church and the Living Stone Church, both of which are unregistered and deemed to be dangerous to the state.

This is the third — and final — instalment of FBI Anon’s comments on 4chan.

Please read Part 1 and Part 2 to understand not only what is going on in the Clinton case but also for clues on geopolitical developments.

Part 1 explains more about FBI Anon and how he came to be somewhat of a regular on the 4chan Ask Me Anything (AMA) posts. Part 2 has a comment on his credibility, probably 90% with some ‘nonsense’ thrown in so he can keep his job.

N.B.: Both Parts 1 and 2 ended up on discussion boards here and here. (Thanks!) Both threads speculate on whether FBI Anon is Steve Pieczenik, a Harvard-trained psychiatrist who is a regular on the Alex Jones Show and has his own website. Obviously, no one can say for certain, but, personally, I doubt it. FBI Anon is working on the Clinton case and is most probably an FBI agent. Pieczenik worked for the State Department in the 1970s and 1980s in specialised operations such as psychological warfare, hostage situations and terrorism. It would seem that both men share the same worldview and have access to similar — but not identical — information and people that would cause them to arrive at similar conclusions.

What follows comes from the FBI Anon chat of October 17. Given the current resumption of the Clinton email investigation , it is probable that this is the most up-to-date information we are likely to receive before the election on Tuesday, November 8.

By October 17, the Billy Bush video of Trump had already circulated.

I have divided his comments up by topic, cleared up salty language, corrected spelling and added more information in brackets. Emphases mine below.

Is the CIA involved in the Clinton investigation?

No. The Intelligence agencies are like modern-day gangs, owing allegiance to no one and cooperating only when necessary and even then, only to a limited degree.

The polls

Trump is winning by around 20% with a 5% MOE. The election is a landslide right now, but the MSM is trying to engineer his downfall. Ironically, women voters liked that Trump tape.

[Someone objected to the 20% figure] You’re forgetting millions who have not voted before. Many polls only sample registered voters or people with a history. Trump will bring in millions who have never voted, including people too shy to be vocal about their support. Independents, which are also a huge shadow bloc, have also moved en masse to Trump. We have internal polls for our own projections as well, and so do the campaigns and the national committees. I guarantee they all see the same thing: a Trump landslide.

If he was not winning, what would be the point [of poll rigging]? They could simply ignore him and do what they did with Ron Paul.

I remember seeing an infograph a while back where someone plotted the oversampling of democrats in polls. That is a very useful tool.

Is there more to come on Trump?

I know they have a tape of him making a lightly off-color remark about blacks [referring to an ‘Uncle Tom’ remark on The Apprentice], but beyond that I have no idea. They really can’t find much on him, hence why the MSM has resorted to crafting narratives out of thin air.

Rigged election and the Clinton campaign

It depends at this point. The political mood right now favors a Trump landslide. HRC and the global elite have two ways to stop him:

1) Slander him to the point of extreme unfavorability, even with core supporters

2) Rig the polls

They are concerned because Trump has brought attention to #2, which was the exact same strategy with Bernie. Therefore they are attempting #1, but the issue is whenever people attack Trump viciously, his support grows. He maintains strength by always finding a new enemy to attack, and the last month he is pulling out the big guns and naming the true face of all of our problems: large, multinational corporations and their leaders.

The bluest states Trump can win

He will win PA and CA

[The next two comments concern California]

Most likely.

1) Trump will do well with Hispanics
2) Trump’s LGBT stance has more of an effect on liberal yuppies than you think
3) California’s population is declining, and only older, more affluent people are voting, i.e. Trump’s primary demographic.
4) The shy Trump supporter effect will take place en masse in CA

NY is Hillary’s no matter what.

The lack of GOPe support for Trump

They attempted a coup because they are bought by the same interests as the Dems. They believed it would hurt Trump, but it only makes them look like fools. Paul Ryan‘s political indecision is one example.

[GOPe McMullin’s chances] No one cares about Egg McMuffin

The chances of a Trump victory

95% Trump victory.

Can voters really beat the fraud and the rigging?

