Did the U.S. and the Saudis Conspire to Push Down Oil Prices?
“Saudi oil policy… has been subject to a great deal of wild and inaccurate conjecture in recent weeks. We do not seek to politicize oil… For us it’s a question of supply and demand, it’s purely business.” – Ali al Naimi, Saudi Oil Minister
“There is no conspiracy, there is no targeting of anyone. This is a market and it goes up and down.” – Suhail Bin Mohammed al-Mazroui, United Arab Emirates’ petroleum minister
“We all see the lowering of oil prices. There’s lots of talk about what’s causing it. Could it be an agreement between the U.S. and Saudi Arabia to punish Iran and affect the economies of Russia and Venezuela? It could.” – Russian President Vladimir Putin
Are falling oil prices part of a US-Saudi plan to inflict economic damage on Russia, Iran and Venezuela?
Venezuelan President Nicolas Maduro seems to think so. In a recent interview that appeared in Reuters, Maduro said he thought the United States and Saudi Arabia wanted to drive down oil prices “to harm Russia.”
Bolivian President Evo Morales agrees with Maduro and told journalists at RT that: “The reduction in oil prices was provoked by the US as an attack on the economies of Venezuela and Russia. In the face of such economic and political attacks, the nations must be united.”
Iranian President Hassan Rouhani said the same thing,with a slightly different twist: “The main reason for (the oil price plunge) is a political conspiracy by certain countries against the interests of the region and the Islamic world … Iran and people of the region will not forget such … treachery against the interests of the Muslim world.”
US-Saudi “treachery”? Is that what’s really driving down oil prices?
Not according to Saudi Arabia’s Petroleum Minister Ali al-Naimi. Al-Naimi has repeatedly denied claims that the kingdom is involved in a conspiracy. He says the tumbling prices are the result of “A lack of cooperation by non-OPEC production nations, along with the spread of misinformation and speculator’s greed.” In other words, everyone else is to blame except the country that has historically kept prices high by controlling output. That’s a bit of a stretch, don’t you think? Especially since–according to the Financial Times — OPEC’s de facto leader has abandoned the cartel’s “traditional strategy” and announced that it won’t cut production even if prices drop to $20 per barrel.
Why? Why would the Saudis suddenly abandon a strategy that allowed them to rake in twice as much dough as they are today? Don’t they like money anymore?
And why would al-Naimi be so eager to crash prices, send Middle East stock markets into freefall, increase the kingdom’s budget deficits to a record-high 5 percent of GDP, and create widespread financial instability? Is grabbing “market share” really that important or is there something else going on here below the surface?
The Guardian’s Larry Elliot thinks the US and Saudi Arabia are engaged a conspiracy to push down oil prices. He points to a September meeting between John Kerry and Saudi King Abdullah where a deal was made to boost production in order to hurt Iran and Russia. Here’s a clip from the article titled “Stakes are high as US plays the oil card against Iran and Russia”:
“…with the help of its Saudi ally, Washington is trying to drive down the oil price by ﬂooding an already weak market with crude. As the Russians and the Iranians are heavily dependent on oil exports, the assumption is that they will become easier to deal with…
John Kerry, the US secretary of state, allegedly struck a deal with King Abdullah in September under which the Saudis would sell crude at below the prevailing market price. That would help explain why the price has been falling at a time when, given the turmoil in Iraq and Syria caused by Islamic State, it would normally have been rising.
The Saudis did something similar in the mid-1980s. Then, the geopolitical motivation for a move that sent the oil price to below $10 a barrel was to destabilize Saddam Hussein’s regime. This time, according to Middle East specialists, the Saudis want to put pressure on Iran and to force Moscow to weaken its support for the Assad regime in Syria… (Stakes are high as US plays the oil card against Iran and Russia, Guardian)
That’s the gist of Elliot’s theory, but is he right?
Vladimir Putin isn’t so sure. Unlike Morales, Maduro and Rouhani, the Russian president has been reluctant to blame falling prices on US-Saudi collusion. In an article in Itar-Tass, Putin opined:
“There’s a lot of talk around” in what concerns the causes for the slide of oil prices, he said at a major annual news conference. “Some people say there is conspiracy between Saudi Arabia and the US in order to punish Iran or to depress the Russian economy or to exert impact on Venezuela.”
“It might be really so or might be different, or there might be the struggle of traditional producers of crude oil and shale oil,” Putin said. “Given the current situation on the market the production of shale oil and gas has practically reached the level of zero operating costs.” (Putin says oil market price conspiracy between Saudi Arabia and US not ruled out, Itar-Tass)
As always, Putin takes the most moderate position, that is, that Washington and the Saudis may be in cahoots, but that droopy prices might simply be a sign of over-supply and weakening demand. In other words, there could be a plot, but then again, maybe not. Putin is a man who avoids passing judgment without sufficient evidence.
The same can’t be said of the Washington Post. In a recent article, WP journalist Chris Mooney dismisses anyone who thinks oil prices are the result of US-Saudi collaboration as “kooky conspiracy theorists”. According to Mooney:
“The reasons for the sudden (price) swing are not particularly glamorous: They involve factors like supply and demand, oil companies having invested heavily in exploration several years ago to produce a glut of oil that has now hit the market — and then, perhaps, the “lack of cohesion” among the diverse members of OPEC.” (Why there are so many kooky conspiracy theories about oil, Washington Post)
Oddly enough, Mooney disproves his own theory a few paragraphs later in the same piece when he says:
“Oil producers really do coordinate. And then, there’s OPEC, which is widely referred to in the press as a “cartel,” and which states up front that its mission is to “coordinate and unify the petroleum policies” of its 12 member countries…. Again, there’s that veneer of plausibility to the idea of some grand oil related strategy.” (WP)
Let me get this straight: One the one hand Mooney agrees that OPEC is a cartel that “coordinates and unify the petroleum policies”, then on the other, he says that market fundamentals are at work. Can you see the disconnect? Cartels obstruct normal supply-demand dynamics by fixing prices, which Mooney seems to breezily ignore.
Also, he scoffs at the idea of “some grand oil related strategy” as if these cartel nations were philanthropic organizations operating in the service of humanity. Right. Someone needs to clue Mooney in on the fact that OPEC is not the Peace Corps. They are monopolizing amalgam of cutthroat extortionists whose only interest is maximizing profits while increasing their own political power. Surely, we can all agree on that fact.
What’s really wrong with Mooney’s article, is that he misses the point entirely. The debate is NOT between so-called “conspiracy theorists” and those who think market forces alone explain the falling prices. It’s between the people who think that the Saudis decision to flood the market is driven by politics rather than a desire to grab “market share.” That’s where people disagree. No denies that there’s manipulation; they merely disagree about the motive. This glaring fact seems to escape Mooney who is on a mission to discredit conspiracy theorists at all cost. Here’s more:
(There’s) “a long tradition of conspiracy theorists who have surmised that the world’s great oil powers — whether countries or mega-corporations — are secretly pulling strings to shape world events.”…
“A lot of conspiracy theories take as their premise that there’s a small group of people who are plotting to control something, to control the government, the banking system, or the main energy source, and they are doing this to the disadvantage of everybody else,” says University of California-Davis historian Kathy Olmsted, author of “Real Enemies: Conspiracy Theories and American Democracy, World War I to 9/11″. (Washington Post)
Got that? Now find me one person who doesn’t think the world is run by a small group of rich, powerful people who operate in their own best interests? Here’s more from the same article:
(Oil) “It’s the perfect lever for shifting world events. If you were a mad secret society with world-dominating aspirations and lots of power, how would you tweak the world to create cascading outcomes that could topple governments and enrich some at the expense of others? It’s hard to see a better lever than the price of oil, given its integral role in the world economy.” (WP)
“A mad secret society”? Has Mooney noticed that — in the last decade and a half — the US has only invaded nations that have huge natural resources (mainly oil and natural gas) or the geography for critical pipeline routes? There’s nothing particularly secret about it, is there?
The United States is not a “mad secret society with world-dominating aspirations”. It’s a empire with blatantly obvious “world-dominating aspirations” run by political puppets who do the work of wealthy elites and corporations. Any sentient being who’s bright enough to browse the daily headlines can figure that one out.
Mooney’s grand finale:
“So in sum, with a surprising and dramatic event like this year’s oil price decline, it would be shocking if it did not generate conspiracy theories. Humans believe them all too easily. And they’re a lot more colorful than a more technical (and accurate) story about supply and demand.” (WP)
Ah, yes. Now I see. Those darn “humans”. They’re so weak-minded they’ll believe anything you tell them, which is why they need someone as smart as Mooney tell them how the world really works.
Have you ever read such nonsense in your life? On top of that, he gets the whole story wrong. This isn’t about market fundamentals. It’s about manipulation. Are the Saudis manipulating supply to grab market share or for political reasons? THAT’S THE QUESTION. The fact that they ARE manipulating supply is not challenged by anyone including the uber-conservative Financial Times that deliberately pointed out that the Saudis had abandoned their traditional role of cutting supply to support prices. That’s what a “swing state” does; it manipulates supply keep prices higher than they would be if market forces were allowed to operate unimpeded.
So what is the motive driving the policy; that’s what we want to know?
Certainly there’s a strong case to be made for market share. No one denies that. If the Saudis keep prices at rock bottom for a prolonged period of time, then a high percentage of the producers (that can’t survive at prices below $70 per barrel) will default leaving OPEC with greater market share and more control over pricing.
So market share is certainly a factor. But is it the only factor?
Is it so far fetched to think that the United States–which in the last year has imposed harsh economic sanctions on Russia, made every effort to sabotage the South Stream pipeline, and toppled the government in Kiev so it could control the flow of Russian gas to countries in the EU–would coerce the Saudis into flooding the market with oil in order to decimate the Russian economy, savage the ruble, and create favorable conditions for regime change in Moscow? Is that so hard to believe?
Apparently New York Times columnist Thomas Freidman doesn’t think so. Here’s how he summed it up in a piece last month: “Is it just my imagination or is there a global oil war underway pitting the United States and Saudi Arabia on one side against Russia and Iran on the other?”
It sounds like Freidman has joined the conspiracy throng, doesn’t it? And he’s not alone either. This is from Alex Lantier at the World Socialist Web Site:
“While there are a host of global economic factors underlying the fall in oil prices, it is unquestionable that a major role in the commodity’s staggering plunge is Washington’s collaboration with OPEC and the Saudi monarchs in Riyadh to boost production and increase the glut on world oil markets.
As Obama traveled to Saudi Arabia after the outbreak of the Ukraine crisis last March, the Guardian wrote, “Angered by the Soviet invasion of Afghanistan in 1979, the Saudis turned on the oil taps, driving down the global price of crude until it reached $20 a barrel (in today’s prices) in the mid-1980s… [Today] the Saudis might be up for such a move—which would also boost global growth—in order to punish Putin over his support for the Assad regime in Syria. Has Washington floated this idea with Riyadh? It would be a surprise if it hasn’t.” (Alex Lantier,Imperialism and the ruble crisis, World Socialist Web Site)
And here’s an intriguing clip from an article at Reuters that suggests the Obama administration is behind the present Saudi policy:
“U.S. Secretary of State John Kerry sidestepped the issue (of a US-Saudi plot) after a trip to Saudi Arabia in September. Asked if past discussions with Riyadh had touched on Russia’s need for oil above $100 to balance its budget, he smiled and said: “They (Saudis) are very, very well aware of their ability to have an impact on global oil prices.” (Saudi oil policy uncertainty unleashes the conspiracy theorists, Reuters)
Of course, they’re in bed together. Saudi Arabia is a US client. It’s not autonomous or sovereign in any meaningful way. It’s a US protectorate, a satellite, a colony. They do what they’re told. Period. True, the relationship is complex, but let’s not be ridiculous. The Saudis are not calling the shots. The idea is absurd. Do you really think that Washington would let Riyadh fiddle prices in a way that destroyed critical US domestic energy industries, ravaged the junk bond market, and generated widespread financial instability without uttering a peep of protest on the matter?
Dream on! If the US was unhappy with the Saudis, we’d all know about it in short-order because it would be raining Daisy Cutters from the Persian Gulf to the Red Sea, which is the way that Washington normally expresses its displeasure on such matters. The fact that Obama has not even alluded to the shocking plunge in prices just proves that the policy coincides with Washington’s broader geopolitical strategy.
And let’s not forget that the Saudis have used oil as a political weapon before, many times before. Indeed, wreaking havoc is nothing new for our good buddies the Saudis. Check this out from Oil Price website:
“In 1973, Egyptian President Anwar Sadat convinced Saudi King Faisal to cut production and raise prices, then to go as far as embargoing oil exports, all with the goal of punishing the United States for supporting Israel against the Arab states. It worked. The “oil price shock” quadrupled prices.
It happened again in 1986, when Saudi Arabia-led OPEC allowed prices to drop precipitously, and then in 1990, when the Saudis sent prices plummeting as a way of taking out Russia, which was seen as a threat to their oil supremacy. In 1998, they succeeded. When the oil price was halved from $25 to $12, Russia defaulted on its debt.
The Saudis and other OPEC members have, of course, used the oil price for the obverse effect, that is, suppressing production to keep prices artificially high and member states swimming in “petrodollars”. In 2008, oil peaked at $147 a barrel.” (Did The Saudis And The US Collude In Dropping Oil Prices?, Oil Price)
1973, 1986, 1990, 1998 and 2008.
So, according to the author, the Saudis have manipulated oil prices at least five times in the past to achieve their foreign policy objectives. But, if that’s the case, then why does the media ridicule people who think the Saudis might be engaged in a similar strategy today?
Could it be that the media is trying to shape public opinion on the issue and, by doing so, actually contribute to the plunge in oil prices?
Bingo. Alert readers have probably noticed that the oil story has been splashed across the headlines for weeks even though the basic facts have not changed in the least. It’s all a rehash of the same tedious story reprinted over and over again. But, why? Why does the public need to have the same “Saudis refuse to cut production” story driven into their consciousness day after day like they’re part of some great collective brainwashing experiment? Could it be that every time the message is repeated, oil sells off, and prices go down? Is that it?
Precisely. For example, last week a refinery was attacked in Libya which pushed oil prices up almost immediately. Just hours later, however, another “Saudis refuse to cut production” story conveniently popped up in all the major US media which pushed prices in the direction the USG wants them to go, er, I mean, back down again.
This is how the media helps to reinforce government policy, by crafting a message that helps to push down prices and, thus, hurt “evil” Putin. (This is called “jawboning”) Keep in mind, that OPEC doesn’t meet again until June, 2015, so there’s nothing new to report on production levels. But that doesn’t mean we’re not going to get regular updates on the “Saudis refuse to cut production” story. Oh, no. The media is going to keep beating that drum until Putin cries “Uncle” and submits to US directives. Either that, or the bond market is going to blow up and take the whole damn global financial system along with it. One way or another, something’s got to give.
Bottom line: Falling oil prices and the plunging ruble are not some kind of free market accident brought on by oversupply and weak demand. That’s baloney. They’re part of a broader geopolitical strategy to strangle the Russian economy, topple Putin, and establish US hegemony across the Asian landmass. It’s all part of Washington’s plan to maintain its top-spot as the world’s only superpower even though its economy is in irreversible decline.
Putin’s Next Move Is Crucial…
The plunge of the Russian currency this week is the drastic outcome of policies implemented by the major imperialist powers to force Russia to submit to American and European imperialism’s neo-colonial restructuring of Eurasia. Punishing the Putin regime’s interference with their plans for regime change in countries such as Ukraine and Syria, the NATO powers are financially strangling Russia.” Alex Lantier, Imperialism and the ruble crisis, WSWS
“The struggle for world domination has assumed titanic proportions. The phases of this struggle are played out upon the bones of the weak and backward nations.” Leon Trotsky, 1929
Russian President Vladimir Putin suffered a stunning defeat on Tuesday when a US-backed plan to push down oil prices sent the ruble into freefall. Russia’s currency plunged 10 percent on Monday followed by an 11 percent drop on Tuesday reducing the ruble’s value by more than half in less than a year. The jarring slide was assisted by western sympathizers at Russia’s Central Bank who, earlier in the day, boosted interest rates from 10.5 percent to 17 percent to slow the decline. But the higher rates only intensified the outflow of capital which put the ruble into a tailspin forcing international banks to remove pricing and liquidity from the currency leading to the suspension of trade. According to Russia Today:
“Russian Federation Council Chair Valentina Matviyenko has ordered a vote on a parliamentary investigation into the recent activities of the Central Bank and its alleged role in the worst-ever plunge of the ruble rate…
“I suggest to start a parliamentary investigation into activities of the Central Bank that has allowed violations of the citizens’ Constitutional rights, including the right for property,” the RIA Novosti quoted Tarlo as saying on Wednesday.
The senator added that according to the law, protecting financial stability in the country is the main task of the Central Bank and its senior management. However, the bank’s actions, in particular the recent raising of the key interest rate to 17 percent, have so far yielded the opposite results.” (Upper House plans probe into Central Bank role in ruble crash, RT)
The prospect that there may be collaborators and fifth columnists at Russia’s Central Bank should surprise no one. The RCB is an independent organization that serves the interests of global capital and regional oligarchs the same as central banks everywhere. This is a group that believes that humanity’s greatest achievement is the free flow of privately-owned capital to markets around the world where it can extract maximum value off the sweat of working people. Why would Russia be any different in that regard?
It isn’t. The actions of the Central Bank have cost the Russian people dearly, and yet, even now the main concern of RCB elites is their own survival and the preservation of the banking system. An article that appeared at Zero Hedge on Wednesday illustrates this point. After ruble trading was suspended, the RCB released a document with “7 new measures” all of which were aimed at protecting the banking system via moratoria on securities losses, breaks on interest rates, additional liquidity provisioning, easier credit and accounting standards, and this gem at the end:
“In order to maintain the stability of the banking sector in the face of increased interest rate and credit risks of a slowdown of the Russian economy the Bank of Russia and the Government of the Russian Federation prepare measures to recapitalize credit institutions in 2015.” (Russian Central Bank Releases 7 Measures It Will Take To Stabilize The Financial Sector, Zero Hedge)
Sound familiar? It should. You see, the Russian Central Bank works a lot like the Fed. At the first sign of trouble they build a nice, big rowboat for themselves and their dodgy bank buddies and leave everyone else to drown. That’s what these bullet points are all about. Save the banks, and to hell the people who suffer from their exploitative policies.
Here’s more from RT:
“Earlier this week a group of State Duma MPs from the Communist Party sent an official address to Putin asking him to sack (Central Bank head, Elvira) Nabiullina, and all senior managers of the Central Bank as their current policies are causing the rapid devaluation of ruble and impoverishment of the majority of the Russian population.
In their letter, the Communists also recalled Putin’s address to the Federal Assembly in which he said that control over inflation must not be in the way of the steady economic growth.
“They listen to your orders and then do the opposite,” the lawmakers complained.” (RT)
In other words, the RCB enforces its own “austerity” policy in Russia just as central bankers do everywhere. There’s nothing conspiratorial about this. CBs are owned and controlled by the big money guys which is why their policies invariably serve the interests of the rich. They might not call it “trickle down” or “structural adjustment” (as they do in the US), but it amounts to the same thing, the inexorable shifting of wealth from working class people to the parasitic plutocrats who control the system and its political agents. Same old, same old.
Even so, the media has pinned the blame for Tuesday’s ruble fiasco on Putin who, of course, has nothing to do with monetary policy. That said, the ruble rout helps to draw attention to the fact that Moscow is clearly losing its war with the US and needs to radically adjust its approach if it hopes to succeed. First of all, Putin might be a great chess player, but he’s got a lot to learn about finance. He also needs a crash-course in asymmetrical warfare if he wants to defend the country from more of Washington’s stealth attacks.
