Some things not to forget, which the new Greek leaders have not…
American historian D.F. Fleming, writing of the post-World War II period in his eminent history of the Cold War, stated that “Greece was the first of the liberated states to be openly and forcibly compelled to accept the political system of the occupying Great Power. It was Churchill who acted first and Stalin who followed his example, in Bulgaria and then in Rumania, though with less bloodshed.”
The British intervened in Greece while World War II was still raging. His Majesty’s Army waged war against ELAS, the left-wing guerrillas who had played a major role in forcing the Nazi occupiers to flee. Shortly after the war ended, the United States joined the Brits in this great anti-communist crusade, intervening in what was now a civil war, taking the side of the neo-fascists against the Greek left. The neo-fascists won and instituted a highly brutal regime, for which the CIA created a suitably repressive internal security agency (KYP in Greek).
In 1964, the liberal George Papandreou came to power, but in April 1967 a military coup took place, just before elections which appeared certain to bring Papandreou back as prime minister. The coup had been a joint effort of the Royal Court, the Greek military, the KYP, the CIA, and the American military stationed in Greece, and was followed immediately by the traditional martial law, censorship, arrests, beatings, and killings, the victims totaling some 8,000 in the first month. This was accompanied by the equally traditional declaration that this was all being done to save the nation from a “communist takeover”. Torture, inflicted in the most gruesome of ways, often with equipment supplied by the United States, became routine.
George Papandreou was not any kind of radical. He was a liberal anti-communist type. But his son Andreas, the heir-apparent, while only a little to the left of his father, had not disguised his wish to take Greece out of the Cold War, and had questioned remaining in NATO, or at least as a satellite of the United States.
Andreas Papandreou was arrested at the time of the coup and held in prison for eight months. Shortly after his release, he and his wife Margaret visited the American ambassador, Phillips Talbot, in Athens. Papandreou later related the following:
I asked Talbot whether America could have intervened the night of the coup, to prevent the death of democracy in Greece. He denied that they could have done anything about it. Then Margaret asked a critical question: What if the coup had been a Communist or a Leftist coup? Talbot answered without hesitation. Then, of course, they would have intervened, and they would have crushed the coup.
Another charming chapter in US-Greek relations occurred in 2001, when Goldman Sachs, the Wall Street Goliath Lowlife, secretly helped Greece keep billions of dollars of debt off their balance sheet through the use of complex financial instruments like credit default swaps. This allowed Greece to meet the baseline requirements to enter the Eurozone in the first place. But it also helped create a debt bubble that would later explode and bring about the current economic crisis that’s drowning the entire continent. Goldman Sachs, however, using its insider knowledge of its Greek client, protected itself from this debt bubble by betting against Greek bonds, expecting that they would eventually fail.
Will the United States, Germany, the rest of the European Union, the European Central Bank, and the International Monetary Fund – collectively constituting the International Mafia – allow the new Greek leaders of the Syriza party to dictate the conditions of Greece’s rescue and salvation? The answer at the moment is a decided “No”. The fact that Syriza leaders, for some time, have made no secret of their affinity for Russia is reason enough to seal their fate. They should have known how the Cold War works.
I believe Syriza is sincere, and I’m rooting for them, but they may have overestimated their own strength, while forgetting how the Mafia came to occupy its position; it didn’t derive from a lot of compromise with left-wing upstarts. Greece may have no choice, eventually, but to default on its debts and leave the Eurozone. The hunger and unemployment of the Greek people may leave them no alternative.
The Twilight Zone of the US State Department
“You are traveling through another dimension, a dimension not only of sight and sound but of mind. A journey into a wondrous land whose boundaries are that of imagination. Your next stop … the Twilight Zone.” (American Television series, 1959-1965)
State Department Daily Press Briefing, February 13, 2015. Department Spokesperson Jen Psaki, questioned by Matthew Lee of The Associated Press.
Lee: President Maduro [of Venezuela] last night went on the air and said that they had arrested multiple people who were allegedly behind a coup that was backed by the United States. What is your response?
Psaki: These latest accusations, like all previous such accusations, are ludicrous. As a matter of longstanding policy, the United States does not support political transitions by non-constitutional means. Political transitions must be democratic, constitutional, peaceful, and legal. We have seen many times that the Venezuelan Government tries to distract from its own actions by blaming the United States or other members of the international community for events inside Venezuela. These efforts reflect a lack of seriousness on the part of the Venezuelan Government to deal with the grave situation it faces.
Lee: Sorry. The US has – whoa, whoa, whoa – the US has a longstanding practice of not promoting – What did you say? How longstanding is that? I would – in particular in South and Latin America, that is not a longstanding practice.
Psaki: Well, my point here, Matt, without getting into history –
Lee: Not in this case.
Psaki: – is that we do not support, we have no involvement with, and these are ludicrous accusations.
Lee: In this specific case.
Lee: But if you go back not that long ago, during your lifetime, even – (laughter)
Psaki: The last 21 years. (Laughter.)
Lee: Well done. Touché. But I mean, does “longstanding” mean 10 years in this case? I mean, what is –
Psaki: Matt, my intention was to speak to the specific reports.
Lee: I understand, but you said it’s a longstanding US practice, and I’m not so sure – it depends on what your definition of “longstanding” is.
Psaki: We will – okay.
Lee: Recently in Kyiv, whatever we say about Ukraine, whatever, the change of government at the beginning of last year was unconstitutional, and you supported it. The constitution was –
Psaki: That is also ludicrous, I would say.
Lee: – not observed.
Psaki: That is not accurate, nor is it with the history of the facts that happened at the time.
Lee: The history of the facts. How was it constitutional?
Psaki: Well, I don’t think I need to go through the history here, but since you gave me the opportunity –- as you know, the former leader of Ukraine left of his own accord.
Leaving the Twilight Zone … The former Ukrainian leader ran for his life from those who had staged the coup, including a mob of vicious US-supported neo-Nazis.
If you know how to contact Ms. Psaki, tell her to have a look at my list of more than 50 governments the United States has attempted to overthrow since the end of the Second World War. None of the attempts were democratic, constitutional, peaceful, or legal; well, a few were non-violent.
The ideology of the American media is that it believes that it doesn’t have any ideology
So NBC’s evening news anchor, Brian Williams, has been caught telling untruths about various events in recent years. What could be worse for a reporter? How about not knowing what’s going on in the world? In your own country? At your own employer? As a case in point I give you Williams’ rival, Scott Pelley, evening news anchor at CBS.
In August 2002, Iraqi Deputy Prime Minister Tariq Aziz told American newscaster Dan Rather on CBS: “We do not possess any nuclear or biological or chemical weapons.”
In December, Aziz stated to Ted Koppel on ABC: “The fact is that we don’t have weapons of mass destruction. We don’t have chemical, biological, or nuclear weaponry.”
Iraqi leader Saddam Hussein himself told CBS’s Rather in February 2003: “These missiles have been destroyed. There are no missiles that are contrary to the prescription of the United Nations [as to range] in Iraq. They are no longer there.”
Moreover, Gen. Hussein Kamel, former head of Iraq’s secret weapons program, and a son-in-law of Saddam Hussein, told the UN in 1995 that Iraq had destroyed its banned missiles and chemical and biological weapons soon after the Persian Gulf War of 1991.
There are yet other examples of Iraqi officials telling the world, before the 2003 American invasion, that the WMD were non-existent.
Enter Scott Pelley. In January 2008, as a CBS reporter, Pelley interviewed FBI agent George Piro, who had interviewed Saddam Hussein before he was executed:
PELLEY: And what did he tell you about how his weapons of mass destruction had been destroyed?
PIRO: He told me that most of the WMD had been destroyed by the U.N. inspectors in the ’90s, and those that hadn’t been destroyed by the inspectors were unilaterally destroyed by Iraq.
PELLEY: He had ordered them destroyed?
PELLEY: So why keep the secret? Why put your nation at risk? Why put your own life at risk to maintain this charade?
For a journalist there might actually be something as bad as not knowing what’s going on in his area of news coverage, even on his own station. After Brian Williams’ fall from grace, his former boss at NBC, Bob Wright, defended Williams by pointing to his favorable coverage of the military, saying: “He has been the strongest supporter of the military of any of the news players. He never comes back with negative stories, he wouldn’t question if we’re spending too much.”
I think it’s safe to say that members of the American mainstream media are not embarrassed by such a “compliment”.
In his acceptance speech for the 2005 Nobel Prize for Literature, Harold Pinter made the following observation:
Everyone knows what happened in the Soviet Union and throughout Eastern Europe during the post-war period: the systematic brutality, the widespread atrocities, the ruthless suppression of independent thought. All this has been fully documented and verified.
But my contention here is that the US crimes in the same period have only been superficially recorded, let alone documented, let alone acknowledged, let alone recognized as crimes at all.
It never happened. Nothing ever happened. Even while it was happening it wasn’t happening. It didn’t matter. It was of no interest. The crimes of the United States have been systematic, constant, vicious, remorseless, but very few people have actually talked about them. You have to hand it to America. It has exercised a quite clinical manipulation of power worldwide while masquerading as a force for universal good. It’s a brilliant, even witty, highly successful act of hypnosis.
Cuba made simple
“The trade embargo can be fully lifted only through legislation – unless Cuba forms a democracy, in which case the president can lift it.”
Aha! So that’s the problem, according to a Washington Post columnist – Cuba is not a democracy! That would explain why the United States does not maintain an embargo against Saudi Arabia, Honduras, Guatemala, Egypt and other distinguished pillars of freedom. The mainstream media routinely refer to Cuba as a dictatorship. Why is it not uncommon even for people on the left to do the same? I think that many of the latter do so in the belief that to say otherwise runs the risk of not being taken seriously, largely a vestige of the Cold War when Communists all over the world were ridiculed for blindly following Moscow’s party line. But what does Cuba do or lack that makes it a dictatorship?
No “free press”? Apart from the question of how free Western media is, if that’s to be the standard, 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 almost all the media worth owning or controlling?
Is it “free elections” that Cuba lacks? They regularly have elections at municipal, regional and national levels. (They do not have direct election of the president, but neither do Germany or the United Kingdom and many other countries). Money plays virtually no role in these elections; neither does party politics, including the Communist Party, since candidates run as individuals. Again, what is the standard by which Cuban elections are to be judged? Is it that they don’t have the Koch Brothers to pour in a billion dollars? Most Americans, if they gave it any thought, might find it difficult to even imagine what a free and democratic election, without great concentrations of corporate money, would look like, or how it would operate. Would Ralph Nader finally be able to get on all 50 state ballots, take part in national television debates, and be able to match the two monopoly parties in media advertising? If that were the case, I think he’d probably win; which is why it’s not the case.
Or perhaps what Cuba lacks is our marvelous “electoral college” system, where the presidential candidate with the most votes is not necessarily the winner. If we really think this system is a good example of democracy why don’t we use it for local and state elections as well?
Is Cuba not a democracy because it arrests dissidents? Many thousands of anti-war and other protesters have been arrested in the United States in recent years, as in every period in American history. During the Occupy Movement two years ago more than 7,000 people were arrested, many beaten by police and mistreated while in custody. And remember: The United States is to the Cuban government like al Qaeda is to Washington, only much more powerful and much closer; virtually without exception, Cuban dissidents have been financed by and aided in other ways by the United States.
Would Washington ignore a group of Americans receiving funds from al Qaeda and engaging in repeated meetings with known members of that organization? In recent years the United States has arrested a great many people in the US and abroad solely on the basis of alleged ties to al Qaeda, with a lot less evidence to go by than Cuba has had with its dissidents’ ties to the United States. Virtually all of Cuba’s “political prisoners” are such dissidents. While others may call Cuba’s security policies dictatorship, I call it self-defense.
The Ministry of Propaganda has a new Commissar
Last month Andrew Lack became chief executive of the Broadcasting Board of Governors, which oversees US government-supported international news media such as Voice of America, Radio Free Europe/Radio Liberty, the Middle East Broadcasting Networks and Radio Free Asia. In a New York Times interview, Mr. Lack was moved to allow the following to escape his mouth: “We are facing a number of challenges from entities like Russia Today which is out there pushing a point of view, the Islamic State in the Middle East and groups like Boko Haram.”
So … this former president of NBC News conflates Russia Today (RT) with the two most despicable groups of “human beings” on the planet. Do mainstream media executives sometimes wonder why so many of their audience has drifted to alternative media, like, for example, RT?
