The concept of banning lead was floated before, but this latest effort to impose back door gun control has all the marking of a tin horn dictator stripping the peasants of any means of resistance. Drop the pretense. All you need to know is WHY IS GOVERNMENT STOCKPILING GUNS, AMMO?, while you are being told you are not allowed to have your own horde. How you answer this question, reveals much about your attitude towards government, and level of concern for protecting yourself from tyrannical edits. It is startling just how much of the population will accept de facto gun control for any trumped up scheme to impose further governmental mastery.
SCOPE reports on the recent announcement on M855 ammunition.
On 13 February 2015, the Bureau of Alcohol, Tobacco, Firearms and Explosives (BATF) released a document [PDF ] that proposed the reclassification of “5.56mm constituent projectiles of SS109 and M855 cartridges” from the category of “primarily used for sporting purposes” to that of “armor piercing ammunition.” The 17-page document was titled
“ATF FRAMEWORK FOR DETERMINING WHETHER CERTAIN PROJECTILES ARE ‘PRIMARILY INTENDED FOR SPORTING PURPOSES’ WITHIN THE MEANING OF 18 U.S.C. 921(a)(17)(C)” and uploaded to ATF.gov , in part to enable interested parties to review it and submit comments before 16 March 2015.
The proposal cited the Law Enforcement Officers Protection Act of 1986 (P.L. 99-408, known as “LEOPA”) and referenced discussions with law enforcement agencies across the country about whether “green tip” ammunition could reasonably be construed an exempt form of sporting ammo under the 1986 guidelines. The publicly available document noted that handguns made to employ the potentially affected ammunition were not available to civilians at the time the exemption was initially granted, and that the ammo type in question did not appear to meet the standard for a sporting purpose exemption:
Applying the sporting purposes framework set-forth above, the 5.56mm projectile that ATF exempted in 1986 does not qualify for an exemption because that projectile when loaded into SS109 and M855 cartridges may be used in a handgun other than a single-shot handgun. Specifically, 5.56mm projectiles loaded into the SS109 and M855 cartridges are commonly used Framework for Deciding Sporting Purpose Ammunition pursuant to 18 USC 921(a) in both “AR-type” rifles and “AR-type” handguns.
The AR platform is the semi-automatic version of the M16 machinegun originally designed for and used by the military. The AR-based handguns and rifles utilize the same magazines and share identical receivers. These AR-type handguns were not commercially available when the armor piercing ammunition exemption was granted in 1986. To ensure consistency, upon final implementation of the sporting purpose framework outlined above, ATF must withdraw the exemptions for 5.56 mm “green tip” ammunition, including both the SS109 and M855 cartridges.
The video BATF Ammo Ban Violates Federal Law As Well As The Constitution and Infowars article provides the legal definition: AR-15 AMMO NOT “ARMOR PIERCING” ACCORDING TO LAW, BUT ATF BANNING IT ANYWAY, both explains the dubious methods being used to circumvent the 2nd Amendment.
To be considered “armor piercing” under 18 U.S.C. 921 (a)(17)(B) , a bullet must have an entirely metal core or have a jacket weighting more than 25% of its weight, which wouldn’t include M855 rounds because their bullets are partly lead .
The definition in full:
(A) The term “ammunition” means ammunition or cartridge cases, primers, bullets, or propellent powder designed for use in any firearm.
(B) The term “armor piercing ammunition” means- (i) a projectile or projectile core which may be used in a handgun and which is constructed entirely (excluding the presence of traces of other substances) from one or a combination of tungsten alloys, steel, iron, brass, bronze, beryllium copper, or depleted uranium; or (ii) a full jacketed projectile larger than .22 caliber designed and intended for use in a handgun and whose jacket has a weight of more than 25 percent of the total weight of the projectile.
(C) The term “armor piercing ammunition” does not include shotgun shot required by Federal or State environmental or game regulations for hunting purposes, a frangible projectile designed for target shooting, a projectile which the Attorney General finds is primarily intended to be used for sporting purposes, or any other projectile or projectile core which the Attorney General finds is intended to be used for industrial purposes, including a charge used in an oil and gas well perforating device.
Now all this legal mumbo jumbo may seem archaic to anyone other than gun enthusiasts, but in fact allowing the government to banish the business end of shells, because the government fears such bullets might be pointed at them, is an admission of despotic panic.
Governments have little need to feel apprehension from citizens, when their conduct is measured by legal and ethical standards. Just ask, what in the world is this contrived necessity to undertake punitive and restrictive measures to strip the public of their legitimate right for self-defense, really all about?
If there is any doubt how the people are responding, just examine the trend in gun and especially further ammo sales.
“If ammunition does become the focus for gun owners, that could become another hot-button topic.
Last year, the Homeland Security Department had to explain to Congress its contracts to buy up to 1.6 billion rounds of ammunition.
Some gun owners believed the department was trying to crowd out private consumers in the ammunition market, but federal officials said their purchases amounted to a tiny fraction of the ammunition produced every year.”
Obviously, buying up the market is too slow a way to crowd out the public. With no constrains in the last two years of the Obama administration, what is one more show of contempt for the rule of law? Yet, proponents of an ammunition free zone cheer last year’s UN Arms Trade Treaty ATT as another component in the efforts to “piecemeal enactment of costly and increasingly restrictive controls on ammunition, private sales and transfers, firearms parts, registration, etc.”
Yes, Obama’s bureaucrats are walking lock step in line with the global objective of having non elites stripped of their armor. If .223 ammo is slated for a meltdown, what will be next?
The Global Gulag essay, Guns, Guts and Goons foretells the dilemma.
“Gun ownership in America is the primary reason why the internationalists fear the wrath of an armed citizenry. The destruction of the Bill of Rights is a prime objective of the beltway statists. Conversely, the elimination of the remnants of an American federalist constitutional republic is the key eliminate required for imposition of the global Illuminati matrix. The primal reason to foster a society that bears weapons is to maintain the means to fight tyranny on your native soil. The United Nations is a subversive and diabolical appendage of world despotism. The choice has never been clearer. Lock and load or kneel and grovel. Guns are mere instruments of force or defense, while government oppression is the reason why the public must possess the means of accountability.”
In the brave new world that is being engineered, going back to archery using rubber tips might be the only option, assuming that stringing for the bow would be allowed.
The list of government warfare against citizen’s right to bear arms just grows. Obama’s feds hid key data to get Calif. lead ammo ban passed in backdoor gun control move comes as no surprise. “Other states have also wrestled with the lead ammunition issue, but California is the first and only state to ban it altogether.”
From that other bastion of individual rights, the New York Times cannot conceal their joy in the item, Move to Ban a Bullet Adds to Its Appeal. However, in the spirit of balance the NYT quotes:
“Representative Robert W. Goodlatte, Republican of Virginia and the chairman of the House Judiciary Committee, urged the agency to reconsider the rule.
“Millions upon millions of M855 rounds have been sold and used in the U.S., yet A.T.F. has not even alleged, much less offered evidence, that even one such round has ever been fired from a handgun at a police officer,” Mr. Goodlatte writes in a letter to the agency’s director, B. Todd Jones, to be sent this week.”
Surely there must be some compelling argument missing that proposes to criminalize the magic tip projectile.
This is a laughable proposal if the underlying intentions for disarming the citizenry was not the ultimate motive were not so draconian.
Do you have the guts to stand up to the goons? You don’t need to have guns to resist if they have their way. What good is a gun without bullets? What is needed is a concerted effort to support organizations and representatives that will fight against this tyranny now, before we all bleed because Americans allowed their disarmament.
The charade of false flag gun crimes used to enact more restrictive laws and regulations needs to be exposed as absolute folly and soul-destroying despotism.
Gee, I hate to keep pointing this stuff out all the time because a whole lot of people get really ticked off at me every time that I do — but the truth is the truth. ISIS, Netanyahu and Hitler really do have a whole lot in common. But as true as this statement may be, still almost nobody these days wants to hear that their favorite emperor isn’t wearing any clothes. Why? Perhaps because it makes people feel bad that they have been so completely suckered, had, duped and used.
However, like it or not, the three emperor-wannabes listed above are still not wearing any clothes. So to speak.
And here’s my checklist to prove it:
1. Received a lot of their financial support from the weapons industry: http://www.globalresearch.ca/
2. Founded their empires (reichs, caliphates, promised lands, whatever) on invasions, blitzkriegs, preemptive wars, guys-just-wanna-have-fun, terrorism, whatever — with the goal of eventually taking over all geopolitical territory within thousands of miles of their empire’s original borders:
3. Committed mass genocide based solely on religion, race, land or resource ownership, language usage and/or nationality:
4. Used illegal weapons, including chemical weapons such as napalm, white phosphorus and noxious gases, and/or landmines, cluster bombs, biological weapons, etc. on civilians:
ISIS: Not really sure. Are broadswords considered illegal weapons if used to behead journalists? Probably. Okay, check.
5. Bomb the freak out of civilian targets:
ISIS: Do RPGs and car-bombs count? Yes? Then “check”
6. Routinely terrorized civilian populations to the point of said populations thinking they were living inside a horror movie, a police state or ‘Stalag 17″https://www.youtube.com/watch?
7. Used lies, snappy slogans, false-flag operations http://yournewswire.com/
8. Wore snappy uniforms designed to intimidate and impress:
9. Supported by rich industrialists, corporatists, recipients of corporate welfare and opulent dictatorships in the Middle East:
10. Had a huge destabilizing effect on Europe, the Middle East and America that ended in tragedy, economic chaos and the further spread of warhttp://cityworldnews.com/
11. Pretends to be of a certain religion but never practices their religion’s goals, ideals or concepts:
12. Steals resources and valuables from the countries and territories that have been illegally seized: http://www.truthdig.com/
13. Has absolutely no tinges of conscience whatsoever after having caused thousands of families, scores of ethnic groups, an unknown number of combat veterans and even whole countries to suffer from shell shock, battle fatigue and PTSD http://www.unrwa.org/newsroom/
14. Is invited to speak before Congress:
Hitler: No way.
ISIS: Not a chance.
Netanyahu: Roll out the red carpet!
“The collapse of the Soviet Union removed the only constraint on Washington’s power to act unilaterally abroad…. Suddenly the United States found itself to be the Uni-power, the ‘world’s only superpower.’ Neoconservatives proclaimed ‘the end of history.’”
— Paul Craig Roberts, former Assistant Secretary of the US Treasury
“Don’t blame the mirror if your face is crooked.”
— Russian proverb
Vladimir Putin delivered a speech at the 43rd Munich Security Conference that created a rift between Washington and Moscow that has only deepened over time. The Russian President’s blistering hour-long critique of US foreign policy provided a rational, point-by-point indictment of US interventions around the world and their devastating effect on global security. Putin probably didn’t realize the impact his candid observations would have on the assembly in Munich or the reaction of powerbrokers in the US who saw the presentation as a turning point in US-Russian relations. But, the fact is, Washington’s hostility towards Russia can be traced back to this particular incident, a speech in which Putin publicly committed himself to a multipolar global system, thus, repudiating the NWO pretensions of US elites. Here’s what he said:
“I am convinced that we have reached that decisive moment when we must seriously think about the architecture of global security. And we must proceed by searching for a reasonable balance between the interests of all participants in the international dialogue.”
With that one formulation, Putin rejected the United States assumed role as the world’s only superpower and steward of global security, a privileged position which Washington feels it earned by prevailing in the Cold War and which entitles the US to unilaterally intervene whenever it sees fit. Putin’s announcement ended years of bickering and deliberation among think tank analysts as to whether Russia could be integrated into the US-led system or not. Now they knew that Putin would never dance to Washington’s tune.
In the early years of his presidency, it was believed that Putin would learn to comply with western demands and accept a subordinate role in the Washington-centric system. But it hasn’t worked out that way. The speech in Munich merely underscored what many US hawks and Cold Warriors had been saying from the beginning, that Putin would not relinquish Russian sovereignty without a fight. The declaration challenging US aspirations to rule the world, left no doubt that Putin was going to be a problem that had to be dealt with by any means necessary including harsh economic sanctions, a State Department-led coup in neighboring Ukraine, a conspiracy to crash oil prices, a speculative attack of the ruble, a proxy war in the Donbass using neo-Nazis as the empire’s shock troops, and myriad false flag operations used to discredit Putin personally while driving a wedge between Moscow and its primary business partners in Europe. Now the Pentagon is planning to send 600 paratroopers to Ukraine ostensibly to “train the Ukrainian National Guard”, a serious escalation that violates the spirit of Minsk 2 and which calls for a proportionate response from the Kremlin. Bottom line: The US is using all the weapons in its arsenal to prosecute its war on Putin.
Last week’s gangland-style murder of Russian opposition leader, Boris Nemtsov, has to be considered in terms of the larger geopolitical game that is currently underway. While we may never know who perpetrated the crime, we can say with certainly that the lack of evidence hasn’t deterred the media or US politicians from using the tragedy to advance an anti-Putin agenda aimed at destabilizing the government and triggering regime change in Moscow. Putin himself suggested that the killing may have been a set-up designed to put more pressure on the Kremlin. The World Socialist Web Site summed up the political implications like this:
“The assassination of Russian opposition politician Boris Nemtsov is a significant political event that arises out of the US-Russia confrontation and the intense struggle that is now underway within the highest levels of the Russian state. The Obama administration and the CIA are playing a major role in the escalation of this conflict, with the aim of producing an outcome that serves the global geo-political and financial interests of US imperialism….
It is all but obvious that the Obama administration is hoping a faction will emerge within the Russian elite, backed by elements in the military and secret police, capable of staging a “palace coup” and getting rid of Putin….
The United States is not seeking to trigger a widespread popular revolt. (But) are directed entirely at convincing a section of the oligarchy and emerging capitalist class that their business interests and personal wealth depend upon US support. That is why the Obama administration has used economic sanctions targeting individuals as a means of exerting pressure on the oligarchs as well as broader sections of the entrepreneurial elite….
It is in the context of this international power struggle that one must evaluate Nemtsov’s murder. Of course, it is possible that his death was the outcome of his private dealings. But it is more likely that he was killed for political reasons. Certainly, the timing of the killing—on the eve of the opposition’s anti-Putin demonstration in Moscow—strongly indicates that the killing was a political assassination, not a private settling of accounts.” (“Murder in Moscow: Why was Boris Nemtsov assassinated?“, David North, World Socialist Web Site)
Just hours after Nemtsov was gunned down in Moscow, the western media swung into action releasing a barrage of articles suggesting Kremlin involvement without a shred of evidence to support their claims. The campaign of innuendo has steadily gained momentum as more Russia “experts” and politicians offer their opinions about who might be responsible. Naturally, none of the interviewees veer from the official storyline that someone in Putin’s charge must have carried out the attack. An article in the Washington Post is a good example of the tactics used in the latest PR campaign to discredit Putin. According to Vladimir Gel’man, Political Scientists European University at St. Petersburg and the University of Helsinki:
“Boris Nemtsov, one of the leaders of political opposition, was shot dead nearby the Kremlin. In my opinion, it has all the hallmarks of a political assassination provoked by an aggressive Kremlin-induced campaign against the “fifth column of national traitors”, who opposed the annexation of Crimea, war with the West over Ukraine, and further decline of political and civil freedoms in the country. We may never know whether the Kremlin ordered this killing, but given the fact that Nemtsov was one of the most consistent critics not only of the Russian regime as such but also of Putin in person, his dissenting voice will never upset Putin and his inner circle anymore.” (“What does Boris Nemtsov’s murder mean for Russia?“, Washington Post)
The article in the Washington Post is fairly typical of others published in the MSM. The coverage is invariably long on finger-pointing and insinuation and short on facts. Traditional journalistic standards of objectivity and fact-gathering have been jettisoned to advance a political agenda that reflects the objectives of ownership. The Nemtsov assassination is just the latest illustration of the abysmal state of western media.