Yes. The rigging works by counting the votes to a higher percentage based on the MOE. So HRC’s votes may count for 1.2 votes isntead of one. Therefore, an overwhelming majority will give Trump a win.

Trump can win, but not without overwhelming support.

Will they ‘mess around’ with electoral votes?

They always do

Will Hillary and the Democrats contest a Trump win?

They will contest, but a re-check will yield the same result.

Trump’s presidential agenda

Trump fully intends to clean house in Washington and with the power brokers of major corporations.

He wants to Make America Great Again. He despises the powerful who have enabled themselves by throwing smaller people under the bus.

[Could he put George Soros in jail?] No.

[There would be an] increase in utilities, industry, and energy sector

Would it be good to enlist in the military during a Trump presidency?


The possibility of a third party winning in future

No third party will take control in America for a long time

Possible Obama pardon for Hillary

If HRC loses, she will be pardoned by Obama. O will then proceed to deteriorate our relations with Russia even further.

What would happen if Hillary won and Americans revolted?

It is very likely HRC would institute martial law and permit the military to conduct safety drills against the revolt

Hillary and gun control

She intends to do an Australia-style gun control, with strict tax punishments for people who refuse to take part in the system.

Sectors favourable under a Hillary presidency

Boost to financials and healthcare

Secret Service opinion of Hillary

HRC is awful. I actually had a conversation with a former secret service agent friend of mine (female). She was assigned to Bill back in the day but she hated Hillary because apparently Hillary hated the Secret service.

Hillary is the least charming person on the planet

Hillary’s sporadic bursts of energy

… whatever she is on is designed to make her energetic for long periods of time.

Hillary’s health

… most likely … Parkinson’s

What does Hillary smell like?

[a few reports and interviews have been circulating claiming she smells like sulfur]

She smells like hair spray and cardboard

Is Clinton involved in satanic activity and/or into extraterrestrials?

Black magic yes. Extraterrestrials I cannot answer.

[Podesta emails point to his interest in extraterrestrials. Articles have also indicated a Clinton interest in UFOs.]

[re satanism and a reference to the Clintons’ close relationship with the late Cardinal Bernardin, also rumoured to be a satanist] Correct.

Are there incriminating Hillary tapes?

No. But there is one of her talking about how blacks are disgusting and poor.

I don’t possess it. You will see it in time. It is kind of funny.

Is there a Bill Clinton ‘rape tape’?

I am not sure.

Is Assange dead?

No. Very scared, but still alive. Whether or not that will change in the next few days is questionable.

[Re Hillary’s remark on droning him] She wants to.

[Re Assange and John Kerry] I have no idea. I am waiting to see what those keys were that they released on Twitter. They are threatening someone.

2016 deaths ‘linked to Clinton’

Potentially 20, confirmed 6

[Latest one] A man in Pennsylvania who knew about the voting machines.

Justice Antonin Scalia’s mysterious death

The common assumption is Scalia was murdered to help bring about gun control via another justice. But then any justice could have been sacked. What was Scalia doing before he died? What topic was he interested in?

Clinton camp’s biggest worry

The truth about the disgusting delights of the Clintons and the global elite coming to light

How did the Clintons get to be so awful?

Bill is a political mastermind. Hillary wasn’t always so corrupt, but once she saw the ptential for power, it drove her to what you see now.

HRC loves power and death.

Does Jeffrey Epstein have anything on the Clintons?

He has nothing.

Mark Cuban

Cuban wanted some loopholes and goodies to remain, but in private conversation Trump let it be known that he intends to fully wipe the slate clean. Cuban did not like that, so he went full HRC because it ultimately benefits him more.

Huma Abedin

She helps the Muslim Brotherhood hold HRC’s ear

Can’t the DNC see what a mistake they made?

There has been significant regret since her 9/11 incident. Unfortunately, there is nothing anyone can do. The Clitnons have bought and paid for the presidency again, the only thing stopping them is Trump.

USS Mason/Yemen situation

The rebels we supported are firing at us with our own tech because they’re too dumb to realize who sold them weapons.