Those of you who have not yet discovered RT, I suggest you go to RT.com to see whether it’s available in your city. And there are no commercials.
It should be noted that the Times interviewer, Ron Nixon, expressed no surprise at Lack’s remark.
- William Blum, Killing Hope: U.S. Military and C.I.A. Interventions Since World War II, chapters 3 and 35
- “Greek Debt Crisis: How Goldman Sachs Helped Greece to Mask its True Debt”, Spiegel Online (Germany), February 8, 2010. Google “Goldman Sachs” Greece for other references.
- U.S. Department of State Daily Press Briefing, February 13, 2015
- Overthrowing other people’s governments: The Master List
- CBS Evening News, August 20, 2002
- ABC Nightline, December 4, 2002
- “60 Minutes II”, February 26, 2003
- Washington Post, March 1, 2003
- “60 Minutes”, January 27, 2008
- Democracy Now!, February 12, 2015, Wright statement made February 10
- Al Kamen, Washington Post, February 18, 2015
- Huffington Post, May 3, 2012
- New York Times, January 21, 2015
“Though it’s happening to a stricken country, on the edge of Europe, the choices presented to Greece are being understood throughout Europe… Obey or leave.”
— Paul Mason, Channel 4 News Blog
It’s not easy to negotiate with a gun to your head. Nevertheless, that’s the situation Greek finance minister Yanis Varoufakis found himself in on Friday preceding a crucial meeting with the Eurogroup. According to one report, the objective of the last-ditch confab “was to prepare a consensus text that would be the basis for the discussion” with the EU’s finance ministers. That might sound innocent enough, but it doesn’t come close to explaining the real purpose of the meeting which was far more sinister. Check out this blurb from Costas Efimeros at the Press Project:
“According to a Greek official who doesn’t want to be named, the Greek delegation were yesterday subject to outright blackmail. Our ‘partners’ informed us that if Eurogroup doesn’t result in an agreement, on Tuesday the Greek government will be forced to implement capital controls. It seemed that they had taken the decision to strangle the Greek economy by cutting off funding to the banks through the ELA system. Furthermore, it seemed that the big Greek banks already knew this. Leaks from the ECB, after all, had suggested that they were preparing for a GREXIT.” (“Europe trashed democracy“, Costas Efimeros, The Press Project)
It’s nice to know that EU leaders ascribe to the same basic moral code as Don Corleone, isn’t it?
The fact is, a slow motion bank run has been underway in Greece for more than a month draining roughly 40 billion euros from the Greek banking system. If a deal hadn’t been struck on Friday, the ECB would have pulled the plug on its liquidity assistance program and blown the whole system to kingdom come. That’s how the Eurocrats planned to say goodbye to their long-struggling member, Greece, by giving them a sharp jolt to the groin before razing their economy to the ground. That tells you everything you need to know about the Eurogroup.
If Greece got the boot on Friday, it’s humanitarian crisis would have deepened overnight while the blow to the capital markets would have paved the way for another financial crisis. Fortunately, the catastrophe was averted mainly because Varoufakis was able to cobble together a viable plan for meeting the Eurogroup’s basic requirements while creating significant opportunities to ease conditions in Greece. Don’t get me wrong; this isn’t a perfect deal by any stretch, but it is the best deal that could have been reached given the circumstances and the unbridled hostility from German finance minister Wolfgang Schaeuble who was eager to scuttle the whole project and throw Greece to the wolves. Varoufakis managed to out maneuver the irascible Schaeuble and get some of what he wanted, but only through stiff-necked resolve and significant compromise. As a result, Greece is still a member of the Eurozone, but just barely. A rejection of its reform package today (Monday) could push the beleaguered country out of the 19-member Union for good.
Keep in mind, the Eurogroup made it perfectly clear from the beginning that they weren’t going to restructure Greece’s debts or end the austerity program. The issues weren’t even on the table. So, those who think that Varoufakis should have given the Eurogroup an ultimatum (“Reduce our debts or we’ll leave.”) simply don’t understand the nature of the negotiations. Varoufakis was forced to operate within very strict parameters. Given those limitations, he nabbed a very respectable deal. Even so, it’s only natural for people to feel let-down, especially since Syriza had promised much more than they could deliver. But that doesn’t mean Varoufakis is a traitor or a sellout. Not at all. It merely means that Syriza’s belief that it could end austerity but keep Greece in the Eurozone proved to be unfounded. In fact, German opposition has made it nearly impossible. The larger point is this: Syriza had no mandate to spearhead a Grexit. That is not what the people voted for or what they want. Varoufakis’s was asked to do the impossible, square the circle. In that regard, he failed. But still, the deal he hammered out should mitigate Greece’s slump to some extent, although one should not expect a full-blown economic recovery, not without a healthy dose of fiscal stimulus which is nowhere in sight.
Varoufakis managed to change the terms of the deal which is now referred to as the “existing arrangement” rather than a “program”. According to Norbert Haring, this new “arrangement”…”is not a “technical” extension of the “program” any more, but an extension of the funding arrangement, plus vague conditionality.” (“Was it worth it? Concessions to Greece relative to the rejected draft of 16 February“, Nobert Haring)
It all sounds very tedious and legalistic, but the change is significant. You see, the real fight between Varoufakis and the Eurogroup was over this precise issue, that is, changing the inflexible, ironclad austerity “program” into a looser “arrangement” where polices can be altered via–what Varoufakis dubbed –“constructive ambiguity.” Varoufakis objective is to create enough gray area for Greece to regain sovereign control over its own economic policies. Constructive ambiguity will help to achieve that, provided the reforms meet the Eurogroup’s fiscal targets.
Here’s more from Haring’s post: “There is no mention any more of “successful conclusion of the program”, nor of “program” in the text. Instead a successful conclusion of the review of the “conditions in the current arrangement” is the new condition. This allows the Greek government to continue to say that the old program cannot be successful. It also allows for changes in the program, as “conditions of the arrangement” is deliberately more vague.” (“Was it worth it? Concessions to Greece relative to the rejected draft of 16 February”, Nobert Haring)
This isn’t just legal claptrap. It’s a critical change in the way the policy is implemented. Once again, Varoufakis has loosened the financial straitjacket in which Greece finds itself, which can only be seen as progress.
The new deal also allows Greece to decide its own reform package rather than the troika dictating what government expenses to cut or which publicly owned assets to sell. Here’s another excerpt from Haring’s post: “Most important change of the whole document: Addition of “The institutions will, for the 2015 primary surplus target, take the economic circumstances in 2015 into account.” Excessive, self-defeating austerity is off. Only the target for 2015 is mentioned, because everything further out would have to be part of a new arrangement, still to be negotiated.”
So Varoufakis has achieved his goal of reducing austerity. Not only is there greater flexibility operationally but, also, Greece will control the levers of decision-making in the “field of tax policy, privatisation, labour market reforms, financial sector, and pensions”. Naturally, the lower the primary surplus, the more fiscal stimulus is available for economic growth. (Running a surplus during a depression is absolute madness, but this is the lousy hand Varoufakis was dealt.)
Haring’s final comments are a good summary of Varoufakis’s achievement:
“Was it worth the hassle to reject the draft of 16 February, just to accept the statement four days later? For Athens it most certainly was. It got the promise that no self-defeating, excessive austerity would be asked of it any more, the assurance that it could devise its own economic and social policies, as long as they did not impact negatively on the interests of its partners, rather than having to execute and leaving in place all the measures accepted by the former government and strongly rejected by the people. These are huge improvements for Athens, with no significant counterbalancing downside compared to 16 February.” (“Was it worth it? Concessions to Greece relative to the rejected draft of 16 February”, Nobert Haring)
Clearly, this is a good deal for Greece, but let’s not go overboard; the basic situation still stinks to high heaven, mainly because the Eurogroup would rather lecture and punish than give a struggling member a helping hand. Had the Eurozone evolved into a viable political union that distributed fiscal transfers to the weaker states on the periphery, Greece would have emerged from its recession years ago. Instead, the fiasco drags on endlessly punctuated by infrequent outbursts from EU leaders who vehemently defend belt-tightening measures that have only made matters worse. If anything, this experience should help the Greek people decide whether there’s a future for them and their children in the Eurozone or not. Dealing with authoritarian boneheads (The Eurogroup) may eventually prove to be more trouble than its worth. (A Grexit looks better by the day!)
As for Varoufakis, well, he passed the finance minister’s test with flying colors. He distinguished himself as a capable horse trader and managed to squeeze more concessions out of the EU’s austerity-obsessed representatives than anyone thought possible. The man proved that he’s neither a “sell out” or a “traitor”.(as some claim.) Quite the contrary, he kept his word and did exactly what the Greek people asked of him.
At the very least, he deserves credit for a valiant effort.
When the Negotium essay, Long History of HSBC Money Laundering was written over two years ago, one might think that the Banksters would look to take a lower profile. Forget about it, when you are part of a made criminal syndicate you never have to serve time, just say you are sorry. Bloomberg reports, the “HSBC Holdings Plc Chief Executive Officer Stuart Gulliver offered “sincerest apologies” following fresh details of how the bank’s Swiss unit helped customers evade taxes.”
The Forbes column, ‘Corporate Governance Is The Very Essence Of A Business’ presents a half hearted public relations spin from the notorious bank for Drug, Inc.
“As part of its response to the revelations HSBC said: “We acknowledge that the compliance culture and standards of due diligence in HSBC’s Swiss private bank, as well as the industry in general, were significantly lower than they are today. At the same time, HSBC was run in a more federated way than it is today and decisions were frequently taken at a country level.”
The most chilling feature of the laborious research into the HSBC files is the documentation of the knowing wrong-doing perpetrated by managers at various levels throughout the bank – and the flippancy with which it was undertaken. From ‘code names’ for clients to widespread collusion, it is clear there is complete contempt for the law.”
Arrogance in spades is how the world’s number two bank operates. Another example provided by Tom Heneghan, who professes to be an International Intelligence Expert, cites the following.
“Alibaba previously was de-listed on the Hong Kong Exchange for dealing in fraud with the Hong Kong branch of noted bank HSBC.
Alibaba is then simultaneously operating a foreign currency money laundry and ponzi scheme tied once again to HSBC.”
The bigger the money the greater the chance you have for just minor pin pricks and fines that are all part of the pay off cycle of international banking.
When it comes to inventing clandestine methods for money laundering, look to the masters in the City of London to perfect the art of double talk. The BBC account, HSBC whistleblower’s email to HMRC uncovered, states:
“An email which the whistleblower at the centre of an HSBC tax scandal says he sent to HM Revenue and Customs in 2008 has been uncovered by a French newspaper.
The UK tax authority has been under fire from MPs on the Public Accounts Committee, who accused tax officials of failing to deal with the matter adequately and ignoring Mr Falciani’s 2008 email.”
No surprise that a years old complaint gets pushed under the rug. HSBC is too big to fail and pays for protections in all the right places.
Reuters adds more accelerants to the firestorm, but the odds that this scandal will suck up all the oxygen to build into an inferno are slim.
“Other countries are already taking action against HSBC based on data leaked by Falciani and previously obtained by tax authorities. In November Argentina charged the bank with helping more than 4,000 clients evade taxes. HSBC Argentina rejected the charge, saying it respected Argentine law.”
Hey, the motive to avoid paying taxes is well understood. However, facilitating criminal enterprises under the banner of a fiduciary banking institution crosses the line. The Guardian provides the following in HSBC files: Swiss bank hid money for suspected criminals.
“HSBC also held assets for bankers accused of looting funds from former Soviet states, while alleged crimes by other account holders include bribery at Malta’s state oil company, cocaine smuggling from the Dominican Republic and the doping of professional cyclists in Spain.
The Swiss bank also held accounts for “politically exposed people” – defined as senior political figures or their relatives at heightened risk of involvement in corruption, money laundering, or avoiding international sanctions – with little evidence of any extra scrutiny of their activities.”
OK, what is the point of citing more horror stories, by now you get the drill that the Globalist interdependent financial extortion system needs a mechanism to keep all the pay offs and ill-gotten gains circulating. The history of HSBC is a case study of all that global corporatists has wrought on the planet.
Governments won’t even investigate credible complaints, enact necessary structural oversight and accountability processes, and certainly will not jail the kingpins who flaunt their untouchable status.