The idea that Putin’s agents would “whack” an opposition candidate just a stone’s throw from the Kremlin is far fetched to say the least. As one commenter at the Moon of Alabama blog noted:
“Isn’t the image of a dead political opponent lying on a bridge overlooked by the Kremlin a bit rich? I mean, short of a dagger lodged between his shoulder blades with the inscription “if found, please return to Mr Putin”, I can’t think of a more over-egged attempt at trying to implicate the Government. And on the night before an opposition rally Nemtsov hoped to lead. I mean, come on.”
While there’s no denying that Moscow could be involved, it seems unlikely. The more probable explanation is that the incident is part of a larger regime change scheme to ignite social unrest and destabilize the government. The US has used these tactics so many times before in various color-coded revolutions, that we won’t reiterate the details here. Even so, it’s worth noting that the US has no red lines when it comes to achieving its strategic goals. It will do whatever it feels is necessary to prevail in its clash with Putin.
The question is why? Why is Washington so determined to remove Putin?
Putin answered this question himself recently at a celebration of Russia’s diplomatic workers’ day. He said Russia would pursue an independent foreign policy despite pressure in what he called “today’s challenging international environment.”
“No matter how much pressure is put on us, the Russian Federation will continue to pursue an independent foreign policy, to support the fundamental interests of our people and in line with global security and stability.” (Reuters)
This is Putin’s unforgivable crime, the same crime as Venezuela, Cuba, Iran, Syria and countless other nations that refuse to march in lockstep to Washington’s directives.
Putin has also resisted NATO encirclement and attempts by the US to loot Russia’s vast natural resources. And while Putin has made every effort to avoid a direct confrontation with the US, he has not backed down on issues that are vital to Russia’s national security, in fact, he has pointed out numerous times not only the threat that encroaching NATO poses to Moscow, but also the lies that preceded its eastward expansion. Here’s Putin at Munich again:
“I would like to quote the speech of NATO General Secretary Mr. Woerner in Brussels on 17 May 1990. He said at the time that: “the fact that we are ready not to place a NATO army outside of German territory gives the Soviet Union a firm security guarantee….
Where are these guarantees?”
Where, indeed. Apparently, they were all lies. As political analyst Pat Buchanan said in his article “Doesn’t Putin Have a Point?”:
“Though the Red Army had picked up and gone home from Eastern Europe voluntarily, and Moscow felt it had an understanding we would not move NATO eastward, we exploited our moment. Not only did we bring Poland into NATO, we brought in Latvia, Lithuania, and Estonia, and virtually the whole Warsaw Pact, planting NATO right on Mother Russia’s front porch. Now, there is a scheme afoot to bring in Ukraine and Georgia in the Caucasus, the birthplace of Stalin….
… though Putin gave us a green light to use bases in the old Soviet republics for the liberation of Afghanistan, we now seem hell-bent on making those bases in Central Asia permanent.
… through the National Endowment for Democracy, its GOP and Democratic auxiliaries, and tax-exempt think tanks, foundations, and “human rights” institutes such as Freedom House,… we have been fomenting regime change in Eastern Europe, the former Soviet republics, and Russia herself….
These are Putin’s grievances. Does he not have a small point?” “(Doesn’t Putin Have a Point?”, Pat Buchanan, antiwar.com)
Now the US wants to deploy its missile defense system to Eastern Europe, a system which–according to Putin “will work automatically with and be an integral part of the US nuclear capability. For the first time in history, and I want to emphasize this, there are elements of the US nuclear capability on the European continent. It simply changes the whole configuration of international security…..Of course, we have to respond to that.”
How can Putin allow this to happen? How can he allow the US to situate nuclear weapons in a location that would increase its first-strike capability and undermine the balance of deterrents allowing the US to force Russia to follow its orders or face certain annihilation. Putin has no choice but to resist this outcome, just as has no choice but to oppose the principle upon which US expansion is based, the notion that the Cold War was won by the US, therefore the US has the right to reshape the world in a way that best suits its own economic and geopolitical interests. Here’s Putin again:
“What is a unipolar world? However one might embellish this term, it refers to a type of situation where there is one center of authority, one center of force, one center of decision-making. It is world in which there is one master, one sovereign. At the end of the day, this is pernicious not only for all those within this system, but also for the sovereign itself because it destroys itself from within…..
I consider that the unipolar model is not only unacceptable but also impossible in today’s world…. the model itself is flawed because at its basis there is and can be no moral foundations for modern civilization….” (Munich, 2007)
What sort of man talks like this? What sort of man talks about “the moral foundations for modern civilization” or invokes FDR in his address?
Putin: “‘Security for one is security for all’. As Franklin D. Roosevelt said during the first few days that the Second World War was breaking out: ‘When peace has been broken anywhere, the peace of all countries everywhere is in danger.’ These words remain topical today.”
I urge everyone to watch at least the first 10 minutes of Putin’s speech and decide for themselves whether they think the characterization (and demonization) of Putin in the media is fair or not. And pay special attention to Minute 6 where Putin says this:
“We are seeing a greater and greater disdain for the basic principles of international law. And independent legal norms are, as a matter of fact, coming increasingly closer to one state’s legal system. One state and, of course, first and foremost the United States, has overstepped its national borders in every way. This is visible in the economic, political, cultural and educational policies it imposes on other nations. Well, who likes this? Who is happy about this?” (“Vladimir Putin’s legendary speech at Munich Security Conference“)
While Putin is making this statement, the camera pans to John McCain and Joe Lieberman who are sitting stone-faced in the front row seething at every word uttered by the Russian president. If you look close enough, you can see the steam emerging from McCain’s ears.
This is why Washington wants regime change in Moscow. It’s because Putin refuses to be pushed around by the United States. It’s because he wants a world that is governed by international laws that are impartially administered by the United Nations. It’s because he rejects a “unipolar” world order where one nation dictates policy to everyone else and where military confrontation becomes the preferred way for the powerful to impose their will on the weak.
Putin: “Today we are witnessing an almost uncontained hyper use of force that is plunging the world into an abyss of permanent conflicts…The United States, has overstepped its national borders in every way….And of course this is extremely dangerous. It results in the fact that no one feels safe. I want to emphasize this — no one feels safe.” Vladimir Putin, Munich 2007
Putin isn’t a perfect man. He has his shortcomings and flaws like everyone else. But he appears to be a decent person who has made great strides in restoring Russia’s economy after it was looted by agents of the US following the dissolution of the Soviet Union. He has lifted living standards, increased pensions, reduced poverty, and improved education and health care which is why his public approval ratings are currently hovering at an eye-watering 86 percent. Even so, Putin is most admired for standing up to the United States and blocking its strategy to pivot to Asia. The proxy war in Ukraine is actually a struggle to thwart Washington’s plan to break up the Russian Federation, encircle China, control the flow of resources from Asia to Europe, and rule the world. Vladimir Putin is at the forefront of that conflagration which is why he has gained the respect and admiration of people around the world.
As for “democracy”, Putin said it best himself:
“Am I a ‘pure democrat’? (laughs) Of course I am. Absolutely. The problem is that I’m all alone, the only one of my kind in the whole world. Just look at what’s happening in America, it’s terrible—torture, homeless people, Guantanamo, people detained without trial or investigation. And look at Europe—harsh treatment of demonstrators, rubber bullets and tear gas used in one capital after another, demonstrators killed on the streets….. I have no one to talk to since Gandhi died.”
Well said, Vladimir.
Back in the day, I was always trying to fly off to report on international combat hot-spots like Iraq and Afghanistan — always hoping that if the American people back home read my horror-stories of war, they too would somehow become war-resisters and that my stories of brutal, grim and unjustified death in far-away places might even help escalate a strong anti-war movement here at home, one that would finally stop the heartless killing of women and children by American tanks, rockets and drones. But now? Now I’m thinking that I should be doing something even more important than traveling to combat zones far away — that I, like some modern-day Jonah, should actually be going down into the belly of the American beast itself instead.
Plus it’s always cheaper to go to North Carolina or Washington DC or St Louis than to go off to Syria, Gaza, Haiti or Ukraine.
The main question that I would be asking in these particular American war zones, however, would be, “What makes America tick?”
What has made us become the most dreaded and hated country in the world — a country that has more weapons and more money to spend on weapons than any other country anywhere, ever? What gives us the right to call ourselves “patriotic” and “brave” and “democratic” when, in reality, it is America that has killed, maimed, tortured and mutilated millions of people all over the world — and trampled any survivors’ chances and their children’s chances of ever ever having a decent life again.
Why do Americans support dictators in Ukraine, Palestine, Honduras, Congo, etc. with such enthusiastic glee? And also why do Americans applaud so loudly when elections here at home are stolen and our infrastructure and school systems die and “Christianity” becomes just another excuse to kill, rape, torture and maim God’s children both at home and abroad?
And what makes Americans bitch and complain so much about what ISIS is doing in Iraq and Syria — when what Americans have done there in the past and are doing there right now is so much much much worse? ISIS fanatics behead hundreds of people. American troops level whole cities and leave them contaminated with radioactive detritus that will kill children and other living things there for the next 500 years.
Why are Americans so set against preventing nuclear holocausts both at home and abroad? Why do Americans cheer and get all teary-eyed and proud when our cops turn into robo-cops and spray peaceful protesters with tear gas? And then actually buy tickets to go see women tortured?
“What makes Americans tick?” I need to know what is going on right here in America before I can possibly understand what the freak is going on in all those American-financed war zones throughout the rest of the world.
So here’s my plan. I’m going to go out and see America first. Ukraine and Gaza and Baghdad will just have to wait — while I, like Jonah, go deep into the belly of the American beast instead.
Despite all the nightmares I have seen in the last decades, I continue to be an idealist and to dream of a better world, a world that Buddha, Abraham, Moses, Jesus and Mohammad would be proud of. Most Americans, however, apparently dream of cruelty, torture, injustice and ruling the world vicariously.
We are the protagonists of our own dreams.
Americans (and all other human beings too for that matter) need to finally learn that it is far better to die with love in our hearts than to live with hatred in our eyes, fear in our guts and evil in our souls.
PS: A Manhattan jury just awarded a $218.5 million verdict against the Palestinian Authority for damages done to Israelis with American citizenship by Palestinian suicide bombers. Do you know what this means? A new precedence has just been set. A new Pandora’s box has just been opened.
From now on, relatives of Americans killed in any foreign country, not just Israel, can also use American courts to get recompense for damages done by acts of “terrorism” on American citizens abroad!
For instance, if any Chilean-Americans were killed in the CIA coup against Allende in Chile, their relatives can now sue Henry Kissinger in American courts — but of course they will have to stand in line behind the relatives of any Cambodian-Americans killed by him.
And what about the bunches and groups of Palestinian-Americans, Yemeni-Americans, Iraqi-Americans, Syrian-Americans, Ukrainian-Americans, Vietnamese-Americans, Somali-Americans, Haitian-Americans, etc. who have been killed by American tanks, rockets and drones?
America? You can no longer pretend to not know what you are doing. See ya in court!
America’s Founding Fathers wisely instituted a federal government with three separate branches with the intention of creating built-in checks and balances designed to protect the liberties of the American people and the independence of the sovereign states. Each branch of government was given authority to check the other branches when they became oppressive or unconstitutional. In addition to the checks and balances built in to the federal government, they assumed that additional checks to power outside the federal government would serve to protect the people’s liberties. Namely, our founders expected that free and independent states, a free and independent press, and free and courageous pulpits would further serve as diligent watchdogs of liberty.
However, only the most naïve among us do not recognize that, for all intents and purposes, the governmental checks and balances in Washington, D.C., are virtually non-existent. For the most part, the three branches of the federal government and the two major political parties in Washington simply facilitate the decisions of the existing power base–especially when it comes to the expansion of federal intrusion and oversight.
All of the political wrangling over the differences between Republicans and Democrats notwithstanding, when it comes to increasing the size and scope of the federal government, the two parties inside the Beltway are practically identical twins. And nowhere is this more clearly observed than in all things said to be for the sake of “national security.”
With very few exceptions, America’s newspapers regurgitate the federal government’s solutions for “national security.” With very few exceptions, a majority of the talking heads on television from both the left and the right embrace America’s military interventionism in the Middle East and the burgeoning Police State currently mushrooming inside the United States. And, again, the banner flying high above all of this warmongering and domestic enslavement is “national security.”
For the sake of “national security,” the Church, too, enthusiastically embraces a domestic Police State and wars of aggression abroad–especially in the Middle East.
Anything that falls under the rubric of “national security” is enthusiastically embraced by most Republicans and Democrats, conservatives and liberals, and Christians and unbelievers. This almost always translates into more global intervention by the U.S. military and increased power by federal, State, and local police agencies in America’s heartland.
The shadows of power that have mostly controlled the federal government (with rare exceptions) since at least the Woodrow Wilson administration are experts at creating Boogeymen for America to hate. And, of course, fighting these Boogeymen serves as a justifiable reason for the federal government to expunge more and more liberties; it’s in the interest of “national security.” But since 9/11, the American people have been more manipulated since perhaps any other time in our nation’s history.
Take a look at this recent report:
“A church hosting a law enforcement appreciation sermon asked its followers to pledge their allegiance to government this weekend, arguing that all state authorities throughout history have been ordained by God.
“According to an anonymous visitor of the Gold Creek Community Church in Mill Creek, Washington, who provided exclusive photos to Infowars, attendees were ordered to submit to the state without question. ‘They had police worship today and last week was military worship where they played clips of American Sniper…’ the source said. ‘They were telling people to basically worship government and worship police no matter what. No mention of police brutality, no mention of the stingray systems grabbing our data…’
“Near the end of the sermon, members of the congregation were asked to raise their right hands and make a pledge, which included the promise to call 911 on ‘suspicious’ neighbors.”
Of course, the justification that the pastor used for this type of state worship was Romans 13. This devilish misinterpretation of Romans 13 has done more to enslave the minds of America’s pastors and Christians than anything I can think of. That’s why my son and I co-authored the book, “Romans 13: The True Meaning of Submission.”
In addition, I delivered a four-message series on Romans 13 that is available on DVD. Find it here:
The infowars report also included a local television news report on how pastors and churches are conditioning their parishioners to become sheepish slaves of the state under the rubric of Romans 13:
See the infowars report here:
Ladies and gentlemen, this kind of report could have been repeated throughout the entire country of Germany during the rise of the Third Reich.
Of course, many of the pastors who are regurgitating this form of state worship are not conscience of what they are doing. They have been indoctrinated in our nation’s seminaries, Bible colleges, Christian universities, etc., to the point that they actually believe they are being both patriotic and spiritual. They are completely blind to the fact that they have become puppets for the New World Order power elite.
Our pastors are in the same boat as many of our military personnel and police officers. They believe that by being willing to submit to any order, no matter how unconstitutional or unrighteous, they are “serving God and country.” Remember, without this ongoing “war on terror” overseas, America’s growing domestic Police State would come crashing down. A domestic Police State is TOTALLY dependent upon the international “war on terror.” And ever since 9/11, the big, bad Boogeymen that are being used to frighten the American people (especially Christians) out of their senses are Muslims–ALL Muslims.
How many times have I heard some well-intentioned (I think they are well-intentioned) Christian say, “There is no such thing as a moderate Muslim.” Or, “There is no such thing as a peaceful Muslim.” Really?