In the last 10 months, the United States has executed a near-perfect takedown of the Russian economy. Following a sloppy State Department-backed coup in Kiev, Washington has consolidated its power in the Capital, removed dissident elements in the government, deployed the CIA to oversee operations, launched a number of attacks on rebel forces in the east, transferred ownership of Ukraine’s vital pipeline system to US puppets and foreign corporations, created a tollbooth separating Moscow from the lucrative EU market, foiled a Russian plan to build an alternate pipeline to southern Europe (South Stream), built up its military assets in the Balkans and Black Sea and, finally–the cherry on the cake–initiated a daring sneak attack on Russia’s currency by employing its Saudi-proxy to flood the market with oil, push prices off a cliff, and trigger a run on the ruble which slashed its value by more than half forcing retail currency platforms to stop trading the battered ruble until prices stabilized.
Like we said, Putin might be a great chess player, but in his battle with the US, he’s getting his clock cleaned. So far, he’s been no match for the maniacal focus and relentless savagery of the Washington powerbrokers. Yes, he’s formed critical alliances across Asia and the world. He’s also created competing institutions (like the BRICS bank) that could break the imperial grip on global finance. And, he’s also expounded a vision of a new world in which “one center of power” does not dictate the rules to everyone else. That’s all great, but he’s losing the war, and that’s what counts. Washington doesn’t care about peoples’ dreams or aspirations. What they care about is ruling the world with an iron fist, which is precisely what they intend to do for the next century or so unless someone stops them. Putin’s actions, however admirable, have not yet changed that basic dynamic. In fact, this latest debacle (authored by the RCB) is a severe setback for the country and could impact Russia’s ability to defend itself against US-NATO aggression.
So what does Putin need to do to reverse the current trend?
The first order of business should be a fundamental change in approach followed by a quick switch from defense to offense. There should be no doubt by now, that Washington is going for the jugular. The attack on the ruble provides clear evidence that the US will not be satisfied until Russia has been decimated and reduced to “a permanent state of colonial dependency.” (Chomsky) The United States has launched a full-blown economic war on Russia and yet the Kremlin is still acting like Washington’s punching bag. You can’t win a war like that. You have to take the initiative; take chances, be bold, think outside the box. That’s what Washington is doing. The rout of the ruble is perhaps the most astonishingly-successful asymmetrical attack in recent memory. It involved tremendous risks and costs on the part of the perpetrators. For example, the lower oil prices have ravaged important domestic industries, created widespread financial instability, and sent markets across the planet into a nosedive. Even so, Washington persevered with its audacious strategy, undeterred by the vast collateral damage, never losing sight of its ultimate objective; to deprive Moscow of crucial oil revenues, to crash the ruble, and to open up Central Asia for imperial expansion and US military bases. (The pivot to Asia)
This is how the US plays the game, by keeping its “eyes on the prize” at all times, and by rolling roughshod over anyone or anything that gets in its way. That is why the US is the world’s only superpower, because the voracious oligarchs who run the country will stop at nothing to get what they want.
Does Putin have the grit to match that kind of venomous determination? Has he even adjusted to the fact that WW3 will be unlike any conflict in the past, that jihadi-proxies and Neo Nazi-proxies will be employed as shock troops for the empire clearing the way for US special forces and foot soldiers who will hold ground and establish the new order? Does he even realize that Barbarossa 2 is already underway, but that the Panzer divisions and 2 million German regulars have been replaced with high-powered computers, covert ops, color-coded revolutions, currency crises, capital flight, cyber attacks and relentless propaganda. That’s 4th Generation (4-G) warfare in a nutshell. And, guess what? The US attack on the ruble has shown that it is the undisputed master of this new kind of warfare. More important, Washington has just prevailed in a battle that could prove to be a critical turning point if Putin doesn’t get his act together and retaliate.
You mean nukes?
Heck no. But, by the same token, you can’t expect to win a confrontation with the US by rerouting gas pipelines to Turkey or by forming stronger coalitions with other BRICS countries or by ditching the dollar. Because none of that stuff makes a damn bit of difference when your currency is in the toilet and the US is making every effort to grind your face into the pavement.
There’s an expression is football that goes something like this: The best defense is a good offense. You can’t win by sitting on the sidelines and hoping your team doesn’t lose. You must engage your adversary at every opportunity never giving ground without a fight. And when an opening appears where you can take the advantage, you must act promptly and decisively never looking back and never checking your motives. That’s how you win.
Washington only thinks in terms winning. It expects to win, and will do whatever is necessary to win. In fact, the whole system has been re-geared for one, sole purpose; to beat the holy hell out of anyone who gets out of line. That’s what we do, and we’ve gotten pretty good at it. So, if you want to compete at that level, you’ve got to have “game”. You’re going to have to step up and prove that you can run with the big kids.
And that’s what makes Putin’s next move so important, crucial really. Because whatever he does will send a message to Washington that he’s either up to the challenge or he’s not. Which is why he needs to come out swinging and do something completely unexpected. The element of surprise, that’s the ticket. And we’re not talking about military action either. That just plays to Uncle Sam’s strong hand. Putin doesn’t need another Vietnam. He needs a coherent gameplan. He needs a winning strategy. He needs to takes risks, put it all on the line and roll the freaking dice. You can’t lock horns with the US and play it safe. That’s a losing strategy. This is smash-mouth, steelcage smackdown, a scorched-earth event where winner takes all. You have to be ready to rumble.
Putin needs to think asymmetrically. What would Obama do if he was in Putin’s shoes?
You know what he’d do: He’d send military support to Assad. He’d arm rebel factions in Saudi Arabia, Somalia, Nigeria and elsewhere. He’d strengthen ties with Venezuela, Bolivia, Ecuador providing them with military, intelligence and logistical support. He’d deploy his NGOs and Think Tank cronies to foment revolution wherever leaders refused to follow Moscow’s directives. He would work tirelessly to build the economic, political, media, and military institutions he needed to impose his own self-serving version of snatch-and-grab capitalism on every nation on every continent in the world. That’s what Obama would do, because that’s what his puppetmasters would demand of him.
But Putin must be more discreet, because his resources are more limited. But he still has options, like the markets, for example. Let’s say Putin announces that creditors in the EU (particularly banks) won’t be paid until the ruble recovers. How does that sound?
Putin: “We’re really sorry about the inconvenience, but we won’t be able to make those onerous principle payments for a while. Please accept our humble apologies.” End of statement.
Moments later: Global stocks plunge 350 points on the prospect of a Russian default and its impact on the woefully-undercapitalized EU banking system.
Get the picture? That’s what you call an asymmetrical attack. The idea was even hinted at in a piece on Bloomberg News. Here’s an excerpt from the article:
“Sergei Markov, a pro-Putin academic, wrote in a column on Vzglyad.ru. “Since the reasons for the ruble’s fall are political, the response should be political, too. For example, a law that would ban Russian companies from repaying debts to Western counterparties if the ruble has dropped more than 50 percent in the last year. That will immediately lower the pressure on the ruble, many countries have done this, Malaysia is one example. It’s in great economic shape now.” (Is Russia ready to impose capital controls? Chicago Tribune)
Here’s more background from RT:
“Major banks across Europe, as well as the UK, US, and Japan, are at major risk should the Russian economy default, according to a new study by Capital Economics. The ING Group in the Netherlands, Raiffeisen Bank in Austria, Societe General in France, UniCredit in Italy, and Commerzbank in Germany, have all faced significant losses in the wake of the ruble crisis…
Overall Societe General, known as Rosbank in the Russian market, has the most exposure at US$31 billion, or €25 billion, according to Citigroup Inc. analysts. This is equivalent to 62 percent of the Paris-based bank’s tangible equity, Bloomberg News reported.
Following the drop, Raiffeisen, which has €15 billion at risk in Russia, saw its stocks plummeted more than 10 percent. Raiffeisen also has significant exposure in Ukraine, which is facing a similar currency sell-off as Russia.” (Russia crisis leaves banks around the world exposed by the billions, RT)
So Putin defaults which nudges the EU banking system down the stairwell. So what? What does that prove?
It proves that Russia has the tools to defend itself. It proves that Putin can disrupt the status quo and spread the pain a bit more equitably. “Spreading the pain” is a tool the US uses quite frequently in its dealings with other countries. Maybe Putin should take a bite of that same apple, eh?
Another option would be to implement capital controls to avoid ruble-dollar conversion and further capital flight. The beauty of capital controls is that they take power away from the big money guys who run the world and hand it back to elected officials. Leaders like Putin are then in a position to say, “Hey, we’re going to take a little break from the dollar system for while until we get caught up. I hope you’ll understand our situation.”
Capital controls are an extremely effective of avoiding capital flight and minimizing the impact of a currency crisis. Here’s a short summary of how these measures helped Malaysia muddle through in 1998:
“When the Asian financial crisis hit, Malaysia’s position looked a lot like Russia’s today: It had big foreign reserves and a low short-term debt level, but relatively high general indebtedness if households and corporations were factored in. At first, to bolster the ringgit, Deputy Prime Minister Anwar Ibrahim pushed through a market-based policy with a flexible exchange rate, rising interest rates and cuts in government spending. It didn’t work: Consumption and investment went down, and pessimism prevailed, exerting downward pressure on the exchange rate.
So, in June 1998, Prime Minister Mahathir Mohammad… appointed a different economic point man, Daim Zainuddin. In September, on Daim’s urging, Malaysia introduced capital controls. It banned offshore operations in ringgit and forbade foreign investors to repatriate profits for a year. Analysts at the time were sharply critical of the measures, and Malaysia’s reputation in the global financial markets inevitably suffered.
According to Kaplan and Rodrik, however, the capital controls were ultimately effective. The government was able to lower interest rates, the economy recovered, the controls were relaxed ahead of time, and by May 1999 Malaysia was back on the international capital markets with a $1 billion bond issue.” (Is Russia ready to impose capital controls, Chicago Tribune)
Sure they were effective, but they piss off the slacker class of oligarchs who think the whole system should be centered on their “inalienable right” to move capital from one spot to another so they can rake-off hefty profits at everyone else’s expense. Capital controls push those creeps to the back of the line so the state can do what it needs to do to preserve the failing economy from the attack of speculators. Here’s a clip from a speech Joseph Stiglitz gave in 2014 at the Atlanta Fed’s 2014 Financial Markets Conference. He said:
“When countries do not impose capital controls and allow exchange rates to vary freely, this can give rise to high levels of exchange rate volatility. The consequence can be high levels of economic volatility, imposing great costs on workers and firms throughout the economy. Even if they can lay off some of the risk, there is a cost to doing so. The very existence of this volatility affects the structure of the economy and overall economic performance.”
That sums it up pretty well. Without capital controls, the deep-pocket Wall Street banks and speculators can simply vacuum the money out of an economy leaving the country broken and penniless. This nihilistic decimation of emerging markets via capital flight is what the kleptocracy breezily refers to as “free markets”, the unwavering plundering of civilization to fatten the coffers of the swinish few at the top of the foodchain. That’s got to stop.
Putin needs to put his foot down now; stop the outflow of cash, stop the conversion of rubles to dollars, force investors to recycle their money into the domestic economy, indict the central bank governors and trundle them off to the hoosegow, and reassert the power of the people over the markets. If he doesn’t, then the speculators will continue to peck away until Russia’s reserves are drained-dry and the country is pushed back into another long-term slump. Who wants that?
And don’t think that Putin’s only problem is Washington either, because it isn’t. He’s got an even bigger headache in his own country with the morons who still buy the hogwash that “the market knows best.” These are the fantasists, the corporate toadies, and the fifth columnists, some of whom hold very high office. Here’s a clip I picked up at the Vineyard of the Saker under the heading “Medvedev declares: more of the same”:
(Russian Prime Minister) “Medvedev has just called a government meeting with most of the directors of top Russian corporations and the director of the Russian Central Bank. He immediately announced that he will not introduce any harsh regulatory measures and that he will let the market forces correct the situation. As for the former Minister of Finance, the one so much beloved in the West, Alexei Kudrin, he expressed his full support for the latest increase in interest rates.”
This is lunacy. The US has just turned Russia’s currency into worthless fishwrap, and bonehead Medvedev wants to play nice and return to “business as usual”??
No thanks. Maybe Medvedev wants to be a slave to the market, but I’ll bet Putin is smarter than that.
Putin’s not going to roll over and play dead for these vipers. He’s got to much on the ball for that. He’s going to beat them at their own game, fair and square. He’s going to implement capital controls, restructure the economy away from the west, and aggressively look for ways to deter Washington from spreading its heinous resource war to Central Asia and beyond.
He’s not going to give an inch. You’ll see.
In 1964, the Brazilian military, in a US-designed coup, overthrew a liberal (not more to the left than that) government and proceeded to rule with an iron fist for the next 21 years. In 1979 the military regime passed an amnesty law blocking the prosecution of its members for torture and other crimes. The amnesty still holds.
That’s how they handle such matters in what used to be called The Third World. In the First World, however, they have no need for such legal niceties. In the United States, military torturers and their political godfathers are granted amnesty automatically, simply for being American, solely for belonging to the “Good Guys Club”.
So now, with the release of the Senate Intelligence Committee report on CIA torture, we have further depressing revelations about US foreign policy. But do Americans and the world need yet another reminder that the United States is a leading practitioner of torture? Yes. The message can not be broadcast too often because the indoctrination of the American people and Americophiles all around the world is so deeply embedded that it takes repeated shocks to the system to dislodge it. No one does brainwashing like the good ol’ Yankee inventors of advertising and public relations. And there is always a new generation just coming of age with stars (and stripes) in their eyes.
The public also has to be reminded yet again that – contrary to what most of the media and Mr. Obama would have us all believe – the president has never actually banned torture per se, despite saying recently that he had “unequivocally banned torture” after taking office.
Shortly after Obama’s first inauguration, both he and Leon Panetta, the new Director of the CIA, explicitly stated that “rendition” was not being ended. As the Los Angeles Times reported at the time: “Under executive orders issued by Obama recently, the CIA still has authority to carry out what are known as renditions, secret abductions and transfers of prisoners to countries that cooperate with the United States.”
The English translation of “cooperate” is “torture”. Rendition is simply outsourcing torture. There was no other reason to take prisoners to Lithuania, Poland, Romania, Egypt, Jordan, Kenya, Somalia, Kosovo, or the Indian Ocean island of Diego Garcia, amongst other torture centers employed by the United States. Kosovo and Diego Garcia – both of which house large and very secretive American military bases – if not some of the other locations, may well still be open for torture business, as is the Guantánamo Base in Cuba.
Moreover, the key Executive Order referred to, number 13491, issued January 22, 2009, “Ensuring Lawful Interrogations”, leaves a major loophole. It states repeatedly that humane treatment, including the absence of torture, is applicable only to prisoners detained in an “armed conflict”. Thus, torture by Americans outside an environment of “armed conflict” is not explicitly prohibited. But what about torture within an environment of “counter-terrorism”?
The Executive Order required the CIA to use only the interrogation methods outlined in a revised Army Field Manual. However, using the Army Field Manual as a guide to prisoner treatment and interrogation still allows solitary confinement, perceptual or sensory deprivation, sensory overload, sleep deprivation, the induction of fear and hopelessness, mind-altering drugs, environmental manipulation such as temperature and noise, and stress positions, amongst other charming examples of American Exceptionalism.
After Panetta was questioned by a Senate panel, the New York Times wrote that he had “left open the possibility that the agency could seek permission to use interrogation methods more aggressive than the limited menu that President Obama authorized under new rules … Mr. Panetta also said the agency would continue the Bush administration practice of ‘rendition’ … But he said the agency would refuse to deliver a suspect into the hands of a country known for torture or other actions ‘that violate our human values’.”
The last sentence is of course childishly absurd. The countries chosen to receive rendition prisoners were chosen precisely and solely because they were willing and able to torture them.
Four months after Obama and Panetta took office, the New York Times could report that renditions had reached new heights.
The present news reports indicate that Washington’s obsession with torture stems from 9/11, to prevent a repetition. The president speaks of “the fearful excesses of the post-9/11 era”. There’s something to that idea, but not a great deal. Torture in America is actually as old as the country. What government has been intimately involved with that horror more than the United States? Teaching it, supplying the manuals, supplying the equipment, creation of international torture centers, kidnaping people to these places, solitary confinement, forced feeding, Guantánamo, Abu Ghraib, Bagram, Chile, Brazil, Argentina, Chicago … Lord forgive us!
In 2011, Brazil instituted a National Truth Commission to officially investigate the crimes of the military government, which came to an end in 1985. But Mr. Obama has in fact rejected calls for a truth commission concerning CIA torture. On June 17 of this year, however, when Vice President Joseph Biden was in Brazil, he gave the Truth Commission 43 State Department cables and reports concerning the Brazilian military regime, including one entitled “Widespread Arrests and Psychophysical Interrogation of Suspected Subversives.”
Thus it is that once again the United States of America will not be subjected to any accountability for having broken US laws, international laws, and the fundamental laws of human decency. Obama can expect the same kindness from his successor as he has extended to George W.
“One of the strengths that makes America exceptional is our willingness to openly confront our past, face our imperfections, make changes and do better.” – Barack Obama, written statement issued moments after the Senate report was made public.
And if that pile of hypocrisy is not big enough or smelly enough, try adding to it Bidens’ remark re his visit to Brazil: “I hope that in taking steps to come to grips with our past we can find a way to focus on the immense promise of the future.”
If the torturers of the Bush and Obama administrations are not held accountable in the United States they must be pursued internationally under the principles of universal jurisdiction.
In 1984, an historic step was taken by the United Nations with the drafting of the “Convention Against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment” (came into force in 1987, ratified by the United States in 1994). Article 2, section 2 of the Convention states: “No exceptional circumstances whatsoever, whether a state of war or a threat of war, internal political instability or any other public emergency, may be invoked as a justification of torture.”
Such marvelously clear, unequivocal, and principled language, to set a single standard for a world that makes it increasingly difficult for one to feel proud of humanity. We cannot slide back. If today it’s deemed acceptable to torture the person who supposedly has the vital “ticking-bomb” information needed to save lives, tomorrow it will be acceptable to torture him to learn the identities of his alleged co-conspirators. Would we allow slavery to resume for just a short while to serve some “national emergency” or some other “higher purpose”?
If you open the window of torture, even just a crack, the cold air of the Dark Ages will fill the whole room.
Cuba … at long, long last … maybe …
Hopefully, it’s what it appears to be. Cuba will now be treated by the United States as a country worthy of at least as much respect as Washington offers to its highly oppressive, murdering, torturing allies in Saudi Arabia, Egypt, Honduras, Israel, Pakistan, Afghanistan, and elsewhere.
It’s a tough decision to normalize relations with a country whose police force murders its own innocent civilians on almost a daily basis, and even more abroad, but Cuba needs to do it. Maybe the Cubans can civilize the Americans a bit.
Let’s hope that America’s terrible economic embargo against the island will go the way of the dinosaurs, and Cuba will be able to demonstrate more than ever what a rational, democratic, socialist society can create. But they must not open the economy for the Yankee blood-suckers to play with as they have all over the world.
And I’ll be able to go to Cuba not as a thief in the night covering my tracks and risking a huge fine.
But with the Republicans taking over Congress next month, all of this may be just a pipe dream.
Barack Obama could have done this six years ago when he took office; or five years ago when American Alan Gross was first arrested and imprisoned in Cuba. It would have been even easier back then, with Obama’s popularity at its height and Congress not as captured by the Know-Nothings as now.
So, Cuba outlasted all the punishment, all the lies, all the insults, all the deprivations, all the murderous sabotage, all the assassination attempts against Fidel, all the policies to isolate the country. But for many years now, it’s the United States that has been isolated in the Western Hemisphere.
Reason Number 13,336 why capitalism will be the death of us.
Antibiotic-resistant bacteria – the “superbugs” – if left unchecked, could result in 10 million deaths a year by 2050. New drugs to fight the superbugs are desperately needed. But a panel advising President Obama warned in September that “there isn’t a sufficiently robust pipeline of new drugs to replace the ones rendered ineffective by antibiotic resistance.”
The problem, it appears, is that “Antibiotics generally provide low returns on investment, so they are not a highly attractive area for research and development.”