Repeating this saga using different circumstances never gets down to the level of approaching solutions. Without a universal outcry against the transnational banking model and the creation of regional and local alternative banking, the big banks will just keep getting larger and more autonomous and above national sovereignty.
What governments these banking house monopolies do not control, matter little in the larger scheme of finance. HSBC along with Goldman Sachs and JP Morgan may be the posters boys of the Banksters cabal, but you will never see their executive faces on a most wanted poster.
Last year Hang the Bankers published 48 suspicious banking deaths asks.
“With the global financial system heading towards a major crash in the near future are these people buckling under the pressure of what they see coming or are they being silenced because of what they know?”
Attempting to answer this question will take insider information of scores of Falciani whistleblowers. Or more probably, those who are considering joining the ranks of informers may well become part of the growing list of the deceased.
For those who doubt the shadow history of debt created banking, watch the video The Rothschild Family – Puppet Masters – World’s Only Trillionaires – Full Documentary on the BREAKING ALL THE RULES You Tube Channel, subscribe for future updates.
What people must come to understand is that banking is not really about making money. It uses the fractional reserve and current zero interest rates to further their political influence over nations to achieve global governance. They are the true outlaws, in Armani suits. HSBC just happens to have a longer experience with global thievery than most
The “Exceptional” U.S. Suffers Crushing Defeat in Debaltsevo…
“There’s no city left. It’s destroyed.”
— Anonymous Ukrainian soldier following the battle of Debaltsevo
In less than a year, the United States has toppled the democratically-elected government of Ukraine, installed a Washington-backed stooge in Kiev, launched a bloody and costly war of annihilation on Russian-speaking people in the East, thrust the economy into a downward death spiral, and reduced the nation to an anarchic, failed state destined to endure a vicious fratricidal civil war for as far as the eye can see.
Last week, Washington suffered its greatest military defeat in more than a decade when Ukraine’s US-backed army was soundly routed in the major railway hub of Debaltsevo. Roughly, 8,000 Ukrainian regulars along with untold numbers of tanks and armored units were surrounded in what-came-to-be-known-as “the cauldron.” The army of the Donetsk Peoples Republic led by DPR commander Alexander Zakharchenko, encircled the invading army and gradually tightened the cordon, eventually killing or capturing most of the troops within the pocket. The Ukrainian Armed Forces suffered major casualties ranging between 3,000 to 3,500 while a vast amount of lethal military hardware was left behind.
According to Zakharchenko, “The amount of equipment Ukrainian units have lost here is beyond description.”
Additionally, the US-backed proxy-army saw many of its crack troops and top-notch units destroyed in the fighting leaving Kiev unable to continue the war without assistance from allies in the US or Europe. The full impact of the defeat will not be known until angry troops returning from the front amass on the streets of the Capital and demand Petro Poroshenko’s resignation. The Ukrainian President is responsible for the massacre at Debaltsevo. He was fully aware that his army faced encirclement but ordered them to remain in order to satisfy powerful right-wing elements in his government. The disaster is even more terrible due to the fact that it was entirely avoidable and achieved no strategic purpose at all. Extreme hubris frequently impacts outcomes on the battlefield. This was the case at Debaltsevo.
The debacle ensures that the bumbling president’s days are numbered. It’s nearly certain that he will either be replaced or hanged sometime in weeks ahead. He has already flown his family to safety out of the country, and there’s growing speculation that both Washington and the far-right nationalists who occupy the Security Services will insist on his removal. That paves the way for a second Ukrainian coup in less than a year, a grim reminder of the tragic failings of US policy in Ukraine. Check out this blurb from a post at the Vineyard of the Saker:
“Looks like the Nazi death squads are on the march again, this time they are looking at Kiev. Thirteen death-squad (aka “volunteer battalion”) leaders have now declared that they are forming their own military command under the command of the notorious Semen Semenchenko. Officially, they are not in any way opposed to the current regime, so said Semenchenko, but in reality their rank and file members are pretty clear about what they want to do: organize a third Maidan and toss out Poroshenko.
What makes these 21st century version of the SA so dangerous for Poroshenko it that he, unlike Hitler, does not have a 21st century version of the SS to eliminate them all overnight. In fact, according to many reports the entire southern part of the rump-Ukraine is now “Kolomoiski-land” fully under the control of the oligarch who finances these death-squads. Add to this the fact that most of the Rada is composed of the very same battalion commanders and assorted Nazi freaks, and you will why Poroshenko is now very much in danger……
The sad reality is that there is simply nobody in the Ukraine capable of disarming these so-called “volunteer battalions”. There are now thousands of uniformed Nazi freaks roaming around with guns who can now impose their law of the jungle on everybody. It sure looks like the future of Banderastan will be something like a mix of Somalia and Mad Max – a failed state, a comprehensively destroyed economy, a collapsed social order and the law of armed gangs of thugs.” (The Vineyard of the Saker)
If Poroshenko is doomed to be the scapegoat in the Debaltsevo cock-up, it’s only because he followed the foolhardy advice of his Washington paymasters. Had he listened to his military advisors instead, he probably would have withdrawn his troops earlier and spared himself a Gadhafi-like demise. Now, that’s probably no longer possible.
Poroshenko’s desperation has led to an appeal to western allies and the United Nations for the deployment of a peacekeeping mission in Ukraine. The request is an admission of defeat and has no chance of being implemented, mainly because it violates the terms of the recent peace agreement (Minsk 2.0), but, also, because voting members on the Security Council (Russia and China) are certain to veto the idea. Clearly, Poroshenko, who is increasingly embattled and reviled, is grasping at straws hoping to avoid the same violent end he ruthlessly inflicted on so many of his countrymen. Here is a brief summary of recent events from the World Socialist Web Site:
“The debacle suffered by the Kiev regime exposes the utterly reckless and frankly stupid character of the policy pursued by Washington and its EU allies in Ukraine….
The initial attempts of the Kiev regime and its CIA backers to subjugate east Ukraine by sheer military terror, relying on fascist militias and select units of the Ukraine army that it considered to be reliable, have failed….
Nevertheless, Washington is pressing Kiev to prepare for a renewed offensive and is still discussing directly arming the Ukrainian army against Russia with US weapons….
In west Ukraine, the population is evading or resisting draft orders to obtain more cannon fodder for the east Ukraine war. At the same time, Ukraine’s economy, cut off from its main industrial base in east Ukraine and its export markets in Russia, is collapsing.
“The country is at war that they cannot afford to fight. There is no economy any longer….Gerald Celente of Trends Journal told Russia Today. “That $160 billion loss of trade with Russia has destroyed the economy, when it was already in a severe recession. It went from very bad to worse than depression levels.”
(“US-backed Kiev regime faces military debacle in east Ukraine war“, Alex Lantier, World Socialist Web Site
Washington has largely won the information war, having persuaded Congress and the American people that US policy in Ukraine is “just”, but on the ground, where it counts, Washington has encountered one catastrophic failure after another. This process will undoubtedly persist until the costs are too exorbitant to bear.
Ironman Varoufakis’s Revolutionary Plan for Europe…
“The ongoing dispute between the German and Greek governments is nothing less than a democratic revolution against German hegemony and the attempt of the Germans and their paladins in the EU to dictate Greek domestic policy.”
–Mathew D. Rose, It’s a revolution, Stupid! Naked Capitalism
“Germany is eating itself over Greece. It is eroding its moral authority, and seems prepared to destroy the eurozone’s integrity just to make a point.”
–Paul Mason, Germany v Greece is a fight to the death, a cultural and economic clash of wills, Guardian
If you haven’t been following developments in the Greek-EU standoff, you’re really missing out. This might be the best story of the year. And what makes it so riveting, is that no one thought that little Greece could face off with the powerful leaders of the EU and make them blink. But that’s exactly what’s happened. On Monday, members of the Eurogroup met with Greece’s finance minister, Yanis Varoufakis, to decide whether they would accept Greece’s terms for an extension of the current loan agreement. There were no real changes to the agreement. The only difference was semantics, that is, the loan would not be seen as a bailout but as “a transitional stage to a new contract for growth for Greece”. In other words, a bridge to a different program altogether.
In retrospect, Varoufakis’s strategy was pure genius, mainly because it knocked the EU finance ministers off balance and threw the process into turmoil. After all, how could they vote “thumbs down” on loan package that they had previously approved just because the language was slightly different? But if they voted “thumbs up”, then what?
Well, then they would be acknowledging (and, tacitly, approving) Greece’s determination to make the program less punitive in the future. That means they’d be paving the way for an end to austerity and a rethink on loan repayment. They’d also be conceding that Greece’s democratically-elected government had the right to alter the policies of the Eurogroup. How could they let that happen?
But, then again, how could they vote it down, after all, it was basically the same deal. As Varoufakis pointed out in a press conference on Monday:
“We agree to the terms of our loan agreements to all our creditors”. And we have “agreed to do nothing to derail the existing budget framework during the interim period.”
See? It’s the same deal.
This is the conundrum the Eurogroup faced on Monday, but instead of dealing with it head-on, as you would expect any mature person to do, they punted. They put off the loan extension decision for another day and called it quits. Now maybe that was the smart thing to do, but the optics sure looked terrible. It looked like Varoufakis stared them down and sent them fleeing like scared schoolchildren.
Now, remember, Monday was the absolute, drop-dead deadline for deciding whether the Eurogroup would approve or reject the new terms for Greece’s loan extension. That means the Eurogroup’s task could not have been more straightforward. All they had to do was vote yes or no. That’s it.
Instead, they called ‘Time Out’ and kicked the can a little further down the road. It was not a particularly proud moment for the European Union. But what’s even worse, is the subterfuge that preceded the meetings; that’s what cast doubt on the character of the people running EU negotiations. Here’s the scoop: About 15 minutes before the confab began, Varoufakis was given a draft communique outlining the provisions of the proposed loan extension. He was pleasantly surprised to find that the document met all his requirements and, so, he was prepared to sign it. Unfortunately, the document was switched shortly before the negotiations began with one that backtracked on all the crucial points.
I’m not making this up. The freaking Eurogroup tried to pull the old switcheroo on Varoufakis to get him to sign something that was different than the original. Can you believe it? And it’s only because Varoufakis studiously combed through the new memo that he was able to notice the discrepancy and jam on the brakes. As it happens, the final copy was just a rehash of the same agreement that Varoufakis has rejected from the onset. The only difference was the underhanded way the Eurogroup tried to slip it by him.
Now you tell me: Would you consider people who do something like that “trustworthy”?
Of course not. This is how people behave when they don’t care about integrity or credibility, when all that matters is winning. If the Eurogroup can trick the Greeks into signing something that’s different than what they think they’re signing; then tough luck for the Greeks. “Caveat emptor”. Buyer beware. The Eurogroup has no problem with that kind of shabby double-dealing. That’s just how they play the game.
But their trickery and bullying hasn’t worked, mainly because Varoufakis is too smart for them. And he’s too charismatic and talented too, which is a problem for the EU bigwigs who resent the fact that this upstart Marxist academic has captured the imaginations of people around the world upsetting their little plan to perpetuate Greece’s 6-year long Depression. They never anticipated that public opinion would shift so dramatically against them, nor had they imagined that all of Europe would be focused laserlike on the shady and autocratic workings of the feckless Eurogroup. That’s not what they wanted. What they wanted was carte blanche to impose their medieval policies on the profligate Greeks, just like the good old days after Lehman Brothers tanked. After all, that’s how a “anti-democratic imperialist project” like the EU is supposed to work, right?
Right, except now Varoufakis and his Marxist troopers have thrown a wrench in the Eurogroup’s plans and put the future in doubt. The tide has turned sharply towards reason, solidarity and compassion instead of repression, exploitation and cruelty. In just a few weeks, the entire playing field has changed, and Greece appears to be getting the upper hand. Who would have known?
If you look at the way that Varoufakis has handled the Eurogroup, you have to admire the subtlety, but effectiveness of his strategy. In any battle, one must draw attention to the righteousness of their cause while exposing the flaws in the character of their adversary. The incident on Monday certainly achieved both. While David never really slayed Goliath, Goliath is certainly in retreat. And that’s alot better than anyone expected.