Why is it that we rarely heard such ludicrous statements before the events of 9/11? There have been millions of Muslims living among us Americans for as long as any of us can remember. There were doubtless thousands of Muslims in the United States at the time of our Revolutionary War. Where was the holy Jihad in this nation? Where were the mass beheadings or genocide against Christians in this country? For the most part, these millions of Muslim Americans have lived peacefully among us for all of our lives. But, now all of a sudden, they are the greatest threat to our country’s very existence? Get real.
The warmongers and international nation builders who desire to drown the United States under the deluge of a global New World Order found the perfect Boogeyman in the form of Islam. If the official report on 9/11 is true (almost half of the American people do NOT believe it is true, including this writer), all the perpetrators of the attacks were men from Saudi Arabia. Yet, we couldn’t invade Saudi Arabia. We need their oil too much. Besides, the Muslim nation of Saudi Arabia is deemed to be a U.S. ally. And we couldn’t attack Iraq on the basis of Saddam Hussein’s alleged atrocities alone. The world just wouldn’t buy it.
Did Hussein kill hundreds of Muslim Kurds (most Muslim violence is perpetrated against other Muslims) during his regime? Probably so. Does anyone want to know why? THEY WERE TRYING TO OVERTHROW HIS GOVERNMENT. Am I justifying what Hussein did against his enemies? No. But the same people who are so quick to condemn Hussein for defending his government with violence seem to pay no attention to the atrocities committed by George H.W. Bush and Bill Clinton against U.S. citizens who posed absolutely NO THREAT to the government in Washington, D.C.
I am talking about Ruby Ridge, Idaho, when our own federal government accused ONE MAN, Randy Weaver, of threatening the United States government, and it sent federal agents to murder both him and his wife, Vicki. A federal sniper murdered Vicki and shot Randy (he survived his wounds). Federal agents also shot their young son, Sammy, in the back and killed him. But Vicki was not holding a rocket launcher or hand grenade; she was holding her little baby in her arms.
I recall that the federal government accused a small splinter group of Seventh Day Adventists (the Branch Davidians) of threatening the U.S. government; and it sent federal agents and combat military personnel to burn them out and machine-gun them to death.
Where was the outrage of all of these patriotic Americans and righteous Christians over the atrocities committed by our own government at Ruby Ridge, Idaho, and Waco, Texas? Neither the Weaver family nor the Branch Davidians posed ANY threat to the U.S. government. Heck! They didn’t even pose a threat to their neighbors. But our federal government murdered them, nonetheless.
One more thing to think about: the U.S. war in Iraq is estimated to have killed over 500,000 Iraqi children. That is more people (men, women, and children) than were killed when we dropped the atomic bombs on Hiroshima and Nagasaki. Of course, then-Secretary of State Madeleine Albright testified before Congress and said the deaths of all of those Iraqi children were “worth it.” (And by the way many of our Christian brethren in the United States are acting, I suppose they think it was worth it, too.)
So, needing something more than just Saddam Hussein’s alleged atrocities against the Kurds to justify a full-scale war in the Middle East, we invented a brand new threat: Al Qaeda. Now, the globalists had their Boogeyman. But after more than a decade of war, and with the American people becoming numb to an Al Qaeda threat, they invented a new Boogeyman: ISIS (IS; ISIL, etc.).
Think of it: OVERNIGHT, ISIS has advanced, sophisticated weapons; OVERNIGHT, it has millions of dollars to spend; OVERNIGHT it has become the greatest threat to, not only the security of the Middle East, but the United States of America. In the name of the threat of ISIS, the surveillance state must be expanded in America. In the name of the threat of ISIS, our local and State police must become more and more militarized. In the name of the threat of ISIS, Americans must be willing to surrender more and more of their liberties.
Neither Al Qaeda nor ISIS could have become the powerful force they have become WITHOUT THE DIRECT ASSISTANCE OF DARK OPS AND DIRTY MONEY FROM THE UNITED STATES. It is just not humanly possible.
Am I suggesting that ISIS is not comprised of radical, militant Muslims who are very violent and dangerous people? Of course not! But I am suggesting, no I am saying, that not every Muslim is a radical, violent Jihadist. I am saying that our country is filled with peaceful, non-violent Muslims who pose absolutely NO THREAT to the people of the United States. And I am saying that the kind of hatred and bigotry that many Christians are demonstrating against the Muslim people in general is a sin against Jehovah God and a contradiction of everything our Savior, the Lord Jesus Christ, taught us. And I am further saying that ISIS could not exist without major assistance from the United States and probably Israel.
Ask yourself, since when do revolutionaries broadcast their atrocities for the entire world to see and for the entire world to become enraged against them? Even surrounding Muslim nations are incensed with the conduct of ISIS. A Jordanian government official just recently stated that members of ISIS are NOT Muslims. Many, if not most, of the Muslim states totally reject ISIS as part of the Muslim brotherhood. Why would ISIS seek to alienate its own brethren? Why would it risk becoming the most hated group of people in the world–even the Muslim world?
It’s because ISIS is a contrivance of U.S. and Israeli Dark Ops who have created and attracted the most radical, hate-filled people of the region and set them up in opposition to the laws of decency in order to incite the American public into accepting more war and more abridgments of their liberties. And whether these master manipulators realized it would happen the way it has or not (they probably did), their biggest assets have turned out to be zealous Christians who see themselves as fighting their own holy war against the Muslim infidels.
Yet, America’s Founding Fathers did not categorize all Muslim people as Jihadists or militant extremists. Yes, Thomas Jefferson had to deal with violent Muslims during his administration. And he did it constitutionally, by the way. He didn’t invade Muslim nations with the U.S. military; he invoked the constitutional solution of asking Congress for letters of marque and reprisal. Ron Paul introduced just such a bill after 9/11, but, of course, George W. Bush and Dick Cheney were already determined to invade Iraq. Invasion plans were in place long before the attacks on 9/11.
That Thomas Jefferson didn’t hate Muslims or regard all of them as being violent Jihadists is plain. The man that Jefferson admired–and copied from–most, John Locke, insisted that Muslims be tolerated in England. Campaigning for religious freedom in Virginia, Jefferson demanded recognition for the religious rights of the “Mahamdan [Muslim], the Jew and the pagan.” In his autobiography, Thomas Jefferson recounted his satisfaction at the passage of his landmark Bill for Establishing Religious Freedom (1786) and the effort by some in the legislature to limit the bill’s scope “in proof that they meant to comprehend, within the mantle of its protection, the Jew and the Gentile, the Christian and Mahometan [Muslim].” Jefferson’s perception of Muslims as peaceful people generally was shared by other Founding Fathers.
Richard Henry Lee, who made the motion for independence at the Continental Congress, declared, “True freedom embraces the Mahomitan [Muslim] and the Gentoo [Hindu] as well as the Christian religion.”
George Washington proposed an exemption for Muslims in Virginia regarding a proposed law that would have demanded citizens to support the Christian religion with their tax dollars. Washington further welcomed “Mohometans” [Muslims] to Mount Vernon. And think of it: Washington didn’t have a company of Secret Service agents protecting him, either.
Of course, men of influence throughout the course of Western Civilization have noted the danger posed by violence-prone Muslims. Rightly so. But I remind you that for many decades, white Americans were the targets of Indian savagery. And the warnings against the Indian tribes were numerous and often justified. I also remind you that much savagery was committed AGAINST the Indians by whites. I further remind you that much of the savagery of the Indians was CREATED by the whites by acts of injustice, deceit, and downright barbarism. It was not all one-sided.
Neither is it all one-sided in the Middle East. America’s CIA and illegal Dark Ops are often INCITING the Muslim people of the Middle East against us. This is deliberate and intentional. It foments war and hatred–on both sides. And when people are filled with fear, and war, and hatred, it is much easier to strip them of their liberties and manipulate them into accepting usurpations of their freedoms that they would otherwise never be inclined to do.
Think about it: if our government truly believed we were at war with Al Qaeda or ISIS, why would it insist on keeping our southern border wide open? If the “war on terror” were legitimate, securing our border would be the FIRST thing our government would do. That it doesn’t proves the duplicitous nature of our so-called “war on terror.”
It’s time for Americans (and especially Christians) to understand that there is a war alright: it is a war against our liberties, and the primary enemy is the New World Order globalists who are using elements of our own government (as well as other governments) against us.
Frankly, if the United States would GET OUT of the Middle East and GET OUT of the United Nations, most of this international conflict that we are mired in today would go away.
When pastors and churches succumb to the notion of submitting to a domestic Police State, when they succumb to the fear and paranoia created by a “war on terror,” and when they succumb to the sins of hate and bigotry against one group of people, they unwittingly become puppets for the New World Order.
Another toxic spill took place into the Yellowstone River on January 17 of this year. It was not the first. An earlier break took place several years ago.
The break occurred, according to Bridger Pipeline, LLC, at 10a.m. The company shut down the pipeline at 11am.
It is in the first hour after a break the most toxic materials escape. This includes Benzene, a carcinogen which may cause cancer. Bridger announced only 300 – 1,200 oil barrels had been spilled into the riber. State estimates the spill as 50,000 US gallons of spilled oil. Benzene was ten to fifteen parts per billion. An EPA official commented that,“anything above five parts per billion is considered a long-term risk.”
It was two days later, January 19th, that 6,000 people from the nearby town of Glendive were told not to use the town’s municipal waterdue to the elevated levels of benzene which had percolated through the Yellowstone River and into their tap water. The city supplied bottled water to residents for four days, declaring the municipal water safe on January 23.
Paul Peronard, an employee of the U.S. Environmental Protection Agency told residents to open their taps and run the water to flush out residual contamination. Peronard also said, “If it doesn’t smell anymore you have cleaned it out, you’re good. Citizens can start drinking it…”
The level at which Benezene is known to be dangerous is five parts per billion. Most people can smell Benzene at levels of 60,000 parts per billion.
Following Peronard’s advice Glendive resident Roseann Koepke ran the taps in her trailer home Thursday after her landlord told her the contamination had been cleared. She turned off the water after the strong smell of oil gave her a headache. Unaware of the facts about Benzene Koepke said, “I ran it for about ten minutes and had to open up the door for five minutes to get the smell out,” she said. “My God, did I end up getting a headache.”
Ms. Koepke said she would try again.
In no instance has an oil company monitored the outpouring of deadly gases in the first hour. Under estimating the size of the spill, failing to provide medical services to impacted residents, or even pay for their drinking water is also standard operating procedure for oil companies as is neglecting to provide Hazmat protection for workers. Get the picture?
“I want to appeal to the Ukrainian people, to the mothers, the fathers, the sisters and the grandparents. Stop sending your sons and brothers to this pointless, merciless slaughter. The interests of the Ukrainian government are not your interests. I beg of you: Come to your senses. You do not have to water Donbass fields with Ukrainian blood. It’s not worth it.”
— Alexander Zakharchenko, Prime Minister of the Donetsk People’s Republic
Washington needs a war in Ukraine to achieve its strategic objectives. This point cannot be overstated.
The US wants to push NATO to Russia’s western border. It wants a land-bridge to Asia to spread US military bases across the continent. It wants to control the pipeline corridors from Russia to Europe to monitor Moscow’s revenues and to ensure that gas continues to be denominated in dollars. And it wants a weaker, unstable Russia that is more prone to regime change, fragmentation and, ultimately, foreign control. These objectives cannot be achieved peacefully, indeed, if the fighting stopped tomorrow, the sanctions would be lifted shortly after, and the Russian economy would begin to recover. How would that benefit Washington?
It wouldn’t. It would undermine Washington’s broader plan to integrate China and Russia into the prevailing economic system, the dollar system. Powerbrokers in the US realize that the present system must either expand or collapse. Either China and Russia are brought to heel and persuaded to accept a subordinate role in the US-led global order or Washington’s tenure as global hegemon will come to an end.
This is why hostilities in East Ukraine have escalated and will continue to escalate. This is why the U.S. Congress approved a bill for tougher sanctions on Russia’s energy sector and lethal aid for Ukraine’s military. This is why Washington has sent military trainers to Ukraine and is preparing to provide $3 billion in “anti-armor missiles, reconnaissance drones, armored Humvees, and radars that can determine the location of enemy rocket and artillery fire.” All of Washington’s actions are designed with one purpose in mind, to intensify the fighting and escalate the conflict. The heavy losses sustained by Ukraine’s inexperienced army and the terrible suffering of the civilians in Lugansk and Donetsk are of no interest to US war-planners. Their job is to make sure that peace is avoided at all cost because peace would derail US plans to pivot to Asia and remain the world’s only superpower. Here’s an except from an article in the WSWS:
“The ultimate aim of the US and its allies is to reduce Russia to an impoverished and semi-colonial status. Such a strategy, historically associated with Carter administration National Security Advisor Zbigniew Brzezinski, is again being openly promoted.
In a speech last year at the Wilson Center, Brzezinski called on Washington to provide Kiev with “weapons designed particularly to permit the Ukrainians to engage in effective urban warfare of resistance.” In line with the policies now recommended in the report by the Brookings Institution and other think tanks calling for US arms to the Kiev regime, Brzezinski called for providing “anti-tank weapons…weapons capable for use in urban short-range fighting.”
While the strategy outlined by Brzezinski is politically criminal—trapping Russia in an ethnic urban war in Ukraine that would threaten the deaths of millions, if not billions of people—it is fully aligned with the policies he has promoted against Russia for decades.” (“The US arming of Ukraine and the danger of World War III“, World Socialist Web Site)
Non-lethal military aid will inevitably lead to lethal military aid, sophisticated weaponry, no-fly zones, covert assistance, foreign contractors, Special ops, and boots on the ground. We’ve seen it all before. There is no popular opposition to the war in the US, no thriving antiwar movement that can shut down cities, order a general strike or disrupt the status quo. So there’s no way to stop the persistent drive to war. The media and the political class have given Obama carte blanche, the authority to prosecute the conflict as he sees fit. That increases the probability of a broader war by this summer following the spring thaw.
While the possibility of a nuclear conflagration cannot be excluded, it won’t effect US plans for the near future. No one thinks that Putin will launch a nuclear war to protect the Donbass, so the deterrent value of the weapons is lost.
And Washington isn’t worried about the costs either. Despite botched military interventions in Afghanistan, Iraq, Libya and half a dozen other countries around the world; US stocks are still soaring, foreign investment in US Treasuries is at record levels,, the US economy is growing at a faster pace than any of its global competitors, and the dollar has risen an eye-watering 13 percent against a basket of foreign currencies since last June. America has paid nothing for decimating vast swathes of the planet and killing more than a million people. Why would they stop now?
They won’t, which is why the fighting in Ukraine is going to escalate. Check this out from the WSWS:
“On Monday, the New York Times announced that the Obama administration is moving to directly arm the Ukrainian army and the fascistic militias supporting the NATO-backed regime in Kiev, after its recent setbacks in the offensive against pro-Russian separatist forces in east Ukraine.
The article cites a joint report issued Monday by the Brookings Institution, the Atlantic Council, and the Chicago Council on Global Affairs and delivered to President Obama, advising the White House and NATO on the best way to escalate the war in Ukraine….
