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.
Putin Gobsmacks Obama and Euro-Leaders with Surprise Gas Deal…
On Monday, Russian President Vladimir Putin clinched a groundbreaking deal with Turkish President Recep Tayyip Erdoğan that will strengthen economic ties between the two nations and make Turkey the major hub for Russian gas in the region. Under the terms of the agreement, Russia will pump additional natural gas to locations in central Turkey and to a “hub at the Turkish-Greek border” which will eventually provide Putin with backdoor access to the lucrative EU market, although Turkey will serve as the critical intermediary. The move creates a de facto Russo-Turkey alliance that could shift the regional balance of power decisively in Moscow’s favor, thus creating another formidable hurtle for Washington’s “pivot to Asia” strategy. While the media is characterizing the change in plans (Putin has abandoned the South Stream pipeline project that would have transported gas to southern Europe) as a “diplomatic defeat” for Russia, the opposite appears to be the case. Putin has once again outmaneuvered the US on both the energy and geopolitical fronts adding to his long list of policy triumphs. Here’s a brief summary from Andrew Korybko at Sputnik News:
“Russia has abandoned the troubled South Stream project and will now be building its replacement with Turkey. This monumental decision signals that Ankara has made its choice to reject Euro-Atlanticsm and embrace Eurasian integration.
In what may possibly be the biggest move towards multipolarity thus far,..Turkey, has done away with its former Euro-Atlantic ambitions. A year ago, none of this would have been foreseeable, but the absolute failure of the US’ Mideast policy and the EU’s energy one made this stunning reversal possible in under a year. Turkey is still anticipated to have some privileged relations with the West, but the entire nature of the relationship has forever changed as the country officially engages in pragmatic multipolarity.
Turkey’s leadership made a major move by sealing such a colossal deal with Russia in such a sensitive political environment, and the old friendship can never be restored…The reverberations are truly global.” (“Cold Turkey: Ankara Buckles Against Western Pressure, Turns to Russia”, Sputnik News)
Korybko seems to be alone in grasping the magnitude of what happened in Ankara on Monday, although –judging by the Obama administration’s silence on the topic–the gravity of the transaction is beginning to sink in. Grandmaster Vlad’s latest move has caught US powerbrokers flat-footed and left them speechless. This is a scenario that no one had anticipated and, if it’s not handled correctly, could turn out to be a real nightmare. Here’s more on Monday’s press conference from Russia Today:
“Putin said that Russia is ready to build a new pipeline to meet Turkey’s growing gas demand, which may include a special hub on the Turkish-Greek border for customers in southern Europe.
For now, the supply of Russian gas to Turkey will be raised by 3 billion cubic meters via the already operating Blue Stream pipeline…Moscow will also reduce the gas price for Turkish customers by 6 percent from January 1, 2015, Putin said.
“We are ready to further reduce gas prices along with the implementation of our joint large-scale projects,” he added.” (“Putin: Russia forced to withdraw from S. Stream project due to EU stance”, RT)
How can this happen? How can Putin waltz into Ankara, scribble his name on a few sheets of paper, and abscond with a key US ally right under Washington’s nose? Isn’t there anyone at the White House who’s smart enough to anticipate a scenario like this or have they all been replaced with warmongering ding-dongs like Susan Rice and Samantha Powers?
The Obama administration has been doing everything in its power to control the flow of gas from east to west and to undermine Russian-EU economic integration. Now it looks like the nimble Putin has found a way to avoid the economic sanctions, (Turkey rejected sanctions on Russia) avoid US coercion and blackmail (which was used on Bulgaria, Hungary, and Serbia), and avoid Washington’s endless belligerence and hostility, and achieve his objectives at the same time. But– then again– isn’t that what you’d expect from a level-headed martial arts pro like Putin?
“I won’t beat you,” says Bad Vlad. “I’ll let you to beat yourself.”
And, so he has. Just ask the befuddled Obama who has yet to prevail in any of his encounters with Putin.
But why the silence? Why hasn’t the White House issued a statement about the big Russian-Turkey gas deal that everyone’s talking about?
I’ll tell you why. It’s because they don’t know what the hell just hit them, that’s why. They were completely blindsided by the announcement and can’t quite figure out what it means for the issues that are on the very top of their foreign policy agenda, like the pivot to Asia, or the wars in Syria and Ukraine, or the much-ballyhooed gas pipeline from Qatar to the EU, that was supposed to transit– you guessed it– Turkey. Is that plan still in the works or has the Putin-Erdogan alliance put the kibosh on that gem too? Let’s face it, Putin has really knocked it out of the park this time. Team Obama is clearly out of its league and has no idea of what’s going on. If Turkey turns eastward and joins the growing Russian bloc, US policymakers are going to have to scrap the better part of their strategic plans for the coming century and go back to Square 1. What a headache.