Currently China is shutting down power in major cities in small bursts to test our power grid.


[Re Obama starting aggression against them before Trump can take office] No, but the goal is to erode relations to the point where Russia will be withdrawn to whoever is President. Even Trump will not take acts of aggression lightly. Obama will flirt with war as long as he can, just enough to make the Russians think poorly of Americans under any scenario. Then Trump will have much more work to restore relations when he gets in.

The Trump Campaign headquarters attacks are all orchestrated. Virtually everything going on right now is a distraction from the imminent threat of war with Russia.

[Possibility of nuclear war with the US] Yes (Russia just did a nuclear bombing drill in Moscow with 40 million people – the US population is still unaware anyhting major is going on)

World War III

I suspect a major war in the next year or two regardless of who is elected. I had hoped that Trump would be able to bring about more peace, but the people he is fighting are determined not to allow it.

[Global elites to trigger it?] Based on recent events, yes.

[Could it start before the end of 2016?] Maybe.

[What country will start it?] Israel or the United States (expect another 9/11 style false flag)

[Countries involved] It will be the US & Japan Vs. China, India, and Russia. I had previously thought India was on our side, but it looks like they may swap allegiances.

[Re India] They have been making deals with Russia, and by proxy they will warm up to China should the US pose a serious threat. Try reading the news.

Savings and production are what drive an economy. China will be hurt by war, but they have savings and a strong production base. Even with a ton of debt, they can pull off a war. The US, on the other hand, is a result of the spend/invest mentality. We have no manufacturing base which can compete globally.

EU will be in WW3, but the collapse of the EU will render them militarily impotent for the most part.

Should people watch out for false flags?


The next false flag may deal with an explosion of a plant or facility controlled by an electrical grid


The ruling class simply wants to rule over an indifferent mass. However, many do believe that in the end times, a war of ideas will occur and they will prevail through the intervention of a “messiah”. Which makes it scarier because there are powerful people who legitimately believe through mass war and death, peace will come.

[Really?] Yes

The Owl of Minerva is an important gesture in upper circles

They don’t see the world as you do. They live in an insulated world of riches and power, and they do not know what it is like to struggle of live paycheck to paycheck. Even though Hillary did as a child, she is so far removed now it doesn’t matter.

[Does George Soros have the Spear of Destiny used to pierce Christ?] No

Who really runs the US government?

George Soros and anyone who considers themselves a Zionist.

[This type of control happened in] 1913

The possibility of conflict involving ‘Constitutional Americans’

Truthfully, I don’t know.

What are the ‘good guys” chances if civil war breaks out?

Who knows at that point?

If Hillary is elected, civil war is a near certainty.

[Could she die before then?] Not likely. Death in 2018-2020 after starting war

The validity of The Citizens Audit

It is asking the right questions, and yes, many of HRC’s PACs and even her campaign solicit foreign money and shadow money.

Credibility of 4chan’s Knowledge Bomb threads

[Part of the question: ‘Some of the things he says make sense, but others seem really out there (like members of the EU being part of a sex club involving refugees).’]

His information is legit.

Is Podesta WikiLeaks email 2010 important?

Very important

FBI Anon’s accuracy

I’ve been wrong a few times, but in my job, being right is not a prerequisite. I only plan for things that may or may not happen.

I have been answering and *mostly giving out correct info for months. The only reason why there is so much doubt now is because CTR and other PAC’s are flooding this board trying to sow doubt wherever they can, and it is unfortunately having an effect. This board was once vehemently pro-trump, but many are beginning to feel doubt.

[Regarding not using consistent self-identification] Because it gives me enough plausible deniability in case someone should want to come looking for me. It’s also the reason why sometimes I give disinformation – it helps give just enough doubt to keep serious people from prying.

I have not claimed to be anything other than someone with knowledge of HRC’s case.

I try to limit these to once per month.

FBI Anon’s wife

Thank you, my wife is giddy to be remembered. Too bad these are dark times.

Which is more important: WikiLeaks or the Clinton Foundation?

The next few batches of the WikiLeaks dumps should help answer this. It will all start to make sense when you connect the dots.