According to the Times, US officials are rapidly shifting to support the report’s proposals. NATO military commander in Europe General Philip M. Breedlove, Defense Secretary Chuck Hagel, US Secretary of State John Kerry, and Chairman of the Joint Chiefs of Staff General Martin Dempsey all supported discussions on directly arming Kiev. National Security Advisor Susan Rice is reconsidering her opposition to arming Kiev, paving the way for Obama’s approval.” (“Washington moves toward arming Ukrainian regime“, World Socialist Web Site)
See what’s going on? The die is already cast. There will be a war with Russia because that’s what the political establishment wants. It’s that simple. And while previous provocations failed to lure Putin into the Ukrainian cauldron, this new surge of violence–a spring offensive– is bound to do the trick. Putin is not going to sit on his hands while proxies armed with US weapons and US logistical support pound the Donbass to Fallujah-type rubble. He’ll do what any responsible leader would do. He’ll protect his people. That means war. (See the vast damage that Obama’s proxy war has done to E. Ukraine here: “An overview of the socio – humanitarian situation on the territory of Donetsk People’s Republic as a consequence of military action from 17 to 23 January 2015“)
Asymmetrical Warfare: Falling Oil Prices
Keep in mind, that the Russian economy has already been battered by economic sanctions, oil price manipulation, and a vicious attack of the ruble. Until this week, the mainstream media dismissed the idea that the Saudis were deliberately pushing down oil prices to hurt Russia. They said the Saudis were merely trying to retain “market share” by maintaining current production levels and letting prices fall naturally. But it was all bunkum as the New York Times finally admitted on Tuesday in an article titled: “Saudi Oil Is Seen as Lever to Pry Russian Support From Syria’s Assad”. Here’s a clip from the article:
“Saudi Arabia has been trying to pressure President Vladimir V. Putin of Russia to abandon his support for President Bashar al-Assad of Syria, using its dominance of the global oil markets at a time when the Russian government is reeling from the effects of plummeting oil prices…
Saudi officials say — and they have told the United States — that they think they have some leverage over Mr. Putin because of their ability to reduce the supply of oil and possibly drive up prices….Any weakening of Russian support for Mr. Assad could be one of the first signs that the recent tumult in the oil market is having an impact on global statecraft…..
Saudi Arabia’s leverage depends on how seriously Moscow views its declining oil revenue. “If they are hurting so bad that they need the oil deal right away, the Saudis are in a good position to make them pay a geopolitical price as well,” said F. Gregory Gause III, a Middle East specialist at Texas A&M’s Bush School of Government and Public Service (“Saudi Oil Is Seen as Lever to Pry Russian Support From Syria’s Assad“, New York Times)
The Saudis “think they have some leverage over Mr. Putin because of their ability” to manipulate prices?
That says it all, doesn’t it?
What’s interesting about this article is the way it conflicts with previous pieces in the Times. For example, just two weeks ago, in an article titled “Who Will Rule the Oil Market?” the author failed to see any political motive behind the Saudi’s action. According to the narrative, the Saudis were just afraid that “they would lose market share permanently” if they cut production and kept prices high. Now the Times has done a 180 and joined the so called conspiracy nuts who said that prices were manipulated for political reasons. In fact, the sudden price plunge had nothing to do with deflationary pressures, supply-demand dynamics, or any other mumbo-jumbo market forces. It was 100 percent politics.
The attack on the ruble was also politically motivated, although the details are much more sketchy. There’s an interesting interview with Alistair Crooke that’s worth a read for those who are curious about how the Pentagon’s “full spectrum dominance” applies to financial warfare. According to Crooke:
“…with Ukraine, we have entered a new era: We have a substantial, geostrategic conflict taking place, but it’s effectively a geo-financial war between the US and Russia. We have the collapse in the oil prices; we have the currency wars; we have the contrived “shorting” — selling short — of the ruble. We have a geo-financial war, and what we are seeing as a consequence of this geo-financial war is that first of all, it has brought about a close alliance between Russia and China.
China understands that Russia constitutes the first domino; if Russia is to fall, China will be next. These two states are together moving to create a parallel financial system, disentangled from the Western financial system. ……
For some time, the international order was structured around the United Nations and the corpus of international law, but more and more the West has tended to bypass the UN as an institution designed to maintain the international order, and instead relies on economic sanctions to pressure some countries. We have a dollar-based financial system, and through instrumentalizing America’s position as controller of all dollar transactions, the US has been able to bypass the old tools of diplomacy and the UN — in order to further its aims.
But increasingly, this monopoly over the reserve currency has become the unilateral tool of the United States — displacing multilateral action at the UN. The US claims jurisdiction over any dollar-denominated transaction that takes place anywhere in the world. And most business and trading transactions in the world are denominated in dollars. This essentially constitutes the financialization of the global order: The International Order depends more on control by the US Treasury and Federal Reserve than on the UN as before.” (“Turkey might become hostage to ISIL just like Pakistan did“, Today’s Zaman)
Financial warfare, asymmetrical warfare, Forth Generation warfare, space warfare, information warfare, nuclear warfare, laser, chemical, and biological warfare. The US has expanded its arsenal well beyond the traditional range of conventional weaponry. The goal, of course, is to preserve the post-1991 world order (The dissolution up of the Soviet Union) and maintain full spectrum dominance. The emergence of a multi-polar world order spearheaded by Moscow poses the greatest single threat to Washington’s plans for continued domination. The first significant clash between these two competing world views will likely take place sometime this summer in East Ukraine. God help us.
NOTE: The Novorussia Armed Forces (NAF) currently have 8,000 Ukrainian regulars surrounded in Debaltsevo, East Ukraine. This is a very big deal although the media has been (predictably) keeping the story out of the headlines.
Evacuation corridors have been opened to allow civilians to leave the area. Fighting could break out at anytime. At present, it looks like a good part of the Kiev’s Nazi army could be destroyed in one fell swoop. This is why Merkel and Hollande have taken an emergency flight to Moscow to talk with Putin. They are not interested in peace. They merely want to save their proxy army from annihilation.
I expect Putin may intervene on behalf of the Ukrainian soldiers, but I think commander Zakharchenko will resist. If he lets these troops go now, what assurance does he have that they won’t be back in a month or so with high-powered weaponry provided by our war-mongering congress and White House?
Tell me; what choice does Zakharchenko really have? If his comrades are killed in future combat because he let Kiev’s army escape, who can he blame but himself?
There are no good choices.
Check here for updates: Ukraine SITREP: *Extremely* dangerous situation in Debaltsevo
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.
Clearly this subject has already been covered in the media news cycle ad nauseam but I still can’t stop thinking about the “I am Charlie” concept. Was the idea behind all those people who held up “I am Charlie” posters supposed to be about protecting free speech? Really? Then why isn’t everyone carrying “I am Julian Assange, Chelsea Manning and Edward Snowden” posters too? Or demanding that the police stop arresting guys who falsely yell “Fire!” in a crowded theater or deliberately start barroom brawls?
Or if those “I am Charlie” posters are in protest of armed thugs in Paris gunning down civilians in cold blood, then why isn’t everyone in Paris also carrying posters proclaiming “I am Iraq” or “I am Syria” or “I am Palestine” or “I am Ukraine” or Libya or Mali or…. You get the picture.
All those people holding up signs protesting the slaughter on Rue Nicolas-Appert might actually think that they too are “Charlie” — and that’s fine. Terrible things happened to the employees of Charlie Hebdo. No one should ever have to suffer the fate of being shot down in cold blood, and thus the victims deserve to be mourned. However I myself chose NOT to be Charlie Hebdo, a vicious slimy obscene rag clearly designed to stir up religious tensions in France.
And I also choose not to be any other bigots or terrorist troublemakers who clearly delight in trying to stir up religious tensions in France, crassly using others’ religious differences to pave their own way to riches and power — and yet who have the ultimate and offensive hypocrisy and nerve to show up for the French “I am Charlie” marches with innocent smiles on their faces. “Who us?” they innocently proclaim — after doing everything they possibly can to stir up bigotry against Muslims.
I am NOT Avigdor Liberman
I am NOT Naftali Bennet
And I am definitely NOT Bibi Netanyahu.
These three guys and their cohorts seem to be always at the center of any religious tension or terrorist attack almost anywhere in the world — starting in 1948 when the Stern Gang blew up the King David Hotel and Moshe Dayan’s “army” slaughtered Christian and Muslim Palestinians left and right in order to steal their land. “Every time anyone says that Israel is our only friend in the Middle East, I can’t help but think that before Israel, we had no enemies in the Middle East,” a Jesuit priest stated back then. And that’s still true today.
Israel’s sleazy military-industrial complex then went on to be an uber-cheerleader for America when our own sleazy military-industrial complex bombed Kuwait, Afghanistan, Iraq, Libya, Syria, Yugoslavia, Yemen, Pakistan, Somalia and I forget what all else. And Israeli neo-cons themselves have bombed Palestine, Egypt, Iran, Iraq, Lebanon and I forget what all else too — not to mention their documented ongoing support for ISIS and Al Qaeda.
If bombs, missiles, white phosphorus, tanks, false-flag operations, F-16s, tear gas or even bottle-rockets are involved, Bibi and these guys are so there!
Millions dead in the Middle East? I call that terrorism. And yet Bibi and his minions actually had the chutzpah to march in Paris “against terrorism,” according to Paris Match. Yeah, right.
Yet who benefited from the Charlie Hebdo incident? Let’s see. According to Paul Craig Roberts, it’s the American military-industrial complex that benefited. “Not France, not Muslims, but US world hegemony. US hegemony over the world is what the CIA supports. US world hegemony is the neoconservative-imposed foreign policy of the US.”
But as they say in poker, “I’ll see Roberts and raise him.” Netanyahu benefited. Apparently, right before the Charlie Dodo incident was staged, France had just announced that it might be backing off supporting sanctions on Russia. What? No immediate prospect of World War III? No big Israeli weapons sales? Bibi must have been tres disappointed!
France had also just announced that it was gonna recognize the Palestinian state. OMG! That must have totally pissed Netanyahu off.
Also, our Bibi is having trouble finding settlers to occupy his many illegal condos in Palestine’s West Bank. But he just loves French Jews — and hopes to scare them enough to force them to flee to Israel and live rent-free on Palestinian land. Heck, I like Israel well enough. Wouldn’t mind living there myself. It’s a nice place. Heck, even the Palestinians used to like living there too. But it’s the Israeli neo-cons’ blood-thirsty hypocritical scheming military-industrial-complex-
And I’m not being anti-Semitic here. Let’s leave all that religious bigotry to Charlie Hebdo. I am only being a student of American-Israeli neo-con “Realpolitik” (Rāˈälpōliˌtēk/: A system of politics or principles based on practical rather than moral or ideological considerations). And Realpolitik has nothing to do with religion.
Good grief, I’m so glad that I’m NOT Netanyahu.
And I also feel nothing but compassion for all the billions of Muslims, Christians and Jews who are being subjected to his vile manipulations. I also feel nothing but compassion for the hostages in the kosher supermarket who were also victims of Bibi’s lust for money and power and to create chaos throughout the world. Even if it means putting all the world’s Jews in danger again.
PS: What is going to happen next in France? Or in Israel and the United States too, for that matter. As my friend RJ suggests, let’s follow Norway’s heroic example after the dreadful 2011 massacre there and stop spending our patrimony on guns, bombs, war and alienation and start spending that money on integrating our nations’ diversity into our national bank of excellent human resources instead.
We’ve already wasted a hundred trillion dollars on “war” so far, only to discover again and again that violence doesn’t ever work. Not in the Middle East, not in Ukraine, not in Paris, not at the World Trade Center and not in Ferguson either. Just imagine if we had spent all that money on education, jobs, and integrating our society into a smooth-running democratic machine instead.
To paraphrase Thomas Piketty, “You can’t have a political democracy unless you have an economic democracy too.” And “war” has ruined — absolutely ruined — the economic democracy of both Israel and the USA. And probably France too.
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.
It Only Increases The Pain…
Recently my email brought me a message from a local Doctor friend who has been an exemplary example of what an activist for righteousness should be. He has been inventive and hard working for several decades with a particular emphasis on our educational system.
The headline of the email reads, “Do You Want to Make a Difference?”, “If so, Here’s How to Impact” the judicial system, educational system, abortion, law enforcement, and the 2nd Amendment.
He suggests Jury Nullification for reforming our courts, distributing flyers to impact abortion and schools, confronting police with the Constitution for supporting the 2ndAmendment, and letters to radio talk shows, newspaper editors, Mayors, Chiefs of Police, and Sheriffs. He also supports placing stickers on bumpers, credit cards, currency, clothing, doorways, drink machines, gas pumps, etc.
His final coup d’état is responding to the greeting “How are you?” with “I haven’t had a good day since Obama was elected!”
This man is genuine and sincere. His efforts are well meaning and directed at evil. However, he is treating symptoms and ignoring the underlying problem I have watched and sometimes participated in these same efforts in past decades. They do not work. They have enjoyed nominal victories but they have failed to stop or even slow the inexorable progression of tyranny and evil in our nation and around the world.
Former President Bush was and President Obama is a stooge to unseen powers. Both passed laws and worked at destroying our sovereignty, tyrannizing the populace, and subduing foreign nations. United States presidential candidates make promises of reform but when they are elected they do the bidding of the power elites who have longtime experience in forcing others to do their bidding.
The under-cover powers that control our elected officials are the real enemies. It is a conspiracy of long standing that includes clandestine power as well as some of the world’s well known individuals. The desires of these powerful people are reflected in the often erratic policies of our government. It is useless to rail at the stooges that get elected to high government positions. They are selected and controlled often before they run for office. Until we understand that the entire government is fixed we will make no progress against those who seek to enslave us.
In United States, Christians have been involved in Right Wing endeavors well back into the
Twentieth Century. They have supported U. S. exceptionalism and often the evil results it has produced. They have been mesmerized by newspapers and television and have refused to seek or even believe the truth. They not only work against their own nation but also against the God who created it.
Every day my email contains articles about atrocities against American citizens: immigration, taxation, Constitutional violations, police brutality, farcical educational programs, injustices in government programs, coming collapses, inaccurate press coverage, inflation, Chinese power, Mexican encroachment, national debt, dishonest politicians, Ebola, etc. etc. Most are atrocious and contain at least an element of truth.
This was my question to my Doctor friend: Why is all this happening and why is it impervious to the strenuous efforts of so many citizens?
He did not respond.
It continues, gentle reader, because the bulk of America’s Christians have accepted a heretical theology that renders them impotent. It continues because those who resist it have not confronted the actual source of the problem. It continues because there is no consensus among the resistors. It continues because there is no real leadership and the constituents are like a herd of cats.
We live in a nation whose citizens consistently vote for politicians that are destroying the nation.
The second part of the question is why is all this happening?
First, the Christian triune God is the one and only sovereign God. He created the Universe and is in control of all that is in it. He has brought about this seemingly irreversible plunge into chaos and tyranny and unless He changes His mind, human efforts to reverse it are useless. Not only will our efforts fail, we will be working against God’s Will and in the process incur His wrath. Second, the battle cannot be won nor can we achieve a single victory until we begin to work and pray against the forces that plague us. Attacking symptoms and allowing the genesis to continue without challenge is futile. Third, discernment is a gift God gives to Christians who are in good standing. When Christians lose their discernment, they need to evaluate their relationship to the One True God. Fourth, God seeks workers that will bear fruit. Those who continue to hit themselves on the thumb will be set aside. Fifth, continued effort to solve our national dilemma by supporting the corrupt system that now exists contributes to the heresy that government is divine and should be responsible for all civic and social ills. Government is not God. God has control over His creation and He is allowing our serious dilemma to fester.
We are being torn asunder by forces that most of our population has failed to identify. Our political system is irreversibly corrupt and attempts to reverse our plunge through that venue are useless.
What to do?
My Doctor friend wants to continue attempting to alert our citizens.