Aha! “Low returns on investment”! What could be simpler to understand? Is it not a concept worth killing and dying for? Just as millions of Americans died in the 20th century so corporations could optimize profits by not protecting the public from tobacco, lead, and asbestos.
Corporations are programmed to optimize profits without regard for the society in which they operate, in much the same way that cancer cells are programmed to proliferate without regard for the health of their host.
Happy New Year. Here’s what you have to look forward to in 2015.
- January 25: 467 people reported missing from a university in Mexico. US State Department blames Russia.
- February 1: Military junta overthrows President Nicolás Maduro in Venezuela. Washington decries the loss of democracy.
- February 2: US recognizes the new Venezuelan military junta, offers it 50 jet fighters and tanks.
- February 3: Revolution breaks out in Venezuela endangering the military junta; 40,000 American marines land in Caracas to quell the uprising.
- February 16: White police officer in Chicago fatally shoots a 6-year old black boy holding a toy gun.
- March 6: Congress passes a new law which states that to become president of the United States a person must have the surname Bush or Clinton.
- April 30: The Department of Homeland Security announces plan to record the DNA at birth of every child born in the United States.
- May 19: The Supreme Court rules that police may search anyone if they have reasonable grounds for believing that the person has pockets.
- May 27: The Transportation Security Administration declares that all airline passengers must strip completely nude at check-in and remain thus until arriving at their destination.
- June 6: White police officer in Oklahoma City tasers a 7-month-old black child, claiming the child was holding a gun; the gun turns out to be a rattle.
- July 19: Two subway trains collide in Manhattan. The United States demands that Moscow explain why there was a Russian citizen in each of the trains.
- September 5: The Democratic Party changes its name to the Republican Lite Party, and announces the opening of a joint bank account with the Republican Party so that corporate lobbyists need make out only one check.
- September 12: White police officer in Alabama shoots black newborn, confusing the umbilical cord for a noose.
- November 16: President Obama announces that Iran, Syria, Lebanon, Palestine, North Korea, Sudan, Nicaragua, Venezuela, Bolivia and Cuba all possess weapons of mass destruction; have close ties to the Islamic State, al Qaeda, and the Taliban; are aiding pro-Russian rebels in Ukraine; were involved in 9-11; played a role in the assassination of John F. Kennedy and the attack on Pearl Harbor; are an imminent threat to the United States and all that is decent and holy; and are all “really bad guys”, who even (choke, gasp) use torture!
- November 21: The United States invades Iran, Syria, Lebanon, Palestine, North Korea, Sudan, Nicaragua, Venezuela, Bolivia and Cuba.
- December 10: Barack Obama is awarded his second Nobel Peace Prize
- December 11: To celebrate his new peace prize, Obama sends out drones to assassinate wrong-thinking individuals in Somalia, Afghanistan and Yemen.
- December 13: Members of Ukraine’s neo-Nazi parties, which hold several high positions in the US-supported government, goose-step through the center of Kiev in full German Storm Trooper uniforms, carrying giant swastika flags, shouting “Heil Hitler”, and singing the Horst Wessel song. Not a word of this appears in any American mainstream media.
- December 15: US Secretary of State warns Russia to stop meddling in Ukraine, accusing Moscow of wanting to re-create the Soviet Union.
- December 16: White police officer shoots a black 98-year-old man sitting in a wheel chair, claiming the man pointed a rifle at him. The rifle turns out to be a cane.
- December 28: The Washington Redskins football team finish their season in last place. The White House blames Vladimir Putin.
- Associated Press, December 11, 2014
- New York Times, December 11, 2014
- Los Angeles Times, February 1, 2009
- New York Times, February 6, 2009
- New York Times, May 24, 2009
- Washington Post, December 11, 2014
- National Security Archive’s Brazil Documentation Project
- Washington Post, December 10, 2014
- See note 7
- Washington Post, December 13, 2014
US-Saudi Subterfuge Send Stocks and Credit Reeling…
U.S. powerbrokers have put the country at risk of another financial crisis to intensify their economic war on Moscow and to move ahead with their plan to “pivot to Asia”.
Here’s what’s happening: Washington has persuaded the Saudis to flood the market with oil to push down prices, decimate Russia’s economy, and reduce Moscow’s resistance to further NATO encirclement and the spreading of US military bases across Central Asia. The US-Saudi scheme has slashed oil prices by nearly a half since they hit their peak in June. The sharp decline in prices has burst the bubble in high-yield debt which has increased the turbulence in the credit markets while pushing global equities into a tailspin. Even so, the roiled markets and spreading contagion have not deterred Washington from pursuing its reckless plan, a plan which uses Riyadh’s stooge-regime to prosecute Washington’s global resource war. Here’s a brief summary from an article by F. William Engdahl titled “The Secret Stupid Saudi-US Deal on Syria”:
“The details are emerging of a new secret and quite stupid Saudi-US deal on Syria and the so-called IS. It involves oil and gas control of the entire region and the weakening of Russia and Iran by Saudi Arabian flooding the world market with cheap oil. Details were concluded in the September meeting by US Secretary of State John Kerry and the Saudi King…
..the kingdom of Saudi Arabia, has been flooding the market with deep discounted oil, triggering a price war within OPEC… The Saudis are targeting sales to Asia for the discounts and in particular, its major Asian customer, China where it is reportedly offering its crude for a mere $50 to $60 a barrel rather than the earlier price of around $100. That Saudi financial discounting operation in turn is by all appearance being coordinated with a US Treasury financial warfare operation, via its Office of Terrorism and Financial Intelligence, in cooperation with a handful of inside players on Wall Street who control oil derivatives trading. The result is a market panic that is gaining momentum daily. China is quite happy to buy the cheap oil, but her close allies, Russia and Iran, are being hit severely…
According to Rashid Abanmy, President of the Riyadh-based Saudi Arabia Oil Policies and Strategic Expectations Center, the dramatic price collapse is being deliberately caused by the Saudis, OPEC’s largest producer. The public reason claimed is to gain new markets in a global market of weakening oil demand. The real reason, according to Abanmy, is to put pressure on Iran on her nuclear program, and on Russia to end her support for Bashar al-Assad in Syria….More than 50% of Russian state revenue comes from its export sales of oil and gas. The US-Saudi oil price manipulation is aimed at destabilizing several strong opponents of US globalist policies. Targets include Iran and Syria, both allies of Russia in opposing a US sole Superpower. The principal target, however, is Putin’s Russia, the single greatest threat today to that Superpower hegemony. (The Secret Stupid Saudi-US Deal on Syria, F. William Engdahl, BFP)
The US must achieve its objectives in Central Asia or forfeit its top-spot as the world’s only superpower. This is why US policymakers have embarked on such a risky venture. There’s simply no other way to sustain the status quo which allows the US to impose its own coercive dollar system on the world, a system in which the US exchanges paper currency produced-at-will by the Central Bank for valuable raw materials, manufactured products and hard labor. Washington is prepared to defend this extortionist petrodollar recycling system to the end, even if it means nuclear war.
How Flooding the Market Adds to Instability
The destructive and destabilizing knock-on effects of this lunatic plan are visible everywhere. Plummeting oil prices are making it harder for energy companies to get the funding they need to roll over their debt or maintain current operations. Companies borrow based on the size of their reserves, but when prices tumble by nearly 50 percent–as they have in the last six months– the value of those reserves falls sharply which cuts off access to the market leaving CEO’s with the dismal prospect of either selling assets at firesale prices or facing default. If the problem could be contained within the sector, there’d be no reason for concern. But what worries Wall Street is that a surge in energy company failures could ripple through the financial system and wallop the banks. Despite six years of zero rates and monetary easing, the nation’s biggest banks are still perilously undercapitalized, which means that a wave of unexpected bankruptcies could be all it takes to collapse the weaker institutions and tip the system back into crisis. Here’s an excerpt from a post at Automatic Earth titled “Will Oil Kill the Zombies?”:
“If prices fall any further, it would seem that most of the entire shale edifice must of necessity crumble to the ground. And that will cause an absolute earthquake in the financial world, because someone supplied the loans the whole thing leans on. An enormous amount of investors have been chasing high yield, including many institutional investors, and they’re about to get burned something bad….. if oil keeps going the way it has lately, the Fed may instead have to think about bailing out the big Wall Street banks once again.” (Will Oil Kill the Zombies?, Raúl Ilargi Meijer, Automatic Earth)
The problem with falling oil prices is not just mounting deflation or droopy profits; it’s the fact that every part of the industry–exploration, development and production — is propped atop a mountain of red ink (junk bonds). When that debt can no longer be serviced or increased, then the primary lenders (counterparties and financial institutions) sustain heavy losses which domino through the entire system. Take a look at this from Marketwatch:
“There’s ‘no question’ that for energy companies with a riskier debt profile the high-yield debt market “is essentially shut down at this stage,” and there are signs that further pain could hit the sector, ” senior fixed-income strategist at U.S. Bank Wealth Management, Dan Heckman told Marketwatch. “We are getting to the point that it is becoming very concerning.” (Marketwatch)
When energy companies lose access to the market and are unable to borrow at low rates, it’s only a matter of time before they trundle off to extinction.
On Friday, the International Energy Agency (IEA) renewed pressure on prices by lowering its estimate for global demand for oil in 2015. The announcement immediately sent stocks into a nosedive. The Dow Jones Industrial Average (DJIA) lost 315 points by the end of the day, while, according to Bloomberg, more than “$1 trillion was erased from the value of global equities in the week”.
The world is awash in cheap petroleum which is wreaking havoc on domestic shale producers that need prices of roughly $70 per barrel to break-even. With West Texas Intermediate (WTI) presently headed south of 60 bucks–and no bottom in sight–these smaller producers are sure to get clobbered. Pension funds, private equity, banks, and other investors who gambled on these dodgy energy-related junk bonds are going to get their heads handed to them in the months ahead.
The troubles in the oil patch are mainly attributable to the Fed’s easy money policies. By dropping rates to zero and flooding the markets with liquidity, the Fed made it possible for every Tom, Dick and Harry to borrow in the bond market regardless of the quality of the debt. No one figured that the bottom would drop out leaving an entire sector high and dry. Everyone thought the all-powerful Fed could print its way out of any mess. After last week’s bloodbath, however, they’re not nearly as confident. Here’s how Bloomberg sums it up:
“The danger of stimulus-induced bubbles is starting to play out in the market for energy-company debt….Since early 2010, energy producers have raised $550 billion of new bonds and loans as the Federal Reserve held borrowing costs near zero, according to Deutsche Bank AG. With oil prices plunging, investors are questioning the ability of some issuers to meet their debt obligations…
The Fed’s decision to keep benchmark interest rates at record lows for six years has encouraged investors to funnel cash into speculative-grade securities to generate returns, raising concern that risks were being overlooked. A report from Moody’s Investors Service this week found that investor protections in corporate debt are at an all-time low, while average yields on junk bonds were recently lower than what investment-grade companies were paying before the credit crisis.” (Fed Bubble Bursts in $550 Billion of Energy Debt: Credit Markets, Bloomberg)
The Fed’s role in this debacle couldn’t be clearer. Investors piled into these dodgy debt-instruments because they thought Bernanke had their back and would intervene at the first sign of trouble. Now that the bubble has burst and the losses are piling up, the Fed is nowhere to be seen.
In the last week, falling oil prices have started to impact the credit markets where investors are ditching debt on anything that looks at all shaky. The signs of contagion are already apparent and likely to get worse. Investors fear that if they don’t hit the “sell” button now, they won’t be able to find a buyer later. In other words, liquidity is drying up fast which is accelerating the rate of decline. Naturally, this has affected US Treasuries which are still seen as “risk free”. As investors increasingly load up on USTs, long-term yields have been pounded into the ground like a tentpeg. As of Friday, the benchmark 10-year Treasury checked in at a miniscule 2.08 percent, the kind of reading one would expect in the middle of a Depression.
The Saudi-led insurgency has reversed the direction of the market, put global stocks into a nosedive and triggered a panic in the credit markets. And while the financial system edges closer to a full-blown crisis every day, policymakers in Washington have remained resolutely silent on the issue, never uttering as much as a peep of protest for a Saudi policy that can only be described as a deliberate act of financial terrorism.
Why is that? Why have Obama and Co. kept their mouths shut while oil prices have plunged, domestic industries have been demolished, and stocks have gone off a cliff? Could it be that they’re actually in cahoots with the Saudis and that it’s all a big game designed to annihilate enemies of the glorious New World Order?
It certainly looks that way.
Shale Leads The Way…
Crude oil prices dipped lower on Wednesday pushing down yields on US Treasuries and sending stocks down sharply. The 30-year UST slipped to a Depression era 2.83 percent while all three major US indices plunged into the red. The Dow Jones Industrial Average (DJIA) led the retreat losing a hefty 268 points before the session ended. The proximate cause of Wednesday’s bloodbath was news that OPEC had reduced its estimate of how much oil it would need to produce in 2015 to meet weakening global demand. According to USA Today:
“OPEC lowered its projection for 2015 production to 28.9 million barrels a day, or about 300,000 fewer than previously forecast, and a 12-year low…. That’s about 1.15 million barrels a day less than the cartel pumped last month, when OPEC left unchanged its 30 million barrel daily production quota…
The steep decline in crude price raises fears that small exploration and production companies could go out of business if the prices fall too low. And that, in turn, could cause turmoil among those who are lending to them: Junk-bond purchasers and smaller banks.” (USA Today)
Lower oil prices do not necessarily boost consumption or strengthen growth. Quite the contrary. Weaker demand is a sign that deflationary pressures are building and stagnation is becoming more entrenched. Also, the 42 percent price-drop in benchmark U.S. crude since its peak in June, is pushing highly-leveraged energy companies closer to the brink. If these companies cannot roll over their debts, (due to the lower prices) then many will default which will negatively impact the broader market. Here’s a brief summary from analyst Wolf Richter:
“The price of oil has plunged …and junk bonds in the US energy sector are getting hammered, after a phenomenal boom that peaked this year. Energy companies sold $50 billion in junk bonds through October, 14% of all junk bonds issued! But junk-rated energy companies trying to raise new money to service old debt or to fund costly fracking or off-shore drilling operations are suddenly hitting resistance.
And the erstwhile booming leveraged loans, the ugly sisters of junk bonds, are causing the Fed to have conniptions. Even Fed Chair Yellen singled them out because they involve banks and represent risks to the financial system. Regulators are investigating them and are trying to curtail them through “macroprudential” means, such as cracking down on banks, rather than through monetary means, such as raising rates. And what the Fed has been worrying about is already happening in the energy sector: leveraged loans are getting mauled. And it’s just the beginning…
“If oil can stabilize, the scope for contagion is limited,” Edward Marrinan, macro credit strategist at RBS Securities, told Bloomberg. “But if we see a further fall in prices, there will have to be a reaction in the broader market as problems will spill out and more segments of the high-yield space will feel the pain.”…Unless a miracle happens that will goose the price of oil pronto, there will be defaults, and they will reverberate beyond the oil patch.” (Oil and Gas Bloodbath Spreads to Junk Bonds, Leveraged Loans. Defaults Next, Wolf Ricter, Wolf Street)
The Fed’s low rates and QE pushed down yields on corporate debt as investors gorged on junk thinking the Fed “had their back”. That made it easier for fly-by-night energy companies to borrow tons of money at historic low rates even though their business model might have been pretty shaky. Now that oil is cratering, investors are getting skittish which has pushed up rates making it harder for companies to refinance their debtload. That means a number of these companies going to go bust, which will create losses for the investors and pension funds that bought their debt in the form of financially-engineered products. The question is, is there enough of this financially-engineered gunk piled up on bank balance sheets to start the dominoes tumbling through the system like they did in 2008?
That question was partially answered on Wednesday following OPEC’s dismal forecast which roiled stocks and send yields on risk-free US Treasuries into a nosedive. Investors ditched their stocks in a mad dash for the exits thinking that the worst is yet to come. USTs provide a haven for nervous investors looking for a safe place to hunker down while the storm passes.
Economist Jack Rasmus has an excellent piece at Counterpunch which explains why investors are so jittery. Here’s a clip from his article titled “The Economic Consequences of Global Oil Deflation”:
“Oil deflation may lead to widespread bankruptcies and defaults for various non-financial companies, which will in turn precipitate financial instability events in banks tied to those companies. The collapse of financial assets associated with oil could also have a further ‘chain effect’ on other forms of financial assets, thus spreading the financial instability to other credit markets.” (The Economic Consequences of Global Oil Deflation, Jack Rasmus, CounterPunch)
Falling oil prices typically drag other commodities prices down with them. This, in turn, hurts emerging markets that depend heavily on the sale of raw materials. Already these fragile economies are showing signs of stress from rising inflation and capital flight. In a country like Japan, however, one might think the effect would be positive since the lower yen has made imported oil more expensive. But that’s not the case. Falling oil prices increase deflationary pressures forcing the Bank of Japan to implement more extreme measures to reverse the trend and try to stimulate growth. What new and destabilizing policy will Japan’s Central Bank employ in its effort to dig its way out of recession? And the same question can be asked of Europe too, which has already endured three bouts of recession in the last five years. Here’s Rasmus again on oil deflation and global financial instability:
“Oil is not only a physical commodity bought, sold and traded on global markets; it has also become an important financial asset since the USA and the world began liberalized trading of oil commodity futures…
Just as declines in oil spills over to declines of other physical commodities…price deflation can also ‘spill over’ to other financial assets, causing their decline as well, in a ‘chain like’ effect.
That chain like effect is not dissimilar to what happened with the housing crash in 2006-08. At that time the deep contraction in the global housing sector ( a physical asset) not only ‘spilled over’ to other sectors of the real economy, but to mortgage bonds…and derivatives based upon those bonds, also crashed. The effect was to ‘spill over’ to other forms of financial assets that set off a chain reaction of financial asset deflation.
The same ‘financial asset chain effect’ could arise if oil prices continued to decline below USD$60 a barrel. That would represent a nearly 50 percent deflation in oil prices that could potentially set in motion a more generalized global financial instability event, possibly associated with a collapse of the corporate junk bond market in the USA that has fueled much of USA shale production.” (CounterPunch)
This is precisely the scenario we think will unfold in the months ahead. What Rasmus is talking about is “contagion”, the lethal spill-over from one asset class to another due to deteriorating conditions in the financial markets and too much leverage. When debts can no longer be serviced, defaults follow sucking liquidity from the system which leads to a sudden (and excruciating) repricing event. Rasmus believes that a sharp cutback in Shale gas and oil production could ignite a crash in junk bonds that will pave the way for more bank closures. Here’s what he says:
“The shake out in Shale that is coming will not occur smoothly. It will mean widespread business defaults in the sector. And since much of the drilling has been financed with risky high yield corporate ‘junk’ bonds, the shale shake out could translate into a financial crash of the US corporate junk bond market, which is now very over-extended, leading to regional bank busts in turn.” (CP)
The financial markets are a big bubble just waiting to burst. If Shale doesn’t do the trick, then something else will. It’s just a matter of time.
Rasmus also believes that the current oil-glut is politically motivated. Washington’s powerbrokers persuaded the Saudis to flood the market with petroleum to push down prices and crush oil-dependent Moscow. The US wants a weak and divided Russia that will comply with US plans to increase its military bases in Central Asia and allow NATO to be deployed to its western borders. Here’s Rasmus again:
“Saudi Arabia and its neocon friends in the USA are targeting both Iran and Russia with their new policy of driving down the price of oil. The impact of oil deflation is already severely affecting the Russian and Iranian economies. In other words, this policy of promoting global oil price deflation finds favor with significant political interests in the USA, who want to generate a deeper disruption of Russian and Iranian economies for reasons of global political objectives. It will not be the first time that oil is used as a global political weapon, nor the last.” (CP)
Washington’s strategy is seriously risky. There’s a good chance the plan could backfire and send stocks into freefall wiping out trillions in a flash. Then all the Fed’s work would amount to nothing.