And, as an aisde, when you are reading Podesta’s e-mails, remember that the Clintons deal in weapons, drugs, and people. Some terminology in use is far more nefarious than many of you suspect.

“cards” [Child Abduction Rapid Deployment]

“favors”, “extras”, “officers”

[What next WikiLeaks will reveal] Evidence of favors for foreign nationals including the sale of human beings.

I know a lot of info regarding their movements of people and children.

Will we see all 33,000 emails?

The NSA has them, it’s just a matter of time before someone hacks them or releases them.

Vote in person or by mail?

Vote in person, always.

Voting in person allows you to be sure your vote was cast the way you desire. You never know what happens to your paper after it is mailed in.

What the public can do

You should be [fighting hard to make sure Hillary is not elected].

Sign up to be an election watcher.

Have faith in Trump, fight hard against the shills.

Vote. Encourage everyone you know to vote. Explain that a vote for Hillary is a vote for mass war and death.

Do not give up hope.

A few weeks ago when wrapping up the 2014 Paralympic Games in Sochi, I referred to a court case in France involving a man who had murdered his six-year old daughter.

Johana Carneiro was a tetraplaegic who had Down’s Syndrome. She was also an epileptic. She had to be helped with every aspect of her life. The father, Americo Carneiro, formerly of Portugal, is a 44-year old stonemason. Mrs Carneiro is bipolar and, according to her husband, spends most of her days on the sofa. She has also been treated in psychiatric hospitals for her condition.

Consequently, Mr Carneiro himself became severely depressed, seeking refuge in psychotropes and alcohol. By the time he put his hand over his daughter’s mouth whilst she slept on January 3, 2011 in Boulancourt (Seine-et-Marne), the court determined that he had lost aspects of his rational judgment.

During his trial, Carneiro described his daughter as ‘smiling’, ‘cheerful’ and ‘making progress’ in the special school where she went when he was at work. Carneiro said he took desperate measures because he worried for her future should anything happen to him.

Carneiro was so depressed that his original plan was to murder his daughter, then his wife. He intended to commit suicide. He had already transferred €10,000 to his mother’s bank account to cover the cost of their funerals. He testified that he lost the courage to do away with his wife and himself.

Carneiro’s barristers and the judges found this an extremely difficult case. Psychiatrists testified that he was a loving father but emotionally ‘spent’.

Counsel and judges used the following principles to arrive at a suspended sentence of five years in prison. The sentence had to reflect that Carneiro:

1/ Deeply regretted what he did and was severely depressed.

2/ Had no right to take his daughter’s life, even if she was disabled and had Down’s Syndrome.

3/ Had an extreme combination of extenuating circumstances weighing upon him as the head of his family.

Therefore, they determined that his sentence needed to reflect that he acted wrongly whilst at the same time showing the court had compassion for him in his suffering.

It seems another person would have gone to the school early on to ask the specialists for help. Surely, he couldn’t be the only such parent in France needing a lot of support in his situation.

It is not unheard of for mothers of a Down’s Syndrome child to become severly depressed. I knew a lady who spent most days lying in bed. She was on antidepressants. Although she was a nurse before she married and had a family — she had several other healthy children — deep down she felt responsible for her child being born the way he was. They put the boy in a dedicated home for Down’s Syndrome sufferers where he could receive the care he needed. She and her husband — a physician — were practising Catholics. Despite his unpredictable work schedule, he kept the family together on a daily basis, including preparing supper when the children were younger.

Therefore, I do not know why some families fare better than others in this respect. It seems that age, education and money are no barrier to severe depression following the birth of a disabled child. If you have any experience with these situations, please feel free to comment below.

As for the Parlympians and participants in America’s Special Olympics, I am grateful that their parents helped them to thrive despite all odds.

To conclude on this subject, I read the comments following the Carneiro case and was appalled at how many said it was right for the father to murder his daughter because of her severe disabilities. I also know several people who believe that if pregnancy scans discover such a foetus, the mother should have an abortion. Sadly, eugenics is not dead.