As for the “cause”, well, that speaks for itself. The Greek bailout was never reasonable because the plan wasn’t designed to create a path for Greece to grow its way out of debt and deflation. No. It was basically a public relations smokescreen used to conceal what was really going on behind the scenes, which was a massive giveaway to the banks and bondholders. Everyone knows this. Check this out from Naked Capitalism:
“According to the Jubilee Debt Campaign, 92% of €240 billion Greece has received since the May 2010 bailout went to Greek and European financial institutions.” (Naked Capitalism)
Yep, it was all just one big welfare payment to the moocher class. Meanwhile, the Greeks got zilch. And, yet, the Eurogroup wants them to continue with this same program?
As far as Greece’s finances are concerned, they’ve gotten progressively worse every year the bailout has dragged on. For example, Greece’s debt-to-GDP ratio has gone from 115 percent in 2010 more than 170 percent today. The country is headed in the wrong direction, which is what makes Varoufakis’s remedies so compelling. It’s because everyone knows that ‘if you are already in a hole, stop digging’. That’s the logic behind Varoufakis’s position; he simply wants to “stop digging.” But that can’t be done by borrowing more money to repay debts that only get bigger with each new bailout. And it can’t be done by implementing excruciating belt-tightening measures that increase unemployment and shrink the economy. It can only be done by reducing one’s debts and initiating programs that help to grow the economy back to health. This isn’t rocket science, but it is anathema to the retrograde ideology of the European Union which is one part bonehead economics and one part German sanctimony. Put the two together and you come up with a pre-Keynesian dystopia where one of the wealthiest regions in the world inches ever-closer to anarchy and ruin for the sole purpose of proving that contractionary expansion actually works. Well, guess what? It doesn’t, and we now have six years of evidence to prove it.
It’s worth noting that the Eurogroup hasn’t budged one inch from its original position. In other words, there really haven’t been any negotiations, not in any meaningful sense of the word. What there has been is one group of pompous blowhards reiterating the same discredited mantra over and over again, even though austerity has been thoroughly denounced by every reputable economist on the planet. Of course that doesn’t matter to the ex-Goldman swindlers at the ECB or their hairshirt counterparts in Berlin. What they want is to extract every last drop of blood from their Greek victims. That’s their game. And, of course, ultimately what they want to do is annihilate the entire EU welfare state; crush the unions, eviscerate pensions, wages and health care, and privatize everything they can get their greasy hands on. That’s the real objective. Greece’s exorbitant debts are just a means to an end, just a way to decimate the middle class in one fell swoop.
Keep in mind, the EU just narrowly avoided a triple-dip recession in the third quarter, which would have been their third slump in less than six years. How do you like that track record? It just illustrates the stunning mismanagement of the Union’s economic affairs and the incompetence of the bureaucrats making the decisions. Even so, these same leaders have no qualms about telling Greece to step in line and follow their diktats to the letter.
Can you believe the arrogance?
Fortunately, Greece has broken from the herd and set out on a new course. They’ve disposed of the mealy-mouth, sellout politicians who used to run the country and put the A-Team in their place. And, boy, are they happy with the results. Syriza’s public approval ratings are through the roof while Varoufakis has become the most admired man in Europe. The question is whether this new troupe of committed leftists can deliver the goods or not. So far, there’s reason for hope, that is, if we can agree about what Varoufakis’s strategy really is.
In earlier writings, Varoufakis said that he wants a New Deal for Greece. He said:
“Unless we have a new deal for Europe, Greece is not going to get a chance….It’s a necessary condition that the eurozone finds a rational plan for itself…. until and unless the eurozone finds a rational plan for stopping this train wreck throughout the European Union, throughout the eurozone, Greece has no chance at all.” Naked Capitalism)
Okay, so Varoufakis wants to stay in the EU, but he wants a change in policy. (Reducing the debts, ending austerity, and boosting fiscal stimulus.) But he also has more ambitious plans of which no one in Brussels, Frankfurt or Berlin seems to be aware. He wants to change the prevailing culture of the Eurozone; gradually, incrementally, but persistently. He wants a Europe that is more democratic and more responsive to the needs of the member states, but he also wants a Europe that is more united via institutions and programs that will strengthen the union. He believes that success will only be achieved if concrete steps are taken “to unify the banking system”, mutualize debt (“the Federal Government having its own debt over and above states.”) …”And thirdly we need an investment policy which runs throughout the Eurozone… a recycling mechanism for the whole thing. Unless we have these things,… I’m afraid there is absolutely nothing to avert the continuation of this slow motion derailment.” (Naked Capitalism)
So, there you have it. Nationalize the banking system, create a Euro-wide bond market, and establish mechanisms for fiscal transfers to the weaker states like we do in the US via welfare, food stamps, gov contracts, subsidies etc. to create some balance between the very rich and productive states like California and New York and the poorer states like South Dakota and Oklahoma. That’s what it’s going to take to create a viable United States of Europe and escape these frustratingly recurrent crises. Varoufakis knows this, but of course he’s not pushing for this. Not yet at least.
Instead, he’s decided to take it slowly, one step at a time. Incremental change, that’s the ticket. Just keep plugging away and building support until the edifice cracks and democracy appears.
That’s Varoufakis’s plan in a nutshell: Revolution from within. Just don’t tell anyone in Berlin.
The resounding victory of Alexis Tsipras in the Greek election was certainly a referendum that rejected the austerity demands placed on Greece by the European Union. The Wall Street Journal says the following, in Syriza Win in Greek Election Sets Up New Europe Clash.
“A Syriza victory marks an astonishing upset of Europe’s political order, which decades ago settled into an orthodox centrism while many in Syriza describe themselves as Marxists. It emboldens the challenges of other radical parties, from the right-wing National Front in France to the newly formed left-wing Podemos party in Spain, and it sets Greece on a collision course with Germany and its other eurozone rescuers.”
What informed political onlooker did not see this coming? The EU acts as if it was a Holy Roman Empire using some very unholy demands and requirements. Since Greece has a laid back culture, the notion that imposing a rigorous German work ethic on the Mediterranean city-states is about as shortsighted as allowing a popular vote in the cradle of Democracy. If the EU wants to be the seat of the Banksters New World Order, rectifying this oversight needs to be part of any additional rollovers of the debt.
The NYT reports on the German reaction to this election, in Greece Chooses Anti-Austerity Party in Major Shift.
“While Greece sees itself as being punished by creditors’ demands, Germany and a host of European officials have argued that Greece and other troubled nations in the eurozone must clean up the high debts and deficits at the root of Europe’s crisis . They say Athens has failed to make enough progress on structural reforms seen as necessary to stabilize the economy, and they are pressing Greece to raise billions of euros through more budgetary cutbacks and taxes.”
Sounds like NATO Panzer tanks may need to surround the Acropolis. At issue is the next round of payments and exactly how far Tsipras’ new coalition government will push back.
From the socialist French press, Greek radical-left leader vows to end ‘humiliation and pain’, the precedent dispute provides a look at the agenda that will be fought over.
“Greece’s bailout deal with the eurozone is due to end on February 28 and Tsipras’s immediate challenge will be to settle doubts over the next installment of more than 7 billion euros in international aid. EU finance ministers are due to discuss the issue in Brussels on Monday.
Tsipras has promised to renegotiate agreements with the European Commission, European Central Bank and International Monetary Fund “troika” and write off much of Greece’s 320-billion-euro debt, which at more than 175 percent of gross domestic product, is the world’s second highest after Japan.”
The imposed neocolonialism from Brussels technocrats on Greece after the 2008 financial bubble is A True Greek Tragedy – Odyssey of the EU, concluded that “This tragedy is an existential test. Appreciate the absurdity of compliance with the New World Order, and apply comic relief, to those who follow commends of the EU Poseidon ship of state.”
At stake is the ability of the EU to continue their centralization dictates in the face of public resistance. The victory of SYRIZA provides encouragement for similar movements from Spain, Portugal to Italy. However, such self-government enthusiasm flies in the face of the institutional power of the blue-blood aristocracy of financial elites, who in the past have never hesitated waging, war to suppress independence sentiments.
The term Grexit is introduced to forewarn the op-out of the EU option. Further explanation is elaborated in Greece lightning: six things you need to know about Syriza’s victory.
- Background – the Greek economy
- Yesterday’s election – and why Syriza wants to stay in the EU
- But Germany is more relaxed about a ‘Grex
- It’s now a question of how far Germany will budge
- The Eurozone is (probably) strong enough to withstand Grexit
- But still, Grexit would be a risk that no one actively wants to take
Hugo Dixon: Grexit still unlikely after Syriza win takes another viewpoint. His outlook is based on the assumption that “no head of government in the other euro countries wants Greece to leave”, so some kind of accommodation will be offered to appease the factions that resist their inordinate debt burden.
“So there might be a way of cutting a deal. The snag is that doing so would involve a massive somersault – or what Greeks call a “kolotoumba”. Many of Tsipras’ backers would then accuse him of betraying their cause. It is still far from clear whether he is prepared to do that.
But if the Syriza leader is not prepared to compromise, Greece will default and will have to impose capital controls to stop the banks collapsing. If the people then forced the government to backtrack, there would be one final chance to stay in the euro. Otherwise, the drachma would beckon.”
Oh the horror of a country leaving the European Union and chucking the EURO. The factual consequences of Greece exiting the EU should not be gauged solely in economic terms. The limits upon which the Bilderberg oligarchy will tolerate liberation dissent become the decisive price and test of brute power in this battle for autonomy.
The Greek version of socialism is surely no model for economic prosperity. Nonetheless, the systematic fleecing of Greek assets by the vultures preying on the misery from the 2008 crash has yet to be put back in balance.
The viability of EU Bonds Rollover Debt with a Chinese Bailout makes the case why the EU is vulnerable to the mountains of their own obligations. The most likely outcome from the election of Alexis Tsipras is that a rescheduling rather than a reduction in the amount of indebtedness will take place. The EU Rothschild band of thieves knows no forgiveness, when it comes to collecting on their phony debt created currency loans.
The brave Spartans saved civilization at Thermopylae. It is doubtful that type of campaign can be fought again by today’s Greeks.
If This Doesn’t Make You Mad…
Why is the Fed threatening to raise interest rates when the economy is still in the doldrums? Is it because they want to avoid further asset-price inflation, prevent the economy from overheating, or is it something else altogether? Take a look at the chart below and you’ll see why the Fed might want to raise rates prematurely. It all has to do with the sharp decline in petrodollars that are no longer recycling into US financial assets. This is from Reuters:
“Energy-exporting countries are set to pull their ‘petrodollars’ out of world markets this year for the first time in almost two decades, according to a study by BNP Paribas. Driven by this year’s drop in oil prices, the shift is likely to cause global market liquidity to fall, the study showed…
This decline follows years of windfalls for oil exporters such as Russia, Angola, Saudi Arabia and Nigeria. Much of that money found its way into financial markets, helping to boost asset prices and keep the cost of borrowing down, through so-called petrodollar recycling.
This year, however, the oil producers will effectively import capital amounting to $7.6 billion. By comparison, they exported $60 billion in 2013 and $248 billion in 2012, according to the following graphic based on BNP Paribas calculations:
‘At its peak, about $500 billion a year was being recycled back into financial markets. This will be the first year in a long time that energy exporters will be sucking capital out,’ said David Spegel, global head of emerging market sovereign and corporate Research at BNP.
In other words, oil exporters are now pulling liquidity out of financial markets rather than putting money in. That could result in higher borrowing costs for governments, companies, and ultimately, consumers as money becomes scarcer.” (Petrodollars leave world markets for first time in 18 years – BNP, Reuters)
Can you see what’s going on?
Now that petrodollar funding has dried up, the Fed needs to find an alternate source of capital to keep the markets bubbly and to shore up the greenback. That’s why the Fed has been talking up the dollar (“jawboning”) and promising to raise rates even though the economy is still pushing up daisies. According to the Fed’s favorite mouthpiece, Jon Hilsenrath:
“Federal Reserve officials are on track to start raising short-term interest rates later this year, even though long-term rates are going in the other direction amid new investor worries about weak global growth, falling oil prices and slowing consumer price inflation…
Many Fed officials have signaled they expect to start lifting their benchmark short-term rate from near zero around the middle of the year. Recent developments in the economy and markets have caused some trepidation among Fed officials and, if sustained, could cause them to delay acting. However several have indicated recently they still expect to move this year and are withholding judgment on delay.” (Fed Officials on Track to Raise Short-Term Rates Later in the Year, Jon Hilsenrath, Wall Street Journal)
And we’re hearing the same from Reuters: “The Federal Reserve is still on track for a potential mid-year interest-rate increase, a top Fed official said on Friday, citing strong U.S. economic momentum and a falling unemployment rate.”