Karma’s a bitch.
Ukraine War Driven by Gas-Dollar Link…
“The Fed’s ‘need’ to take on an even more active role as foreigners further slow the purchases of our paper is to put the pedal to the metal on the currency debasement race now being run in the developed world — a race which is speeding us all toward the end of the present currency regime.” Stephanie Pomboy, MacroMavens
“No matter what our Western counterparts tell us, we can see what’s going on. NATO is blatantly building up its forces in Eastern Europe, including the Black Sea and the Baltic Sea areas. Its operational and combat training activities are gaining in scale.” Russian President Vladimir Putin
If there was a way the United States could achieve its long-term strategic objectives and, at the same time, avoid a war with Russia, it would do so. Unfortunately, that is not an option, which is why there’s going to be a clash between the two nuclear-armed adversaries sometime in the near future.
Let me explain: The Obama administration is trying to rebalance US policy in a way that shifts the focus of attention from the Middle East to Asia, which is expected to be the fastest growing region in the coming century. This policy-change is called the “pivot” to Asia. In order to benefit from Asia’s surge of growth, the US plans to beef up its presence on the continent, expand its military bases, strengthen bilateral alliances and trade agreements, and assume the role of regional security kingpin. The not-so-secret purpose of the policy is China “containment”, that is, Washington wants to preserve its position as the world’s only superpower by controlling China’s explosive growth. (The US wants a weak, divided China that will do what it’s told.)
In order to achieve its goals in Asia, the US needs to push NATO further eastward, tighten its encirclement of Russia, and control the flow of oil and gas from east to west. These are the necessary preconditions for establishing US hegemonic rule over the continent. And this is why the Obama administration is so invested in Kiev’s blundering junta-government; it’s because Washington needs Poroshenko’s neo Nazi shock troops to draw Russia into a conflagration in Ukraine that will drain its resources, discredit Putin in the eyes of his EU trading partners, and create the pretext for deploying NATO to Russia’s western border.
The idea that Obama’s proxy army in Ukraine is defending the country’s sovereignty is pure bunkum. What’s going on below the surface is the US is trying to stave off irreversible economic decline and an ever-shrinking share of global GDP through military force. What we’re seeing in Ukraine today, is a 21st century version of the Great Game implemented by political fantasists and Koolaid drinkers who think they can turn the clock back to the post WW2 heyday of the US Empire when the world was America’s oyster. Thankfully, that period is over.
Keep in mind, the glorious US military has spent the last 13 years fighting sheep herders in flip-flops in Afghanistan in a conflict that, at best, could be characterized as a stalemate. And now the White House wants to take on Russia?
Can you appreciate the insanity of the policy?
This is why Secretary of Defense Chuck Hagel was sacked last week, because he wasn’t sufficiently eager to pursue this madcap policy of escalating the wars in Afghanistan, Iraq, Syria and Ukraine. Everyone knows it’s true, the administration hasn’t even tried to deny it. They’d rather stick with foam-at-the-mouth buffoons, like Susan Rice and Samantha Powers, then a decorated veteran who has more credibility and intelligence in his little finger than Obama’s whole National Security team put together.
So now Obama is completely surrounded by rabid warmongering imbeciles, all of whom ascribe to the same fairytale that the US is going to dust-off Russia, remove Assad, redraw the map of the Middle East, control the flow of gas and oil from the ME to markets in the EU, and establish myriad beachheads across Asia where they can keep a tight grip on China’s growth.
Tell me, dear reader, doesn’t that strike you as a bit improbable?
But, of course, the Obama claque think it’s all within their grasp, because, well, because that’s what they’ve been told to think, and because that’s what the US has to do if it wants to maintain its exalted position as the world’s lone superpower when its economic significance in the world is steadily declining. You see, here’s the thing: The exceptional nation is becoming more unexceptional all the time, and that’s what has the political class worried, because they see the handwriting on the wall, and the writing says, “Enjoy it while it lasts, buddy, cuz you ain’t gonna be numero uno much longer.”
And the US has allies in this wacky crusade too, notably Israel and Saudi Arabia. The Saudis have been particularly helpful lately by flooding the market with oil to push down prices and crush the Russian economy. (On Friday, Benchmark crude oil prices plummeted to a four-year low, with Brent crude sinking to $69.11 a barrel.) The Obama administration is using the classic one-two punch of economic sanctions and plunging oil revenues to bully Moscow into withdrawing from Crimea so Washington can move its nuclear arsenal to within spitting distance of Moscow. Here’s a bit of background from the Guardian:
“Think about how the Obama administration sees the state of the world. It wants Tehran to come to heel over its nuclear programme. It wants Vladimir Putin to back off in eastern Ukraine. But after recent experiences in Iraq and Afghanistan, the White House has no desire to put American boots on the ground. Instead, with the help of its Saudi ally, Washington is trying to drive down the oil price by flooding an already weak market with crude. As the Russians and the Iranians are heavily dependent on oil exports, the assumption is that they will become easier to deal with.
John Kerry, the US secretary of state, allegedly struck a deal with King Abdullah in September under which the Saudis would sell crude at below the prevailing market price. That would help explain why the price has been falling at a time when, given the turmoil in Iraq and Syria caused by Islamic State, it would normally have been rising.” (Stakes are high as US plays the oil card against Iran and Russia, Larry Eliot, Guardian)
And here’s more from Salon’s Patrick L. Smith at Salon:
“Less than a week after the Minsk Protocol was signed, Kerry made a little-noted trip to Jeddah to see King Abdullah at his summer residence. When it was reported at all, this was put across as part of Kerry’s campaign to secure Arab support in the fight against the Islamic State.
Stop right there. That is not all there was to the visit, my trustworthy sources tell me. The other half of the visit had to do with Washington’s unabated desire to ruin the Russian economy. To do this, Kerry told the Saudis 1) to raise production and 2) to cut its crude price. Keep in mind these pertinent numbers: The Saudis produce a barrel of oil for less than $30 as break-even in the national budget; the Russians need $105.
Shortly after Kerry’s visit, the Saudis began increasing production, sure enough — by more than 100,000 barrels daily during the rest of September, more apparently to come…
Think about this. Winter is coming, there are serious production outages now in Iraq, Nigeria, Venezuela and Libya, other OPEC members are screaming for relief, and the Saudis make back-to-back moves certain to push falling prices still lower? You do the math, with Kerry’s unreported itinerary in mind, and to help you along I offer this from an extremely well-positioned source in the commodities markets: “There are very big hands pushing oil into global supply now,” this source wrote in an e-mail note the other day.” (What Really Happened in Beijing: Putin, Obama, Xi And The Back Story The Media Won’t Tell You, Patrick L. Smith, Salon)
The Obama team managed to persuade our good buddies the Saudis to flood the market with oil, drive down prices, and put the Russian economy into a nosedive. At the same time, the US has intensified its economic sanctions, done everything in its power to sabotage Gazprom’s South Stream pipeline (that would bypass Ukraine and deliver natural gas to Europe via a southern route), and cajole the Ukrainian parliament into auctioning off 49 percent of the leasing rights and underground storage facilities to privately-owned foreign corporations.
How do you like that? So the US has launched a full-blown economic war against Russia that’s been completely omitted in the western media. Are you surprised?
Washington is determined to block further Russo-EU economic integration in order to collapse the Russian economy and put foreign capital in control of regional energy distribution. It’s all about the pivot. The big money guys figure the US has to pivot to Asia to be a player in the next century. All of these unprovoked attacks on Moscow are based on that one lunatic strategy.
But aren’t people in the EU going to be angry when they can’t get the energy they need (at the prices they want) to run their businesses and heat their homes?
Washington doesn’t think so. Washington thinks its allies in the Middle East can meet the EU’s energy needs without any difficulty. Check out this clip from an article by analyst F. William Engdahl:
“…details are emerging of a new secret and quite stupid Saudi-US deal on Syria and the so-called IS. It involves oil and gas control of the entire region and the weakening of Russia and Iran by Saudi Arabian flooding the world market with cheap oil. ….
On September 11, US Secretary of State Kerry met Saudi King Abdullah at his palace on the Red Sea. The King invited former head of Saudi intelligence, Prince Bandar to attend. There a deal was hammered out which saw Saudi support for the Syrian airstrikes against ISIS on condition Washington backed the Saudis in toppling Assad, a firm ally of Russia and de facto of Iran and an obstacle to Saudi and UAE plans to control the emerging EU natural gas market and destroy Russia’s lucrative EU trade. A report in the Wall Street Journal noted there had been “months of behind-the-scenes work by the US and Arab leaders, who agreed on the need to cooperate against Islamic State, but not how or when.
The process gave the Saudis leverage to extract a fresh US commitment to beef up training for rebels fighting Mr. Assad, whose demise the Saudis still see as a top priority.”
(The Secret Stupid Saudi-US Deal on Syria, F. William Engdahl, BFP)
So the wars in Ukraine and Syria are not really separate conflicts at all. They’re both part of the same global resource war the US has been prosecuting for the last decade and a half. The US plans to cut off the flow of Russian gas and replace it with gas from Qatar which will flow through Syria and onto the EU market after Assad is toppled.
Here’s what’s going on: Syria’s troubles began shortly after it announced that it was going to be part of an “Islamic pipeline” that would transfer natural gas from the South Pars gas field off the coast of Iran across Iraq and Syria, eventually connecting to Greece and the lucrative EU market. According to author Dmitri Minin:
“A gas pipeline from Iran would be highly profitable for Syria. Europe would gain from it as well, but clearly someone in the West didn’t like it. The West’s gas-supplying allies in the Persian Gulf weren’t happy with it either, nor was would-be no. 1 gas transporter Turkey, as it would then be out of the game.” (The Geopolitics of Gas and the Syrian Crisis: Syrian “Opposition” Armed to Thwart Construction of Iran-Iraq-Syria Gas Pipeline, Dmitri Minin, Global Research)
Two months after Assad signed the deal with Iraq and Iran, the rebellion broke out in Syria. That’s quite a coincidence, don’t you think? Funny how frequently those kinds of things happen when foreign leaders don’t march to Washington’s tune.
Here’s more from Minin:
“Qatar is doing all it can to thwart the construction of the pipeline, including arming the opposition fighters in Syria, many of whom come from Saudi Arabia, Pakistan and Libya…
The Arabic newspaper Al-Akhbar cites information according to which there is a plan approved by the U.S. government to create a new pipeline for transporting gas from Qatar to Europe involving Turkey and Israel…
This new pipeline is to begin in Qatar, cross Saudi territory and then the territory of Jordan, thus bypassing Shiite Iraq, and reach Syria. Near Homs the pipeline is to branch in three directions: to Latakia, Tripoli in northern Lebanon, and Turkey. Homs, where there are also hydrocarbon reserves, is the project’s main crossroads, and it is not surprising… that the fiercest fighting is taking place. Here the fate of Syria is being decided. The parts of Syrian territory where detachments of rebels are operating with the support of the U.S., Qatar and Turkey, that is, the north, Homs and the environs of Damascus, coincide with the route that the pipeline is to follow to Turkey and Tripoli, Lebanon. A comparison of a map of armed hostilities and a map of the Qatar pipeline route indicates a link between armed activities and the desire to control these Syrian territories. Qatar’s allies are trying to accomplish three goals: to break Russia’s gas monopoly in Europe; to free Turkey from its dependence on Iranian gas; and to give Israel the chance to export its gas to Europe by land at less cost.”
How do you like that; another coincidence: “The fiercest fighting (in Syria) is taking place” where there’s massive “hydrocarbon reserves” and along the planned pipeline route.
So the conflict in Syria isn’t really about terrorism at all. It’s about natural gas, competing pipelines and access to markets in the EU. It’s about money and power. The whole ISIS-thing is a big hoax to conceal what’s really going on, which is a global war for resources, more blood for oil.
But how does the US benefit from all of this, after all, won’t the gas revenues go to Qatar and the transit countries rather than the US?
Yep, they sure will. But the gas will also be denominated in dollars which will shore up demand for USDs thus perpetuating the petrodollar recycling system which creates a vast market for US debt and which helps to keep US stocks and bonds in the nosebleed section. And that’s what this is all about, preserving dollar supremacy by forcing nations to hold excessive amounts of USDs to use in their energy transactions and to service their dollar-denominated debts.
As long as Washington can control the world’s energy supplies and force the world to trade in dollars, it can spend well in excess of what it produces and not be held to account. It’s like having a credit card you never have to pay off.
That’s a racket Uncle Sam is prepared to defend with everything he’s got, even nukes.
The global economy has just hit the wall. Do not underestimate the significance of the Asian downturn. Japan saw a dramatic rebirth after WWII and China was transformed into an industrial powerhouse from the “Free Trade” debacle. Now that the Central Bankers of the world are turning to Japan and China to keep the financial bubble from blowing, the focus pivots to the East. Pushing on a string is no easy task. Nervously, all eyes have to wonder if more debt will prevent the expected crash.
When the British financial press warns about Spreading deflation across East Asia threatens fresh debt crisis, people should listen.
“Deflation is becoming lodged in all the economic strongholds of East Asia. It is happening faster and going deeper than almost anybody expected just months ago, and is likely to find its way to Europe through currency warfare in short order.
China is in effect strapped to the rocketing dollar through its quasi-peg, increasingly a torture machine. George Magnus from UBS says this cannot continue. “What is happening in the property market is the tip of the iceberg for the whole economy. China will have to resort to monetary reflation over the winter, and I think this will include a lower yuan. We are heading into a currency war,” he said.”
The Economist provides the establishment viewpoint of the latest strategy in Deflation, deflated.
“WHEN people think of a large Asian country on the brink of deflation, they probably have Japan in mind. But China, the biggest of them all, is now skirting close to outright falls in prices across a wide swathe of the economy. Producer prices have been declining for nearly three years and consumer price inflation is mired at its lowest level since 2010.
Deflation is rightly feared by central bankers around the world as a most destructive economic force, making debts more expensive in real terms and leading to a vicious cycle of contraction as consumers delay purchases and companies put off investments. Yet the Chinese central bank has been remarkably laid-back about the downward lilt in prices. The most obvious tool in its kit to arrest the slide would be to cut interest rates, but it has not done so since July 2012; the benchmark one-year lending rate remains lofty at 6%. What explains the central bank’s calm in the face of falling prices, and is it making a big mistake?”
This last assessment demonstrates that when the shift in direction was announced, the financial community jumped on the bandwagon to In Change of Strategy, China Cuts Interest Rate.
“China finally admitted it has a growth problem — and that is a big step to getting the global economy back on track.
In cutting rates, China joins the parade of global policy makers who are stepping up their stimulus efforts to support growth. They are filling a void left by the United States Federal Reserve, which just ended a six-year bond-buying campaign that has kept borrowing costs low and has encouraged spending worldwide.”
The admission that a massive infusion to recapitalize the international system requires a new source to finance the retracting economies is significant. It seems that a tag team effort between China and Japan will hit the banking houses from different directions.
Japan Fires Another Shot in Global Currency War is the analysis from the Wall Street Journal.
“The Bank of Japan 8301.TO -1.63%’s surprise move to increase its asset purchases has sent the yen plummeting, with the dollar passing through ¥110 Friday to trade at highs not seen in six years. This is the mechanism through which Japan will try to restore inflation to its perennially stagnating economy. The BOJ describes its actions in terms of boosting domestic growth and pricing power, but the real way it works is to export deflation to the rest of the world – it has been doing this ever since the yen began an 30% decline versus the dollar once “Abenomics” stimulus measures were first floated in the fall of 2012.”
Japan will play the role of the QE Federal Reserve policy and the Chinese will finally slash their interest rates. Such moves are not taken because the global economies are prospering. Looking for actual growth is like Waiting for Godot.
The mystery that faces all economies is when does deflation become impervious to further stimulus? How many more times can the deficits, imbalances and shortfalls be papered or rolled over before a depression ensues.
Japan is already the poster child for negative growth and with the irrational expenditures that China has spent on ghost cities, their reported growth rates are about as valid as a stock buy recommendation from a Wall Street firm that is shorting their own portfolio.
Looking to the orient to pull the world out of a lethargic corporatist spiral is problematic at best. China slowed growth now reported at 7.3 percent is seen as setting the stage that fuels debt and property bubbles. Yet the balance of trade surpluses that China continues to build up against American consumption from their exports has never benefited economic conditions in the United States.
The Dollar Collapse site asks: Most of the World Panics — Is the US Next?
- Will stepped-up debt monetization and interest rate reductions succeed where the past batch failed?
- Can the US remain aloof from the carnage taking place all around it?
As the Asian economies suffer their own version of contraction on the road to a meltdown, who believes that the transnational corporations that have plotted to off shore their production for decades, will ever reverse their strategy and start returning manufacturing back in the US?
Who will buy the ever increasing US Treasury debt if China unwinds? Of course the Federal Reserve will ratchet up and even bigger QE infusion that will result with more zeros to the national debt.
The most effective solution for America is establishing a tax reform that encourages a domestic renaissance and setting tariffs at levels that will reverse the systemic balance of payments deficits. The worldwide deflation has commenced, so start thinking local and not global.
You Are The Slave…
Recently I received a book about the history of Islam. It is written in inviting prose and covers in detail the saga that unfolded through history from the time of the birth of Ishmael and Isaac. On the cover is the bust of a soldier armed with a rifle on a background tinted in blood red. The Tile of the book is “The Blood of the Moon” written by Dr. George Grant and published in 1991. It is a great read. I recommend it.
Grant contends that Islam is a religion that cannot be stamped out by the sole use of military force. Nevertheless he seems to support both Israel and the United States military. The book provides a clarion call for resistance to an Islamic plan to use brutalities to bring the world under their control.
I have just finished reading through several of R. J. Rushdoony’s books for the second time. . His writing platform has King Jesus enthroned and active in the affairs of the world. Rushdoony provides superb explanations of the implications of a thorough, literal interpretation of Scripture. He maintains that righteous government requires righteous citizens.
Good books written by capable thinkers invariably avoid the obvious existence of conspiracies. We have progressed from the empires of Rome and France where large portions of the world fell under tyranny to quests for new world orders that hope to extend hegemony over the entire earth. Like the airplanes that spray chemicals in our skies the public and most good commentators ignore reality, preferring instead to live in the comfortable but dangerous world of fantasy.
Chalcedon Foundation has published another collection of Dr. Rushdoony’s musings entitled “Our Threatened Freedom”. It is a collection of radio spots recorded in the early 1980s. As with all of Reverend Rushdoony’s commentaries they are incisive and pertinent. They cement the necessity of freedom in creating a prosperous society and pinpoint the insanity of allowing humanism to gain control. Over and over again Rushdoony documents the irrational chaos created by overzealous humanistic government. The book produces extensive evidence that the checks and balances incorporated into our Constitution are not working.
Unfortunately, Rushdoony does not entertain the premise that irrational chaos is being purposely created throughout the world because chaotic societies are easier to dominate. There is no mention of the yearly Bilderberg meetings (See Here) where the wealthy and powerful meet to discuss and implement their collective agenda. There is no mention of Zionism, which is a conspiracy, or the International bankers who control currencies, a power which is tantamount to control of the food supply. David Rockefeller’s long time promotion of world government now confirmed in his book “Memoirs” is not cited.
There is an element of irony in the fact that theologically sound Christian teaching maintains that the Triune God created the world and even in these rebellious and barbaric times is in firm control of current events. This fact allays the fears and striving of those that oppose the power seekers. God controls the world and will always do so in spite of the evil efforts of those He created.
Coincidentally, Presidential candidates are often invited to the Bilderberg meetings prior to running for office.
Princeton’s Martin Gilens and Northwestern’s Benjamin I. Page have published a study that concludes “–ordinary citizens have virtually no influence over what their government does in the United States. And economic elites and interest groups, especially those representing business, have a substantial degree of influence. Government policy-making over the last few decades reflects the preferences of those groups — of economic elites and of organized interests.” Read here and here.