There’s a good article in Wednesday’s New York Times that summarizes Washington’s ambivalence towards South Stream perfectly. Here’s an excerpt:
“Moscow has long presented the project, proposed in 2007, as making good business sense because it would provide a new route for Russian gas to reach Europe. Washington and Brussels have opposed the project on the grounds that it was a vehicle for cementing Russian influence over southern Europe and for bypassing Ukraine, whose price disputes with Gazprom twice interrupted supplies to Europe in recent years.”
Putin’s Surprise Call to Scrap South Stream Gas Pipeline Leaves Europe Reeling”, New York Times)
This has been the argument from the get-go, that selling gas to people in the EU somehow strengthens Putin’s maniacal grip on the continent. What a joke. Would you, dear reader, be willing turn off the heat, tear up your energy bill, and freeze to death in the dark to prove to your gas company that you’re not willing to capitulate to their tyrannical rule?
Of course not, because the idea is ridiculous. Just like blocking South Stream is ridiculous. Putin is selling gas, not tyranny. He doesn’t want people clicking their heels and goosestepping to work. That’s just propaganda from the people in the oil industry who lost the competition for supplying fuel to the EU. Call it sour grapes if you want, because that’s what it is. Their pipeline failed, (Nabucco) and Putin’s won. End of story. It’s called capitalism. Deal with it.
And here’s another thing: The countries that South Stream would have served, do not have a back-up supplier to meet their growing gas needs. So by following Washington’s lead, they’ve basically shot themselves in the foot. Analysts figure that any replacement for Russian gas will probably be 30 percent more expensive then they would have paid Gazprom.
Hurrah for the US! Hurrah for stupidity!
The US has been determined to sabotage South Stream from the very beginning, mainly because Washington wants its corporations and banks to control the flow of gas to the EU market through privately-owned pipelines in Ukraine. That way they can rake in bigger profits for their moneybags shareholders. Without going into too much detail about the various methods the US has used to torpedo the project, there’s one story that’s worth a look. This is from Zero Hedge:
“…two months before the Ukraine government was overthrown the prime minister of Bulgaria, Plamen Oresharski, ordered a halt to work on the South Stream on the recommendation of the EU. The decision was announced after his talks with US senators.
“At this time there is a request from the European Commission, after which we’ve suspended the current works, I ordered it,” Oresharski told journalists after meeting with John McCain, Chris Murphy and Ron Johnson during their visit to Bulgaria on Sunday. “Further proceedings will be decided after additional consultations with Brussels.”
At the time McCain, commenting on the situation, said that “Bulgaria should solve the South Stream problems in collaboration with European colleagues,” adding that in the current situation they would want “less Russian involvement” in the project.
“America has decided that it wants to put itself in a position where it excludes anybody it doesn’t like from countries where it thinks it might have an interest, and there is no economic rationality in this at all,” (said)Ben Aris, editor of Business New Europe told RT.” (“Europe Gives Bulgaria A Bank System Lifeline As Battle Over “South Stream” Pipeline Heats Up”, Zero Hedge)
Let me get this straight: Madman McCain strolls into town and immediately starts ordering people around telling them he wants “less Russian involvement”, and that’s enough to bring South Stream to a screeching halt? Is that what you’re telling me?
Yep. Sure sounds like it.
Does that help you see what’s really going here? This isn’t about Putin. It’s about gas, and who’s going to profit from that gas, and in whose currency that gas will be denominated. That’s what it’s about. The rest of the nonsense about “Russian involvement” or terrorism or human rights or national sovereignty is just gibberish. The people who run this country (like McCain), don’t care about that kind of stuff. What they care about is money; money and power. That’s it.
So what are they going to do now? How are the big powerboys in Washington going to express their rage over this new threat created by Putin and Erdogan?
It doesn’t take a genius to figure that one out, after all, we’ve seen it a million times before.
They’re going to go after Erdogan hammer and tongs. That’s what they always do, isn’t it?
The only reason they haven’t started in already is because they’re getting their propaganda ducks in a row, which usually takes a day or two. But as soon as that’s taken care of, they’ll start dismantling old Recep one excruciating headline at a time. Erdogan is going to be the new Hitler and the greatest threat to humanity the world has ever seen. You can bet on it.