Notice the sudden change in tone from dovish to hawkish? Expect that to intensify in the months ahead as the major media tries to spin the data in a way that serves the Fed’s broader objectives. Like this article in Bloomberg titled, “Yellen Signals She Won’t Babysit Markets in Turmoil”:
“Janet Yellen is leaving the Greenspan ‘put”’behind as she charts the first interest-rate increase since 2006 amid growing financial-market volatility.
The Federal Reserve chair has signaled she wants to place the economic outlook at the center of policy making, while looking past short-term market fluctuations. To succeed, she must wean investors from the notion, which gained currency under predecessor Alan Greenspan, that the Fed will bail them out if their bets go bad — just as a put option protects against a drop in stock prices.
“The succession of Fed puts over the years has led to a wide range of distortions in financial markets,” said Lawrence Goodman, president of the Center for Financial Stability, a monetary research group in New York. “There have been swollen asset values followed by sharp declines. This is a very good time for the Fed to move away.
“Let me be clear, there is no Fed equity market put,” William C. Dudley, president of the New York Fed, the central bank’s watchdog on financial markets, said in a Dec. 1 speech in New York.” (She’s No Greenspan: Yellen Signals She Won’t Babysit Markets in Turmoil)
“There’s no Fed equity put”?
That’s ridiculous. Then how does one explain the way the Fed has launched additional rounds of QE every time stocks have started to sputter? And how does one explain the Fed’s $4 trillion balance sheet all of which was spent on financial assets?
Let’s face it, Central bank intervention has been the only game in town. It’s not just the main driver of stocks. It’s the only driver of stocks. Everyone knows that. Yellen is going to do everything in her power to keep stocks in the stratosphere just like her predecessors, Greenspan and Bernanke. The only that’s going to change, is her approach.
As for the economy, well, just a glance of the headlines tells the whole story. Like this gem from CNBC last week:
“U.S. consumer prices recorded their biggest decline in six years in December and underlying inflation pressures were benign,…The Labor Department said on Friday its Consumer Price Index fell 0.4 percent last month, the largest drop since December 2008, after sliding 0.3 percent in November. In the 12 months through December, CPI increased 0.8 percent…
Darkening prospects for the global economy could also complicate matters for the U.S. central bank.
Inflation is running below the Fed’s 2 percent target, despite a strengthening labor market and overall economy.” (Consumer Price Index drops 0.4% in December, in line with estimates, CNBC)
Think about that for a minute: Consumer prices just logged their biggest drop since the freaking slump of 2008 and, yet, the Fed is still babbling about raising rates.
Talk about lunacy. Not only has the Fed not reached its inflation target of 2%, but it’s abandoned the project altogether. Why? Why has the Fed suddenly stopped trying to boost inflation when the yields on benchmark 10-year US Treasuries have just plunged to record lows (1.70%) and are blinking red? In other words, the bond market is signaling slow growth and zero inflation for as far as the eye can see, but the Fed wants to raise rates and slash growth even more?? It doesn’t make any sense, unless of course, Yellen has something else up her sleeve. Which she does.
Now get a load of this shocker on retail sales in last week’s news. This is from Bloomberg:
“The optimism surrounding the outlook for U.S. consumers was taken down a notch as retail sales slumped in December by the most in almost a year, prompting some economists to lower spending and growth forecasts.
The 0.9 percent decline in purchases …. extended beyond any single group as receipts fell in nine of 13 major retail categories.
Treasury yields and stocks fell as a deepening commodities rout and the drop in sales spurred concern global growth is slowing…
…average hourly earnings falling 0.2 percent in December from the month before in the first drop since late 2012. That limits the amount of spending consumers can undertake without dipping into savings or racking up debt.” (U.S. Retail Sales Down Sharply, Likely Cuts to Growth Forecasts Ahead, Bloomberg)
Remember when everyone thought that low oil prices were going to save the economy? It hasn’t worked out that way though, has it? Nor will it. Falling oil prices usually indicate recession, crisis or deflation. Take your pick. They’re usually not a sign of green shoots, escape velocity, or sunny uplands.
And did you catch that part about falling wages? How do you expand a consumer-dependent economy, when workers are seeing their wages shrivel every month? In case, you haven’t seen the abysmal stagnation of wages in graph-form, here’s a chart from American Progress:
Negative real wage growth means the amount of slack in the market is still considerable.
So while stock prices have doubled or tripled in the last 6 years, wages have basically been flatlining. That’s a pretty crummy distribution system, don’t you think. Unless you’re in the 1 percent of course, then everything is just hunky dory.
But at least Yellen can find some comfort in the fact that unemployment continues to improve. In fact, just two weeks ago unemployment dropped to an impressive 5.4%, the lowest since 2007. So if we forget about the fact that wages are stagnating, that management has nabbed all the productivity-gains for the last 40 years, and that another 451,000 workers dropped off the radar altogether in December, then everything looks pretty rosy. But, of course, it’s all just a bunch of baloney. Take a look at this from Zero Hedge:
“Another month, another attempt by the BLS to mask the collapse in the US labor force with a seasonally-adjusted surge in waiter, bartender and other low-paying jobs. Case in point… the labor participation rate just slid once more, dropping to 62.7%, or the lowest print since December 1977. This happened because the number of Americans not in the labor forced soared by 451,000 in December, far outpacing the 111,000 jobs added according to the Household Survey, and is the primary reason why the number of uenmployed Americans dropped by 383,000.
So, yeah, unemployment looks great until you pick through the data and see it’s all a big fraud. Unemployment is only falling because more and more people are throwing in the towel and giving up entirely.
Finally, there’s the rapidly-expanding mess in the oil patch where the news on layoffs and cut backs gets worse by the day. This is from Wolf Richter at Naked Capitalism:
“Layoffs are cascading through the oil and gas sector. On Tuesday, the Dallas Fed projected that in Texas alone, 140,000 jobs could be eliminated. Halliburton said that it was axing an undisclosed number of people in Houston. Suncor Energy, Canada’s largest oil producer, will dump 1,000 workers in its tar-sands projects. Helmerich & Payne is idling rigs and cutting jobs. Smaller companies are slashing projects and jobs at an even faster pace. And now Slumberger, the world’s biggest oilfield-services company, will cut 9,000 jobs.” (Money dries up for oil and gas, layoffs spread, write-offs start, Wolf Richter, Naked Capitalism)
And then there’s this tidbit from Pam Martens at Wall Street on Parade:
“In a December 15 article by Patrick Jenkins in the Financial Times, readers learned that data from Barclays indicated that “energy bonds now make up nearly 16 per cent of the $1.3 trillion junk bond market — more than three times their proportion 10 years ago,” and “Nearly 45 per cent of this year’s non-investment grade syndicated loans have been in oil and gas.” Raising further alarms, AllianceBernstein has released research suggesting that the deals were not fully subscribed by investors with the potential that “as much as half of the outstanding financing from the past couple of years may be stuck on banks’ books.” (The perfect storm for Wall Street banks, Russ and Pam Martens, Wall Street on Parade)
How do you like that? So nearly half the toxic energy-related gunk that was bundled up into dodgy junk bonds (and is likely to default in the near future) is sitting on bank balance sheets. Does that sound like a potential trigger for another financial crisis or what?
And, no, I am not trying to ignore the fact that third quarter GDP came in at a whopping 5 percent which vastly exceeded all the analysts estimates. But let’s put that into perspective. According to economist Dean Baker, the growth spurt was mainly “an anomaly” …”driven by extraordinary jump in military spending and a big fall in the size of the trade deficit that is unlikely to be repeated.” Here’s more from Baker:
“As usual, just about everything we’ve heard about the economy is wrong. To start, the 5.0 percent growth number must be understood against a darker backdrop: The economy actually shrank at a 2.1 percent annual rate in the first quarter. If we take the first three quarters of the year together, the average growth rate was a more modest 2.5 percent.” (Don’t Believe What You Hear About the US Economy, Dean Baker, CEPR)
So, the economy is growing at a crummy 2.5 percent, but Yellen wants to raise rates. Why? Does she want to shave that number to 2 percent or 1.5 percent? Is that it? She wants to go backwards?
Of course not. The real reason the Fed wants to raise rates, is to attract foreign capital to US markets in order to keep stocks soaring, keep borrowing costs low, and reinforce the dollar’s role as the world’s reserve currency. That’s what’s really going on. The petrodollars are drying up, so US markets need a new source of funding. Direct foreign investment, that’s the ticket, Ducky. All the Fed needs to do is boost rates by, let’s say, 0.5 percent and “Cha-ching”, here comes the capital. Works like a charm every time, just ask former Treasury Secretary Robert Rubin whose strong dollar policy sent stock prices into orbit while widening the nation’s current account deficit by many orders of magnitude. (We never said the plan didn’t have its downside.)
The Fed’s sinister plan to raise interest rates (sometime by mid-2015) will push the dollar’s exchange rate higher thus triggering capital flight in the emerging markets which are already struggling with plunging commodities prices and an excruciating slowdown. The investment flows from the EMs to US financial assets and Treasuries will offset the loss of petrodollar revenue while expanding Wall Street’s ginormous stock market bubble. As for the emerging markets, well, they’re going to take it in the shorts bigtime as one would expect. Here’s a clip from an article by Ambrose-Evans Pritchard that lays it out in black and white:
“The US Federal Reserve has pulled the trigger. Emerging markets must now brace for their ordeal by fire. They have collectively borrowed $5.7 trillion in US dollars, a currency they cannot print and do not control. This hard-currency debt has tripled in a decade, split between $3.1 trillion in bank loans and $2.6 trillion in bonds. It is comparable in scale and ratio-terms to any of the biggest cross-border lending sprees of the past two centuries…
Officials from the Bank for International Settlements say privately that developing countries may be just as vulnerable to a dollar shock as they were in the Fed tightening cycle of the late 1990s, which culminated in Russia’s default and the East Asia Crisis. The difference this time is that emerging markets have grown to be half the world economy. Their aggregate debt levels have reached a record 175pc of GDP, up 30 percentage points since 2009…”
This time the threat does not come from insolvent states. They have learned the lesson of the late 1990s. Few have dollar debts. But their companies and banks most certainly do, some 70pc of GDP in Russia, for example. This amounts to much the same thing in macro-economic terms. ” (Fed calls time on $5.7 trillion of emerging market dollar debt, Ambrose-Evans Pritchard, Telegraph)
The Fed has been through this drill so many times before they could do it in their sleep. (” U.S. interest-rate hikes in 1980s and 1990s played a role in financial crises across Latin America and East Asia.” Foreign Policy Magazine) They’ve learned how to profit off every crisis, particularly the one’s that they themselves create, which is just about all of them. In this case, most of the loans to foreign businesses and banks were denominated in dollars. So, now that the dollar is soaring, (“The dollar’s value has risen about 15 percent relative to the euro and the yen just since the summer.” NPR) the debts are going to balloon accordingly (in real terms) which is going to push a lot of businesses off a cliff forcing sovereigns to step in and provide emergency bailouts.
Did someone say “looming financial crisis”?
Indeed. Bernanke’s “easy money” has inflated bubbles across the planet. Now these bubbles are about to burst due to the strong dollar and anticipated higher rates. At the same time, the policy-switch will send hundreds of billions of foreign capital flooding into US markets pushing stocks and bonds through the roof while generating mega-profits for JPM, G-Sax and the rest of the Wall Street gang. All according to plan.
Naturally, the stronger dollar will weigh heavily on employment and exports as foreign imports become cheaper and more attractive to US consumers. That will reduce hiring at home. Also the current account deficit will widen significantly, meaning that the US will again be consuming much more than it produces. (This took place under Rubin, too.) But here’s what’s interesting about that: According to the Bureau of Economic Analysis: “Our current account deficit has narrowed sharply since the crisis…The U.S. current account deficit now stands at 2.5 percent of GDP, down from more than 6 percent in the fourth quarter of 2005.” (BEA)
Great. In other words, Obama’s obsessive fiscal belt-tightening lowered the deficits enough so that Wall Street can “party on” for the foreseeable future, ignoring the gigantic bubbles they’re inflating or the emerging market economies that are about to be decimated in this latest dollar swindle.
If that doesn’t make you mad, I don’t know what will.