A few days after the Carneiro verdict, I read an article on the Episcopal site Stand Firm about a Chinese man who carries his disabled son to and from school every day. It is an 18-mile round trip. The Daily Mail reported on the family. The father said (emphases mine):

‘I have carried him there and back now since last September, every morning I get up at 5am to prepare a lunch for him to eat and then I walk the four-and-a-half miles to the school, and then come back here so I can work to earn money. I then walk back to the school to pick up my son and bring him home.’

He said that he estimates he has walked around 1,600 miles up and down hills backwards and forwards since he started counting: ‘My son with his disabilities is not in a position to walk on his own and it also means that he can’t ride a bike. Despite being 12 he’s just 90 cm tall. But I am proud of the fact that he is already top of his class and I know he will achieve great things. My dream is that he will go to college.’

As Stand Firm’s Sarah Hey says:

So many things run through my head when I read a story like this.

I think I’ve got problems?  I need to think again.

People are really desperate and will do desperate things—some good, some bad. I have so much respect for this man—he does what he must.

How much this man must love his son, as disabled as he is. He has such hopes for him. Such faith. As much as he loves his son, God loves us even more. He is willing to go to immense lengths for us, not merely one time through death on the cross, but every single day in a variety of ways.

I wish the Carneiro family had had a different outcome. Nonetheless, as several French commenters and legal experts have said, Mr Carneiro will have his late daughter on his mind more often than not.

May we remember parents and families of disabled children in our prayers as well as the children themselves. May all be guided by His divine grace.

My thanks to Rogue Lutheran who wrote in last week with links to a story with which I was unfamiliar but had been wondering about.

For over 15 years, I have pondered how our global economy puts so much emphasis on trading newish financial instruments such as derivatives, collateralised debt obligations and credit default swaps.  Yes, they make big money, but whatever happened to simpler trades of commodities or foreign exchange rates — what used to be known as ‘speculation’ — and was something that most people could understand?

The next two posts will explore this phenomenon, which began in the late 20th century, and is contributing to our current global economic meltdown.  It involves ‘dead hard sums’ (a phrase borrowed from the satirical comic magazine Viz) which attempt to smooth out investment and actuarial risk whilst continuing to spin money.

For any financial or mathematical boffins reading this, I’m only trying to simplify this for my readers.  This is not intended to be a financial industry white paper!  Sources are listed at the bottom of the post.

A highly gifted man named David X Li has had a part to play in this.  However, as we shall see, he is not the only guilty party.

From China to Canada

Xiang Lin Li was born in 1963 in China.  His father was, the Financial Times says, ‘a mid-ranking police official’, a low-echelon public official whom Chairman Mao’s government moved to the countryside for re-education.  This is where the young Li grew up and attended school.  Most children in his situation had few prospects of attending school or going on to higher education, but Li was not only exceptionally bright, he also applied himself diligently to his studies.

After secondary school, he attended Nankai University, one of China’s top institutions of higher learning, where he earned a master’s degree in Economics.  In 1987, the Canadian government worked with the Chinese to sponsor some of China’s best students at their universities.  Chinese officials at the time were eager to find out more about the inner workings of capitalism and sent a group of their best and brightest across the Pacific.  Among these graduates was Xiang Lin Li, who, anxious to be selected, had learned French in four months in his own time whilst completing his master’s.

Li attended Laval University in Quebec and earned his MBA.  He then earned a PhD in Statistics from the University of Waterloo in Ontario.  Whilst he had been in Canada, the regime in China had changed, becoming less open to the West.  Remember Deng Xiaoping and the Tianamen Square demonstrations in 1989?  Li, understandably, had little desire to return to his homeland and began looking at other options in North America.  He even changed his name to David X Li.

Meanwhile, big changes were taking place in the financial and insurance industries, both of which were looking at more accurate risk and pricing models which involved complex mathematical calculations.  Around the same time, the arms race of the Cold War had come to an end.  A number of physicists who had worked on related projects in the defence industry began looking for new jobs.  The buzz in their specialised circle was that they could make substantial salaries in Wall Street, the City of London (financial district) or Silicon Valley.  Li was undoubtedly aware of the opportunities open to mathematical geniuses.