Whistleblower Sibel Edmonds thinks that Washington has had-it-in for Erdogan a long time now, dating back to a dust up he had with the CIA a few years back. In any event, she gives a pretty good account of what we can expect now that Erdogan is on Washington’s enemies list. Here’s a clip from her post at Boiling Frogs:
“We all know what happens to those puppets when they end up in a rift with the CIA. Don’t we? The rift always brings expiration. Once a puppet is considered expired, then lo and behold, all of a sudden, the reversal branding and marketing begins: All old skeletons are dug out of the deep closets and leaked to the media. His previously overlooked human rights violations are looked at and scrutinized under a microscope. The terrorist card is brought into the equation. And the list goes on…
… All Empire-installed puppets and regimes must commit to the Empire’s commandments….Thou shall not violate the Imperial commandments. Because if you do, thou shall be disgraced, exposed, uninstalled, and may even be given death. All you have to do is look at the past century’s history. See what happens when an installed puppet gets too confident and inflicted with hubris, and ignores one or more commandments. This is when they are reborn as dictators, despots, torturers, and yes, terrorists. This is when their backyards get dug up to find a few grams of weapons of mass destruction.”…
No matter how we look at it Erdogan’s days are numbered … Anyone who ever dares to be this reckless will be punished and made an example for all other installed-puppets…” (“Turkish PM Erdogan: The Speedy Transformation of an Imperial Puppet”, BFP)
So there it is. That’s what you can expect by the end of the week when the media starts their full-throttle demonizing of Erdogan, the man who dared to act independently and put the interests of his own people above those of the Washington mob bosses. As anyone who’s followed US foreign policy for the last 60 years will tell you; that’s a big no-no.
Ukraine War Driven by Gas-Dollar Link…
“The Fed’s ‘need’ to take on an even more active role as foreigners further slow the purchases of our paper is to put the pedal to the metal on the currency debasement race now being run in the developed world — a race which is speeding us all toward the end of the present currency regime.” Stephanie Pomboy, MacroMavens
“No matter what our Western counterparts tell us, we can see what’s going on. NATO is blatantly building up its forces in Eastern Europe, including the Black Sea and the Baltic Sea areas. Its operational and combat training activities are gaining in scale.” Russian President Vladimir Putin
If there was a way the United States could achieve its long-term strategic objectives and, at the same time, avoid a war with Russia, it would do so. Unfortunately, that is not an option, which is why there’s going to be a clash between the two nuclear-armed adversaries sometime in the near future.
Let me explain: The Obama administration is trying to rebalance US policy in a way that shifts the focus of attention from the Middle East to Asia, which is expected to be the fastest growing region in the coming century. This policy-change is called the “pivot” to Asia. In order to benefit from Asia’s surge of growth, the US plans to beef up its presence on the continent, expand its military bases, strengthen bilateral alliances and trade agreements, and assume the role of regional security kingpin. The not-so-secret purpose of the policy is China “containment”, that is, Washington wants to preserve its position as the world’s only superpower by controlling China’s explosive growth. (The US wants a weak, divided China that will do what it’s told.)
In order to achieve its goals in Asia, the US needs to push NATO further eastward, tighten its encirclement of Russia, and control the flow of oil and gas from east to west. These are the necessary preconditions for establishing US hegemonic rule over the continent. And this is why the Obama administration is so invested in Kiev’s blundering junta-government; it’s because Washington needs Poroshenko’s neo Nazi shock troops to draw Russia into a conflagration in Ukraine that will drain its resources, discredit Putin in the eyes of his EU trading partners, and create the pretext for deploying NATO to Russia’s western border.
The idea that Obama’s proxy army in Ukraine is defending the country’s sovereignty is pure bunkum. What’s going on below the surface is the US is trying to stave off irreversible economic decline and an ever-shrinking share of global GDP through military force. What we’re seeing in Ukraine today, is a 21st century version of the Great Game implemented by political fantasists and Koolaid drinkers who think they can turn the clock back to the post WW2 heyday of the US Empire when the world was America’s oyster. Thankfully, that period is over.
Keep in mind, the glorious US military has spent the last 13 years fighting sheep herders in flip-flops in Afghanistan in a conflict that, at best, could be characterized as a stalemate. And now the White House wants to take on Russia?
Can you appreciate the insanity of the policy?
This is why Secretary of Defense Chuck Hagel was sacked last week, because he wasn’t sufficiently eager to pursue this madcap policy of escalating the wars in Afghanistan, Iraq, Syria and Ukraine. Everyone knows it’s true, the administration hasn’t even tried to deny it. They’d rather stick with foam-at-the-mouth buffoons, like Susan Rice and Samantha Powers, then a decorated veteran who has more credibility and intelligence in his little finger than Obama’s whole National Security team put together.
So now Obama is completely surrounded by rabid warmongering imbeciles, all of whom ascribe to the same fairytale that the US is going to dust-off Russia, remove Assad, redraw the map of the Middle East, control the flow of gas and oil from the ME to markets in the EU, and establish myriad beachheads across Asia where they can keep a tight grip on China’s growth.
Tell me, dear reader, doesn’t that strike you as a bit improbable?
But, of course, the Obama claque think it’s all within their grasp, because, well, because that’s what they’ve been told to think, and because that’s what the US has to do if it wants to maintain its exalted position as the world’s lone superpower when its economic significance in the world is steadily declining. You see, here’s the thing: The exceptional nation is becoming more unexceptional all the time, and that’s what has the political class worried, because they see the handwriting on the wall, and the writing says, “Enjoy it while it lasts, buddy, cuz you ain’t gonna be numero uno much longer.”