My sister, a smart gal, told me she thinks President George W. Bush really thought he could bring a democratic government to the people of Iraq. She is somewhat like the Russian citizen who on a train to Siberia told his fellow prisoner that he did not think Stalin knew what was going on. Attempts to change her mind are futile. She is concerned that if she accepted the truth her friends would laugh at her. She is typical of many of our citizens
Recently I listened to a talk by Marc Victor, an Arizona Defense Attorney. He stated that the United States of America is a police state and proceeded to prove his contention. He told how the Commerce Clause (To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes) in Article 1, Section 8 of the United States Constitution has been construed to allow the federal government to prosecute almost any crime anywhere in the country. He cited our astounding incarceration rate, the highest per capita in the entire world, and the uncontrolled power of every police officer in the nation. He said that if you are stopped by a policeman for a traffic violation take the ticket and go; argument might cost you your life. Listen here.
Our recently married son traveled to northern Louisiana to spend the holiday with his wife’s family. Patty and I booked a room in Clearwater where we spent a few very interesting days in one of the upscale Marriott Hotels. We were astonished at the variety of people. Several Asians with children, a tall Black man with a handsome White wife and two very well behaved boys. A Muslim and his wife from Ghana, he works with computers in Orlando; couples from Michigan, North Carolina, and several other states. A man from North Carolina had a son playing in the North Carolina State/ UCF football game (UCF lost). Several Indian families and several Black families, people from around the world.
Two couples stood out among those we met, they were from Chicago. A few years ago they moved from Russia. We talked about the United States and I expressed my concern for the country. Their impression was opposite to mine. They disliked Putin contending that he did not care for the Russian people but they were delighted with the U. S. enjoying its freedom and confident in its strength. As we talked it became apparent that they were judging our nation from a different perspective. One of the men had lost his grandparents to Stalin’s purges. They had moved from a totalitarian regime to a nation that still has a large degree of individual freedom. While I am judging America against the freedom we enjoyed when I was growing up during the 1930s depression, they are enjoying a degree of freedom they have never known.
The entelechy of perspective determines the evaluation of life. The Triune God of the Bible provides the only true perspective. Christians must accept the fact that neither they nor the government they elect can control the world. It is God’s world and He controls it. Loss of freedom is a Biblical punishment for disobedience and our nation and its people have been and continue to be disobedient.
When we begin to see and accept the truth things will get better.
Do we continue hitting our thumb with the hammer or do we take another tack?
“Our task as Christians is to move ourselves and our society from the realm of curses to the realm of blessings.” R. J. Rushdoony, “Systematic Theology”, Pg. 1024
Did the U.S. and the Saudis Conspire to Push Down Oil Prices?
“Saudi oil policy… has been subject to a great deal of wild and inaccurate conjecture in recent weeks. We do not seek to politicize oil… For us it’s a question of supply and demand, it’s purely business.” – Ali al Naimi, Saudi Oil Minister
“There is no conspiracy, there is no targeting of anyone. This is a market and it goes up and down.” – Suhail Bin Mohammed al-Mazroui, United Arab Emirates’ petroleum minister
“We all see the lowering of oil prices. There’s lots of talk about what’s causing it. Could it be an agreement between the U.S. and Saudi Arabia to punish Iran and affect the economies of Russia and Venezuela? It could.” – Russian President Vladimir Putin
Are falling oil prices part of a US-Saudi plan to inflict economic damage on Russia, Iran and Venezuela?
Venezuelan President Nicolas Maduro seems to think so. In a recent interview that appeared in Reuters, Maduro said he thought the United States and Saudi Arabia wanted to drive down oil prices “to harm Russia.”
Bolivian President Evo Morales agrees with Maduro and told journalists at RT that: “The reduction in oil prices was provoked by the US as an attack on the economies of Venezuela and Russia. In the face of such economic and political attacks, the nations must be united.”
Iranian President Hassan Rouhani said the same thing,with a slightly different twist: “The main reason for (the oil price plunge) is a political conspiracy by certain countries against the interests of the region and the Islamic world … Iran and people of the region will not forget such … treachery against the interests of the Muslim world.”
US-Saudi “treachery”? Is that what’s really driving down oil prices?
Not according to Saudi Arabia’s Petroleum Minister Ali al-Naimi. Al-Naimi has repeatedly denied claims that the kingdom is involved in a conspiracy. He says the tumbling prices are the result of “A lack of cooperation by non-OPEC production nations, along with the spread of misinformation and speculator’s greed.” In other words, everyone else is to blame except the country that has historically kept prices high by controlling output. That’s a bit of a stretch, don’t you think? Especially since–according to the Financial Times — OPEC’s de facto leader has abandoned the cartel’s “traditional strategy” and announced that it won’t cut production even if prices drop to $20 per barrel.
Why? Why would the Saudis suddenly abandon a strategy that allowed them to rake in twice as much dough as they are today? Don’t they like money anymore?
And why would al-Naimi be so eager to crash prices, send Middle East stock markets into freefall, increase the kingdom’s budget deficits to a record-high 5 percent of GDP, and create widespread financial instability? Is grabbing “market share” really that important or is there something else going on here below the surface?
The Guardian’s Larry Elliot thinks the US and Saudi Arabia are engaged a conspiracy to push down oil prices. He points to a September meeting between John Kerry and Saudi King Abdullah where a deal was made to boost production in order to hurt Iran and Russia. Here’s a clip from the article titled “Stakes are high as US plays the oil card against Iran and Russia”:
“…with the help of its Saudi ally, Washington is trying to drive down the oil price by ﬂooding an already weak market with crude. As the Russians and the Iranians are heavily dependent on oil exports, the assumption is that they will become easier to deal with…
John Kerry, the US secretary of state, allegedly struck a deal with King Abdullah in September under which the Saudis would sell crude at below the prevailing market price. That would help explain why the price has been falling at a time when, given the turmoil in Iraq and Syria caused by Islamic State, it would normally have been rising.
The Saudis did something similar in the mid-1980s. Then, the geopolitical motivation for a move that sent the oil price to below $10 a barrel was to destabilize Saddam Hussein’s regime. This time, according to Middle East specialists, the Saudis want to put pressure on Iran and to force Moscow to weaken its support for the Assad regime in Syria… (Stakes are high as US plays the oil card against Iran and Russia, Guardian)
That’s the gist of Elliot’s theory, but is he right?
Vladimir Putin isn’t so sure. Unlike Morales, Maduro and Rouhani, the Russian president has been reluctant to blame falling prices on US-Saudi collusion. In an article in Itar-Tass, Putin opined:
“There’s a lot of talk around” in what concerns the causes for the slide of oil prices, he said at a major annual news conference. “Some people say there is conspiracy between Saudi Arabia and the US in order to punish Iran or to depress the Russian economy or to exert impact on Venezuela.”
“It might be really so or might be different, or there might be the struggle of traditional producers of crude oil and shale oil,” Putin said. “Given the current situation on the market the production of shale oil and gas has practically reached the level of zero operating costs.” (Putin says oil market price conspiracy between Saudi Arabia and US not ruled out, Itar-Tass)
As always, Putin takes the most moderate position, that is, that Washington and the Saudis may be in cahoots, but that droopy prices might simply be a sign of over-supply and weakening demand. In other words, there could be a plot, but then again, maybe not. Putin is a man who avoids passing judgment without sufficient evidence.
The same can’t be said of the Washington Post. In a recent article, WP journalist Chris Mooney dismisses anyone who thinks oil prices are the result of US-Saudi collaboration as “kooky conspiracy theorists”. According to Mooney:
“The reasons for the sudden (price) swing are not particularly glamorous: They involve factors like supply and demand, oil companies having invested heavily in exploration several years ago to produce a glut of oil that has now hit the market — and then, perhaps, the “lack of cohesion” among the diverse members of OPEC.” (Why there are so many kooky conspiracy theories about oil, Washington Post)
Oddly enough, Mooney disproves his own theory a few paragraphs later in the same piece when he says:
“Oil producers really do coordinate. And then, there’s OPEC, which is widely referred to in the press as a “cartel,” and which states up front that its mission is to “coordinate and unify the petroleum policies” of its 12 member countries…. Again, there’s that veneer of plausibility to the idea of some grand oil related strategy.” (WP)
Let me get this straight: One the one hand Mooney agrees that OPEC is a cartel that “coordinates and unify the petroleum policies”, then on the other, he says that market fundamentals are at work. Can you see the disconnect? Cartels obstruct normal supply-demand dynamics by fixing prices, which Mooney seems to breezily ignore.
Also, he scoffs at the idea of “some grand oil related strategy” as if these cartel nations were philanthropic organizations operating in the service of humanity. Right. Someone needs to clue Mooney in on the fact that OPEC is not the Peace Corps. They are monopolizing amalgam of cutthroat extortionists whose only interest is maximizing profits while increasing their own political power. Surely, we can all agree on that fact.
What’s really wrong with Mooney’s article, is that he misses the point entirely. The debate is NOT between so-called “conspiracy theorists” and those who think market forces alone explain the falling prices. It’s between the people who think that the Saudis decision to flood the market is driven by politics rather than a desire to grab “market share.” That’s where people disagree. No denies that there’s manipulation; they merely disagree about the motive. This glaring fact seems to escape Mooney who is on a mission to discredit conspiracy theorists at all cost. Here’s more:
(There’s) “a long tradition of conspiracy theorists who have surmised that the world’s great oil powers — whether countries or mega-corporations — are secretly pulling strings to shape world events.”…
“A lot of conspiracy theories take as their premise that there’s a small group of people who are plotting to control something, to control the government, the banking system, or the main energy source, and they are doing this to the disadvantage of everybody else,” says University of California-Davis historian Kathy Olmsted, author of “Real Enemies: Conspiracy Theories and American Democracy, World War I to 9/11″. (Washington Post)
Got that? Now find me one person who doesn’t think the world is run by a small group of rich, powerful people who operate in their own best interests? Here’s more from the same article:
(Oil) “It’s the perfect lever for shifting world events. If you were a mad secret society with world-dominating aspirations and lots of power, how would you tweak the world to create cascading outcomes that could topple governments and enrich some at the expense of others? It’s hard to see a better lever than the price of oil, given its integral role in the world economy.” (WP)
“A mad secret society”? Has Mooney noticed that — in the last decade and a half — the US has only invaded nations that have huge natural resources (mainly oil and natural gas) or the geography for critical pipeline routes? There’s nothing particularly secret about it, is there?
The United States is not a “mad secret society with world-dominating aspirations”. It’s a empire with blatantly obvious “world-dominating aspirations” run by political puppets who do the work of wealthy elites and corporations. Any sentient being who’s bright enough to browse the daily headlines can figure that one out.
Mooney’s grand finale:
“So in sum, with a surprising and dramatic event like this year’s oil price decline, it would be shocking if it did not generate conspiracy theories. Humans believe them all too easily. And they’re a lot more colorful than a more technical (and accurate) story about supply and demand.” (WP)
Ah, yes. Now I see. Those darn “humans”. They’re so weak-minded they’ll believe anything you tell them, which is why they need someone as smart as Mooney tell them how the world really works.
Have you ever read such nonsense in your life? On top of that, he gets the whole story wrong. This isn’t about market fundamentals. It’s about manipulation. Are the Saudis manipulating supply to grab market share or for political reasons? THAT’S THE QUESTION. The fact that they ARE manipulating supply is not challenged by anyone including the uber-conservative Financial Times that deliberately pointed out that the Saudis had abandoned their traditional role of cutting supply to support prices. That’s what a “swing state” does; it manipulates supply keep prices higher than they would be if market forces were allowed to operate unimpeded.
So what is the motive driving the policy; that’s what we want to know?
Certainly there’s a strong case to be made for market share. No one denies that. If the Saudis keep prices at rock bottom for a prolonged period of time, then a high percentage of the producers (that can’t survive at prices below $70 per barrel) will default leaving OPEC with greater market share and more control over pricing.
So market share is certainly a factor. But is it the only factor?
Is it so far fetched to think that the United States–which in the last year has imposed harsh economic sanctions on Russia, made every effort to sabotage the South Stream pipeline, and toppled the government in Kiev so it could control the flow of Russian gas to countries in the EU–would coerce the Saudis into flooding the market with oil in order to decimate the Russian economy, savage the ruble, and create favorable conditions for regime change in Moscow? Is that so hard to believe?
Apparently New York Times columnist Thomas Freidman doesn’t think so. Here’s how he summed it up in a piece last month: “Is it just my imagination or is there a global oil war underway pitting the United States and Saudi Arabia on one side against Russia and Iran on the other?”
It sounds like Freidman has joined the conspiracy throng, doesn’t it? And he’s not alone either. This is from Alex Lantier at the World Socialist Web Site:
“While there are a host of global economic factors underlying the fall in oil prices, it is unquestionable that a major role in the commodity’s staggering plunge is Washington’s collaboration with OPEC and the Saudi monarchs in Riyadh to boost production and increase the glut on world oil markets.
As Obama traveled to Saudi Arabia after the outbreak of the Ukraine crisis last March, the Guardian wrote, “Angered by the Soviet invasion of Afghanistan in 1979, the Saudis turned on the oil taps, driving down the global price of crude until it reached $20 a barrel (in today’s prices) in the mid-1980s… [Today] the Saudis might be up for such a move—which would also boost global growth—in order to punish Putin over his support for the Assad regime in Syria. Has Washington floated this idea with Riyadh? It would be a surprise if it hasn’t.” (Alex Lantier,Imperialism and the ruble crisis, World Socialist Web Site)
And here’s an intriguing clip from an article at Reuters that suggests the Obama administration is behind the present Saudi policy:
“U.S. Secretary of State John Kerry sidestepped the issue (of a US-Saudi plot) after a trip to Saudi Arabia in September. Asked if past discussions with Riyadh had touched on Russia’s need for oil above $100 to balance its budget, he smiled and said: “They (Saudis) are very, very well aware of their ability to have an impact on global oil prices.” (Saudi oil policy uncertainty unleashes the conspiracy theorists, Reuters)
Of course, they’re in bed together. Saudi Arabia is a US client. It’s not autonomous or sovereign in any meaningful way. It’s a US protectorate, a satellite, a colony. They do what they’re told. Period. True, the relationship is complex, but let’s not be ridiculous. The Saudis are not calling the shots. The idea is absurd. Do you really think that Washington would let Riyadh fiddle prices in a way that destroyed critical US domestic energy industries, ravaged the junk bond market, and generated widespread financial instability without uttering a peep of protest on the matter?
Dream on! If the US was unhappy with the Saudis, we’d all know about it in short-order because it would be raining Daisy Cutters from the Persian Gulf to the Red Sea, which is the way that Washington normally expresses its displeasure on such matters. The fact that Obama has not even alluded to the shocking plunge in prices just proves that the policy coincides with Washington’s broader geopolitical strategy.
And let’s not forget that the Saudis have used oil as a political weapon before, many times before. Indeed, wreaking havoc is nothing new for our good buddies the Saudis. Check this out from Oil Price website:
“In 1973, Egyptian President Anwar Sadat convinced Saudi King Faisal to cut production and raise prices, then to go as far as embargoing oil exports, all with the goal of punishing the United States for supporting Israel against the Arab states. It worked. The “oil price shock” quadrupled prices.
It happened again in 1986, when Saudi Arabia-led OPEC allowed prices to drop precipitously, and then in 1990, when the Saudis sent prices plummeting as a way of taking out Russia, which was seen as a threat to their oil supremacy. In 1998, they succeeded. When the oil price was halved from $25 to $12, Russia defaulted on its debt.
The Saudis and other OPEC members have, of course, used the oil price for the obverse effect, that is, suppressing production to keep prices artificially high and member states swimming in “petrodollars”. In 2008, oil peaked at $147 a barrel.” (Did The Saudis And The US Collude In Dropping Oil Prices?, Oil Price)
1973, 1986, 1990, 1998 and 2008.