Conspiracies are ignored because “conspiracy theorists” are widely considered a bit whacky. The word “conspiracy” has been demonized to prevent the expression of truth.
The plotters have made great progress in the past several decades World government wonks have become leaders in most Western nations and as the United States military does the bidding of the Zionists, hegemonic progress is occurring in the Muslim world.
Influential neocon Max Boot lobbies for perpetual war seeking the destruction of all enemies of Israel using the United States military. It has been going on for a long time. Boot is supported by scores of wealthy, influential neocons in powerful positions throughout the nation; he also has the media and a horde of wild eyed Evangelical Christians that make his current position almost impregnable. We are a giant puppet being controlled by a midget puppeteer creating an anomaly that is regularly ignored by prominent American authors. Read here and here
Jacob Hornberger (Future of Freedom Foundation) describes the current condition of our nation: “Is the situation here at home bad? We both know it is. Invasions, occupations, torture, indefinite detention, embargoes, sanctions, foreign aid, empire, militarized police, drug raids, asset forfeiture, infringements on civil liberties, IRS, income taxation, Federal Reserve, fiat money, welfare, minimum-wage laws, and economic regulations. The welfare-warfare state is destroying our freedom, morality, prosperity, and independence. We need to smash this immoral and destructive apparatus out of existence!”
Hornberger is on target with his description and the need to “smash this immoral and destructive apparatus out of existence”. However, he fails to identify exactly how it is to be smashed!
There are some cracks beginning to appear in one conspiracy that could bode for future confrontation. Publisher, Editor and writer, Tal Brooke, has used his SPC (Spiritual Counterfeits Project) Journal to bring some light to our current dilemma. In the latest issue 38.1 and 38.2 he has authored an incisive piece entitled “The Messiah of a Divided People”. In a paragraph describing the ancient Elders of the Sanhedrin he describes their dissatisfaction with a Messiah “who went like a lamb to the slaughter” preferring one that would defeat the Romans, install Zion as the world ruler and appoint them as rulers of the world
He writes, “This was, and remains, their aim and expectation. They would be the world’s five star generals and judges, Jerusalem would be the center of the World Court. And they could tell Caesar to roll over like a dog. They could walk into the city of Rome and take anything they wanted. They could occupy the palace, they could execute judgment on the multitudes of the treacherous. The world would finally be theirs as they believed Isaiah had promised them. And these Elders would rule the entire earth from Zion. This remains the goal.” (Emphasis mine.) . (For copies of the SPC Journal call 510-540-0300)
The same issue of the SPC Journal contains articles by Jewish Christian writers Steven Wohlberg and Steven Sizer. Confrontation is not about hatred but about justice, peace, truth and righteousness for all people.
Talmudic Zionists realize at least two goal by supporting perpetual war: They destroy the United States of America, a supposedly Christian nation (a religion they overtly hate), and at the same time contribute to the safety and power of neo-Israel. Christianity seeks to bring the Creation under the dominion of the Triune God by peaceful means; Talmudic Zionists by stealth; and Islam by siege.
What will happen when these various power structures conflict? Will the bankers dominate; the Zionists, the international Bilderbergers, Islam, or the business tycoons? Will the Christian Triune God allow His world to be controlled by evil forces as punishment to rebellious Christians? Or will Christians repent and allow the sword of the Spirit to Challenge the enemies of Christ? Time will tell.
Wake up America. It is not our elected officials who are setting policy for our nation. Instead, it is the money barons, the Zionists, the Bilderbergers, and the international business tycoons. That is at least a partial reason why elected officials do not keep their pre-electoral promises. Obedience to the enabling masters is mandatory and retribution for disobedience is severe – note the fate of Presidents Reagan and Kennedy.
President Nixon set the stage for China to decimate the U. S. economy; President Carter gave away the Panama Canal; the Patriot Act was written long before 9/11, and Obamacare was constructed before his election. The agenda is set in place before the presidents are elected and the people are expected to blame the puppet president rather than the invisible power centers that are actually setting policy. The system is working.
It is time for American voters to understand that the candidates for President of the United States are pre-selected and only those obedient candidates are allowed to gain the office. Voting is a sham to placate the populace.
Overt slavery has been eradicated in most of the Western World but the often denied sinfulness of men has put the entire world under a threat of becoming a massive slave plantation.
Does the Name “Strauss-Kahn” Ring a Bell?
The International Monetary Fund has finally admitted that it was wrong to recommend austerity as early as it did in 2010-2011. The IMF now agrees that it should have waited until the US and EU economies were on a sustainable growth-path before advising them to trim their budget deficits and reduce public spending. According to a report issued by the IMF’s research division, the Independent Evaluation Office (IEO): “IMF advocacy of fiscal consolidation proved to be premature for major advanced economies, as growth projections turned out to be optimistic…This policy mix was less than fully effective in promoting recovery and exacerbated adverse spillovers.”
Now there’s an understatement.
What’s so disingenuous about the IMF’s apology, is that the bank knew exactly what the effects of its policy would be, but stuck with its recommendations to reward its constituents. That’s what really happened. The only reason it’s trying to distance itself from those decisions now, is to make the public think it was all just a big mistake.
But it wasn’t a mistake. It was deliberate and here’s the chart that proves it:
(Democrats Reap What They Sowed, Rob Urie, CounterPunch)
There it is, six years of policy in one lousy picture. And don’t kid yourself, the IMF played a critical role in this wealth-shifting fiasco. It’s job was to push for less public spending and deeper fiscal cuts while the Central Banks flooded the financial markets with liquidity (QE). The results are obvious, in fact, one of the Fed’s own officials, Andrew Huszar, admitted that QE was a massive bailout for the rich. “I’ve come to recognize the program for what it really is,” said Huszar who actually worked on the program, “the greatest backdoor Wall Street bailout of all time.” There it is, straight from the horse’s mouth.
So now the IMF wants to throw a little dust in everyone’s eyes by making it look like it was a big goof-up by well-meaning but misguided bankers. And the media is helping them by its omissions.
Let me explain: Of the more than 455 articles on Google News covering the IMF’s mea culpa, not one piece refers to the man who was the IMF’s Managing Director at the time in question. Doesn’t that strike you as a bit odd?
Why would the media scrub any mention of Dominique Strauss-Kahn from its coverage? Could it be that (according to NPR):
“The IMF’s managing director wanted to give Greece, Portugal and Ireland the time needed to put their accounts in order, and he also argued for softening the austerity measures associated with the bailouts for those countries.
Greek economists say that under Strauss-Kahn’s leadership, the IMF was a counterbalance to the strict austerity policies favored by northern European leaders. In fact, according to the daily Le Monde, Strauss-Kahn is fond of calling those who argue for tighter austerity “fous furieux,” which roughly translates as “mad men.”
Strauss-Kahn’s view is that shock-therapy measures imposed on Greece and other European countries with sovereign debt crises will lead only to economic recession and severe social unrest.
Several commentators pointed out Monday that at a time of turmoil in the eurozone and division among European leaders, it was the IMF, under Strauss-Kahn’s leadership, that kept the eurozone’s rescue strategy on track.
The Financial Times said that the IMF’s single most important influence in the resolution of the eurozone crisis was political — amid a lack of political leadership, the paper said, the IMF filled a vacuum.
(IMF Chief’s Arrest Renews Euro Debt Crisis Fears, NPR)
Ah-ha! So Strauss-Kahn wasn’t on board with the IMF’s shock doctrine prescription. In fact, he was opposed to it. So there were voices for sanity within the IMF, they just didn’t prevail in the policy debate.
But why would that be, after all, Strauss-Kahn was the IMF’s Managing Director, his views should have carried greater weight than anyone else’s, right?
Right. Except DSK got the ax for a sexual encounter at New York’s ritzy Sofitel Hotel. So the changes he had in mind never took place, which means that the distribution of wealth continued to flow upwards just like the moneybags constituents of the IMF had hoped for.
Funny how that works, isn’t it? Funny how it’s always the Elliot Spitzers, and the Scott Ritters, and the Dominique Strauss-Kahn’s who get nailed for their dalliances, but the big Wall Street guys never get caught.
Why is that?
The fact is, Strauss-Kahn was off the reservation and no longer supported the policies that the establishment elites who run the IMF wanted to see implemented. They felt threatened by DSK’s Keynesian approach and wanted to get rid of him. That’s it in a nutshell.
Do you know why the bigwig plutocrats hated DSK?
It had nothing to do with his sexual acrobatics at the Sofitel Hotel. Nobody cares about that shite. What they were worried about were his plans for the IMF which he laid out in a speech he gave at the Brookings Institution in April 2011, one month before he got the boot. The speech got very little attention at the time, but– for all practical purposes– it was DSK’s swan song. And, I think you’ll see why.
The experience must have been a real shocker for the gaggle of tycoons and hangers-on who attend these typically-tedious gatherings. Instead of praise for “market discipline”, “labor flexibility” and “fiscal consolidation”, Strauss-Kahn delivered a rousing 30 minute tribute to leftist ideals and wealth-sharing sounding more like a young Leon Trotsky addressing the Forth International than a cold-hearted bureaucrat heading the world’s most notorious loan sharking operation. By the time the speech ended, I’m sure the knives were already being sharped for the wayward Managing Director. To put it bluntly, DSK’s goose was cooked. Here’s a clip from the speech that will help to explain why:
“…The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes”…
Not everyone will agree with the entirety of this statement. But what we have learnt over time is that unemployment and inequality can undermine the very achievements of the market economy, by sowing the seeds of instability…
.. the IMF cannot be indifferent to distribution issues…
Today, we need a similar full force forward response in ensuring that we get the recovery we need. And that means not only a recovery that is sustainable and balanced among countries, but also one that brings employment and fair distribution…
But growth alone is not enough. We need direct labor market policies…
Let me talk briefly about the second lung of the social crisis—inequality…IMF research also shows that sustainable growth over time is associated with a more equal income distribution…
We need policies to reduce inequality, and to ensure a fairer distribution of opportunities and resources. Strong social safety nets combined with progressive taxation can dampen market-driven inequality. Investment in health and education is critical. Collective bargaining rights are important, especially in an environment of stagnating real wages. Social partnership is a useful framework, as it allows both the growth gains and adjustment pains to be shared fairly…
We have also supported a tax on financial activities (and) organized jointly with the ILO … to better understand the policies behind job-creating growth…
Ultimately, employment and equity are building blocks of economic stability and prosperity, of political stability and peace. This goes to the heart of the IMF’s mandate. It must be placed at the heart of the policy agenda. Thank you very much.” (The Global Jobs Crisis— Sustaining the Recovery through Employment and Equitable Growth, Dominique Strauss-Kahn, Managing Director IMF, April 13, 2011)
Can you imagine the chorus of groans that must have emerged from the crowd when Strauss-Kahn made his pitch for “progressive taxation”, “collective bargaining rights”, “protecting social safety nets”, “direct labor market policies” and “taxes on financial activities”? And how do you think the crowd reacted when he told them he’d settled on a more enlightened way to distribute the wealth they’d accumulated over a lifetime of insider trading, crooked backroom deals and shady business transactions?
Do you think they liked that idea or do you suppose they lunged for their blood pressure medication before scuttling pell-mell towards the exits?
Let’s face it; Strauss-Kahn was headed in a direction that wasn’t compatible with the interests of the cutthroats who run the IMF. That much is clear. Now whether these same guys concocted the goofy “honey trap” at the Sofitel Hotel, we may never know. But what we do know is this: If you’re Managing Director of the IMF, you’d better not use your power to champion “distribution” or collective bargaining rights or you’re wind up like Strauss-Kahn, dragged off to the hoosegow in manacles wondering where the hell you went wrong.
DSK was probably done-in by the people who hated his guts. Now they want to polish-up their image by rewriting history.
And, you know, they’re rich enough to pull it off, too.
Anyone who follows the news regularly, knows that the media has done everything in its power to smear Vladimir Putin and to demonize him as a tyrant and a thug. Fortunately, most people aren’t buying it.
Yes, I’ve seen the polls that say that Putin and Russia are viewed “less favorably” than they were prior to the crisis in Ukraine. In fact, here’s a clip from a recent PEW survey which seems to prove that I’m wrong:
“Across the 44 countries surveyed, a median percentage of 43% have unfavorable opinions of Russia, compared with 34% who are positive.
Negative ratings of Russia have increased significantly since 2013 in 20 of the 36 countries surveyed…
Americans and Europeans in particular have soured on Russia over the past 12 months. More than six-in-ten in Poland, Germany, Italy, Spain, France, the U.S. and the UK have an unfavorable image of Russia. And in all but one of these countries negative reviews are up by double digits since last year, including by 29 percentage points in the U.S., 27 points in Poland, 24 points in the UK and 23 points in Spain.” (Russia’s Global Image Negative amid Crisis in Ukraine: Americans’ and Europeans’ Views Sour Dramatically, PEW Research)
These results strongly suggest that the public blames Moscow for the fighting in Ukraine and (presumably)agrees with the prevailing storyline that Putin is a vicious aggressor who seized Crimea in order to rebuild the Soviet Empire. The problem with the PEW survey is that the results are based random samples of nationwide face-to-face or telephone interviews.
Why is that a problem?
It’s a problem because the man-on-the-street hasn’t the foggiest idea of what’s going on in Ukraine. All he knows is what he’s heard on TV. So, naturally, when he’s asked to offer his opinion on the matter, he’s going to regurgitate some variation of the official version, which is that Putin is responsible.
But try asking someone who’s actually been following events in Ukraine that same question, and you’re going to get an entirely different answer. Among the people who follow the daily developments in Ukraine, roughly two out of three support the Russian position. This isn’t something you’re going to find in the survey data, but if you take the time to comb the comments lines in the international media, you’ll see what I’m saying is true.
I hadn’t figured this out until last week’s G-20 Summit in Brisbane when Canada’s PM Stephen Harper brusquely greeted Putin saying, “I guess I’ll shake your hand, but I only have one thing to say to you: you need to get out of Ukraine.”
The incident immediately became headline news around the world as journalists for all the major media heaped praise on Harper for courageously “shirt-fronting” the dastardly Putin. What was left out in the media’s account of the exchange, was Putin’s crisp retort, which was, “Unfortunately it is impossible, (for us to leave Ukraine) because we are not there.”
Touché. As you might expect, Putin’s response did not fit with the media’s narrative, so it was scrubbed from the coverage altogether.
The Harper incident was a particularly big deal in Canada where all the newspapers ran gushing articles lauding the prime minister for his righteousness and fortitude. Oddly enough, however, only a small percentage of the people who commented on the dust-up, saw Harper as the hero. Here’s a few samples of what ordinary people had to say. This is from BobsOpinion:
“Harper embarrasses Canadians again on the international stage. It will take years for Canadians to re-build our international relationships and to re-build our reputation.”
This comment is from redondex:
“Harper made a childish and baseless remark to Putin and walked off with a grin of a proud five year old spoilt kid. All Harper achieved was to ridicule himself in front of the rest of the world. That is our leaders usual behavior.”
This is from Makman1:
“I was under the impression that a proper democracy would first use negotiating as a way to understand the divergent groups involved in the Ukrainian revolution and then apply a political solution, if possible. The present Ukrainian government immediately used force. PERIOD! The Harper government, instead of using its “influence” to attempt to defuse a complex situation blindly followed the actions of the USA. If Harper really cared at all he would ask his foreign minister to get directly involved with Russian and Ukrainian counterparts and help reach a compromise…. Hopefully, Harper is not supporting Ukrainian right wing fascists?”
This is from Jörð:
“It’s not wise for Harper to follow America’s lead on every foreign policy. The USA government has a terrible track record when it comes to getting things right in foreign lands. Also Putin was correct when he responded to Harper’s comment by saying “It’s impossible, we are not there.” Technically Russia is not “In” the Ukraine.”
This is Time4Change:
“This is another example of Harper BLUSTERING backed with NO SUBSTANCE! Why are there NO SANCTIONS on the Russian Energy Giants Rosneft and Rostec? Could it be the hundreds of billions of $s the Russians have invested in the tar sands have caused Harper to be the SOFTEST on ACTIONS while shouting the loudest.”
And this is from Mt Athabaska:
” …one day Harper will reach puberty on global affairs.”
It’s worth noting that these comments were lifted from article that was published by the Canadian Broadcasting Corporation. I was shocked at how harshly Harper was criticized by his own countrymen. I was also surprised that the author’s obvious anti-Putin bias had virtually no impact on the opinions of the people who commented on the incident. In fact, it appeared to make many of them mad.
I should also mention that I omitted all of the comments that lambasted Harper for hiding in a broom closet “while a gun battle ensued in a nearby hallway of the Parliament building in Ottawa” in early October. (See here: Needless to say, Harper’s comical performance at the G-20 hasn’t convinced anyone that he’s the courageous leader he imagines himself to be.)
The media is increasingly worried that it’s losing its ability to persuade people to support policies that only serve the interests of elites. The media has rolled out all the heavy artillery in its campaign to demonize Putin, but the strategy hasn’t worked. In fact, it’s backfired quite badly leading some publications to cancel their comments section altogether.
And the response from readers has been huge too, mainly because the standoff between two nuclear-armed adversaries has galvanized the publics’ attention. For example, in the CBC article I cited above, more than 2,500 comments have been posted already, while many of the other articles on Ukraine or Putin have exceeded 6,000 comments. This just shows how closely people are following events and how passionate they feel about the policy.
And, as we said earlier, this isn’t just a Canadian phenom either. For example, here are a few of the comments I picked up from an article in the conservative UK Telegraph in an article titled Global economy to suffer as Putin quits G20 early.
“The US supports the neo-Nazi ethnic cleansing campaign in east Ukraine, Russia supports the Russian speaking Ukrainian majority in the east against it. Pretty simple really, and the US enforced sanctions can only harm EU Russian relations, a win-win all round for the neoconservative hawks.”
“So, the media tells us in the Title that Putin is to blame when the Global economy suffers, because he left the G20 early. What stupidity. And what a statement in bringing warships as their targeted President attends yet another meeting. Good for Putin. Blame the US-backed coup and looting and 4000 deaths on Putin, and blame the Ukrainian plane that shot down a passenger flight on him, too. Then shun him at a world meeting, as if he doesn’t have the right and responsibility to defend his country’s borders, Naval base, pipeline and brothers in the Ukraine as they are shelled and killed by US manipulation.
Instead of shock and awe and intruding where they didn’t belong like the US in all the Mid-Eastern countries according to long-ago made plans, Putin sends humanitarian aid and the people vote in Donetsk and Luhansk.
Putin-not all Americans are stupid sheep. My apologies for the onslaught of ignorance and imperialism. You are standing up to bullies of the worst kind. The world needs peaceful solutions to restore the harm of NWO fanaticism and corrupt bankers. Hold the line.”
MP Jones: “The US never ended the cold war and the ‘useful idiots’ in this context are us in Europe and the UK.”
“Most British people are deeply unconvinced by the flood of US and EU propaganda over Ukraine, trying to cast Russia as the villain – when the civil war there was caused directly by the US and their EU side kicks backing a coup to overthrow the elected government of a sovereign country, Ukraine.”
“With due respect to the author, you say that his (Putin’s) popularity will rise at home as a consequence of this. Please read the message boards North American and European, you will find his popularity seems to have increased everywhere.
Guess the Brains behind 5 eyes and snooping will now have to move into the new reality of the power of the internet to provide information which they would not like others to get. Just a question of time before they make their next move – Censorship!”
“If, the ‘Seven Dwarfs’ (US, UK, EU, Japan, Australia, Canada, and South Africa) like bullies, weren’t so obsessed with beating Russia or China into a corner, rather than bringing Russia or China into their corner; the world would be a better place. Co-operation works better than devastation.”
John Derbyshire :
“Why all this Anti Russian propaganda. The fools who run the West keep creating bogeymen Bin Laden, ISIS, oddly both had connections to Western Powers. So as we face an economic down in the world economy we need another bogeyman, and up pops Putin in the Capitalist controlled media!