And the US has allies in this wacky crusade too, notably Israel and Saudi Arabia. The Saudis have been particularly helpful lately by flooding the market with oil to push down prices and crush the Russian economy. (On Friday, Benchmark crude oil prices plummeted to a four-year low, with Brent crude sinking to $69.11 a barrel.) The Obama administration is using the classic one-two punch of economic sanctions and plunging oil revenues to bully Moscow into withdrawing from Crimea so Washington can move its nuclear arsenal to within spitting distance of Moscow. Here’s a bit of background from the Guardian:
“Think about how the Obama administration sees the state of the world. It wants Tehran to come to heel over its nuclear programme. It wants Vladimir Putin to back off in eastern Ukraine. But after recent experiences in Iraq and Afghanistan, the White House has no desire to put American boots on the ground. Instead, with the help of its Saudi ally, Washington is trying to drive down the oil price by flooding an already weak market with crude. As the Russians and the Iranians are heavily dependent on oil exports, the assumption is that they will become easier to deal with.
John Kerry, the US secretary of state, allegedly struck a deal with King Abdullah in September under which the Saudis would sell crude at below the prevailing market price. That would help explain why the price has been falling at a time when, given the turmoil in Iraq and Syria caused by Islamic State, it would normally have been rising.” (Stakes are high as US plays the oil card against Iran and Russia, Larry Eliot, Guardian)
And here’s more from Salon’s Patrick L. Smith at Salon:
“Less than a week after the Minsk Protocol was signed, Kerry made a little-noted trip to Jeddah to see King Abdullah at his summer residence. When it was reported at all, this was put across as part of Kerry’s campaign to secure Arab support in the fight against the Islamic State.
Stop right there. That is not all there was to the visit, my trustworthy sources tell me. The other half of the visit had to do with Washington’s unabated desire to ruin the Russian economy. To do this, Kerry told the Saudis 1) to raise production and 2) to cut its crude price. Keep in mind these pertinent numbers: The Saudis produce a barrel of oil for less than $30 as break-even in the national budget; the Russians need $105.
Shortly after Kerry’s visit, the Saudis began increasing production, sure enough — by more than 100,000 barrels daily during the rest of September, more apparently to come…
Think about this. Winter is coming, there are serious production outages now in Iraq, Nigeria, Venezuela and Libya, other OPEC members are screaming for relief, and the Saudis make back-to-back moves certain to push falling prices still lower? You do the math, with Kerry’s unreported itinerary in mind, and to help you along I offer this from an extremely well-positioned source in the commodities markets: “There are very big hands pushing oil into global supply now,” this source wrote in an e-mail note the other day.” (What Really Happened in Beijing: Putin, Obama, Xi And The Back Story The Media Won’t Tell You, Patrick L. Smith, Salon)
The Obama team managed to persuade our good buddies the Saudis to flood the market with oil, drive down prices, and put the Russian economy into a nosedive. At the same time, the US has intensified its economic sanctions, done everything in its power to sabotage Gazprom’s South Stream pipeline (that would bypass Ukraine and deliver natural gas to Europe via a southern route), and cajole the Ukrainian parliament into auctioning off 49 percent of the leasing rights and underground storage facilities to privately-owned foreign corporations.
How do you like that? So the US has launched a full-blown economic war against Russia that’s been completely omitted in the western media. Are you surprised?
Washington is determined to block further Russo-EU economic integration in order to collapse the Russian economy and put foreign capital in control of regional energy distribution. It’s all about the pivot. The big money guys figure the US has to pivot to Asia to be a player in the next century. All of these unprovoked attacks on Moscow are based on that one lunatic strategy.
But aren’t people in the EU going to be angry when they can’t get the energy they need (at the prices they want) to run their businesses and heat their homes?
Washington doesn’t think so. Washington thinks its allies in the Middle East can meet the EU’s energy needs without any difficulty. Check out this clip from an article by analyst F. William Engdahl:
“…details are emerging of a new secret and quite stupid Saudi-US deal on Syria and the so-called IS. It involves oil and gas control of the entire region and the weakening of Russia and Iran by Saudi Arabian flooding the world market with cheap oil. ….
On September 11, US Secretary of State Kerry met Saudi King Abdullah at his palace on the Red Sea. The King invited former head of Saudi intelligence, Prince Bandar to attend. There a deal was hammered out which saw Saudi support for the Syrian airstrikes against ISIS on condition Washington backed the Saudis in toppling Assad, a firm ally of Russia and de facto of Iran and an obstacle to Saudi and UAE plans to control the emerging EU natural gas market and destroy Russia’s lucrative EU trade. A report in the Wall Street Journal noted there had been “months of behind-the-scenes work by the US and Arab leaders, who agreed on the need to cooperate against Islamic State, but not how or when.
The process gave the Saudis leverage to extract a fresh US commitment to beef up training for rebels fighting Mr. Assad, whose demise the Saudis still see as a top priority.”