So, according to the author, the Saudis have manipulated oil prices at least five times in the past to achieve their foreign policy objectives. But, if that’s the case, then why does the media ridicule people who think the Saudis might be engaged in a similar strategy today?
Could it be that the media is trying to shape public opinion on the issue and, by doing so, actually contribute to the plunge in oil prices?
Bingo. Alert readers have probably noticed that the oil story has been splashed across the headlines for weeks even though the basic facts have not changed in the least. It’s all a rehash of the same tedious story reprinted over and over again. But, why? Why does the public need to have the same “Saudis refuse to cut production” story driven into their consciousness day after day like they’re part of some great collective brainwashing experiment? Could it be that every time the message is repeated, oil sells off, and prices go down? Is that it?
Precisely. For example, last week a refinery was attacked in Libya which pushed oil prices up almost immediately. Just hours later, however, another “Saudis refuse to cut production” story conveniently popped up in all the major US media which pushed prices in the direction the USG wants them to go, er, I mean, back down again.
This is how the media helps to reinforce government policy, by crafting a message that helps to push down prices and, thus, hurt “evil” Putin. (This is called “jawboning”) Keep in mind, that OPEC doesn’t meet again until June, 2015, so there’s nothing new to report on production levels. But that doesn’t mean we’re not going to get regular updates on the “Saudis refuse to cut production” story. Oh, no. The media is going to keep beating that drum until Putin cries “Uncle” and submits to US directives. Either that, or the bond market is going to blow up and take the whole damn global financial system along with it. One way or another, something’s got to give.
Bottom line: Falling oil prices and the plunging ruble are not some kind of free market accident brought on by oversupply and weak demand. That’s baloney. They’re part of a broader geopolitical strategy to strangle the Russian economy, topple Putin, and establish US hegemony across the Asian landmass. It’s all part of Washington’s plan to maintain its top-spot as the world’s only superpower even though its economy is in irreversible decline.
Putin’s Next Move Is Crucial…
The plunge of the Russian currency this week is the drastic outcome of policies implemented by the major imperialist powers to force Russia to submit to American and European imperialism’s neo-colonial restructuring of Eurasia. Punishing the Putin regime’s interference with their plans for regime change in countries such as Ukraine and Syria, the NATO powers are financially strangling Russia.” Alex Lantier, Imperialism and the ruble crisis, WSWS
“The struggle for world domination has assumed titanic proportions. The phases of this struggle are played out upon the bones of the weak and backward nations.” Leon Trotsky, 1929
Russian President Vladimir Putin suffered a stunning defeat on Tuesday when a US-backed plan to push down oil prices sent the ruble into freefall. Russia’s currency plunged 10 percent on Monday followed by an 11 percent drop on Tuesday reducing the ruble’s value by more than half in less than a year. The jarring slide was assisted by western sympathizers at Russia’s Central Bank who, earlier in the day, boosted interest rates from 10.5 percent to 17 percent to slow the decline. But the higher rates only intensified the outflow of capital which put the ruble into a tailspin forcing international banks to remove pricing and liquidity from the currency leading to the suspension of trade. According to Russia Today:
“Russian Federation Council Chair Valentina Matviyenko has ordered a vote on a parliamentary investigation into the recent activities of the Central Bank and its alleged role in the worst-ever plunge of the ruble rate…
“I suggest to start a parliamentary investigation into activities of the Central Bank that has allowed violations of the citizens’ Constitutional rights, including the right for property,” the RIA Novosti quoted Tarlo as saying on Wednesday.
The senator added that according to the law, protecting financial stability in the country is the main task of the Central Bank and its senior management. However, the bank’s actions, in particular the recent raising of the key interest rate to 17 percent, have so far yielded the opposite results.” (Upper House plans probe into Central Bank role in ruble crash, RT)
The prospect that there may be collaborators and fifth columnists at Russia’s Central Bank should surprise no one. The RCB is an independent organization that serves the interests of global capital and regional oligarchs the same as central banks everywhere. This is a group that believes that humanity’s greatest achievement is the free flow of privately-owned capital to markets around the world where it can extract maximum value off the sweat of working people. Why would Russia be any different in that regard?
It isn’t. The actions of the Central Bank have cost the Russian people dearly, and yet, even now the main concern of RCB elites is their own survival and the preservation of the banking system. An article that appeared at Zero Hedge on Wednesday illustrates this point. After ruble trading was suspended, the RCB released a document with “7 new measures” all of which were aimed at protecting the banking system via moratoria on securities losses, breaks on interest rates, additional liquidity provisioning, easier credit and accounting standards, and this gem at the end:
“In order to maintain the stability of the banking sector in the face of increased interest rate and credit risks of a slowdown of the Russian economy the Bank of Russia and the Government of the Russian Federation prepare measures to recapitalize credit institutions in 2015.” (Russian Central Bank Releases 7 Measures It Will Take To Stabilize The Financial Sector, Zero Hedge)
Sound familiar? It should. You see, the Russian Central Bank works a lot like the Fed. At the first sign of trouble they build a nice, big rowboat for themselves and their dodgy bank buddies and leave everyone else to drown. That’s what these bullet points are all about. Save the banks, and to hell the people who suffer from their exploitative policies.
Here’s more from RT:
“Earlier this week a group of State Duma MPs from the Communist Party sent an official address to Putin asking him to sack (Central Bank head, Elvira) Nabiullina, and all senior managers of the Central Bank as their current policies are causing the rapid devaluation of ruble and impoverishment of the majority of the Russian population.
In their letter, the Communists also recalled Putin’s address to the Federal Assembly in which he said that control over inflation must not be in the way of the steady economic growth.
“They listen to your orders and then do the opposite,” the lawmakers complained.” (RT)
In other words, the RCB enforces its own “austerity” policy in Russia just as central bankers do everywhere. There’s nothing conspiratorial about this. CBs are owned and controlled by the big money guys which is why their policies invariably serve the interests of the rich. They might not call it “trickle down” or “structural adjustment” (as they do in the US), but it amounts to the same thing, the inexorable shifting of wealth from working class people to the parasitic plutocrats who control the system and its political agents. Same old, same old.
Even so, the media has pinned the blame for Tuesday’s ruble fiasco on Putin who, of course, has nothing to do with monetary policy. That said, the ruble rout helps to draw attention to the fact that Moscow is clearly losing its war with the US and needs to radically adjust its approach if it hopes to succeed. First of all, Putin might be a great chess player, but he’s got a lot to learn about finance. He also needs a crash-course in asymmetrical warfare if he wants to defend the country from more of Washington’s stealth attacks.
In the last 10 months, the United States has executed a near-perfect takedown of the Russian economy. Following a sloppy State Department-backed coup in Kiev, Washington has consolidated its power in the Capital, removed dissident elements in the government, deployed the CIA to oversee operations, launched a number of attacks on rebel forces in the east, transferred ownership of Ukraine’s vital pipeline system to US puppets and foreign corporations, created a tollbooth separating Moscow from the lucrative EU market, foiled a Russian plan to build an alternate pipeline to southern Europe (South Stream), built up its military assets in the Balkans and Black Sea and, finally–the cherry on the cake–initiated a daring sneak attack on Russia’s currency by employing its Saudi-proxy to flood the market with oil, push prices off a cliff, and trigger a run on the ruble which slashed its value by more than half forcing retail currency platforms to stop trading the battered ruble until prices stabilized.
Like we said, Putin might be a great chess player, but in his battle with the US, he’s getting his clock cleaned. So far, he’s been no match for the maniacal focus and relentless savagery of the Washington powerbrokers. Yes, he’s formed critical alliances across Asia and the world. He’s also created competing institutions (like the BRICS bank) that could break the imperial grip on global finance. And, he’s also expounded a vision of a new world in which “one center of power” does not dictate the rules to everyone else. That’s all great, but he’s losing the war, and that’s what counts. Washington doesn’t care about peoples’ dreams or aspirations. What they care about is ruling the world with an iron fist, which is precisely what they intend to do for the next century or so unless someone stops them. Putin’s actions, however admirable, have not yet changed that basic dynamic. In fact, this latest debacle (authored by the RCB) is a severe setback for the country and could impact Russia’s ability to defend itself against US-NATO aggression.
So what does Putin need to do to reverse the current trend?
The first order of business should be a fundamental change in approach followed by a quick switch from defense to offense. There should be no doubt by now, that Washington is going for the jugular. The attack on the ruble provides clear evidence that the US will not be satisfied until Russia has been decimated and reduced to “a permanent state of colonial dependency.” (Chomsky) The United States has launched a full-blown economic war on Russia and yet the Kremlin is still acting like Washington’s punching bag. You can’t win a war like that. You have to take the initiative; take chances, be bold, think outside the box. That’s what Washington is doing. The rout of the ruble is perhaps the most astonishingly-successful asymmetrical attack in recent memory. It involved tremendous risks and costs on the part of the perpetrators. For example, the lower oil prices have ravaged important domestic industries, created widespread financial instability, and sent markets across the planet into a nosedive. Even so, Washington persevered with its audacious strategy, undeterred by the vast collateral damage, never losing sight of its ultimate objective; to deprive Moscow of crucial oil revenues, to crash the ruble, and to open up Central Asia for imperial expansion and US military bases. (The pivot to Asia)
This is how the US plays the game, by keeping its “eyes on the prize” at all times, and by rolling roughshod over anyone or anything that gets in its way. That is why the US is the world’s only superpower, because the voracious oligarchs who run the country will stop at nothing to get what they want.
Does Putin have the grit to match that kind of venomous determination? Has he even adjusted to the fact that WW3 will be unlike any conflict in the past, that jihadi-proxies and Neo Nazi-proxies will be employed as shock troops for the empire clearing the way for US special forces and foot soldiers who will hold ground and establish the new order? Does he even realize that Barbarossa 2 is already underway, but that the Panzer divisions and 2 million German regulars have been replaced with high-powered computers, covert ops, color-coded revolutions, currency crises, capital flight, cyber attacks and relentless propaganda. That’s 4th Generation (4-G) warfare in a nutshell. And, guess what? The US attack on the ruble has shown that it is the undisputed master of this new kind of warfare. More important, Washington has just prevailed in a battle that could prove to be a critical turning point if Putin doesn’t get his act together and retaliate.
You mean nukes?
Heck no. But, by the same token, you can’t expect to win a confrontation with the US by rerouting gas pipelines to Turkey or by forming stronger coalitions with other BRICS countries or by ditching the dollar. Because none of that stuff makes a damn bit of difference when your currency is in the toilet and the US is making every effort to grind your face into the pavement.
There’s an expression is football that goes something like this: The best defense is a good offense. You can’t win by sitting on the sidelines and hoping your team doesn’t lose. You must engage your adversary at every opportunity never giving ground without a fight. And when an opening appears where you can take the advantage, you must act promptly and decisively never looking back and never checking your motives. That’s how you win.
Washington only thinks in terms winning. It expects to win, and will do whatever is necessary to win. In fact, the whole system has been re-geared for one, sole purpose; to beat the holy hell out of anyone who gets out of line. That’s what we do, and we’ve gotten pretty good at it. So, if you want to compete at that level, you’ve got to have “game”. You’re going to have to step up and prove that you can run with the big kids.
And that’s what makes Putin’s next move so important, crucial really. Because whatever he does will send a message to Washington that he’s either up to the challenge or he’s not. Which is why he needs to come out swinging and do something completely unexpected. The element of surprise, that’s the ticket. And we’re not talking about military action either. That just plays to Uncle Sam’s strong hand. Putin doesn’t need another Vietnam. He needs a coherent gameplan. He needs a winning strategy. He needs to takes risks, put it all on the line and roll the freaking dice. You can’t lock horns with the US and play it safe. That’s a losing strategy. This is smash-mouth, steelcage smackdown, a scorched-earth event where winner takes all. You have to be ready to rumble.
Putin needs to think asymmetrically. What would Obama do if he was in Putin’s shoes?
You know what he’d do: He’d send military support to Assad. He’d arm rebel factions in Saudi Arabia, Somalia, Nigeria and elsewhere. He’d strengthen ties with Venezuela, Bolivia, Ecuador providing them with military, intelligence and logistical support. He’d deploy his NGOs and Think Tank cronies to foment revolution wherever leaders refused to follow Moscow’s directives. He would work tirelessly to build the economic, political, media, and military institutions he needed to impose his own self-serving version of snatch-and-grab capitalism on every nation on every continent in the world. That’s what Obama would do, because that’s what his puppetmasters would demand of him.
But Putin must be more discreet, because his resources are more limited. But he still has options, like the markets, for example. Let’s say Putin announces that creditors in the EU (particularly banks) won’t be paid until the ruble recovers. How does that sound?
Putin: “We’re really sorry about the inconvenience, but we won’t be able to make those onerous principle payments for a while. Please accept our humble apologies.” End of statement.
Moments later: Global stocks plunge 350 points on the prospect of a Russian default and its impact on the woefully-undercapitalized EU banking system.
Get the picture? That’s what you call an asymmetrical attack. The idea was even hinted at in a piece on Bloomberg News. Here’s an excerpt from the article:
“Sergei Markov, a pro-Putin academic, wrote in a column on Vzglyad.ru. “Since the reasons for the ruble’s fall are political, the response should be political, too. For example, a law that would ban Russian companies from repaying debts to Western counterparties if the ruble has dropped more than 50 percent in the last year. That will immediately lower the pressure on the ruble, many countries have done this, Malaysia is one example. It’s in great economic shape now.” (Is Russia ready to impose capital controls? Chicago Tribune)
Here’s more background from RT:
“Major banks across Europe, as well as the UK, US, and Japan, are at major risk should the Russian economy default, according to a new study by Capital Economics. The ING Group in the Netherlands, Raiffeisen Bank in Austria, Societe General in France, UniCredit in Italy, and Commerzbank in Germany, have all faced significant losses in the wake of the ruble crisis…
Overall Societe General, known as Rosbank in the Russian market, has the most exposure at US$31 billion, or €25 billion, according to Citigroup Inc. analysts. This is equivalent to 62 percent of the Paris-based bank’s tangible equity, Bloomberg News reported.
Following the drop, Raiffeisen, which has €15 billion at risk in Russia, saw its stocks plummeted more than 10 percent. Raiffeisen also has significant exposure in Ukraine, which is facing a similar currency sell-off as Russia.” (Russia crisis leaves banks around the world exposed by the billions, RT)
So Putin defaults which nudges the EU banking system down the stairwell. So what? What does that prove?
It proves that Russia has the tools to defend itself. It proves that Putin can disrupt the status quo and spread the pain a bit more equitably. “Spreading the pain” is a tool the US uses quite frequently in its dealings with other countries. Maybe Putin should take a bite of that same apple, eh?
Another option would be to implement capital controls to avoid ruble-dollar conversion and further capital flight. The beauty of capital controls is that they take power away from the big money guys who run the world and hand it back to elected officials. Leaders like Putin are then in a position to say, “Hey, we’re going to take a little break from the dollar system for while until we get caught up. I hope you’ll understand our situation.”
Capital controls are an extremely effective of avoiding capital flight and minimizing the impact of a currency crisis. Here’s a short summary of how these measures helped Malaysia muddle through in 1998:
“When the Asian financial crisis hit, Malaysia’s position looked a lot like Russia’s today: It had big foreign reserves and a low short-term debt level, but relatively high general indebtedness if households and corporations were factored in. At first, to bolster the ringgit, Deputy Prime Minister Anwar Ibrahim pushed through a market-based policy with a flexible exchange rate, rising interest rates and cuts in government spending. It didn’t work: Consumption and investment went down, and pessimism prevailed, exerting downward pressure on the exchange rate.