After Paris, condemnation of religious fanaticism is at its height. I’d guess that even many progressives fantasize about wringing the necks of jihadists, bashing into their heads some thoughts about the intellect, about satire, humor, freedom of speech. We’re talking here, after all, about young men raised in France, not Saudi Arabia.
Where has all this Islamic fundamentalism come from in this modern age? Most of it comes – trained, armed, financed, indoctrinated – from Afghanistan, Iraq, Libya, and Syria. During various periods from the 1970s to the present, these four countries had been the most secular, modern, educated, welfare states in the Middle East region. And what had happened to these secular, modern, educated, welfare states?
In the 1980s, the United States overthrew the Afghan government that was progressive, with full rights for women, believe it or not , leading to the creation of the Taliban and their taking power.
In the 2000s, the United States overthrew the Iraqi government, destroying not only the secular state, but the civilized state as well, leaving a failed state.
In 2011, the United States and its NATO military machine overthrew the secular Libyan government of Muammar Gaddafi, leaving behind a lawless state and unleashing many hundreds of jihadists and tons of weaponry across the Middle East.
And for the past few years the United States has been engaged in overthrowing the secular Syrian government of Bashar al-Assad. This, along with the US occupation of Iraq having triggered widespread Sunni-Shia warfare, led to the creation of The Islamic State with all its beheadings and other charming practices.
However, despite it all, the world was made safe for capitalism, imperialism, anti-communism, oil, Israel, and jihadists. God is Great!
Starting with the Cold War, and with the above interventions building upon that, we have 70 years of American foreign policy, without which – as Russian/American writer Andre Vltchek has observed – “almost all Muslim countries, including Iran, Egypt and Indonesia, would now most likely be socialist, under a group of very moderate and mostly secular leaders”. Even the ultra-oppressive Saudi Arabia – without Washington’s protection – would probably be a very different place.
On January 11, Paris was the site of a March of National Unity in honor of the magazine Charlie Hebdo, whose journalists had been assassinated by terrorists. The march was rather touching, but it was also an orgy of Western hypocrisy, with the French TV broadcasters and the assembled crowd extolling without end the NATO world’s reverence for journalists and freedom of speech; an ocean of signs declaring Je suis Charlie … Nous Sommes Tous Charlie; and flaunting giant pencils, as if pencils – not bombs, invasions, overthrows, torture, and drone attacks – have been the West’s weapons of choice in the Middle East during the past century.
No reference was made to the fact that the American military, in the course of its wars in recent decades in the Middle East and elsewhere, had been responsible for the deliberate deaths of dozens of journalists. In Iraq, among other incidents, see Wikileaks’ 2007 video of the cold-blooded murder of two Reuters journalists; the 2003 US air-to-surface missile attack on the offices of Al Jazeera in Baghdad that left three journalists dead and four wounded; and the American firing on Baghdad’s Hotel Palestine the same year that killed two foreign cameramen.
Moreover, on October 8, 2001, the second day of the US bombing of Afghanistan, the transmitters for the Taliban government’s Radio Shari were bombed and shortly after this the US bombed some 20 regional radio sites. US Defense Secretary Donald Rumsfeld defended the targeting of these facilities, saying: “Naturally, they cannot be considered to be free media outlets. They are mouthpieces of the Taliban and those harboring terrorists.”
And in Yugoslavia, in 1999, during the infamous 78-day bombing of a country which posed no threat at all to the United States or any other country, state-owned Radio Television Serbia (RTS) was targeted because it was broadcasting things which the United States and NATO did not like (like how much horror the bombing was causing). The bombs took the lives of many of the station’s staff, and both legs of one of the survivors, which had to be amputated to free him from the wreckage.
I present here some views on Charlie Hebdo sent to me by a friend in Paris who has long had a close familiarity with the publication and its staff:
“On international politics Charlie Hebdo was neoconservative. It supported every single NATO intervention from Yugoslavia to the present. They were anti-Muslim, anti-Hamas (or any Palestinian organization), anti-Russian, anti-Cuban (with the exception of one cartoonist), anti-Hugo Chávez, anti-Iran, anti-Syria, pro-Pussy Riot, pro-Kiev … Do I need to continue?
“Strangely enough, the magazine was considered to be ‘leftist’. It’s difficult for me to criticize them now because they weren’t ‘bad people’, just a bunch of funny cartoonists, yes, but intellectual freewheelers without any particular agenda and who actually didn’t give a fuck about any form of ‘correctness’ – political, religious, or whatever; just having fun and trying to sell a ‘subversive’ magazine (with the notable exception of the former editor, Philippe Val, who is, I think, a true-blooded neocon).”
Dumb and Dumber
Remember Arseniy Yatsenuk? The Ukrainian whom US State Department officials adopted as one of their own in early 2014 and guided into the position of Prime Minister so he could lead the Ukrainian Forces of Good against Russia in the new Cold War?
In an interview on German television on January 7, 2015 Yatsenuk allowed the following words to cross his lips: “We all remember well the Soviet invasion of Ukraine and Germany. We will not allow that, and nobody has the right to rewrite the results of World War Two”.
The Ukrainian Forces of Good, it should be kept in mind, also include several neo-Nazis in high government positions and many more partaking in the fight against Ukrainian pro-Russians in the south-east of the country. Last June, Yatsenuk referred to these pro-Russians as “sub-humans” , directly equivalent to the Nazi term “untermenschen”.
So the next time you shake your head at some stupid remark made by a member of the US government, try to find some consolation in the thought that high American officials are not necessarily the dumbest, except of course in their choice of who is worthy of being one of the empire’s partners.
The type of rally held in Paris this month to condemn an act of terror by jihadists could as well have been held for the victims of Odessa in Ukraine last May. The same neo-Nazi types referred to above took time off from parading around with their swastika-like symbols and calling for the death of Russians, Communists and Jews, and burned down a trade-union building in Odessa, killing scores of people and sending hundreds to hospital; many of the victims were beaten or shot when they tried to flee the flames and smoke; ambulances were blocked from reaching the wounded … Try and find a single American mainstream media entity that has made even a slightly serious attempt to capture the horror. You would have to go to the Russian station in Washington, DC, RT.com, search “Odessa fire” for many stories, images and videos. Also see the Wikipedia entry on the 2 May 2014 Odessa clashes.
If the American people were forced to watch, listen, and read all the stories of neo-Nazi behavior in Ukraine the past few years, I think they – yes, even the American people and their less-than-intellectual Congressional representatives – would start to wonder why their government was so closely allied with such people. The United States may even go to war with Russia on the side of such people.
L’Occident n’est pas Charlie pour Odessa. Il n’y a pas de défilé à Paris pour Odessa.
Some thoughts about this thing called ideology
Norman Finkelstein, the fiery American critic of Israel, was interviewed recently by Paul Jay on The Real News Network. Finkelstein related how he had been a Maoist in his youth and had been devastated by the exposure and downfall of the Gang of Four in 1976 in China. “It came out there was just an awful lot of corruption. The people who we thought were absolutely selfless were very self-absorbed. And it was clear. The overthrow of the Gang of Four had huge popular support.”
Many other Maoists were torn apart by the event. “Everything was overthrown overnight, the whole Maoist system, which we thought [were] new socialist men, they all believed in putting self second, fighting self. And then overnight the whole thing was reversed.”
“You know, many people think it was McCarthy that destroyed the Communist Party,” Finkelstein continued. “That’s absolutely not true. You know, when you were a communist back then, you had the inner strength to withstand McCarthyism, because it was the cause. What destroyed the Communist Party was Khrushchev’s speech,” a reference to Soviet premier Nikita Khrushchev’s 1956 exposure of the crimes of Joseph Stalin and his dictatorial rule.
Although I was old enough, and interested enough, to be influenced by the Chinese and Russian revolutions, I was not. I remained an admirer of capitalism and a good loyal anti-communist. It was the war in Vietnam that was my Gang of Four and my Nikita Khrushchev. Day after day during 1964 and early 1965 I followed the news carefully, catching up on the day’s statistics of American firepower, bombing sorties, and body counts. I was filled with patriotic pride at our massive power to shape history. Words like those of Winston Churchill, upon America’s entry into the Second World War, came easily to mind again – “England would live; Britain would live; the Commonwealth of Nations would live.” Then, one day – a day like any other day – it suddenly and inexplicably hit me. In those villages with the strange names there were people under those falling bombs, people running in total desperation from that god-awful machine-gun strafing.
This pattern took hold. The news reports would stir in me a self-righteous satisfaction that we were teaching those damn commies that they couldn’t get away with whatever it was they were trying to get away with. The very next moment I would be struck by a wave of repulsion at the horror of it all. Eventually, the repulsion won out over the patriotic pride, never to go back to where I had been; but dooming me to experience the despair of American foreign policy again and again, decade after decade.
The human brain is an amazing organ. It keeps working 24 hours a day, 7 days a week, and 52 weeks a year, from before you leave the womb, right up until the day you find nationalism. And that day can come very early. Here’s a recent headline from the Washington Post: “In the United States the brainwashing starts in kindergarten.”
Oh, my mistake. It actually said “In N. Korea the brainwashing starts in kindergarten.”
Let Cuba Live! The Devil’s List of what the United States has done to Cuba
On May 31, 1999, a lawsuit for $181 billion in wrongful death, personal injury, and economic damages was filed in a Havana court against the government of the United States. It was subsequently filed with the United Nations. Since that time its fate is somewhat of a mystery.
The lawsuit covered the 40 years since the country’s 1959 revolution and described, in considerable detail taken from personal testimony of victims, US acts of aggression against Cuba; specifying, often by name, date, and particular circumstances, each person known to have been killed or seriously wounded. In all, 3,478 people were killed and an additional 2,099 seriously injured. (These figures do not include the many indirect victims of Washington’s economic pressures and blockade, which caused difficulties in obtaining medicine and food, in addition to creating other hardships.)
The case was, in legal terms, very narrowly drawn. It was for the wrongful death of individuals, on behalf of their survivors, and for personal injuries to those who survived serious wounds, on their own behalf. No unsuccessful American attacks were deemed relevant, and consequently there was no testimony regarding the many hundreds of unsuccessful assassination attempts against Cuban President Fidel Castro and other high officials, or even of bombings in which no one was killed or injured. Damages to crops, livestock, or the Cuban economy in general were also excluded, so there was no testimony about the introduction into the island of swine fever or tobacco mold.
However, those aspects of Washington’s chemical and biological warfare waged against Cuba that involved human victims were described in detail, most significantly the creation of an epidemic of hemorrhagic dengue fever in 1981, during which some 340,000 people were infected and 116,000 hospitalized; this in a country which had never before experienced a single case of the disease. In the end, 158 people, including 101 children, died. That only 158 people died, out of some 116,000 who were hospitalized, was an eloquent testimony to the remarkable Cuban public health sector.
The complaint describes the campaign of air and naval attacks against Cuba that commenced in October 1959, when US president Dwight Eisenhower approved a program that included bombings of sugar mills, the burning of sugar fields, machine-gun attacks on Havana, even on passenger trains.
Another section of the complaint described the armed terrorist groups, los banditos, who ravaged the island for five years, from 1960 to 1965, when the last group was located and defeated. These bands terrorized small farmers, torturing and killing those considered (often erroneously) active supporters of the Revolution; men, women, and children. Several young volunteer literacy-campaign teachers were among the victims of the bandits.
There was also of course the notorious Bay of Pigs invasion, in April 1961. Although the entire incident lasted less than 72 hours, 176 Cubans were killed and 300 more wounded, 50 of them permanently disabled.
The complaint also described the unending campaign of major acts of sabotage and terrorism that included the bombing of ships and planes as well as stores and offices. The most horrific example of sabotage was of course the 1976 bombing of a Cubana airliner off Barbados in which all 73 people on board were killed. There were as well as the murder of Cuban diplomats and officials around the world, including one such murder on the streets of New York City in 1980. This campaign continued to the 1990s, with the murders of Cuban policemen, soldiers, and sailors in 1992 and 1994, and the 1997 hotel bombing campaign, which took the life of a foreigner; the bombing campaign was aimed at discouraging tourism and led to the sending of Cuban intelligence officers to the US in an attempt to put an end to the bombings; from their ranks rose the Cuban Five.
To the above can be added the many acts of financial extortion, violence and sabotage carried out by the United States and its agents in the 16 years since the lawsuit was filed. In sum total, the deep-seated injury and trauma inflicted upon on the Cuban people can be regarded as the island’s own 9-11.