(The Secret Stupid Saudi-US Deal on Syria, F. William Engdahl, BFP)
So the wars in Ukraine and Syria are not really separate conflicts at all. They’re both part of the same global resource war the US has been prosecuting for the last decade and a half. The US plans to cut off the flow of Russian gas and replace it with gas from Qatar which will flow through Syria and onto the EU market after Assad is toppled.
Here’s what’s going on: Syria’s troubles began shortly after it announced that it was going to be part of an “Islamic pipeline” that would transfer natural gas from the South Pars gas field off the coast of Iran across Iraq and Syria, eventually connecting to Greece and the lucrative EU market. According to author Dmitri Minin:
“A gas pipeline from Iran would be highly profitable for Syria. Europe would gain from it as well, but clearly someone in the West didn’t like it. The West’s gas-supplying allies in the Persian Gulf weren’t happy with it either, nor was would-be no. 1 gas transporter Turkey, as it would then be out of the game.” (The Geopolitics of Gas and the Syrian Crisis: Syrian “Opposition” Armed to Thwart Construction of Iran-Iraq-Syria Gas Pipeline, Dmitri Minin, Global Research)
Two months after Assad signed the deal with Iraq and Iran, the rebellion broke out in Syria. That’s quite a coincidence, don’t you think? Funny how frequently those kinds of things happen when foreign leaders don’t march to Washington’s tune.
Here’s more from Minin:
“Qatar is doing all it can to thwart the construction of the pipeline, including arming the opposition fighters in Syria, many of whom come from Saudi Arabia, Pakistan and Libya…
The Arabic newspaper Al-Akhbar cites information according to which there is a plan approved by the U.S. government to create a new pipeline for transporting gas from Qatar to Europe involving Turkey and Israel…
This new pipeline is to begin in Qatar, cross Saudi territory and then the territory of Jordan, thus bypassing Shiite Iraq, and reach Syria. Near Homs the pipeline is to branch in three directions: to Latakia, Tripoli in northern Lebanon, and Turkey. Homs, where there are also hydrocarbon reserves, is the project’s main crossroads, and it is not surprising… that the fiercest fighting is taking place. Here the fate of Syria is being decided. The parts of Syrian territory where detachments of rebels are operating with the support of the U.S., Qatar and Turkey, that is, the north, Homs and the environs of Damascus, coincide with the route that the pipeline is to follow to Turkey and Tripoli, Lebanon. A comparison of a map of armed hostilities and a map of the Qatar pipeline route indicates a link between armed activities and the desire to control these Syrian territories. Qatar’s allies are trying to accomplish three goals: to break Russia’s gas monopoly in Europe; to free Turkey from its dependence on Iranian gas; and to give Israel the chance to export its gas to Europe by land at less cost.”
How do you like that; another coincidence: “The fiercest fighting (in Syria) is taking place” where there’s massive “hydrocarbon reserves” and along the planned pipeline route.
So the conflict in Syria isn’t really about terrorism at all. It’s about natural gas, competing pipelines and access to markets in the EU. It’s about money and power. The whole ISIS-thing is a big hoax to conceal what’s really going on, which is a global war for resources, more blood for oil.
But how does the US benefit from all of this, after all, won’t the gas revenues go to Qatar and the transit countries rather than the US?
Yep, they sure will. But the gas will also be denominated in dollars which will shore up demand for USDs thus perpetuating the petrodollar recycling system which creates a vast market for US debt and which helps to keep US stocks and bonds in the nosebleed section. And that’s what this is all about, preserving dollar supremacy by forcing nations to hold excessive amounts of USDs to use in their energy transactions and to service their dollar-denominated debts.
As long as Washington can control the world’s energy supplies and force the world to trade in dollars, it can spend well in excess of what it produces and not be held to account. It’s like having a credit card you never have to pay off.
That’s a racket Uncle Sam is prepared to defend with everything he’s got, even nukes.
“Russia reinforced what Western and Ukrainian officials described as a stealth invasion on Wednesday [August 27], sending armored troops across the border as it expanded the conflict to a new section of Ukrainian territory. The latest incursion, which Ukraine’s military said included five armored personnel carriers, was at least the third movement of troops and weapons from Russia across the southeast part of the border this week.”
None of the photos accompanying this New York Times story online showed any of these Russian troops or armored vehicles.
“The Obama administration,” the story continued, “has asserted over the past week that the Russians had moved artillery, air-defense systems and armor to help the separatists in Donetsk and Luhansk. ‘These incursions indicate a Russian-directed counteroffensive is likely underway’, Jen Psaki, the State Department spokeswoman, said. At the department’s daily briefing in Washington, Ms. Psaki also criticized what she called the Russian government’s ‘unwillingness to tell the truth’ that its military had sent soldiers as deep as 30 miles inside Ukraine territory.”