So, in June 1998, Prime Minister Mahathir Mohammad… appointed a different economic point man, Daim Zainuddin. In September, on Daim’s urging, Malaysia introduced capital controls. It banned offshore operations in ringgit and forbade foreign investors to repatriate profits for a year. Analysts at the time were sharply critical of the measures, and Malaysia’s reputation in the global financial markets inevitably suffered.
According to Kaplan and Rodrik, however, the capital controls were ultimately effective. The government was able to lower interest rates, the economy recovered, the controls were relaxed ahead of time, and by May 1999 Malaysia was back on the international capital markets with a $1 billion bond issue.” (Is Russia ready to impose capital controls, Chicago Tribune)
Sure they were effective, but they piss off the slacker class of oligarchs who think the whole system should be centered on their “inalienable right” to move capital from one spot to another so they can rake-off hefty profits at everyone else’s expense. Capital controls push those creeps to the back of the line so the state can do what it needs to do to preserve the failing economy from the attack of speculators. Here’s a clip from a speech Joseph Stiglitz gave in 2014 at the Atlanta Fed’s 2014 Financial Markets Conference. He said:
“When countries do not impose capital controls and allow exchange rates to vary freely, this can give rise to high levels of exchange rate volatility. The consequence can be high levels of economic volatility, imposing great costs on workers and firms throughout the economy. Even if they can lay off some of the risk, there is a cost to doing so. The very existence of this volatility affects the structure of the economy and overall economic performance.”
That sums it up pretty well. Without capital controls, the deep-pocket Wall Street banks and speculators can simply vacuum the money out of an economy leaving the country broken and penniless. This nihilistic decimation of emerging markets via capital flight is what the kleptocracy breezily refers to as “free markets”, the unwavering plundering of civilization to fatten the coffers of the swinish few at the top of the foodchain. That’s got to stop.
Putin needs to put his foot down now; stop the outflow of cash, stop the conversion of rubles to dollars, force investors to recycle their money into the domestic economy, indict the central bank governors and trundle them off to the hoosegow, and reassert the power of the people over the markets. If he doesn’t, then the speculators will continue to peck away until Russia’s reserves are drained-dry and the country is pushed back into another long-term slump. Who wants that?
And don’t think that Putin’s only problem is Washington either, because it isn’t. He’s got an even bigger headache in his own country with the morons who still buy the hogwash that “the market knows best.” These are the fantasists, the corporate toadies, and the fifth columnists, some of whom hold very high office. Here’s a clip I picked up at the Vineyard of the Saker under the heading “Medvedev declares: more of the same”:
(Russian Prime Minister) “Medvedev has just called a government meeting with most of the directors of top Russian corporations and the director of the Russian Central Bank. He immediately announced that he will not introduce any harsh regulatory measures and that he will let the market forces correct the situation. As for the former Minister of Finance, the one so much beloved in the West, Alexei Kudrin, he expressed his full support for the latest increase in interest rates.”
This is lunacy. The US has just turned Russia’s currency into worthless fishwrap, and bonehead Medvedev wants to play nice and return to “business as usual”??
No thanks. Maybe Medvedev wants to be a slave to the market, but I’ll bet Putin is smarter than that.
Putin’s not going to roll over and play dead for these vipers. He’s got to much on the ball for that. He’s going to beat them at their own game, fair and square. He’s going to implement capital controls, restructure the economy away from the west, and aggressively look for ways to deter Washington from spreading its heinous resource war to Central Asia and beyond.
He’s not going to give an inch. You’ll see.
In 1964, the Brazilian military, in a US-designed coup, overthrew a liberal (not more to the left than that) government and proceeded to rule with an iron fist for the next 21 years. In 1979 the military regime passed an amnesty law blocking the prosecution of its members for torture and other crimes. The amnesty still holds.
That’s how they handle such matters in what used to be called The Third World. In the First World, however, they have no need for such legal niceties. In the United States, military torturers and their political godfathers are granted amnesty automatically, simply for being American, solely for belonging to the “Good Guys Club”.
So now, with the release of the Senate Intelligence Committee report on CIA torture, we have further depressing revelations about US foreign policy. But do Americans and the world need yet another reminder that the United States is a leading practitioner of torture? Yes. The message can not be broadcast too often because the indoctrination of the American people and Americophiles all around the world is so deeply embedded that it takes repeated shocks to the system to dislodge it. No one does brainwashing like the good ol’ Yankee inventors of advertising and public relations. And there is always a new generation just coming of age with stars (and stripes) in their eyes.
The public also has to be reminded yet again that – contrary to what most of the media and Mr. Obama would have us all believe – the president has never actually banned torture per se, despite saying recently that he had “unequivocally banned torture” after taking office.
Shortly after Obama’s first inauguration, both he and Leon Panetta, the new Director of the CIA, explicitly stated that “rendition” was not being ended. As the Los Angeles Times reported at the time: “Under executive orders issued by Obama recently, the CIA still has authority to carry out what are known as renditions, secret abductions and transfers of prisoners to countries that cooperate with the United States.”
The English translation of “cooperate” is “torture”. Rendition is simply outsourcing torture. There was no other reason to take prisoners to Lithuania, Poland, Romania, Egypt, Jordan, Kenya, Somalia, Kosovo, or the Indian Ocean island of Diego Garcia, amongst other torture centers employed by the United States. Kosovo and Diego Garcia – both of which house large and very secretive American military bases – if not some of the other locations, may well still be open for torture business, as is the Guantánamo Base in Cuba.
Moreover, the key Executive Order referred to, number 13491, issued January 22, 2009, “Ensuring Lawful Interrogations”, leaves a major loophole. It states repeatedly that humane treatment, including the absence of torture, is applicable only to prisoners detained in an “armed conflict”. Thus, torture by Americans outside an environment of “armed conflict” is not explicitly prohibited. But what about torture within an environment of “counter-terrorism”?
The Executive Order required the CIA to use only the interrogation methods outlined in a revised Army Field Manual. However, using the Army Field Manual as a guide to prisoner treatment and interrogation still allows solitary confinement, perceptual or sensory deprivation, sensory overload, sleep deprivation, the induction of fear and hopelessness, mind-altering drugs, environmental manipulation such as temperature and noise, and stress positions, amongst other charming examples of American Exceptionalism.
After Panetta was questioned by a Senate panel, the New York Times wrote that he had “left open the possibility that the agency could seek permission to use interrogation methods more aggressive than the limited menu that President Obama authorized under new rules … Mr. Panetta also said the agency would continue the Bush administration practice of ‘rendition’ … But he said the agency would refuse to deliver a suspect into the hands of a country known for torture or other actions ‘that violate our human values’.”
The last sentence is of course childishly absurd. The countries chosen to receive rendition prisoners were chosen precisely and solely because they were willing and able to torture them.
Four months after Obama and Panetta took office, the New York Times could report that renditions had reached new heights.
The present news reports indicate that Washington’s obsession with torture stems from 9/11, to prevent a repetition. The president speaks of “the fearful excesses of the post-9/11 era”. There’s something to that idea, but not a great deal. Torture in America is actually as old as the country. What government has been intimately involved with that horror more than the United States? Teaching it, supplying the manuals, supplying the equipment, creation of international torture centers, kidnaping people to these places, solitary confinement, forced feeding, Guantánamo, Abu Ghraib, Bagram, Chile, Brazil, Argentina, Chicago … Lord forgive us!
In 2011, Brazil instituted a National Truth Commission to officially investigate the crimes of the military government, which came to an end in 1985. But Mr. Obama has in fact rejected calls for a truth commission concerning CIA torture. On June 17 of this year, however, when Vice President Joseph Biden was in Brazil, he gave the Truth Commission 43 State Department cables and reports concerning the Brazilian military regime, including one entitled “Widespread Arrests and Psychophysical Interrogation of Suspected Subversives.”
Thus it is that once again the United States of America will not be subjected to any accountability for having broken US laws, international laws, and the fundamental laws of human decency. Obama can expect the same kindness from his successor as he has extended to George W.
“One of the strengths that makes America exceptional is our willingness to openly confront our past, face our imperfections, make changes and do better.” – Barack Obama, written statement issued moments after the Senate report was made public.
And if that pile of hypocrisy is not big enough or smelly enough, try adding to it Bidens’ remark re his visit to Brazil: “I hope that in taking steps to come to grips with our past we can find a way to focus on the immense promise of the future.”
If the torturers of the Bush and Obama administrations are not held accountable in the United States they must be pursued internationally under the principles of universal jurisdiction.
In 1984, an historic step was taken by the United Nations with the drafting of the “Convention Against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment” (came into force in 1987, ratified by the United States in 1994). Article 2, section 2 of the Convention states: “No exceptional circumstances whatsoever, whether a state of war or a threat of war, internal political instability or any other public emergency, may be invoked as a justification of torture.”
Such marvelously clear, unequivocal, and principled language, to set a single standard for a world that makes it increasingly difficult for one to feel proud of humanity. We cannot slide back. If today it’s deemed acceptable to torture the person who supposedly has the vital “ticking-bomb” information needed to save lives, tomorrow it will be acceptable to torture him to learn the identities of his alleged co-conspirators. Would we allow slavery to resume for just a short while to serve some “national emergency” or some other “higher purpose”?
If you open the window of torture, even just a crack, the cold air of the Dark Ages will fill the whole room.
Cuba … at long, long last … maybe …
Hopefully, it’s what it appears to be. Cuba will now be treated by the United States as a country worthy of at least as much respect as Washington offers to its highly oppressive, murdering, torturing allies in Saudi Arabia, Egypt, Honduras, Israel, Pakistan, Afghanistan, and elsewhere.
It’s a tough decision to normalize relations with a country whose police force murders its own innocent civilians on almost a daily basis, and even more abroad, but Cuba needs to do it. Maybe the Cubans can civilize the Americans a bit.
Let’s hope that America’s terrible economic embargo against the island will go the way of the dinosaurs, and Cuba will be able to demonstrate more than ever what a rational, democratic, socialist society can create. But they must not open the economy for the Yankee blood-suckers to play with as they have all over the world.
And I’ll be able to go to Cuba not as a thief in the night covering my tracks and risking a huge fine.
But with the Republicans taking over Congress next month, all of this may be just a pipe dream.
Barack Obama could have done this six years ago when he took office; or five years ago when American Alan Gross was first arrested and imprisoned in Cuba. It would have been even easier back then, with Obama’s popularity at its height and Congress not as captured by the Know-Nothings as now.
So, Cuba outlasted all the punishment, all the lies, all the insults, all the deprivations, all the murderous sabotage, all the assassination attempts against Fidel, all the policies to isolate the country. But for many years now, it’s the United States that has been isolated in the Western Hemisphere.
Reason Number 13,336 why capitalism will be the death of us.
Antibiotic-resistant bacteria – the “superbugs” – if left unchecked, could result in 10 million deaths a year by 2050. New drugs to fight the superbugs are desperately needed. But a panel advising President Obama warned in September that “there isn’t a sufficiently robust pipeline of new drugs to replace the ones rendered ineffective by antibiotic resistance.”
The problem, it appears, is that “Antibiotics generally provide low returns on investment, so they are not a highly attractive area for research and development.”
Aha! “Low returns on investment”! What could be simpler to understand? Is it not a concept worth killing and dying for? Just as millions of Americans died in the 20th century so corporations could optimize profits by not protecting the public from tobacco, lead, and asbestos.
Corporations are programmed to optimize profits without regard for the society in which they operate, in much the same way that cancer cells are programmed to proliferate without regard for the health of their host.
Happy New Year. Here’s what you have to look forward to in 2015.
- January 25: 467 people reported missing from a university in Mexico. US State Department blames Russia.
- February 1: Military junta overthrows President Nicolás Maduro in Venezuela. Washington decries the loss of democracy.
- February 2: US recognizes the new Venezuelan military junta, offers it 50 jet fighters and tanks.
- February 3: Revolution breaks out in Venezuela endangering the military junta; 40,000 American marines land in Caracas to quell the uprising.
- February 16: White police officer in Chicago fatally shoots a 6-year old black boy holding a toy gun.
- March 6: Congress passes a new law which states that to become president of the United States a person must have the surname Bush or Clinton.
- April 30: The Department of Homeland Security announces plan to record the DNA at birth of every child born in the United States.
- May 19: The Supreme Court rules that police may search anyone if they have reasonable grounds for believing that the person has pockets.
- May 27: The Transportation Security Administration declares that all airline passengers must strip completely nude at check-in and remain thus until arriving at their destination.
- June 6: White police officer in Oklahoma City tasers a 7-month-old black child, claiming the child was holding a gun; the gun turns out to be a rattle.
- July 19: Two subway trains collide in Manhattan. The United States demands that Moscow explain why there was a Russian citizen in each of the trains.
- September 5: The Democratic Party changes its name to the Republican Lite Party, and announces the opening of a joint bank account with the Republican Party so that corporate lobbyists need make out only one check.
- September 12: White police officer in Alabama shoots black newborn, confusing the umbilical cord for a noose.
- November 16: President Obama announces that Iran, Syria, Lebanon, Palestine, North Korea, Sudan, Nicaragua, Venezuela, Bolivia and Cuba all possess weapons of mass destruction; have close ties to the Islamic State, al Qaeda, and the Taliban; are aiding pro-Russian rebels in Ukraine; were involved in 9-11; played a role in the assassination of John F. Kennedy and the attack on Pearl Harbor; are an imminent threat to the United States and all that is decent and holy; and are all “really bad guys”, who even (choke, gasp) use torture!
- November 21: The United States invades Iran, Syria, Lebanon, Palestine, North Korea, Sudan, Nicaragua, Venezuela, Bolivia and Cuba.
- December 10: Barack Obama is awarded his second Nobel Peace Prize
- December 11: To celebrate his new peace prize, Obama sends out drones to assassinate wrong-thinking individuals in Somalia, Afghanistan and Yemen.
- December 13: Members of Ukraine’s neo-Nazi parties, which hold several high positions in the US-supported government, goose-step through the center of Kiev in full German Storm Trooper uniforms, carrying giant swastika flags, shouting “Heil Hitler”, and singing the Horst Wessel song. Not a word of this appears in any American mainstream media.
- December 15: US Secretary of State warns Russia to stop meddling in Ukraine, accusing Moscow of wanting to re-create the Soviet Union.
- December 16: White police officer shoots a black 98-year-old man sitting in a wheel chair, claiming the man pointed a rifle at him. The rifle turns out to be a cane.
- December 28: The Washington Redskins football team finish their season in last place. The White House blames Vladimir Putin.
- Associated Press, December 11, 2014
- New York Times, December 11, 2014
- Los Angeles Times, February 1, 2009
- New York Times, February 6, 2009
- New York Times, May 24, 2009
- Washington Post, December 11, 2014
- National Security Archive’s Brazil Documentation Project
- Washington Post, December 10, 2014
- See note 7
- Washington Post, December 13, 2014
US-Saudi Subterfuge Send Stocks and Credit Reeling…
U.S. powerbrokers have put the country at risk of another financial crisis to intensify their economic war on Moscow and to move ahead with their plan to “pivot to Asia”.