People seem to have short memories of pre Putin era, when Yeltsin backed by the West led the country to economic meltdown. Maybe he has scant regard for democratic institutions, but do Western governments support the views of the people!
All of this came about when the United States pushed Nato’s borders eastward and involved themselves in the Ukraine, particularly Mr Kerry. Russia felt itself threatened not by demands of democracy a device used by the worlds superpower, but the growing influence of the United States in the region. The fact that the USA exploited ethnic tensions only shows what was their intention in the region.”
“If the objective is to make Mr Putin appear isolated on the world stage in order to make him less popular at home, it isn’t working and also shows a profound misunderstanding of the Russian mind-set. ‘
Our Western political leaders also have a profound misunderstanding of strategy. Just about everything they do in relation to Russia is wrong and gains the West nothing. But they do like willy waving. Just a pity they do so much damage while they are at it.”
RedBaron9495: “With the public, the effect is rebounding and probably starting to gain Putin more support and worldwide sympathy. This British news forum is good example of that. They made the mistake of going into overkill…..and the public are wising up to the propaganda. They seen this all before prior to Iraq 2003 invasion…and again with Gaddafi.”
Circle of DNA :
“Well, the lives of average folks in Russia has been drastically improved since Putin took the reins of power. He defends Russian interests, fights the empire of chaos, and is massively supported by his people. He is also well educated and a first class statesmen. What is there not to like about him?”
Alltaxationistheft: “The Russian people appreciate how lucky they’ve been for Vladimir Putin to be around at the right time to resist the Neocon supremacist Wolfowitz doctrine…
Since the 1990s , the war mongering maniacs in the West have been planning to asset strip, and plunder Russia via ”liberal democracy”, claiming its natural resources while funding serial inter-ethnic tribal wars via US allies Qatar and Saudi Arabia…
In the 1990s, Russian people were driven into starvation ,prostitution and suicide under pro American ”Liberal” US corporate puppet Yeltsin… but Putin kicked the CIA EU Mossad lunatics out and has been re-building a Russia into a world power ever since.”
“The classless western free (loading) world that produces very little except paper currency, lies and bullshit. I am surprised Mr. Putin came and surrounded himself with such low life scum.
When all the western oligarchs hate someone as much as they hate President Putin, you know he has to be doing something right.”
There’s no need to be selective. Curious readers should go to any editorial platform that covers the crisis in Ukraine and judge for themselves if what I’m saying is true or not. The comments above are in no way extraordinary. What they do show, however, is that the media is losing the propaganda war in pretty stunning fashion, and that’s a huge victory for ordinary people. It’s very difficult for elites to prosecute their criminal wars or implement their rip-off economic policies when people can clearly see what they’re up to.
Now check out this article in the German paper Zeit Online where the author bemoans the media’s loss of influence. The article is titled “How Putin Divides”:
“Why do so many German citizens judge the crisis in Crimea in a completely different way than politicians and the media?
In my 30 years of experience with debates, I have never seen anything like what is now happening in Germany in the dispute over Russia and Crimea….
Unless surveys are misleading, two-thirds of German citizens, voters and readers stand opposed to four-fifths of the political class – in other words, to the government, to the overwhelming majority of members of parliament and to most newspapers and broadcasters. But what does “stand” mean? Many are downright up in arms. And from what one can gauge from letters to the editor, the share of critics seems significantly higher now than what was triggered by Sarrazin’s inflammatory book back then.” (Zeit Online)
Did you catch that part about the “two-thirds of German citizens.. stand opposed to four-fifths of the political class…and to most newspapers and broadcasters”?
That’s a triumph in itself, isn’t it? And what is the issue they disagree about?
They disagree “about the conflict between an aggressive autocrat (Bad Vlad) and Western democracies.”(the Washington-led troublemakers)
Here’s more from the same article:
“…the legitimacy of international law is being questioned in an offensive manner, while the legitimacy of Putin’s nationalist-imperialist ideology is being seriously considered….. It doesn’t do any good to accuse the majority of sheepishness or base economic selfishness, even if that seems to be the driving motive of some business leaders… The issue goes deeper, much deeper.” (How Putin Divides, Von Bernd Ulrich, Zeit Online)
“The legitimacy of international law is being questioned”?!?
Have you ever read such crybaby gibberish in your life?
Why is “the legitimacy of international law is being questioned”? Because people don’t accept blindly what they read the papers and hear on the news anymore? Because corporate editors no longer control how people think about issues? Because people are using their critical thinking skills to see through the lies and bullshit that idiots like the author ladle out in heaping doses every day? Is that why?
It seems to me that that’s a positive development, that people should question whatever they read in the papers and look for other sources of information before they form an opinion.
The bottom line is that no one believes the goofy propaganda the western media is trying to ram down the everyone’s throat anymore.
As kyle555 at Zero Hedge says: “India, China, Brazil and a host of other countries, representing more than half the world’s population, aren’t buying the western imperialist narrative on Ukraine. Nor are major segments of the domestic populations of the countries that are warmongering against Russia.”
Nor do they believe that US wars are a force for good in the world. Here’s strannick at Zero Hedge:
“Russia has seen firsthand the American dream for other nations, as American backed Oligarchs pillaged Russia while it’s people starved and were impoverished. Putin loves his country, and won’t sit on his thumbs while America attempts to encircle it through proxies while rationalizing its actions through corrupt MSMedia propaganda.”
Nor are they buying the “Putin is Hitler” crappola.
This is from smacker:
“People see in Putin a proud national leader who has the guts to stand up to our own criminals and who has over 80% support from his own population. That is enough to admire the guy, whatever else he might be.”
This is from Gaius frakkin':
“A lot of the hatred from the political puppets in the West is due to Putin’s popularity. They’re jealous sociopaths who yearn to be respected and admired as much as him. The fact that Putin’s popularity is never mentioned is the key tell.”
And this from Joe Tierney:
“Vladdy-Poot is hammering home the point that the euros need to stop being America’s bitches, think for themselves, consider the terrible “costs” accruing to them for “wearing the blue dress” for America.
…America’s “global chaos ploy” is failing. Its cynical, “throw everyone under the bus” strategy just to cut across the rise of Russia-China is exposed for what it is – America cares nothing about the euros or anyone else. All it cares about is its own global dominance in perpetuity, no matter the “costs” to the rest of the world, including its friends and allies.
Putin has balls the size of the moon, and you can damn well bet that right now Russia and Putin are secretly being cheered on a grand scale around the globe.”
There’s a reason why, according to Gallup, Trust in Media (is at an) All-Time Low. It’s because the corporate media is the most perfidious, double-dealing, hypocritical institution in the country today. That’s why the anti-Putin propaganda has fallen on deaf ears. It’s because most people know you can’t believe anything you read in the news.
“Russia reinforced what Western and Ukrainian officials described as a stealth invasion on Wednesday [August 27], sending armored troops across the border as it expanded the conflict to a new section of Ukrainian territory. The latest incursion, which Ukraine’s military said included five armored personnel carriers, was at least the third movement of troops and weapons from Russia across the southeast part of the border this week.”
None of the photos accompanying this New York Times story online showed any of these Russian troops or armored vehicles.
“The Obama administration,” the story continued, “has asserted over the past week that the Russians had moved artillery, air-defense systems and armor to help the separatists in Donetsk and Luhansk. ‘These incursions indicate a Russian-directed counteroffensive is likely underway’, Jen Psaki, the State Department spokeswoman, said. At the department’s daily briefing in Washington, Ms. Psaki also criticized what she called the Russian government’s ‘unwillingness to tell the truth’ that its military had sent soldiers as deep as 30 miles inside Ukraine territory.”
Thirty miles inside Ukraine territory and not a single satellite photo, not a camera anywhere around, not even a one-minute video to show for it. “Ms. Psaki apparently [sic] was referring to videos of captured Russian soldiers, distributed by the Ukrainian government.” The Times apparently forgot to inform its readers where they could see these videos.
“The Russian aim, one Western official said, may possibly be to seize an outlet to the sea in the event that Russia tries to establish a separatist enclave in eastern Ukraine.”
This of course hasn’t taken place. So what happened to all these Russian soldiers 30 miles inside Ukraine? What happened to all the armored vehicles, weapons, and equipment?
“The United States has photographs that show the Russian artillery moved into Ukraine, American officials say. One photo dated last Thursday, shown to a New York Times reporter, shows Russian military units moving self-propelled artillery into Ukraine. Another photo, dated Saturday, shows the artillery in firing positions in Ukraine.”
Where are these photographs? And how will we know that these are Russian soldiers? And how will we know that the photos were taken in Ukraine? But most importantly, where are the fucking photographs?
Why am I so cynical? Because the Ukrainian and US governments have been feeding us these scare stories for eight months now, without clear visual or other evidence, often without even common sense. Here are a few of the many other examples, before and after the one above:
- The Wall Street Journal (March 28) reported: “Russian troops massing near Ukraine are actively concealing their positions and establishing supply lines that could be used in a prolonged deployment, ratcheting up concerns that Moscow is preparing for another [sic] major incursion and not conducting exercises as it claims, US officials said.”
- “The Ukrainian government charged that the Russian military was not only approaching but had actually crossed the border into rebel-held regions.” (Washington Post, November 7)
- “U.S. Air Force Gen. Philip M. Breedlove told reporters in Bulgaria that NATO had observed Russian tanks, Russian artillery, Russian air defense systems and Russian combat troops enter Ukraine across a completely wide-open border with Russia in the previous two days.” (Washington Post, November 13)
- “Ukraine accuses Russia of sending more soldiers and weapons to help rebels prepare for a new offensive. The Kremlin has repeatedly denied aiding the separatists.” (Reuters, November 16)
Since the February US-backed coup in Ukraine, the State Department has made one accusation after another about Russian military actions in Eastern Ukraine without presenting any kind of satellite imagery or other visual or documentary evidence; or they present something that’s very unclear and wholly inconclusive, such as unmarked vehicles, or unsourced reports, or citing “social media”; what we’re left with is often no more than just an accusation. The Ukrainian government has matched them.
On top of all this we should keep in mind that if Moscow decided to invade Ukraine they’d certainly provide air cover for their ground forces. There has been no mention of air cover.
This is all reminiscent of the numerous stories in the past three years of “Syrian planes bombing defenseless citizens”. Have you ever seen a photo or video of a Syrian government plane dropping bombs? Or of the bombs exploding? When the source of the story is mentioned, it’s almost invariably the rebels who are fighting against the Syrian government. Then there’s the “chemical weapon” attacks by the same evil Assad government. When a photo or video has accompanied the story I’ve never once seen grieving loved ones or media present; not one person can be seen wearing a gas mask. Is it only children killed or suffering? No rebels?
And then there’s the July 17 shootdown of Malaysia Flight MH17, over eastern Ukraine, taking 298 lives, which Washington would love to pin on Russia or the pro-Russian rebels. The US government – and therefore the US media, the EU, and NATO – want us all to believe it was the rebels and/or Russia behind it. The world is still waiting for any evidence. Or even a motivation. Anything at all. President Obama is not waiting. In a talk on November 15 in Australia, he spoke of “opposing Russia’s aggression against Ukraine – which is a threat to the world, as we saw in the appalling shoot-down of MH17”. Based on my reading, I’d guess that it was the Ukranian government behind the shootdown, mistaking it for Putin’s plane that reportedly was in the area.
Can it be said with certainty that all the above accusations were lies? No, but the burden of proof is on the accusers, and the world is still waiting. The accusers would like to create the impression that there are two sides to each question without actually having to supply one of them.
The United States punishing Cuba
For years American political leaders and media were fond of labeling Cuba an “international pariah”. We haven’t heard that for a very long time. Perhaps one reason is the annual vote in the United Nations General Assembly on the resolution which reads: “Necessity of ending the economic, commercial and financial embargo imposed by the United States of America against Cuba”. This is how the vote has gone (not including abstentions):
|Year||Votes (Yes-No)||No Votes|
|1993||88-4||US, Israel, Albania, Paraguay|
|1995||117-3||US, Israel, Uzbekistan|
|1996||138-3||US, Israel, Uzbekistan|
|1997||143-3||US, Israel, Uzbekistan|
|2000||167-3||US, Israel, Marshall Islands|
|2001||167-3||US, Israel, Marshall Islands|
|2002||173-3||US, Israel, Marshall Islands|
|2003||179-3||US, Israel, Marshall Islands|
|2004||179-4||US, Israel, Marshall Islands, Palau|
|2005||182-4||US, Israel, Marshall Islands, Palau|
|2006||183-4||US, Israel, Marshall Islands, Palau|
|2007||184-4||US, Israel, Marshall Islands, Palau|
|2008||185-3||US, Israel, Palau|
|2009||187-3||US, Israel, Palau|
|2012||188-3||US, Israel, Palau|
This year Washington’s policy may be subject to even more criticism than usual due to the widespread recognition of Cuba’s response to the Ebola outbreak in Africa.
Each fall the UN vote is a welcome reminder that the world has not completely lost its senses and that the American empire does not completely control the opinion of other governments.
Speaking before the General Assembly before last year’s vote, Cuban Foreign Minister Bruno Rodriguez declared: “The economic damages accumulated after half a century as a result of the implementation of the blockade amount to $1.126 trillion.” He added that the blockade “has been further tightened under President Obama’s administration”, some 30 US and foreign entities being hit with $2.446 billion in fines due to their interaction with Cuba.
However, the American envoy, Ronald Godard, in an appeal to other countries to oppose the resolution, said:
The international community … cannot in good conscience ignore the ease and frequency with which the Cuban regime silences critics, disrupts peaceful assembly, impedes independent journalism and, despite positive reforms, continues to prevent some Cubans from leaving or returning to the island. The Cuban government continues its tactics of politically motivated detentions, harassment and police violence against Cuban citizens.
So there you have it. That is why Cuba must be punished. One can only guess what Mr. Godard would respond if told that more than 7,000 people were arrested in the United States during the Occupy Movement’s first 8 months of protest in 2011-12 ; that many of them were physically abused by the police; and that their encampments were violently destroyed.
Does Mr. Godard have access to any news media? Hardly a day passes in America without a police officer shooting to death an unarmed person.
As to “independent journalism” – What would happen if Cuba announced that from now on anyone in the country could own any kind of media? How long would it be before CIA money – secret and unlimited CIA money financing all kinds of fronts in Cuba – would own or control most of the media worth owning or controlling?
The real reason for Washington’s eternal hostility toward Cuba has not changed since the revolution in 1959 – The fear of a good example of an alternative to the capitalist model; a fear that has been validated repeatedly over the years as many Third World countries have expressed their adulation of Cuba.
How the embargo began: On April 6, 1960, Lester D. Mallory, US Deputy Assistant Secretary of State for Inter-American Affairs, wrote in an internal memorandum: “The majority of Cubans support Castro … The only foreseeable means of alienating internal support is through disenchantment and disaffection based on economic dissatisfaction and hardship. … every possible means should be undertaken promptly to weaken the economic life of Cuba.” Mallory proposed “a line of action which … makes the greatest inroads in denying money and supplies to Cuba, to decrease monetary and real wages, to bring about hunger, desperation and overthrow of government.”
Later that year, the Eisenhower administration instituted its suffocating embargo against its everlasting enemy.
The United States judging and punishing the rest of the world
In addition to Cuba, Washington currently is imposing economic and other sanctions against Burma, Democratic Republic of the Congo, Iran, China, North Korea, South Korea, United Arab Emirates, Pakistan, Sri Lanka, Switzerland, Turkey, Germany, Malaysia, South Africa, Mexico, South Sudan, Sudan, Russia, Syria, Venezuela, India, and Zimbabwe. These are sanctions mainly against governments, but also against some private enterprises; there are also many other sanctions against individuals not included here.
Imbued with a sense of America’s moral superiority and “exceptionalism”, each year the State Department judges the world, issuing reports evaluating the behavior of all other nations, often accompanied by sanctions of one kind or another. There are different reports rating how each lesser nation has performed in the previous year in areas such as religious freedom, human rights, the war on drugs, trafficking in persons, and sponsors of terrorism. The criteria used in these reports are often political. Cuba, for example, is always listed as a sponsor of terrorism whereas anti-Castro exile groups in Florida, which have committed literally hundreds of terrorist acts over the years, are not listed as terrorist groups or supporters of such.
Cuba, which has been on the sponsor-of-terrorism list longer (since 1982) than any other country, is one of the most glaring anomalies. The most recent State Department report on this matter, in 2012, states that there is “no indication that the Cuban government provided weapons or paramilitary training to terrorist groups.” There are, however, some retirees of Spain’s Basque terrorist group ETA (which appears on the verge of disbanding) in Cuba, but the report notes that the Cuban government evidently is trying to distance itself from them by denying them services such as travel documents. Some members of the Revolutionary Armed Forces of Colombia (FARC) have been allowed into Cuba, but that was because Cuba was hosting peace talks between the FARC and the Colombian government, which the report notes.
The US sanctions mechanism is so effective and formidable that it strikes fear (of huge fines) into the hearts of banks and other private-sector organizations that might otherwise consider dealing with a listed state.
Some selected thoughts on American elections and democracy
In politics, as on the sickbed, people toss from one side to the other, thinking they will be more comfortable.
– Johann Wolfgang von Goethe (1749-1832)
- 2012 presidential election:
223,389,800 eligible to vote
128,449,140 actually voted
Obama got 65,443,674 votes
Obama was thus supported by 29.3% of eligible voters
- There are 100 million adults in the United States who do not vote. This is a very large base from which an independent party can draw millions of new votes.
- If God had wanted more of us to vote in elections, he would give us better candidates.
- “The people can have anything they want. The trouble is, they do not want anything. At least they vote that way on election day.” – Eugene Debs, American socialist leader (1855-1926)
- “If persons over 60 are the only American age group voting at rates that begin to approximate European voting, it’s because they’re the only Americans who live in a welfare state – Medicare, Social Security, and earlier, GI loans, FHA loans.” – John Powers
- “The American political system is essentially a contract between the Republican and Democratic parties, enforced by federal and state two-party laws, all designed to guarantee the survival of both no matter how many people despise or ignore them.” – Richard Reeves (1936- )
- The American electoral system, once the object of much national and international pride, has slid inexorably from “one person, one vote”, to “one dollar, one vote”.
- Noam Chomsky: “It is important to bear in mind that political campaigns are designed by the same people who sell toothpaste and cars. Their professional concern in their regular vocation is not to provide information. Their goal, rather, is deceit.”
- If the Electoral College is such a good system, why don’t we have it for local and state elections?
- “All the props of a democracy remain intact – elections, legislatures, media – but they predominantly function at the service of the oligarchy.” – Richard Wolff
- The RepDem Party holds elections as if they were auctions; indeed, an outright auction for the presidency would be more efficient. To make the auction more interesting we need a second party, which must at a minimum be granted two privileges: getting on the ballot in all 50 states and taking part in television debates.
- The US does in fact have two parties: the Ins and the Outs … the evil of two lessers.
- Alexander Cockburn: “There was a time once when ‘lesser of two evils’ actually meant something momentous, like the choice between starving to death on a lifeboat, or eating the first mate.”
- Cornel West has suggested that it’s become difficult to even imagine what a free and democratic society, without great concentrations of corporate power, would look like, or how it would operate.
- The United States now resembles a police state punctuated by elections.
- How many voters does it take to change a light bulb? None. Because voters can’t change anything.
- H.L. Mencken (1880-1956): “As democracy is perfected, the office represents, more and more closely, the inner soul of the people. We move toward a lofty ideal. On some great and glorious day the plain folks of the land will reach their heart’s desire at last, and the White House will be adorned by a downright moron.”
- “All elections are distractions. Nothing conceals tyranny better than elections.” – Joel Hirschhorn
- In 1941, one of the country’s more acerbic editors, a priest named Edward Dowling, commented: “The two greatest obstacles to democracy in the United States are, first, the widespread delusion among the poor that we have a democracy, and second, the chronic terror among the rich, lest we get it.”