- US Department of the Army, Afghanistan, A Country Study (1986), pp.121, 128, 130, 223, 232
- Counterpunch, January 10, 2015
- Index on Censorship, the UK’s leading organization promoting freedom of expression, October 18, 2001
- The Independent (London), April 24, 1999
- “Ukrainian Prime Minister Arseniy Yatsenyuk talking to Pinar Atalay”, Tagesschau (Germany), January 7, 2015 (in Ukrainian with German voice-over)
- CNN, June 15, 2014
- See William Blum, West-Bloc Dissident: A Cold War Memoir, chapter 3
- Washington Post, January 17, 2015, page A6
- William Blum, Killing Hope: US Military and CIA Interventions Since World War II, chapter 30, for a capsule summary of Washington’s chemical and biological warfare against Havana.
- For further information, see William Schaap, Covert Action Quarterly magazine (Washington, DC), Fall/Winter 1999, pp.26-29
It’s so often the case that the best thing a person can do to improve his reputation is die. John F. Kennedy is now a legendary president, but would he be estimated so highly if he’d been able to end his political career as a man and not a myth? Ah, the power of martyrdom.
And so it is with the editors and cartoonists of French magazine Charlie Hebdo (CH). In the wake of the Jan. 7 attack on its offices, millions are showing their support, heroicizing CH and saying “Je suisCharlie” (I am Charlie). On the other hand, there are a few lonely voices, such as Catholic League president Bill Donohue, who have some less than flattering things to say about the magazine. After unequivocally condemning the killings, Donohue called CH’s late publisher, Stephane Charbonnier, “narcissistic” and said that the journalist “didn’t understand the role he played in his tragic death.”
While I usually agree with Donohue, I do part company with him here — somewhat. First, the tone of his statement is a bit too deferential toward Islamic sensitivities. Second, I’m not so sure Donohue himself truly understands the role Charbonnier played in his tragic death. As to this, make no mistake:
Charlie Hebdo was an enemy of Western civilization.
Question: Did the people at CH ever oppose the Muslim immigration into France that, ultimately, led to their deaths?
Maybe I’m wrong, but I’m willing to go out on a limb and guess they didn’t, that they were rather more inclined to call those who did inveigh against it “racists,” xenophobes and intolerant bigots. And this certainly was reflected in an interview CH cartoonist Bernard Holtrop gave to a Dutch newspaper Saturday. He didn’t say much, it seems, but amidst his few words he made sure to express his dissatisfaction with the fact that the CH attack will help Marine Le Pen’s National Front, the only prominent French party questioning the nation’s immigration model.
We might also note that the victims at CH were basically defenseless, save the one police officer guarding the journalists, because of the gun control that is part of their leftist agenda.
As for the material CH was disgorging, Town Hall’s John Ransom characterized it well, saying that the Charlie caricatures were “juvenile, loaded with bathroom humor, and not at all smart. There were many cartoons that I felt were just offensive — not just to Muslims, but to me as well” (hat tip: Jack Kemp). In other words, to reference that failed leftist radio effort, CH was the Air(head) America of print. In typical liberal style, its artists mistook profanity for profundity, cynicism for sagacity and insult for intellectualism. It’s reminiscent of the women who strip naked to protest; even if their causes were just — which they invariably aren’t — what does it prove? Could you imagine George Washington, or maybe wife Martha, having bared it all to protest the British? With that mentality, would there ever have been a positive and successful American Revolution?
But I’ll tell you what it proves: that we’ve had a successful Western devolution. It proves that Frankfurt School founder Willi Munzenberg wasn’t kidding when he said that to impose the dictatorship of the proletariat, they would “make the West so corrupt it stinks.” This putrefaction is now well advanced, and CH was part of this decay.
Of course, many would respect the fact that CH, unlike most leftists, didn’t spare Muslims the scorn it also heaped on Christians and anyone else didn’t like (which seems to have been everyone else). But while this isn’t as bad as a fifth column in your midst, a platoon that indiscriminately sprays bullets at everybody, its own side as well as the enemy, isn’t exactly helping. (In fact, were one of these leftists in a foxhole next to me, I’d have to frag him before dealing with the foe wearing a different uniform.)
Oh, but let me amend that. One might wonder if CH had a side except its own, and I suspect that such people don’t much like themselves, either (can you blame them on that score?); it seemed that everyone was its enemy. CH showed “nuns masturbating and popes wearing condoms,” as Donohue pointed out, and had also attacked the French government, which is pretty much socialist no matter who is in charge. And I know a fellow like this, by the way; he criticized G.W. Bush for being too conservative and then changed his tune when Obama took office.
He started criticizing Obama for being too conservative.
We might ask such people, is there any good in the world at all? Or are you the only good extant?
I know what their answer will be: “F*** ***, @#$%&!”
This typical leftist hatred was reflected by CH’s Holtrop, who responded to the outpouring of support for his mag rag by dismissively saying “We have a lot of new friends, like the pope, Queen Elizabeth and [Russian President Vladimir] Putin. It really makes me laugh …We vomit on all these people who suddenly say they are our friends.”
But Holtrop and his comrades had been vomiting on Western civilization for years, which is why he doesn’t have to worry about me counting myself among his friends. Instead, I would remind you of British statesman Edmund Burke’s sage words, “It is written in the eternal constitution of things that men of intemperate minds cannot be free. Their passions forge their fetters.” We’re not going to preserve legitimate liberties that would be robbed by men of intemperate minds by being men of different intemperate minds. And whom should we fear most? Who most imperils us? Muslim fundamentalists? Or the left-wing fundamentalists who, like dysfunctional cells attacking a body’s immune system, make us susceptible to harmful outside agencies? To paraphrase Roman philosopher Cicero, an enemy at the gates carrying his banner openly is less formidable than those within the gates who rot the soul of a nation, work secretly in the night to undermine the pillars of the society, and infect the body politic so that it can no longer resist.
We fought with the besieged Soviets to defeat Hitler, but we never said “I am Stalin.” I’m certainly as opposed to Muslim jihadists as anyone, but I’m proud to say je ne suis pas Charlie.
Is Putin Creating A New World Order?
“If undercharging for energy products occurs deliberately, it also effects those who introduce these limitations. Problems will arise and grow, worsening the situation not only for Russia but also for our partners.” – Russian President Vladimir Putin
It’s hard to know which country is going to suffer the most from falling oil prices. Up to now, of course, Russia, Iran and Venezuela have taken the biggest hit, but that will probably change as time goes on. What the Obama administration should be worried about is the second-order effects that will eventually show up in terms of higher unemployment, market volatility, and wobbly bank balance sheets. That’s where the real damage is going to crop up because that’s where red ink and bad loans can metastasize into a full-blown financial crisis. Check out this blurb from Nick Cunningham at Oilprice.com and you’ll see what I mean:
“According to an assessment from the Federal Reserve Bank of Dallas, an estimated 250,000 jobs across eight U.S. states could be lost in 2015 if oil prices don’t rise. More than 50 percent of those job losses would occur in Texas, which leads the nation in oil production.
There are some early signs that a slowdown in drilling could spread to the manufacturing sector in Texas… One executive at a metal manufacturing company said in the survey, “the drop in crude oil prices is going to make things ugly… quickly.” Another company that manufactures machinery told the Dallas Fed, “Low oil prices will drive reductions in U.S. drilling rigs, which will in turn reduce the market for our products.”
The sentiment was similar for a chemical manufacturer, who said “lower oil prices will adversely impact margins. Energy volatility will cause our customers to keep inventories tight.”
States like Texas, North Dakota, Oklahoma, and Louisiana have seen their economies boom over the last few years as oil production surged. But the sector is now deflating, leaving gashes in employment rolls and state budgets.” (Low Prices Lead To Layoffs In The Oil Patch, Nick Cunningham, Oilprice.com)
Of course industries lay-off workers all the time and it doesn’t always lead to a financial crisis. But unemployment is just one part of the picture, lower personal consumption is another. Take a look:
“Falling oil prices are a bigger drag on economic growth than the incremental “savings” received by the consumer…..Another way to show this graphically is to look at the annual changes in Personal Consumption Expenditures (PCE) in aggregate as compared to the subsection of PCE spent on energy and related products. This is shown in the chart below.
Lower Energy Prices To Lower PCE (Personal Consumption Expenditures):
(The Gasoline Price Myth, Lance Roberts, oilprice.com)
See? So despite what you might have read in the MSM, lower gas prices do not translate into greater personal consumption or more robust growth. Quiet the contrary, they tend to intensify deflationary pressures and reduce activity which is a damper on growth.
Then there’s the knock-on effects that crashing prices and layoffs have on other industries like mining, manufacturing and chemical production. Here’s more from Oil Price:
“Oil and gas production makeup a hefty chunk of the “mining and manufacturing” component of the employment rolls. Since 2000, when the oil price boom gained traction, Texas has comprised more than 40% of all jobs in the country according to first quarter data from the Dallas Federal Reserve…
The majority of the jobs “created” since the financial crisis have been lower wage paying jobs in retail, healthcare and other service sectors of the economy. Conversely, the jobs created within the energy space are some of the highest wage paying opportunities available in engineering, technology, accounting, legal, etc. In fact, each job created in energy related areas has had a “ripple effect” of creating 2.8 jobs elsewhere in the economy from piping to coatings, trucking and transportation, restaurants and retail….
The obvious ramification of the plunge in oil prices is that eventually the loss of revenue will lead to cuts in production, declines in capital expenditure plans (which comprise almost 1/4th of all capex expenditures in the S&P 500), freezes and/or reductions in employment, and declines in revenue and profitability…
Simply put, lower oil and gasoline prices may have a bigger detraction on the economy than the “savings” provided to consumers.” (The Gasoline Price Myth, Lance Roberts, oilprice.com)
None of this sounds very reassuring, does it? And yet, all we hear from the media is how the economy is going to reach “escape velocity” on the back of cheap oil. Nonsense. This is just more “green shoots” baloney wrapped in public relations hype. The fact is, the economy needs the good-paying jobs more than it needs low-priced energy. But now that prices are tumbling, those jobs are going to disappear which is going to be a drag on growth. Now check out these headlines I picked up on Google News that help to show what’s going on off the radar:
“Texas is in danger of a recession”, CNN Money.
“Texas Could Be Headed for an Oil-Fueled Recession, JP Morgan Economist Says”, Wall Street Journal “Good Times From Texas to North Dakota May Turn Bad on Oil-Price Drop”, Bloomberg
“Low Oil Prices in the New Year Are Screwing Petrostates”, Vice News
“Top US Oil States Are Taking A Hit From Plunging Crude Prices”, Business Insider
Get the picture? If oil prices continue to fall, unemployment is going to spike, activity is going to slow, and the economy is going tank. And the damage won’t be limited to the US either. Get a load of this from the UK Telegraph:
“A third of Britain’s listed oil and gas companies are in danger of running out of working capital and even going bankrupt amid a slump in the value of crude, according to new research.
Financial risk management group Company Watch believes that 70pc of the UK’s publicly listed oil exploration and production companies are now unprofitable, racking up significant losses in the region of £1.8bn.
Such is the extent of the financial pressure now bearing down on highly leveraged drillers in the UK that Company Watch estimates that a third of the 126 quoted oil and gas companies on AIM and the London Stock Exchange are generating no revenues.
The findings are the latest warning to hit the oil and gas industry since a slump in the price of crude accelerated in November when the Organisation of Petroleum Exporting Countries (Opec) decided to keep its output levels unchanged. The decision has caused carnage in oil markets with a barrel of Brent crude falling 45pc since June to around $60 per barrel.” (Third of listed UK oil and gas drillers face bankruptcy, Telegraph)
“Carnage in oil markets,” you say?
Indeed. Many of the oil-drilling newcomers set up shop to take advantage of the low rates and easy money available in the bond market. Now that prices have crashed, investors are avoiding energy-related junk bonds like the plague which is making it impossible for the smaller companies to roll over their debt or attract fresh capital. When these companies start to default en masse, as they certainly will if prices don’t rebound, the blowback will be felt on bank balance sheets across the country creating the possibility of another financial meltdown. (Now we ARE talking about a financial crisis.)