Applied mathematics on Wall Street

Back in 1984, Robert Rubin — who later served as US Treasury Secretary — was working for Goldman Sachs. He, too, was interested in improving the investment bank’s financial modelling and approached Fischer Black, a tenured academic at MIT’s Sloan School of Management. Black’s speciality was Economics and he had published several sophisticated papers about the relationship between Economics and the financial markets.

Thanks to Rubin, Black was the first to move to Wall Street to put his theories into practice.  Rubin’s gamble on hiring Black paid off handsomely. In order to come up with a rational price for Goldman’s market risks, Black used a mathematical model — Black-Scholes — which he and Myron Scholes developed in 1973.  Myron Scholes would later win the 1997 Nobel Prize in Economics.  Black-Scholes was the starting point for what is known as quantitative finance.  The specialists who work on the complex mathematical models are known as quants.

In 1985, a particle physicist Emanuel Derman — no doubt one of the aforementioned looking to segue into a new field — joined Goldman and worked for Black. He later took over Black’s responsibilities for the bank.  Black died in 1995 at the age of 57.

A number of physicists went into this type of work, which was, understandably, highly paid.  It was not uncommon for them to be referred to as POWs — Physicists on Wall Street.  Some traders did not take kindly to these quants and made deprecating remarks about their scientific prowess and perceived geekiness.  Nonetheless, the quants’ work helped the traders make even more money.

More on this tomorrow.  For now, suffice it to say that quantitative finance had its first major hiccup in 1998.  Long Term Capital Management (LTCM), a hedge fund which had benefited from the genius of the quants, suddenly needed a bailout from the US government.  The quants had not realised the global correlation of risk.  It turned out that the same investors around the world were putting money into the same markets.  On this point, the Financial Times explains that Russia’s financial crisis of 1998 caused panic selling in Mexico.  One country’s bond crisis — Russia’s — would have an adverse effect on another country several thousand miles away.  Therefore, the risk pattern of correlation was much wider than LTCM’s quants had imagined.

Dr Li’s North American career

By the time Dr Li earned his doctorate in 1997, the quants were well-established in the world of high finance.  Li’s contemporaries did not envisage him going into an academic career.  He was too ambitious and too driven a personality.  They were not wrong.  That year, he began working for the Canadian Imperial Bank of Commerce (CIBC).

In 1998, he moved to New York for a job with a consultancy, the RiskMetrics Group, an offshoot of JP Morgan.  Although unrelated, LTCM’s request for a bailout occurred that same summer.  Nonetheless, the quants’ prestige continued unabated in the finance and insurance industries. Insurance companies were employing quants in order to determine more accurate pricing of annuities.  The quants there were working at the top of the actuary scale, where there was equally big money to be made.

Part of Li’s work included actuarial science. He gave much thought to the ‘broken heart syndrome’, whereby a widow(er) dies soon after the spouse.  Quants working in actuarial science in or for the insurance industry attempt to perfect complex mathematical models predicting the probability and risk of when and how often this might happen.  Better models provide insurance companies with more realistic prices for life insurance policies and annuities.

Two years later, Li was working for JP Morgan Chase & Co.  He published a paper in the Journal of Fixed Income. In his paper he applied his previous work with actuarial science and the broken heart syndrome.  The paper explored — and attempted to solve — the problem of default correlation, the interdependency of risk which LTCM had not fully realised.  Default correlation was one of Wall Street’s greatest problems.

He explained his reasoning:

Suddenly I thought that the problem I was trying to solve was exactly like the problem these guys were trying to solve. Default is like the death of a company, so we should model this the same way we model human life.

Li’s paper developed a model adapted from one which actuarial science uses for financial markets. Li’s model is called the Gaussian copula.  ‘Copula’ is a Latin word meaning ‘link’ or ‘tie’. In probability theory and statistics it refers to the dependence between random variables.  ‘Gaussian’ refers to Carl Friedrich Gauss, a 19th century German statistician.