Thirty miles inside Ukraine territory and not a single satellite photo, not a camera anywhere around, not even a one-minute video to show for it. “Ms. Psaki apparently [sic] was referring to videos of captured Russian soldiers, distributed by the Ukrainian government.” The Times apparently forgot to inform its readers where they could see these videos.
“The Russian aim, one Western official said, may possibly be to seize an outlet to the sea in the event that Russia tries to establish a separatist enclave in eastern Ukraine.”
This of course hasn’t taken place. So what happened to all these Russian soldiers 30 miles inside Ukraine? What happened to all the armored vehicles, weapons, and equipment?
“The United States has photographs that show the Russian artillery moved into Ukraine, American officials say. One photo dated last Thursday, shown to a New York Times reporter, shows Russian military units moving self-propelled artillery into Ukraine. Another photo, dated Saturday, shows the artillery in firing positions in Ukraine.”
Where are these photographs? And how will we know that these are Russian soldiers? And how will we know that the photos were taken in Ukraine? But most importantly, where are the fucking photographs?
Why am I so cynical? Because the Ukrainian and US governments have been feeding us these scare stories for eight months now, without clear visual or other evidence, often without even common sense. Here are a few of the many other examples, before and after the one above:
- The Wall Street Journal (March 28) reported: “Russian troops massing near Ukraine are actively concealing their positions and establishing supply lines that could be used in a prolonged deployment, ratcheting up concerns that Moscow is preparing for another [sic] major incursion and not conducting exercises as it claims, US officials said.”
- “The Ukrainian government charged that the Russian military was not only approaching but had actually crossed the border into rebel-held regions.” (Washington Post, November 7)
- “U.S. Air Force Gen. Philip M. Breedlove told reporters in Bulgaria that NATO had observed Russian tanks, Russian artillery, Russian air defense systems and Russian combat troops enter Ukraine across a completely wide-open border with Russia in the previous two days.” (Washington Post, November 13)
- “Ukraine accuses Russia of sending more soldiers and weapons to help rebels prepare for a new offensive. The Kremlin has repeatedly denied aiding the separatists.” (Reuters, November 16)
Since the February US-backed coup in Ukraine, the State Department has made one accusation after another about Russian military actions in Eastern Ukraine without presenting any kind of satellite imagery or other visual or documentary evidence; or they present something that’s very unclear and wholly inconclusive, such as unmarked vehicles, or unsourced reports, or citing “social media”; what we’re left with is often no more than just an accusation. The Ukrainian government has matched them.
On top of all this we should keep in mind that if Moscow decided to invade Ukraine they’d certainly provide air cover for their ground forces. There has been no mention of air cover.
This is all reminiscent of the numerous stories in the past three years of “Syrian planes bombing defenseless citizens”. Have you ever seen a photo or video of a Syrian government plane dropping bombs? Or of the bombs exploding? When the source of the story is mentioned, it’s almost invariably the rebels who are fighting against the Syrian government. Then there’s the “chemical weapon” attacks by the same evil Assad government. When a photo or video has accompanied the story I’ve never once seen grieving loved ones or media present; not one person can be seen wearing a gas mask. Is it only children killed or suffering? No rebels?
And then there’s the July 17 shootdown of Malaysia Flight MH17, over eastern Ukraine, taking 298 lives, which Washington would love to pin on Russia or the pro-Russian rebels. The US government – and therefore the US media, the EU, and NATO – want us all to believe it was the rebels and/or Russia behind it. The world is still waiting for any evidence. Or even a motivation. Anything at all. President Obama is not waiting. In a talk on November 15 in Australia, he spoke of “opposing Russia’s aggression against Ukraine – which is a threat to the world, as we saw in the appalling shoot-down of MH17”. Based on my reading, I’d guess that it was the Ukranian government behind the shootdown, mistaking it for Putin’s plane that reportedly was in the area.
Can it be said with certainty that all the above accusations were lies? No, but the burden of proof is on the accusers, and the world is still waiting. The accusers would like to create the impression that there are two sides to each question without actually having to supply one of them.
The United States punishing Cuba
For years American political leaders and media were fond of labeling Cuba an “international pariah”. We haven’t heard that for a very long time. Perhaps one reason is the annual vote in the United Nations General Assembly on the resolution which reads: “Necessity of ending the economic, commercial and financial embargo imposed by the United States of America against Cuba”. This is how the vote has gone (not including abstentions):
|Year||Votes (Yes-No)||No Votes|
|1993||88-4||US, Israel, Albania, Paraguay|
|1995||117-3||US, Israel, Uzbekistan|
|1996||138-3||US, Israel, Uzbekistan|
|1997||143-3||US, Israel, Uzbekistan|
|2000||167-3||US, Israel, Marshall Islands|
|2001||167-3||US, Israel, Marshall Islands|
|2002||173-3||US, Israel, Marshall Islands|
|2003||179-3||US, Israel, Marshall Islands|
|2004||179-4||US, Israel, Marshall Islands, Palau|
|2005||182-4||US, Israel, Marshall Islands, Palau|
|2006||183-4||US, Israel, Marshall Islands, Palau|
|2007||184-4||US, Israel, Marshall Islands, Palau|
|2008||185-3||US, Israel, Palau|
|2009||187-3||US, Israel, Palau|
|2012||188-3||US, Israel, Palau|
This year Washington’s policy may be subject to even more criticism than usual due to the widespread recognition of Cuba’s response to the Ebola outbreak in Africa.