Here’s what’s happening: Washington has persuaded the Saudis to flood the market with oil to push down prices, decimate Russia’s economy, and reduce Moscow’s resistance to further NATO encirclement and the spreading of US military bases across Central Asia. The US-Saudi scheme has slashed oil prices by nearly a half since they hit their peak in June. The sharp decline in prices has burst the bubble in high-yield debt which has increased the turbulence in the credit markets while pushing global equities into a tailspin. Even so, the roiled markets and spreading contagion have not deterred Washington from pursuing its reckless plan, a plan which uses Riyadh’s stooge-regime to prosecute Washington’s global resource war. Here’s a brief summary from an article by F. William Engdahl titled “The Secret Stupid Saudi-US Deal on Syria”:
“The details are emerging of a new secret and quite stupid Saudi-US deal on Syria and the so-called IS. It involves oil and gas control of the entire region and the weakening of Russia and Iran by Saudi Arabian flooding the world market with cheap oil. Details were concluded in the September meeting by US Secretary of State John Kerry and the Saudi King…
..the kingdom of Saudi Arabia, has been flooding the market with deep discounted oil, triggering a price war within OPEC… The Saudis are targeting sales to Asia for the discounts and in particular, its major Asian customer, China where it is reportedly offering its crude for a mere $50 to $60 a barrel rather than the earlier price of around $100. That Saudi financial discounting operation in turn is by all appearance being coordinated with a US Treasury financial warfare operation, via its Office of Terrorism and Financial Intelligence, in cooperation with a handful of inside players on Wall Street who control oil derivatives trading. The result is a market panic that is gaining momentum daily. China is quite happy to buy the cheap oil, but her close allies, Russia and Iran, are being hit severely…
According to Rashid Abanmy, President of the Riyadh-based Saudi Arabia Oil Policies and Strategic Expectations Center, the dramatic price collapse is being deliberately caused by the Saudis, OPEC’s largest producer. The public reason claimed is to gain new markets in a global market of weakening oil demand. The real reason, according to Abanmy, is to put pressure on Iran on her nuclear program, and on Russia to end her support for Bashar al-Assad in Syria….More than 50% of Russian state revenue comes from its export sales of oil and gas. The US-Saudi oil price manipulation is aimed at destabilizing several strong opponents of US globalist policies. Targets include Iran and Syria, both allies of Russia in opposing a US sole Superpower. The principal target, however, is Putin’s Russia, the single greatest threat today to that Superpower hegemony. (The Secret Stupid Saudi-US Deal on Syria, F. William Engdahl, BFP)
The US must achieve its objectives in Central Asia or forfeit its top-spot as the world’s only superpower. This is why US policymakers have embarked on such a risky venture. There’s simply no other way to sustain the status quo which allows the US to impose its own coercive dollar system on the world, a system in which the US exchanges paper currency produced-at-will by the Central Bank for valuable raw materials, manufactured products and hard labor. Washington is prepared to defend this extortionist petrodollar recycling system to the end, even if it means nuclear war.
How Flooding the Market Adds to Instability
The destructive and destabilizing knock-on effects of this lunatic plan are visible everywhere. Plummeting oil prices are making it harder for energy companies to get the funding they need to roll over their debt or maintain current operations. Companies borrow based on the size of their reserves, but when prices tumble by nearly 50 percent–as they have in the last six months– the value of those reserves falls sharply which cuts off access to the market leaving CEO’s with the dismal prospect of either selling assets at firesale prices or facing default. If the problem could be contained within the sector, there’d be no reason for concern. But what worries Wall Street is that a surge in energy company failures could ripple through the financial system and wallop the banks. Despite six years of zero rates and monetary easing, the nation’s biggest banks are still perilously undercapitalized, which means that a wave of unexpected bankruptcies could be all it takes to collapse the weaker institutions and tip the system back into crisis. Here’s an excerpt from a post at Automatic Earth titled “Will Oil Kill the Zombies?”:
“If prices fall any further, it would seem that most of the entire shale edifice must of necessity crumble to the ground. And that will cause an absolute earthquake in the financial world, because someone supplied the loans the whole thing leans on. An enormous amount of investors have been chasing high yield, including many institutional investors, and they’re about to get burned something bad….. if oil keeps going the way it has lately, the Fed may instead have to think about bailing out the big Wall Street banks once again.” (Will Oil Kill the Zombies?, Raúl Ilargi Meijer, Automatic Earth)
The problem with falling oil prices is not just mounting deflation or droopy profits; it’s the fact that every part of the industry–exploration, development and production — is propped atop a mountain of red ink (junk bonds). When that debt can no longer be serviced or increased, then the primary lenders (counterparties and financial institutions) sustain heavy losses which domino through the entire system. Take a look at this from Marketwatch:
“There’s ‘no question’ that for energy companies with a riskier debt profile the high-yield debt market “is essentially shut down at this stage,” and there are signs that further pain could hit the sector, ” senior fixed-income strategist at U.S. Bank Wealth Management, Dan Heckman told Marketwatch. “We are getting to the point that it is becoming very concerning.” (Marketwatch)
When energy companies lose access to the market and are unable to borrow at low rates, it’s only a matter of time before they trundle off to extinction.
On Friday, the International Energy Agency (IEA) renewed pressure on prices by lowering its estimate for global demand for oil in 2015. The announcement immediately sent stocks into a nosedive. The Dow Jones Industrial Average (DJIA) lost 315 points by the end of the day, while, according to Bloomberg, more than “$1 trillion was erased from the value of global equities in the week”.
The world is awash in cheap petroleum which is wreaking havoc on domestic shale producers that need prices of roughly $70 per barrel to break-even. With West Texas Intermediate (WTI) presently headed south of 60 bucks–and no bottom in sight–these smaller producers are sure to get clobbered. Pension funds, private equity, banks, and other investors who gambled on these dodgy energy-related junk bonds are going to get their heads handed to them in the months ahead.
The troubles in the oil patch are mainly attributable to the Fed’s easy money policies. By dropping rates to zero and flooding the markets with liquidity, the Fed made it possible for every Tom, Dick and Harry to borrow in the bond market regardless of the quality of the debt. No one figured that the bottom would drop out leaving an entire sector high and dry. Everyone thought the all-powerful Fed could print its way out of any mess. After last week’s bloodbath, however, they’re not nearly as confident. Here’s how Bloomberg sums it up:
“The danger of stimulus-induced bubbles is starting to play out in the market for energy-company debt….Since early 2010, energy producers have raised $550 billion of new bonds and loans as the Federal Reserve held borrowing costs near zero, according to Deutsche Bank AG. With oil prices plunging, investors are questioning the ability of some issuers to meet their debt obligations…
The Fed’s decision to keep benchmark interest rates at record lows for six years has encouraged investors to funnel cash into speculative-grade securities to generate returns, raising concern that risks were being overlooked. A report from Moody’s Investors Service this week found that investor protections in corporate debt are at an all-time low, while average yields on junk bonds were recently lower than what investment-grade companies were paying before the credit crisis.” (Fed Bubble Bursts in $550 Billion of Energy Debt: Credit Markets, Bloomberg)
The Fed’s role in this debacle couldn’t be clearer. Investors piled into these dodgy debt-instruments because they thought Bernanke had their back and would intervene at the first sign of trouble. Now that the bubble has burst and the losses are piling up, the Fed is nowhere to be seen.
In the last week, falling oil prices have started to impact the credit markets where investors are ditching debt on anything that looks at all shaky. The signs of contagion are already apparent and likely to get worse. Investors fear that if they don’t hit the “sell” button now, they won’t be able to find a buyer later. In other words, liquidity is drying up fast which is accelerating the rate of decline. Naturally, this has affected US Treasuries which are still seen as “risk free”. As investors increasingly load up on USTs, long-term yields have been pounded into the ground like a tentpeg. As of Friday, the benchmark 10-year Treasury checked in at a miniscule 2.08 percent, the kind of reading one would expect in the middle of a Depression.
The Saudi-led insurgency has reversed the direction of the market, put global stocks into a nosedive and triggered a panic in the credit markets. And while the financial system edges closer to a full-blown crisis every day, policymakers in Washington have remained resolutely silent on the issue, never uttering as much as a peep of protest for a Saudi policy that can only be described as a deliberate act of financial terrorism.
Why is that? Why have Obama and Co. kept their mouths shut while oil prices have plunged, domestic industries have been demolished, and stocks have gone off a cliff? Could it be that they’re actually in cahoots with the Saudis and that it’s all a big game designed to annihilate enemies of the glorious New World Order?
It certainly looks that way.
Shale Leads The Way…
Crude oil prices dipped lower on Wednesday pushing down yields on US Treasuries and sending stocks down sharply. The 30-year UST slipped to a Depression era 2.83 percent while all three major US indices plunged into the red. The Dow Jones Industrial Average (DJIA) led the retreat losing a hefty 268 points before the session ended. The proximate cause of Wednesday’s bloodbath was news that OPEC had reduced its estimate of how much oil it would need to produce in 2015 to meet weakening global demand. According to USA Today:
“OPEC lowered its projection for 2015 production to 28.9 million barrels a day, or about 300,000 fewer than previously forecast, and a 12-year low…. That’s about 1.15 million barrels a day less than the cartel pumped last month, when OPEC left unchanged its 30 million barrel daily production quota…
The steep decline in crude price raises fears that small exploration and production companies could go out of business if the prices fall too low. And that, in turn, could cause turmoil among those who are lending to them: Junk-bond purchasers and smaller banks.” (USA Today)
Lower oil prices do not necessarily boost consumption or strengthen growth. Quite the contrary. Weaker demand is a sign that deflationary pressures are building and stagnation is becoming more entrenched. Also, the 42 percent price-drop in benchmark U.S. crude since its peak in June, is pushing highly-leveraged energy companies closer to the brink. If these companies cannot roll over their debts, (due to the lower prices) then many will default which will negatively impact the broader market. Here’s a brief summary from analyst Wolf Richter:
“The price of oil has plunged …and junk bonds in the US energy sector are getting hammered, after a phenomenal boom that peaked this year. Energy companies sold $50 billion in junk bonds through October, 14% of all junk bonds issued! But junk-rated energy companies trying to raise new money to service old debt or to fund costly fracking or off-shore drilling operations are suddenly hitting resistance.
And the erstwhile booming leveraged loans, the ugly sisters of junk bonds, are causing the Fed to have conniptions. Even Fed Chair Yellen singled them out because they involve banks and represent risks to the financial system. Regulators are investigating them and are trying to curtail them through “macroprudential” means, such as cracking down on banks, rather than through monetary means, such as raising rates. And what the Fed has been worrying about is already happening in the energy sector: leveraged loans are getting mauled. And it’s just the beginning…
“If oil can stabilize, the scope for contagion is limited,” Edward Marrinan, macro credit strategist at RBS Securities, told Bloomberg. “But if we see a further fall in prices, there will have to be a reaction in the broader market as problems will spill out and more segments of the high-yield space will feel the pain.”…Unless a miracle happens that will goose the price of oil pronto, there will be defaults, and they will reverberate beyond the oil patch.” (Oil and Gas Bloodbath Spreads to Junk Bonds, Leveraged Loans. Defaults Next, Wolf Ricter, Wolf Street)
The Fed’s low rates and QE pushed down yields on corporate debt as investors gorged on junk thinking the Fed “had their back”. That made it easier for fly-by-night energy companies to borrow tons of money at historic low rates even though their business model might have been pretty shaky. Now that oil is cratering, investors are getting skittish which has pushed up rates making it harder for companies to refinance their debtload. That means a number of these companies going to go bust, which will create losses for the investors and pension funds that bought their debt in the form of financially-engineered products. The question is, is there enough of this financially-engineered gunk piled up on bank balance sheets to start the dominoes tumbling through the system like they did in 2008?
That question was partially answered on Wednesday following OPEC’s dismal forecast which roiled stocks and send yields on risk-free US Treasuries into a nosedive. Investors ditched their stocks in a mad dash for the exits thinking that the worst is yet to come. USTs provide a haven for nervous investors looking for a safe place to hunker down while the storm passes.
Economist Jack Rasmus has an excellent piece at Counterpunch which explains why investors are so jittery. Here’s a clip from his article titled “The Economic Consequences of Global Oil Deflation”:
“Oil deflation may lead to widespread bankruptcies and defaults for various non-financial companies, which will in turn precipitate financial instability events in banks tied to those companies. The collapse of financial assets associated with oil could also have a further ‘chain effect’ on other forms of financial assets, thus spreading the financial instability to other credit markets.” (The Economic Consequences of Global Oil Deflation, Jack Rasmus, CounterPunch)
Falling oil prices typically drag other commodities prices down with them. This, in turn, hurts emerging markets that depend heavily on the sale of raw materials. Already these fragile economies are showing signs of stress from rising inflation and capital flight. In a country like Japan, however, one might think the effect would be positive since the lower yen has made imported oil more expensive. But that’s not the case. Falling oil prices increase deflationary pressures forcing the Bank of Japan to implement more extreme measures to reverse the trend and try to stimulate growth. What new and destabilizing policy will Japan’s Central Bank employ in its effort to dig its way out of recession? And the same question can be asked of Europe too, which has already endured three bouts of recession in the last five years. Here’s Rasmus again on oil deflation and global financial instability:
“Oil is not only a physical commodity bought, sold and traded on global markets; it has also become an important financial asset since the USA and the world began liberalized trading of oil commodity futures…
Just as declines in oil spills over to declines of other physical commodities…price deflation can also ‘spill over’ to other financial assets, causing their decline as well, in a ‘chain like’ effect.
That chain like effect is not dissimilar to what happened with the housing crash in 2006-08. At that time the deep contraction in the global housing sector ( a physical asset) not only ‘spilled over’ to other sectors of the real economy, but to mortgage bonds…and derivatives based upon those bonds, also crashed. The effect was to ‘spill over’ to other forms of financial assets that set off a chain reaction of financial asset deflation.
The same ‘financial asset chain effect’ could arise if oil prices continued to decline below USD$60 a barrel. That would represent a nearly 50 percent deflation in oil prices that could potentially set in motion a more generalized global financial instability event, possibly associated with a collapse of the corporate junk bond market in the USA that has fueled much of USA shale production.” (CounterPunch)
This is precisely the scenario we think will unfold in the months ahead. What Rasmus is talking about is “contagion”, the lethal spill-over from one asset class to another due to deteriorating conditions in the financial markets and too much leverage. When debts can no longer be serviced, defaults follow sucking liquidity from the system which leads to a sudden (and excruciating) repricing event. Rasmus believes that a sharp cutback in Shale gas and oil production could ignite a crash in junk bonds that will pave the way for more bank closures. Here’s what he says:
“The shake out in Shale that is coming will not occur smoothly. It will mean widespread business defaults in the sector. And since much of the drilling has been financed with risky high yield corporate ‘junk’ bonds, the shale shake out could translate into a financial crash of the US corporate junk bond market, which is now very over-extended, leading to regional bank busts in turn.” (CP)
The financial markets are a big bubble just waiting to burst. If Shale doesn’t do the trick, then something else will. It’s just a matter of time.
Rasmus also believes that the current oil-glut is politically motivated. Washington’s powerbrokers persuaded the Saudis to flood the market with petroleum to push down prices and crush oil-dependent Moscow. The US wants a weak and divided Russia that will comply with US plans to increase its military bases in Central Asia and allow NATO to be deployed to its western borders. Here’s Rasmus again:
“Saudi Arabia and its neocon friends in the USA are targeting both Iran and Russia with their new policy of driving down the price of oil. The impact of oil deflation is already severely affecting the Russian and Iranian economies. In other words, this policy of promoting global oil price deflation finds favor with significant political interests in the USA, who want to generate a deeper disruption of Russian and Iranian economies for reasons of global political objectives. It will not be the first time that oil is used as a global political weapon, nor the last.” (CP)
Washington’s strategy is seriously risky. There’s a good chance the plan could backfire and send stocks into freefall wiping out trillions in a flash. Then all the Fed’s work would amount to nothing.
Karma’s a bitch.