Li’s paper took the financial world by storm. The Wall Street Journal explains how it works, in principle:

To figure out the likelihood of defaults in a bond pool, the model uses information about the way investors are treating each bond — how risky they’re perceiving its issuer to be. The market’s assessment of the default likelihood for each company, for each of the next 10 years, is encapsulated in what’s called a credit curve. Banks and traders take the credit curves of all 100 companies in a pool and plug them into the model.

The model runs the data through the copula function and spits out a default correlation for the pool — the likelihood of all of its companies defaulting on their debt at once. The correlation would be high if all the credit curves looked the same, lower if they didn’t. By knowing the pool’s default correlation, banks and traders can agree with one another on how much more the riskiest slice of the bond pool ought to yield than the most conservative slice.

We’ll look at more theory and applications behind the Gaussian copula tomorrow — without the ‘dead hard sums’.

In short, the Gaussian copula opened up the financial markets to newer, more sophisticated and sexier financial instruments, such as the synthetic CDO (credit default obligation).  Huge sums of money are traded every day and reflected in the salaries and bonuses which traders and analysts  make every year.

The Barnstable Patriot describes another:

It was called a Credit Default Swap (CDS). The CDS was a derivative attached to each subprime bundle. This derivative permitted an investor who bought one of these securities to swap the risk of default with a designated counterparty, such as AIG. The price of the CDS, determined by the market’s assessment of the imbedded risk, was the insurance fee paid by the investor.

The newly minted investment grade securities flew out the door. Hundreds of billions worth of them ended up in the coffers of institutions. The CDSs were even more popular. They started trading independently as bets on the likelihood of specific defaults (counterparties still had to pay off in the event of default). Before long $60 trillion worth of them (an amount larger than all the economies of the world combined) were outstanding.

And therein lies the problem.  With all of this risk bundling (again, for tomorrow), these instruments require analysis before they go onto the market.  The outcome is only as good as the numbers plugged in to the equation at the start.  Li later warned in 2005:

Very few people understand the essence of the model.

But that didn’t stop the banks from going full-tilt with it. Ratings agencies Moody’s and Standard and Poor’s also adopted it.

In 2006, the subprime housing market began to unravel. The Financial Times explained in 2009:

The cheap debt made available by the finance revolution was so cheap, in fact, that the loans should never have been made. And the correlation model was still mapping the housing market as it had been in 1990s, not the grossly inflated monster it had become. The development of the model had, ironically, changed the nature of the reality it was modelling.

However, Li’s Gaussian copula assumed a ‘normal’ state of affairs. Whilst it worked well for actuaries, the financial world is beset by more random events and unpredictability.  Nassim Nicholas Taleb, author of The Black Swan, was one of a handful to point this out:

The thing never worked. Anything that relies on correlation is charlatanism.

Investment banks counter this by saying they use a variety of mathematical models, not just the Gaussian copula.  Perhaps, but maybe they need to keep a keener eye on the quants, their methods and their inputs.

Where is Li now?

In 2007, David Li returned to China. In 2008, Wired says that he started working in Beijing as the head of the risk management department of the China International Capital Corporation.  He does not speak to the press.

Of Dr Li and the Gaussian copula, the Barnstable Patriot concludes:

Conspiracy theorists can be forgiven for wondering this episode was part of an intricate plot to destroy our system. If so, it almost worked, and may yet do so.

I’m not sure it was a conspiracy.  China would have been caught up in the nexus as well.  However, what we do learn from this is that greed can kill a global economy — and our future.


‘Credit Derivatives Got a Boost from Clever Pricing Model; Hedge Funds Misused It’ – Wall Street Journal, 2005

‘Recipe for Disaster: The Formula That Killed Wall Street’ – Wired, 2009

‘The formula that felled Wall Street’ – Financial Times, 2009

‘The mysterious Dr Li’ – Barnstable Patriot (Massachusetts), 2010

Tomorrow: How the Gaussian copula is used

© Churchmouse and Churchmouse Campanologist, 2009-2018. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Churchmouse and Churchmouse Campanologist with appropriate and specific direction to the original content.
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