- “Elections are a necessary, but certainly not a sufficient, condition for democracy. Political participation is not just a casting of votes. It is a way of life.” – UN Human Development Report, 1993
- “If you don’t vote, you can’t complain!” I reply, “You have it backwards. If you DO vote, you can’t complain. You asked for it, and they’re going to give it to you, good and hard.”
- “How to get people to vote against their interests and to really think against their interests is very clever. It’s the cleverest ruling class that I have ever come across in history. It’s been 200 years at it. It’s superb.” – Gore Vidal
- We can’t use our democracy/our vote to change the way the economy functions. This is very anti-democratic.
- What does a majority vote mean other than that the sales campaign was successful?
- Roman Emperor Marcus Aurelius: “The opinion of 10,000 men is of no value if none of them know anything about the subject.”
- We do have representative government. The question is: Who does our government represent?
- “On the day after the 2002 election I watched a crawl on the bottom of the CNN news screen. It said, ‘Proprietary software may make inspection of electronic voting systems impossible.’ It was the final and absolute coronation of corporate rights over democracy; of money over truth.” – Mike Ruppert, RIP
- “It’s not that voting is useless or stupid; rather, it’s the exaggeration of the power of voting that has drained the meaning from American politics.” – Michael Ventura
- After going through the recent national, state and local elections, I am now convinced that taxation without representation would have been a much better system.
- “Ever since the Constitution was illegally foisted on the American people we have lived in a blatant plutocracy. The Constitution was drafted in secret by a self-appointed elite committee, and it was designed to bring three kinds of power under control: Royalty, the Church, and the People. All were to be subjugated to the interests of a wealthy elite. That’s what republics were all about. And that’s how they have functioned ever since.” – Richard K. Moore
- “As demonstrated in Russia and numerous other countries, when faced with a choice between democracy without capitalism or capitalism without democracy, Western elites unhesitatingly embrace the latter.” – Michael Parenti
- “The fact that a supposedly sophisticated electorate had been stampeded by the cynical propaganda of the day threw serious doubt on the validity of the assumptions underlying parliamentary democracy as a whole.” – British Superspy for the Soviets Kim Philby (1912-1988), explaining his reasons for becoming a Communist instead of turning to the Labour Party
- US Supreme Court Justice Louis Brandeis (1856-1941): “We may have democracy in this country, or we may have wealth concentrated in the hands of a few, but we cannot have both.”
- “We don’t need to run America like a business or like the military. We need to run America like a democracy.” – Jill Stein, Green Party presidential candidate 2012
- Democracy Now!, October 30, 2013
- Huffingfton Post, May 3, 2012
- Department of State, Foreign Relations of the United States, 1958-1960, Volume VI, Cuba(1991), p.885 (online here)
- For the complete detailed list, see U.S. Department of State, Nonproliferation Sanctions
- U.S. Department of State, “Country Reports on Terrorism 2012, Chapter 3: State Sponsors of Terrorism,” May 20, 2013
Global trade relationships and agreements are moving in very different directions. The public relations press releases hide the undercurrents that are driving the formations of alternative economic alliances. While the G 20, markets its all inclusive umbrella policy forums, the mere formation of a BRICS counterweight forecasts deep and fundamental differences. So what is really behind the creation of a different approach to the post WWII dominate U.S. lead model? A clue can be found in an attempt to modify the operations and direction of IMF functions.
Announced in the Russian press, BRICS to propose IMF reform at G20 summit, is a pressure attempt to move the center of power away from current synergism.
“At the G20 summit in the Australian city of Brisbane on November 15-16, Russia and other BRICS countries (Brazil, India, China and South Africa) will propose alternative solutions concerning the reform of the International Monetary Fund, involving, in particular, gradual implementation of reforms, Russian G20 Sherpa Svetlana Lukash told reporters.
“The most important thing for us is the still unresolved G20 problem of the IMF reform,” Lukash said. She recalled the U.S. Congress has yet to ratify the 2010 resolution. “Not only does it thwart the process of renewing the IMF in accordance with the current reality where we see a big rise in the role of emerging economies. It also prevents the decisions to double the IMF capital from coming into force,” she said.”
The appearance of maintaining a working relationship among opposing interests may present an assuring PR message, but who really believes that the path to a new cold war is paved with mutual cooperation? Impetus for a parallel financial system is certainly based more on political objective than commerce or economic benefits.
The Washington Post describes What the new bank of BRICS is all about in this manner.
“Heads of state from Brazil, Russia, India, China, and South Africa (the so-called BRICS countries) agreed to establish a New Development Bank (NDB) at their summit meeting. They will have a president (an Indian for the first six years), a Board of Governors Chair (a Russian), a Board of Directors Chair (a Brazilian), and a headquarters (in Shanghai). What is the purpose of this BRICS bank? Why have these countries created it now? And, what implications does it have for the global development-finance landscape?
The “what” is relatively straightforward. The NDB has been given $50 billion in initial capital. As with similar initiatives in other regions (see below), the BRICS bank appears to work on an equal-share voting basis, with each of the five signatories contributing $10 billion. The capital base is to be used to finance infrastructure and “sustainable development” projects in the BRICS countries initially, but other low and middle-income countries will be able buy in and apply for funding. BRICS countries have also created a $100 billion Contingency Reserve Arrangement (CRA), meant to provide additional liquidity protection to member countries during balance of payments problems. The CRA—unlike the pool of contributed capital to the BRICS bank, which is equally shared—is being funded 41 percent by China, 18 percent from Brazil, India, and Russia, and 5 percent from South Africa.”
China’s motivation to participate in BRICS banking is most interesting and revealing. Since it is not absolutely essential for China to be a member of BRICS, Gudrun Wacker, from the German Institute for International and Security Affairs presents this finding in a report, China’s role in G20 / BRICS and Implications, may shed an insight on their reasoning.
“The future of BRICS depends on the future performance of the G7/8 and G20: If the G20 develops into a real coordination mechanism, there might be less Chinese interest in BRICS. The future prospects of BRICS were presented as less promising than those of the G20, since BRICS will not be able to solve global problems. It is not yet clear whether the main deliverable of BRICS will be directed at cooperation among its members or at third countries. While the idea of BRIC as a group was originally picked up by Russia (the invitation to the first summit, as a move toward “extension” of the strategic triangle Russia, China. India?), its members are now all active in certain fields. For China, it is also an important effort to emerge from its isolation (Copenhagen climate summit). Another factor shaping the future of BRICS might be the development of US-China relations: While all interview partners agreed that BRICS does not aim at creating a new, anti-Western world order, it can be seen as a response to the US-led world order.”
The methodology of Mr. Wacker’s research relied upon comments from interviews. Relying on sentiments that BRICS goal is not bent on developing a counterbalance to Western banking hegemony is poppycock. Geopolitical dimensions in international affairs have Russia as the latest bogyman. Any economic analysis that ignores power brokers desperate attempt to shift the causes of a failing world economy onto the backs of enemy nations is flawed.
Also, the notion that major economic transnational corporatists operate with altruism for third world countries is sheer lunacy. All these trade organizations are attempts to position vying interests to settle for a subservient role to a subordinate structure under a global debt creation banking system.
Attempts to scare the populist into believing that Global Warming inaction raises specter of war over climate change are absurd. “At the G20 summit, other nations overrode host Australia’s attempts to keep climate change off the agenda and agreed to call for strong action with the aim of adopting a binding protocol at the Paris conference.” Such initiatives are pure political “PC” orthodoxy and actually diminish prosperity.
The great schism in trade among nations is that some countries are not willing to lie down with diseased parasites. This should not be construed to favor the emergence of the BRICS union as a shining future. However, what it does purport is that the road to the NWO modeling for globalism by entrenched financial elites has produced opposition.
Conflict is the normal human condition, and especially when money is used as a medium of world control and domination is the goal. The G 20 is useless. Breaking the banking monopoly that fosters endless terror and war is the universal objective for the inhabitants of this planet. Another unsavory photo op for world leaders just produces more nausea.
How is your life going under the Global Empire? If you answer honestly, for non billionaires, the response must reflect disappointment if not immense distress. Middle America stands on the precipice of oblivion. While the recent past decades have shown steep declines in financial security and net wealth, the future looks much more ominous. The link between the shift to an internationalist de-industrialization economy and open border immigration has hit the United States hard. This harsh reality is routinely denied in the financial press, but the social chaos that engulfs society is largely caused by this betrayal mindset. Corporatists are waging war against the American public.
Summing up the battle lines is the quintessential voice of an America First philosophy. Pat Buchanan on Free Trade is a collection of quotations and references that should be a must read for every displaced citizen. And that group includes virtually everyone.
“Good for global business” isn’t necessarily good for US
“Global capitalists have become acolytes of global governance. They wish to see national sovereignty diminished and sanctions abolished. Where yesterday American businesses suffered damage to their good name for selling scrap iron to Japan before Pearl Harbor, today [war materiel is routinely exported] to potentially hostile nations. Once it was true that what was good the Fortune 500 was good for America. That is no longer true, and what is good for America must take precedence.”
Source: “A Republic, Not an Empire,” p.349 , Oct 9, 1999
The most puzzling malady that penetrates the “PC” culture is a fear of confronting the direct consequences of encouraging an invasion of illegal’s into the country. The disconnect that sweeps across national borders is not isolated just to the United States. Western Europe is not only in decay but is on the verge of social and economic collapse.
Demetrios Papademetriou, PhD, Director of the Migration Policy Institute, wrote in his Sep. 2005 Migration Policy Institute essay “The Global Struggle with Illegal Migration: No End in Sight”: How Are Illegal Immigration and Globalization Related?
“For nearly two decades now, capital and the market for goods, services, and workers of many types have weaved an ever more intricate web of global economic and social interdependence… No aspect of this interdependence seems to be more visible to the public of advanced industrial societies than the movement of people. And no part of that movement is proving pricklier to manage effectively, or more difficult for publics to come to terms with, than irregular (also known as unauthorized, undocumented, or illegal) migration…”
Dr. Papademetriou’s assumption that interdependency is the new normal may be supported with the procession of the Trilateral Commission’s “New International Economic Order”. Nonetheless, the destruction of national sovereignty is a price that no country can afford to adopt, much less pay and remain a nation. Interdependency is the death knell of traditional values, autonomous commerce and individual civil liberties. With the ringing of the bell at the NY Stock exchange, the sound of prosperity goes deaf for the populist, while globalist elites extract the last pound of flesh from an intentionally designed consolidation of a Corporatocracy economy.
The fate of the world is at stake if the forces of globalization are left to complete their total domination of monetary and financial control. It is just as important to prevent the next bipartisan arrangement to grant effective amnesty to millions of illegal foreigners, who have shown little interest to assimilate or adopt the heritage and values of our founding principles.
Warren Mass wrote over a year ago in Permanent Amnesty, Temporary Border.
“An important part of regulating legal immigration, in addition to evaluating each prospective immigrant’s ability to become a productive, law-abiding citizen, is to determine how many immigrants the United States is capable of absorbing each year, taking into consideration the impact on our nation’s economy and culture.”
If this standard needs to apply to those who apply for citizenship, by what absurd twist of logic or sanity pertains to President Obama’s intentions of issuing executive orders that are clearly unconstitutional? How insulting it is to hard press citizens, relegated to enduring impoverishment from off shoring livable wage jobs, while awarding effective amnesty to illegals.
Columnist Glenn R. Jackson review of author Kenneth Buchdahl’s book, Dismantling The American Dream: Globalization, Free Trade, immigration, Unemployment, Poverty, Debt, Foreign Dependency hits the mark.
“First and foremost it is good to see the recognition by Buchdahl of American culture as critical to the building of the American Dream. As Buchdahl writes the development of a culture is grounded in a unique American personality and intricate system of values and beliefs that is responsible for America’s enviable situation. And it is that enviable situation that has contributed to creating the forces that are working rapidly, knowingly or not, to dismantle the American Dream.
Dismantling the American Dream chronicles the unintended impact of America’s pop culture belief in globalization as a force for good in our economy and the failure of leadership to recognize that belief gone awry. America’s political leaders continued belief in free trade and give-away trade deals, in the face of the near deathblow of NAFTA to American manufacturing is but one of the delusions of globalization that Buchdahl lays bare.”
The interjection of cultural aspects may well be the missing link that escapes most chronicles on current events. Documenting the actual results from Free Trade Treaties, should in and of itself win the intellectual argument that economic destruction of Middle America has already happened. Add in the deliberate call for mass migration and social incentives to cross the border has created the latest flood in undocumented aliens.
When Democracy Now asks, Obama & McConnell Pledge Cooperation; Will Fast-Tracking Secretive TPP Trade Deal Top Their Agenda?, and presents Ralph Nader on TPP and the “Unstoppable” Left-Right Anti-Corporate Movement, one has hope that the Buchanan Brigades message is being heard.
With the celebrity coronation that the Democrats are showering on their new favorite daughter, the “Pocahontas Princess”, Elizabeth Warren’s Crusade Against Disastrous “Free Trade” Agreements, is welcomed.
An inquiry was made to NY Senator Charles E. Schumer on the TPA, Trade Priorities Act of 2014 (S.1900). His reply can be read on this link.
An alliance among anti-free trade factions from all ideological camps is necessary to stop the globalist juggernaut. Even if such a coalition could be grown, the likelihood that linkage to the need to stop illegal immigration and opposition to amnesty, would be frosty.
This brings up the opportunity to interject the appeal, WE MUST NOT SURRENDER TO IMMIGRATION AMNESTY, by Frosty Wooldridge. ““Why would any member of Congress who opposes executive amnesty provide President Obama the funds to carry it out? A Republican majority must force congressional Democrats to answer this question through their votes”.
Likewise, why would as covered in the New American essay, Republicans to Obama: We Will Give You Trade Promotion Authority, patriots want to grant “fast track” authority to a President, who is defiant to congressional constitutional separation of powers?
“Fast track authority eventually expired on April 16, 1994, and was not reauthorized by Congress until the passage of the Bipartisan Trade Promotion Authority Act (BPTAA) of 2002. BPTAA reinstated fast track authority renamed as “trade promotion authority” (TPA), which expired in 2007. In 2012, President Obama requested renewal of TPA/fast track authority to complete negotiations for the TPP and TTIP.”
The answer should be apparent that any support of “fast track” or for TPP is a vote bought with globalist control. If it is so obvious that such influence is at play in trade deals, why are so many confused activists not able to see through the “Open Border” fraud and act upon the best interests for American workers and families?
That taboo culture factor, covered in the Buchdahl book explains the blind spot from the Loony Left. A review of a pro immigration site, Open Borders will demonstrate a systemic disconnect from reality. Often Libertarian purists, also fall under the spell of a transcendental fantasy. To their credit, Open Borders presents the concept of CITIZENISM and provides the following its key features.
Citizenism places substantially greater weight on the rights and interests of citizens than non-citizens, though it operates within moral side-constraints.
Citizenism is about current citizens, not about the people who may become citizens as a result of immigration or deportation policy.
Citizenism, as conceived by its original proponent Sailer, is both about the individual ethics of voters and about the responsibilities of elected representatives.
Citizenism is about loyalty, not admiration, toward one’s fellow citizens.
If you understand the destructive nature of corporatist trade agreements that only benefit transnational conglomerates, while poisoning economic commerce for Middle Americans, why would you not oppose the lunacy of unrestrictive mass migration? The imperative moral directive is to protect and defend your own nation, its traditional culture and responsible citizens.
Saving the world is a concept that resides in the sick minds of the Save the Planet Kill Yourself mindset. If they are so devoted to a globalist utopia, the influx of trespassers must be leaving their own homeland in better shape. Just how well is life south of the border doing?
This week I am going down to Long Beach, CA, in order to attend the world-renowned BoucherCon, a fabulous annual convention for mystery book writers and readers. You just gotta love BoucherCon.
At last year’s convention in Albany, NY, I scored 50 free books — but still haven’t finished reading them yet. However, it’s always reassuring to know that I’ll probably never run out of murder-mystery books to read ever again — especially since I’m about to score yet another 50 free books at this Long Beach convention.
But the biggest mystery of all these days seems to be “Who, exactly, is actually running the American government?” Well, here’s a big clue: “It ain’t you or me.” The fact that we ourselves definitely do not run America was clearly demonstrated once again in this last election cycle — when a huge majority of Americans either voted against their own best self-interests or didn’t even vote at all.
Apparently we Americans can just barely manage to keep the kids dressed, the dog washed, the bathroom stocked with toilet paper, the mortgage paid, the 401K alive and our own lives up and running — let alone keep a democracy alive and well. It’s definitely not like 1776 around here right now.
But not to worry. I myself have already solved the mystery of who actually does run America while most Americans are all busy doing something else.
According to political analyst Peter Dale Scott, America is actually run by a select group of people that he calls the “American Deep State”. And these guys are really bad-ass. They even have their own internet system — and probably even their own FaceBook apps too. And of course they also have their own bunkers, billionaire supporters, lobbyists and election fixers as well — and Congress, the Supreme Court and the White House all take orders from them. That’s totally scary! Makes those “October Surprise” Ebola and ISIS scares look like a walk in the park. http://whowhatwhy.com/2014/10/
So. Why do I think that Peter Dale Scott is right? There just has to be a shadow government here in America — because what else could possibly explain why America continuously and consistently acts so strongly against its own best interests? http://3chicspolitico.com/
“But Jane,” you might ask, “just exactly who are these underworld shadowy cartoonish characters that you’ve just described — and exactly what are they up to?” Well, from all my recent sleuthing around, I’ve discovered that this uber-shadow government, whoever it is composed of, obviously has a soft spot in its heart for starting wars, ruining economies, and disrupting countries, regions and even whole continents whenever they possibly can. No American in his or her right mind would ever want to do that.
“But, Jane,” you might ask next, “how can you actually prove all this? Sounds rather paranoid and conspiracy-theory-ish to me.” Hey, I’m on this like Sherlock Holmes!
But even though I can’t exactly sneak into these guys’ bunkers or onto their yachts or secretly listen in on their phone conversations, I can still easily see all the footprints these hoodlums have left behind in the snow. “Means, motive and opportunity,” as Holmes would say. Just get out your magnifying glass and look at these clues:
Footprint # 1: China and Korea. Before we even knew what hit us after WWII, suddenly China had been torn up in rebellion against our corrupt man in Peking, Chaing Kai Shek. And then the whole Korean peninsula blew up. Was the loss of China and the destruction of Korea in the average American’s best interests? Totally not. So who had the motive, means and opportunity here? You tell me.
Footprint # 2: Vietnam. The whole result of that “war” was to destabilize all of Southeast Asia. Okay. You got China, Korea and Southeast Asia destabilized now. And did it benefit the average American to have Asia so broken and hateful against us? It did not. But who did it benefit?
Footprint # 3: Mexico, Central America and South America. Do Americans really benefit from having death squads and drug lords on the rampage down there? What do you think? I think not. All we got out of this deal was a whole bunch of undocumented refugees coming up here in search of their lost treasures. But then who does benefit? Those shadowy guys behind the curtain who sell arms and own banks? Yeah.
Footprint # 4: Yugoslavia. The American Deep State picked at Yugoslavia and picked at Yugoslavia until it too finally fell apart. Balkanization. How could that have possibly been good for America? It wasn’t. But who did benefit from its fall? Wall Street and War Street. Of course.
Footprint # 5: The Middle East. What a freaking mess! And who made this mess? It wasn’t the American people. We had no dog in this fight. But the American Deep State both did then and does now. Libya, Syria, Palestine, Iraq, Lebanon, Egypt, Israel? Means, motive and opportunity to make a real mess. And, yes, Israel is a hot mess too.
Footprint # 6: Africa. Africa has been fried, poached and eaten whole by the American Deep State too. From apartheid South Africa and the bloody attacks on democratic Angola to the Ebola and HIV disasters, blood diamonds, IMF loans with never-ending interest payments and rape in the Congo, Africa is now a hot mess. And who exactly benefited from this scramble for Africa? Not you and me — or our children or our dogs either.