Each fall the UN vote is a welcome reminder that the world has not completely lost its senses and that the American empire does not completely control the opinion of other governments.
Speaking before the General Assembly before last year’s vote, Cuban Foreign Minister Bruno Rodriguez declared: “The economic damages accumulated after half a century as a result of the implementation of the blockade amount to $1.126 trillion.” He added that the blockade “has been further tightened under President Obama’s administration”, some 30 US and foreign entities being hit with $2.446 billion in fines due to their interaction with Cuba.
However, the American envoy, Ronald Godard, in an appeal to other countries to oppose the resolution, said:
The international community … cannot in good conscience ignore the ease and frequency with which the Cuban regime silences critics, disrupts peaceful assembly, impedes independent journalism and, despite positive reforms, continues to prevent some Cubans from leaving or returning to the island. The Cuban government continues its tactics of politically motivated detentions, harassment and police violence against Cuban citizens.
So there you have it. That is why Cuba must be punished. One can only guess what Mr. Godard would respond if told that more than 7,000 people were arrested in the United States during the Occupy Movement’s first 8 months of protest in 2011-12 ; that many of them were physically abused by the police; and that their encampments were violently destroyed.
Does Mr. Godard have access to any news media? Hardly a day passes in America without a police officer shooting to death an unarmed person.
As to “independent journalism” – What would happen if Cuba announced that from now on anyone in the country could own any kind of media? How long would it be before CIA money – secret and unlimited CIA money financing all kinds of fronts in Cuba – would own or control most of the media worth owning or controlling?
The real reason for Washington’s eternal hostility toward Cuba has not changed since the revolution in 1959 – The fear of a good example of an alternative to the capitalist model; a fear that has been validated repeatedly over the years as many Third World countries have expressed their adulation of Cuba.
How the embargo began: On April 6, 1960, Lester D. Mallory, US Deputy Assistant Secretary of State for Inter-American Affairs, wrote in an internal memorandum: “The majority of Cubans support Castro … The only foreseeable means of alienating internal support is through disenchantment and disaffection based on economic dissatisfaction and hardship. … every possible means should be undertaken promptly to weaken the economic life of Cuba.” Mallory proposed “a line of action which … makes the greatest inroads in denying money and supplies to Cuba, to decrease monetary and real wages, to bring about hunger, desperation and overthrow of government.”
Later that year, the Eisenhower administration instituted its suffocating embargo against its everlasting enemy.
The United States judging and punishing the rest of the world
In addition to Cuba, Washington currently is imposing economic and other sanctions against Burma, Democratic Republic of the Congo, Iran, China, North Korea, South Korea, United Arab Emirates, Pakistan, Sri Lanka, Switzerland, Turkey, Germany, Malaysia, South Africa, Mexico, South Sudan, Sudan, Russia, Syria, Venezuela, India, and Zimbabwe. These are sanctions mainly against governments, but also against some private enterprises; there are also many other sanctions against individuals not included here.
Imbued with a sense of America’s moral superiority and “exceptionalism”, each year the State Department judges the world, issuing reports evaluating the behavior of all other nations, often accompanied by sanctions of one kind or another. There are different reports rating how each lesser nation has performed in the previous year in areas such as religious freedom, human rights, the war on drugs, trafficking in persons, and sponsors of terrorism. The criteria used in these reports are often political. Cuba, for example, is always listed as a sponsor of terrorism whereas anti-Castro exile groups in Florida, which have committed literally hundreds of terrorist acts over the years, are not listed as terrorist groups or supporters of such.
Cuba, which has been on the sponsor-of-terrorism list longer (since 1982) than any other country, is one of the most glaring anomalies. The most recent State Department report on this matter, in 2012, states that there is “no indication that the Cuban government provided weapons or paramilitary training to terrorist groups.” There are, however, some retirees of Spain’s Basque terrorist group ETA (which appears on the verge of disbanding) in Cuba, but the report notes that the Cuban government evidently is trying to distance itself from them by denying them services such as travel documents. Some members of the Revolutionary Armed Forces of Colombia (FARC) have been allowed into Cuba, but that was because Cuba was hosting peace talks between the FARC and the Colombian government, which the report notes.
The US sanctions mechanism is so effective and formidable that it strikes fear (of huge fines) into the hearts of banks and other private-sector organizations that might otherwise consider dealing with a listed state.
Some selected thoughts on American elections and democracy
In politics, as on the sickbed, people toss from one side to the other, thinking they will be more comfortable.