The basic problem is that the banks have bundled a lot of their dodgy debt into financially-engineered products like Collateralized Loan Obligations (CLOs) and Collateralized Debt Obligations (CDOs) that will inevitably fail when borrowers are no longer able to service the loans. The rot can be concealed for a while, but eventually, if prices don’t recover, a significant number of these companies are going to go under which will push the perennially-undercapitalized banking system to the brink once again. That’s why Washington’s plan to push down oil prices (to hurt the Russian economy) might have made sense on a short-term basis (to shock Putin into submission) but as a long-term strategy, it’s nuts. And what’s even crazier, is that Obama has decided to double-down on the same wacky plan even though Putin hasn’t given an inch. Check this out from Reuters on Monday:
“The Obama administration has opened a new front in the global battle for oil market share, effectively clearing the way for the shipment of as much as a million barrels per day of ultra-light U.S. crude to the rest of the world…
The Department of Commerce on Tuesday ended a year-long silence on a contentious, four-decade ban on oil exports, saying it had begun approving a backlog of requests to sell processed light oil abroad.
The action comes at a critical juncture for the global oil market. World prices have halved to less than $60 a barrel since the summer as top exporter Saudi Arabia, once a staunch defender of $100 oil, refused to cut production in the face of surging U.S. shale output and tempered global demand…
With global oil markets in flux, it is far from clear how much U.S. condensate will find a market overseas.”
(Analysis – U.S. opening of oil export tap widens battle for global market, Reuters)
Does that make sense to you, dear reader? Why would Obama suddenly opt to change the rules of the game when he knows it will increase supply and push prices down even further? Why would he do that? Certainly, he doesn’t want to inflict more pain on domestic producers, does he?
Let’s let Obama answer the question for himself. Here’s a clip from an NPR interview with the president just last week. About halfway through the interview, NPR’s Steve Inskeep asks Obama: “Are you just lucky that the price of oil went down and therefore their currency collapsed or …is it something that you did?
Barack Obama: If you’ll recall, their (Russia) economy was already contracting and capital was fleeing even before oil collapsed. And part of our rationale in this process was that the only thing keeping that economy afloat was the price of oil. And if, in fact, we were steady in applying sanction pressure, which we have been, that over time it would make the economy of Russia sufficiently vulnerable that if and when there were disruptions with respect to the price of oil — which, inevitably, there are going to be sometime, if not this year then next year or the year after — that they’d have enormous difficulty managing it.” (Transcript: President Obama’s Full NPR Interview)
Am I mistaken or did Obama just admit that he wanted “disruptions” in the “price of oil” because he figured Putin would have “enormous difficulty managing it”?
Isn’t that the same as saying that it was all part of Washington’s plan; that plunging prices were just the icing on the cake for their asymmetrical attack on the Russian economy? It sure sounds like it. And that would also explain why Obama decided to allow domestic producers to dump more oil on the market even though it’s going to send prices lower. Apparently, none of that matters as long as the policy hurts Russia.
So maybe the US-Saudi oil collusion theory isn’t so far fetched after all. Maybe Salon’s Patrick L. Smith was right when he said:
“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)
Vladimir Putin: Public Enemy Number 1
Let’s cut to the chase: All these oil shenanigans are really aimed at just one man: Vladimir Putin. There are a number of reasons why Washington wants to get rid of Putin, the first of which is that the Russian president has become an obstacle to US plans to pivot to Asia. That’s the main issue. As long as Putin is calling the shots, there’s going to be growing resistance to NATO’s push eastward and Washington’s military expansion across Central Asia which could undermine US plans to encircle China and remain the world’s only superpower. Here’s an excerpt from Zbigniew Brzezinski’s The Grand Chessboard which helps to explain the importance Eurasia is in terms of Washington’s global ambitions:
“..how America ‘manages’ Eurasia is critical. A power that dominates Eurasia would control two of the world’s three most advanced and economically productive regions. A mere glance at the map also suggests that control over Eurasia would almost automatically entail Africa’s subordination, rendering the Western Hemisphere and Oceania (Australia) geopolitically peripheral to the world’s central continent. About 75 per cent of the world’s people live in Eurasia, and most of the world’s physical wealth is there as well, both in its enterprises and underneath its soil. Eurasia accounts for about three-fourths of the world’s known energy resources.” (p.31) (Zbigniew Brzezinski, The Grand Chessboard: American Primacy And It’s Geostrategic Imperatives, Key Quotes From Zbigniew Brzezinksi’s Seminal Book)
Get it? Prevailing in Asia is the administration’s top priority, which is why the US is rapidly moving its military assets into place. Check this out from the World Socialist Web Site:
“Under Obama’s “pivot to Asia,” the Pacific Command will account for more than 60 percent of all US military forces, up from 50 percent under the Bush administration. This includes new US basing arrangements in the Philippines, Singapore and Australia, as well as renewed close military ties to New Zealand, and ongoing US military exercises in Thailand, Malaysia, Indonesia and Taiwan….(as well as) large troop deployments in Japan and South Korea, including nuclear-armed units.” (The global scale of US militarism, Patrick Martin, World Socialist Web Site)
The “Big Shift” is already underway, which is why obstacles have to be removed and Putin’s got to go.
Second, Putin has made himself a general nuisance vis a vis US strategic objectives in Syria, Iran and Ukraine. In Syria, Putin has thrown his support behind Assad who the US wants to topple in order to redraw the map of the Middle East and build gas pipelines from Qatar to Turkey to access the lucrative EU market.
Third, Putin has strengthened a number of coalitions and alliances –the BRICS bank, the Eurasian Economic Union, and the Shanghai Cooperation Organization–all of which pose a challenge to US dominance in the region as well as a viable alternative to neoliberal financial institutions like the IMF and World Bank. Going back to Brzezinski’s “chessboard” once again, we see that the US should not feel threatened by any one nation, but should be constantly on-the-lookout for “regional coalitions” which could derail its plans to rule the world. Here’s Brzezinski again:
“…the three grand imperatives of imperial geostrategy are to prevent collusion and maintain security dependence among the vassals, to keep tributaries pliant and protected, and to keep the barbarians from coming together.” (p.40)
“Henceforth, the United States may have to determine how to cope with regional coalitions that seek to push America out of Eurasia, thereby threatening America’s status as a global power.” (p.55) (Zbigniew Brzezinski, The Grand Chessboard: American Primacy And It’s Geostrategic Imperatives, Key Quotes From Zbigniew Brzezinksi’s Seminal Book)
As a founding member and primary backer of these organizations, (and initiator of giant energy deals with China, India and Turkey) Putin has become Washington’s biggest headache and a logical target for regime change.
Finally, Putin is doing whatever he can to circumvent dollar-denominated business and financial transactions. The move away from the buck is a direct attack on the US’s greatest source of power, the ability to control the de facto international currency and to require that other nation’s stockpile dollars for their energy purchases which are then recycled into US financial assets, stocks bonds and US Treasuries. This petrodollar-recycling scam allows the US to run gigantic current account deficits without raising interest rates or reducing government spending. Putin’s anti-dollar policies could diminish the greenback’s role as reserve currency and put an end to a system that institutionalizes looting.
This is why Putin is Public Enemy Number 1. It’s because he’s blocking the US pivot to Asia, strengthening anti-Washington coalitions, sabotaging US foreign policy objectives in the Middle East, creating institutions that rival the IMF and World Bank, transacting massive energy deals with critical US allies, increasing membership in an integrated, single-market Eurasian Economic Union, and attacking the structural foundation upon which the entire US empire rests, the dollar.
Naturally, Washington’s powerbrokers are worried about these developments, just as they are worried about the new world order which is gradually taking shape under Putin’s guidance. But, so far, they haven’t been able to do anything about it. The administration’s regime change schemers and fantasists have shown time-and-again that they’re no match for Bad Vlad who has beaten them at every turn.
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.
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.
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.
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.
The attention that Taibbi is receiving for the Rolling Stone essay, The $9 Billion Witness: Meet JPMorgan Chase’s Worst Nightmare, may push forward a serious debate on the systemic corruption that is common knowledge among informed observers of the financial structure. Zero Hedge can always be depended upon to incisively sum up the issue.
“In reality, there is nothing surprising in Matt Taibbi’s latest piece since returning to Rolling Stone from the Intercept, as it tells a story everyone is by now is all too familiar with: a former bank employee (in this case Alayne Fleischmann) who was a worker in a bank’s (in this case JPM) mortgage operations group, where she observed and engaged in what she describes as “massive criminal securities fraud” and who was fired after trying to bring the attention of those above her to said “criminal” activity.
The story doesn’t end there, and as Carmen Segarra already showed, when she revealed that Goldman runs the NY Fed, once Alayne was let go and tried to “whistleblow” on the house of Jimon from the outside, she found the that US Department of Justice headed by Eric Holder is just as, if not more, corrupt, and in his desperate attempt to prevent discovery and bring JPM et al to justice, he would stretch the statue of limitations on frauds committed during the crisis long enough to where nobody had any legal recourse any more, up to and including the US taxpayer.”
Well, that is a sober and tragic assessment. Even more heartbreaking is the statement made by Ms. Fleischmann as reported in Straight Line Logic.
“And now, with Holder about to leave office and his Justice Department reportedly wrapping up its final settlements, the state is effectively putting the finishing touches on what will amount to a sweeping, industrywide effort to bury the facts of a whole generation of Wall Street corruption. “I could be sued into bankruptcy,” she says. “I could lose my license to practice law. I could lose everything. But if we don’t start speaking up, then this really is all we’re going to get: the biggest financial cover-up in history.”
The only coherent response that regular citizens can exert, when dealing with the mega financial houses, is to avoid entanglements whenever possible. What good is it to establish accounts, whether as loans, savings or investments, when the rules of survival are stacked against main street customers?
Firms like JP Morgan or Goldman are not terrified by fines because they are protected by the “To Big To Fail” culture. Bailouts are a way of life and infusion of easy money into the liquidity flow of balance sheets employ the most creative accounting techniques to cover up accurate net worth.
The threat of principals actually doing jail time is so remote that the probability is far greater that the next Secretary of the Treasury will come from their ranks.
This plight produces a true dilemma of confidence. In this environment only brave souls dare become a whistleblower. Public support for such individuals like Fleischmann and Segarra is faint because neither are public persons, readily recognized by most people. This lack of notoriety as individuals is far less important than the criminal activity both are documenting.
However, in a media driven and social networking society, the personality of celebrity far out paces the substance of the offenses. Matt Taibbi’s star persona, deserved or manufactured, illustrates that getting attention through the clutter and noise of the sound bites is possible. For an unknown person, getting your 15 minutes of fame requires even more creative strategies, to expose the basic purpose in the news revelations.
The dying main stream presstitutes will not confront the intrinsic nature of the abuses because their own financial futures depend upon Wall Street support. Yet, struggling Middle America foolishly rely upon their reporting and advice in most financial matters.
JPMorgan Chase’s Worst Nightmare fundamentally is the unwinding of the derivative debt black hole of their making. The essential risk of a collapse and implosion of the financial manipulated markets only grows because no effort or willingness exists to purge the system of crooked companies, practices or individuals. The culture of corruption survives because the pattern of exposing and demanding justice is so brutally punished.
How can meaningful accountability come from internal reform, when the price of disclosure is the end of your professional endeavors and even your livelihood?
Arguments, data and evidence of generational embedded fraud have been made by some of the most intuitive minds on finance and economics. Nonetheless, the degeneracy accelerates. The wolves of Wall Street target their prey when they lobby regulators to allow for more exotic financial products that are designed to fleece the public and place the entire monitory system in greater jeopardy.
Activists rally during elections cycles to pressure the establishment. The Occupy Wall Street movement, misguided on potential solutions, did muster awareness with media exposure. However, most taxpayers do not exert sufficient outrage about the selling out of their financial security.
Stopping “massive criminal securities fraud” is a true national security requirement. Internet revelations can only expose the latest schemes. As stated in the essay, Repeal of Glass-Steagall and the Too Big To Fail Culture, is a major reason for the current unsustainable breakdown in trust and lack of liability consequences for financial institutions.
Take the opportunity of the Alayne Fleischmann disclosures to demand that your newly elected representatives exert the courage to advance a national debate on a major overhaul of the ground rules for Wall Street.
While the prospects are slim that any constructive and critical legislation will come out of the new Congress, public indignation needs to grow and intensify. The battle for economic viability and perseverance of capital is being lost for ordinary citizens. An angry constituency is necessary to confront the outrageous abuses that pass as normal conduct. The sacrifices of Alayne Fleischmann and Carmen Segarra need not be in vain. Mobilize for action; boycott the big banks and security fraudsters.
“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.