Footprint # 7: Ukraine: You have no idea what a broken egg Ukraine has become recently as neo-Nazis kill innocent civilians right and left. Their theme song seems to be, “Party like it’s Serbia in 1995!” Plus a German company, Telefunken Racoms, is actually selling these Ukrainian neo-Nazis their weapons. “Party like it’s Leningrad in 1942!” http://cyber-berkut.net/
But have any of us average Americans actually benefited from all this world-wide chaos? No, no, no and no. So who did? The American Deep State.
Footprint # 8: America. That’s us. It should come as no surprise to anyone even semi-conscious right now that our economy has tanked, we’re at each others’ throats and Corporations are now People. The propaganda machine that the Deep State now runs here would make Hitler proud! Or happily match up with George Orwell’s prescient observation that “War is Peace.” And this is all part of a plan to make Americans as dazed and confused as, say, Africans and the folks in the Middle East are now. But who the freak benefits from all this? Definitely not us. http://readersupportednews.
So then your next question should be, “How can we stop this, put an end to the American Deep State and return to being a democracy?” How can you even try to stop a shadow? It’s hard. But we could start by regulating Wall Street, limiting weapons manufacturers’ profits, making sure that our election laws never let anyone anywhere for any reason contribute more than $200 to any election campaign, having fact-checkers sort out all those blatant lies in campaign broadcasts, and fiercely guarding against election violations. Oh, and also get rid of all those Deep State bunkers, yachts and private internet rat-lines that we American taxpayers are paying for now.
Or perhaps we could just run a PowerBall lottery for every available position in Congress, on the Supreme Court and in the White House. Surely any random lottery winner would do a better job of resisting the American Deep State than those sorry wimps that we now have kissing the DS’s booties and being their gollums.
But however we go about it, we have just got to stop the American Deep State from murdering our democracy — before it’s too late and the American dream’s corpse arrives DOA at the morgue.
PS: See you at BoucherCon! It would be a mystery to me why anyone would not want to attend that.
You just have to love the wit and precision of a political image. Pat Dollard’s title NY Post Destroys Obama With Brutal Cover, says it all. The arrogant despot was indeed STRIPPED! The belated question is why did it take so long? In order to answer the obvious, most political analysts’ will fall into the partisan trap of party politics. Hope and change finally was seen as dictatorial haughtiness. Most voters do not believe that they are deceived by skilled liars when they cast their ballot. Yet, that is a pattern that is uninterrupted in most elections. Only the style of administrations differs, while the establishment continues to pull the strings and policies to move the consolidation of the New World Order forward.
That Nefarious Warrior Organism is eager to accelerate the next stage of the master plan. Under an openly NeoCon front, John McCain’s chairmanship of a Senate Armed Services Committee will get to pressure the public into believing that their national security requires vigorous interventionism. Before you think that the Democrats differ from this same post WWII strategy, it would be best to brush up on a necessary history lesson.
Obama never attempted to confront, much less reverse the foreign policy of defending an empire. At the core of American power is the use of force that threatens any regime, which will not capitulate to the dictates of the financial elites that put Obama in office. The same can be said for most of the presidencies from FDR onward. The mere attempt to buck this system got JFK killed and Reagan shot. Yet to even mention such vial thoughts earns the historiographer a place in the conspiracy hall of infamy.
The abandonment of truth is a primary requirement to be part of the system. The reverse also applies. To be a successful player in the corridors of power, the skills of deception and prevarication must be demonstrated. Obama excelled in this task. However, his usefulness is now over.
For the indoctrinated clones that only see politics through a progressive lens, dealing with defeat seems inconceivable. Conversely, the novice supporters of Republican candidates vote with the erroneous belief that the country will now get back on track. Both crowds operate in a mindset that does not work in the real world.
Winning a GOP majority in the Senate removes the crook Harry Reid and his Mafioso tactics but the added seats in the House just gives Boehner flexibility to ignore Tea Party representatives. When you hear of an atmosphere of collaboration between Obama and the new anticipated Senate leader Mitch McConnell, you should shudder.
Democracy Now provides a correct assessment on Obama & McConnell Pledge Cooperation; Will Fast-Tracking Secretive TPP Trade Deal Top Their Agenda?
“We get analysis from Lori Wallach of Public Citizen’s Global Trade Watch, who notes that while some analysts say GOP gains will accelerate the passage of fast-track legislation in Congress to enable an agreement on the TPP, “it is kind of hard for the Republicans to voluntarily delegate more authority to the guy they’ve been attacking as the imperial president who grabs power that’s not his.” The controversial so-called free trade deal involves 12 countries and nearly 40 percent of the global economy. Trade ministers from the 12 countries negotiating the trade deal are due to meet in Beijing ahead of the Asia-Pacific economic summit next week to continue negotiations.”
Oh if only such logic would be applied to the deal making sell out process. Here is a central point to most political arrangements. Forget about compromises, the deal boils down to serving the interests of the shady figures behind the officials. Corporatist Republicans want to continue the globalism sellout just as much as the Democrat partisans, who take the same contributions from the financial elites.
No honest observers of the nuclear fallout from the Reid run Senate can conclude that passing legislation through the conference process with the House was ever considered. Will the new GOP Senate leadership return to the 60 vote filibuster tradition? This test will determine if any optimism would return.
In a racy post on Facebook, the always provocative Karen De Coster asks: “Why the F$%K – Does a Congress with a 10% approval rating has a 90% Re-election rate?” Reelection Rates Over the Years provides added evidence of this tragedy.
Maybe the immediate query should be why the newly elected Republican Senators would vote for a known deal maker betrayer of principles like McConnell as their leader? For a more detailed analysis of Expectations after the 2014 Elections, the Radical Reactionary essay is worthy of a read.
THE MEGALOMANICALITY OF BARACK HUSSEIN OBAMA cites the Obama the Insane comes out with this… Delusional behavior occurs next out of a mad man.
- EXCERPT: “The American people sent a message,’ he claimed, ‘one that they’ve sent for several elections now. They expect the people they elect to work as hard as they do. They expect us to focus on their ambitions, and not ours.”
- EXCERPT: “Our economy is outpacing most of the world. But we’ve just gotta keep at it. Much of that will take action from Congress. And I’m eager to work with the next Congress.”
- EXCERPT: “He said he would only work with Republicans if they seek to ‘make responsible changes’ to the law. I’m going to be very receptive to hearing those ideas. Despite all the contention,” Obama claimed, “we now know that the law works.”
- EXCERPT: “Executive orders,” he said, “will be replaced and supplanted by a bill from Congress. You send me a bill that I can sign and those executive actions go away. But what I’m not gonna do is just wait.”
For some unsolicited advice for any honorable Democrats left in their party, consider the following. Jeffrey Steinberg of Executive Intelligence Review floated this option back in October 2010, Invoke the 25th Amendment To Remove Obama. Undoubtedly the situation has worsened dramatically since then. “LaRouche demanded the invocation of the 25th Amendment, which provides for the orderly removal of a President, and his replacement by the Vice President, due to physical or mental impairment.”
The actual 25th amendment says:
Whenever the Vice President and a majority of either the principal officers of the executive departments or of such other body as Congress may by law provide, transmit to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office, the Vice President shall immediately assume the powers and duties of the office as Acting President.
Thereafter, when the President transmits to the President pro tempore of the Senate and the Speaker of the House of Representatives his written declaration that no inability exists, he shall resume the powers and duties of his office unless the Vice President and a majority of either the principal officers of the executive department or of such other body as Congress may by law provide, transmit within four days to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office. Thereupon Congress shall decide the issue, assembling within forty-eight hours for that purpose if not in session. If the Congress, within twenty-one days after receipt of the latter written declaration, or, if Congress is not in session, within twenty-one days after Congress is required to assemble, determines by two-thirds vote of both Houses that the President is unable to discharge the powers and duties of his office, the Vice President shall continue to discharge the same as Acting President; otherwise, the President shall resume the powers and duties of his office.
Barack Hussein Obama thinks he is an emperor but is actually a dysfunctional psychopath. His dictates need to be ignored and his irrelevancy demands his replacement. Since the Congress does not have the courage to impeach this unhinged traitor, the Democratic careerists need to step up, (for no better reason) than to save their own skins.
Even a two year term under Joe “wacko” Biden would be preferable to an insane sociopath with his finger on the nuclear button.
Discard any pure or noble reasons for adopting such a removal process. Bank on sheer self-interest to blame all the failures on the best fall guy since Richard Nixon. The establishment needs a cover-up to distract the public from the coming economic collapse. When a liar commander in chief no longer is believable, his clothes are STRIPPED from the throne.
Republicans must feel maximum heat NOT to save Obama. Those cowardly chicken hawks will bomb anyone on the globe to maintain the empire, but will not lift a finger to remove a modern day Emperor Justin II. Praetorian Prefect warns of a bi-partisan malady. Now it is time to act and dispatch Obama to a disgraceful internment.
“It’s not the underlying economics that’s driving things, it’s central bank liquidity.”
— Matt King, Citigroup
Soaring auto sales are not so much a sign of a strong economy as they are an indication of financial hanky-panky. We saw this same type of fakery play out in housing between 2004 – 2006, when prices went through the roof due to a mortgage-lending scam (“subprime”) that crashed the stock market and sent the economy reeling. Now the bigtime money guys are at it again, writing up auto loans for anyone who can sit upright in a chair and scribble an “X” on the dotted line. As a result, car sales have surged to over 16 million for the last 6 months. (A full 7 million more than the low point in January, 2009.) And it’s not hard to see why either. The finance gurus are packaging these sketchy subprimes into bonds, offloading them on eager investors, and recycling the profits into more crappy loans. It’s a perfect circle and it won’t end until the loans start blowing up, jittery investors head for the exits, and Uncle Sugar rides to the rescue with more bailouts.
But we’re getting ahead of ourselves. First take a look at these charts by House of Debt which shows the disparity between auto spending and other types of spending since the end of the slump in 2009.
House of Debt: “New auto purchases have driven the consumer spending recovery to a large degree. The chart below shows the spending recovery for new auto sales and for all other retail spending…
From 2009 to 2013, spending on new autos increased by 40% in nominal terms. All other spending increased by only 20%. Further, excluding autos, 2013 saw lower growth in nominal retail spending than 2012…
The concern is that a lot of auto purchases are being fueled with debt, given a strong recovery in the auto loan market. Below is the net flow of auto loans from 2002 to 2013. It is a net flow because it includes pay downs in addition to new originations. As it shows, auto lending in 2012 and 2013 tops any other year during the previous expansion from 2002 to 2007 (although it is still below the amount of new auto loans in 2000 and 2001).
(“Another Debt-Fueled Spending Spree?” House of Debt)
How about that? So there’s a bigger debt bubble in auto loans today than there was before the bust. But why? Is it because demand is strong, jobs are plentiful, wages are rising, the economy is growing, and people are optimistic about the future?
Heck, no. It’s because rates are low, credit is easy, and dealers are ready to put anyone with a license and a heartbeat into a brand-spanking new car no questions asked. Here are the details from an article in the New York Times titled “In a Subprime Bubble for Used Cars, Borrowers Pay Sky-High Rates” by Jessica Silver-Greenberg and Michael Corkery:
”Auto loans to people with tarnished credit have risen more than 130 percent in the five years since the immediate aftermath of the financial crisis, with roughly one in four new auto loans last year going to borrowers considered subprime — people with credit scores at or below 640.
The explosive growth is being driven by some of the same dynamics that were at work in subprime mortgages. A wave of money is pouring into subprime autos, as the high rates and steady profits of the loans attract investors. Just as Wall Street stoked the boom in mortgages, some of the nation’s biggest banks and private equity firms are feeding the growth in subprime auto loans by investing in lenders and making money available for loans.
And, like subprime mortgages before the financial crisis, many subprime auto loans are bundled into complex bonds and sold as securities by banks to insurance companies, mutual funds and public pension funds — a process that creates ever-greater demand for loans.
The New York Times examined more than 100 bankruptcy court cases, dozens of civil lawsuits against lenders and hundreds of loan documents and found that subprime auto loans can come with interest rates that can exceed 23 percent. The loans were typically at least twice the size of the value of the used cars purchased, including dozens of battered vehicles with mechanical defects hidden from borrowers. Such loans can thrust already vulnerable borrowers further into debt, even propelling some into bankruptcy, according to the court records, as well as interviews with borrowers and lawyers in 19 states.
In another echo of the mortgage boom, The Times investigation also found dozens of loans that included incorrect information about borrowers’ income and employment, leading people who had lost their jobs, were in bankruptcy or were living on Social Security to qualify for loans that they could never afford.” (“In a Subprime Bubble for Used Cars, Borrowers Pay Sky-High Rates”, New York Times)
Can you believe that this kind of chicanery is going on in broad daylight without the regulators stepping in? Think about it for a minute: If the NYT’s journalists can find “dozens of loans that included incorrect information about borrowers’ income and employment”, then why can’t the government regulators? It’s ridiculous. What we’re talking about here is a new version of “liar’s loans” where dealers are helping people who don’t have the means to repay the debt, to fudge the details on their loan application so they can drive off in a shiny new Impala.
Haven’t we seen this movie before?
Here’s more from USA Today: “In the first quarter of 2014, 24.9% of all new-car loans were 73 to 84 months long. Four years ago, less than 10% of loans were that long. In fact, such lengthy terms have pulled the average new-car loan to 66 months. That’s an all-time record.”
7 years to pay off a car? You got to be kidding me? It’s like a second mortgage. And there’s more, too. The average monthly payment and average amount financed hit record highs in the first quarter too. This is from Auto News:
“The average monthly new-vehicle payment was $474 in the first quarter, up 3.3 percent from a year ago. The average monthly used-vehicle payment was $352, up 1.1 percent, Experian Automotive said.
Also in the first quarter, the average amount financed on a new-vehicle loan was $27,612, an increase of $964, or 3.6 percent. For used vehicles, the average amount financed was $17,927, up $395 or 2.3 percent.”
So Americans are not just loading on more debt, they’re also assuming that they’re financial situation is going to be stable enough to make these large payments well into the future. Good luck with that.
It’s also worth noting that, in many transactions, dealers are actually lending more than the value of the vehicle. According to Reuters David Henry,
“The average loan-to-value on new cars rose to 110.6 percent… On used cars it rose to 133.2 percent…
Auto lenders often provide loans that exceed the value of cars they are financing because borrowers want cash to pay sales taxes and fees.”
(“U.S. car buyers borrow more as rates fall and standards loosen“, David Henry, Reuters)
Let me see if I got this straight: You walk onto a car lot without a dime in your pocket, and drive off in a brand new car with everything paid for upfront? Such a deal! Can you see why we think that the sales numbers are a big fake? This isn’t the sign of a strong economy. It’s the sign of another gigantic credit bubble rip-off. But what do the dealers get out of this thing? Is it really worth their while to botch the underwriting when they know that eventually they’ll have to repossess the vehicle? Sure, it is, because there’s big money in stuffing people into loans they can’t afford.
Here’s how the Times explains it: ”Auto loans to borrowers considered subprime, those with credit scores at or below 640, have spiked in the last five years. The jump has been driven in large part by the demand among investors for securities backed by the loans, which offer high returns at a time of low interest rates. Roughly 25 percent of all new auto loans made last year were subprime, and the volume of subprime auto loans reached more than $145 billion in the first three months of this year.”
Bingo. So not only do they make dough on the high interest rates they charge their subprime borrowers, (Sometimes 23 percent or more.) they also make it by selling the loan to investors who are eager to buy any manner of crappy bond provided it offers a better return than US Treasuries. This is the mess Bernanke created by fixing interest rates at zero for nearly 6 years. Zirp (zero interest rate policy) unavoidably leads to excessive risk taking by yield-crazed speculators. The voracious appetite for subprime securities (ABS–Asset-Backed Securities) has even surprised the bond issuers who are constantly beating the bushes looking for sketchier products. This is from the same article by the NY Times:
“Investors, seeking a higher return when interest rates are low, recently flocked to buy a bond issue from Prestige Financial Services of Utah. Orders to invest in the $390 million debt deal were four times greater than the amount of available securities.
What is backing many of these securities? Auto loans made to people who have been in bankruptcy.
An affiliate of the Larry H. Miller Group of Companies, Prestige specializes in making the loans to people in bankruptcy, packaging them into securities and then selling them to investors.
“It’s been a hot space,” Richard L. Hyde, the firm’s chief operating officer, said during an interview in March. Investors are betting on risky borrowers. The average interest rate on loans bundled into Prestige’s latest offering, for example, is 18.6 percent, up slightly from a similar offering rolled out a year earlier…. To meet that rising demand, Wall Street snatches up more and more loans to package into the complex investments.” (NYT)
HA! Now there’s a good way to feather the old retirement fund; load up on bonds made up of loans to people who’ve gone bust.
This is the impact that zero rates have on investor behavior. The abundance of cheap and plentiful liquidity invariably leads to trouble. And there are victims in this Central Bank-authored gold rush too, namely the unsophisticated borrowers who pay prohibitively high rates on beater vehicles that are typically worth less-than-half the value of the loan. (Check the NYT article for examples.)
The Times also notes that the ratings agencies have been playing along with the finance companies just as they did during the subprime mortgage fiasco. Here’s more from the Times:
“Rating agencies, which assess the quality of the bonds, are helping fuel the boom. They are giving many of these securities top ratings, which clears the way for major investors, from pension funds to employee retirement accounts, to buy the bonds. In March, for example, Standard & Poor’s blessed most of Prestige’s bond with a triple-A rating. Slices of a similar bond that Prestige sold last year also fetched the highest rating from S.&P. A large slice of that bond is held in mutual funds managed by BlackRock, one of the world’s largest money managers.” (NYT)
Ask yourself this, dear reader: How are the ratings agencies able to give “many of these securities top ratings”, when the investigators from the Times found “dozens of loans that included incorrect information about borrowers’ income and employment, leading people who had lost their jobs, were in bankruptcy or were living on Social Security to qualify for loans that they could never afford”?
Let’s face it: The regulatory changes in Dodd-Frank haven’t done a damn thing to protect the victims of these dodgy subprime schemes. Borrowers and investors are both getting gouged by a system that only protects the interests of the perpetrators. The sad fact is that nothing has changed. The system is just as corrupt as it was when Lehman went down.
So, how long can this go on before the market implodes?
According to the Times:
“financial firms are beginning to see signs of strain. In the first three months of this year, banks had to write off as entirely uncollectable an average of $8,541 of each delinquent auto loan, up about 15 percent from a year earlier, according to Experian…
In another sign of trouble ahead, repossessions, while still relatively low, increased nearly 78 percent to an estimated 388,000 cars in the first three months of the year from the same period a year earlier, according to the latest data provided by Experian. The number of borrowers who are more than 60 days late on their car payments also jumped in 22 states during that period….” (NYT)
(According to Amber Nelson at loan.com: “In the second quarter, the value of all auto loans late by 60 days or more was more than $4 billion, up 27 percent from the prior year, according to Experian.”)
So, yeah, the trouble is mounting, but that doesn’t mean that this madness won’t continue for some time to come. It probably will. It’ll probably drag-on until the economy turns south and more borrowers start falling behind on their payments. That will lead to more defaults, heavier losses on auto bonds, and a hasty race to the exits by investors. Isn’t that how the subprime mortgage scam played out?
Indeed. But at least there are signs of hope on the regulatory front. Check out this clip from an article at CNBC:
“In August, both Santander Consumer and General Motors Financial Co. acknowledged receiving Justice Department subpoenas in connection with a probe over possible violations of civil-fraud laws. And the Consumer Financial Protection Bureau and the Securities and Exchange Commission have both stepped up their scrutiny of the auto-loan market.” (“New debt crisis fear: Subprime auto loans“, CNBC)
So the SEC, the DOJ, and the CFPB are actually investigating the underwriting practices of these behemoth finance companies to see if they violated “civil fraud laws”?
Will wonders never cease?
Just don’t hold your breath waiting for convictions.