– Johann Wolfgang von Goethe (1749-1832)
- 2012 presidential election:
223,389,800 eligible to vote
128,449,140 actually voted
Obama got 65,443,674 votes
Obama was thus supported by 29.3% of eligible voters
- There are 100 million adults in the United States who do not vote. This is a very large base from which an independent party can draw millions of new votes.
- If God had wanted more of us to vote in elections, he would give us better candidates.
- “The people can have anything they want. The trouble is, they do not want anything. At least they vote that way on election day.” – Eugene Debs, American socialist leader (1855-1926)
- “If persons over 60 are the only American age group voting at rates that begin to approximate European voting, it’s because they’re the only Americans who live in a welfare state – Medicare, Social Security, and earlier, GI loans, FHA loans.” – John Powers
- “The American political system is essentially a contract between the Republican and Democratic parties, enforced by federal and state two-party laws, all designed to guarantee the survival of both no matter how many people despise or ignore them.” – Richard Reeves (1936- )
- The American electoral system, once the object of much national and international pride, has slid inexorably from “one person, one vote”, to “one dollar, one vote”.
- Noam Chomsky: “It is important to bear in mind that political campaigns are designed by the same people who sell toothpaste and cars. Their professional concern in their regular vocation is not to provide information. Their goal, rather, is deceit.”
- If the Electoral College is such a good system, why don’t we have it for local and state elections?
- “All the props of a democracy remain intact – elections, legislatures, media – but they predominantly function at the service of the oligarchy.” – Richard Wolff
- The RepDem Party holds elections as if they were auctions; indeed, an outright auction for the presidency would be more efficient. To make the auction more interesting we need a second party, which must at a minimum be granted two privileges: getting on the ballot in all 50 states and taking part in television debates.
- The US does in fact have two parties: the Ins and the Outs … the evil of two lessers.
- Alexander Cockburn: “There was a time once when ‘lesser of two evils’ actually meant something momentous, like the choice between starving to death on a lifeboat, or eating the first mate.”
- Cornel West has suggested that it’s become difficult to even imagine what a free and democratic society, without great concentrations of corporate power, would look like, or how it would operate.
- The United States now resembles a police state punctuated by elections.
- How many voters does it take to change a light bulb? None. Because voters can’t change anything.
- H.L. Mencken (1880-1956): “As democracy is perfected, the office represents, more and more closely, the inner soul of the people. We move toward a lofty ideal. On some great and glorious day the plain folks of the land will reach their heart’s desire at last, and the White House will be adorned by a downright moron.”
- “All elections are distractions. Nothing conceals tyranny better than elections.” – Joel Hirschhorn
- In 1941, one of the country’s more acerbic editors, a priest named Edward Dowling, commented: “The two greatest obstacles to democracy in the United States are, first, the widespread delusion among the poor that we have a democracy, and second, the chronic terror among the rich, lest we get it.”
- “Elections are a necessary, but certainly not a sufficient, condition for democracy. Political participation is not just a casting of votes. It is a way of life.” – UN Human Development Report, 1993
- “If you don’t vote, you can’t complain!” I reply, “You have it backwards. If you DO vote, you can’t complain. You asked for it, and they’re going to give it to you, good and hard.”
- “How to get people to vote against their interests and to really think against their interests is very clever. It’s the cleverest ruling class that I have ever come across in history. It’s been 200 years at it. It’s superb.” – Gore Vidal
- We can’t use our democracy/our vote to change the way the economy functions. This is very anti-democratic.
- What does a majority vote mean other than that the sales campaign was successful?
- Roman Emperor Marcus Aurelius: “The opinion of 10,000 men is of no value if none of them know anything about the subject.”
- We do have representative government. The question is: Who does our government represent?
- “On the day after the 2002 election I watched a crawl on the bottom of the CNN news screen. It said, ‘Proprietary software may make inspection of electronic voting systems impossible.’ It was the final and absolute coronation of corporate rights over democracy; of money over truth.” – Mike Ruppert, RIP
- “It’s not that voting is useless or stupid; rather, it’s the exaggeration of the power of voting that has drained the meaning from American politics.” – Michael Ventura
- After going through the recent national, state and local elections, I am now convinced that taxation without representation would have been a much better system.
- “Ever since the Constitution was illegally foisted on the American people we have lived in a blatant plutocracy. The Constitution was drafted in secret by a self-appointed elite committee, and it was designed to bring three kinds of power under control: Royalty, the Church, and the People. All were to be subjugated to the interests of a wealthy elite. That’s what republics were all about. And that’s how they have functioned ever since.” – Richard K. Moore
- “As demonstrated in Russia and numerous other countries, when faced with a choice between democracy without capitalism or capitalism without democracy, Western elites unhesitatingly embrace the latter.” – Michael Parenti
- “The fact that a supposedly sophisticated electorate had been stampeded by the cynical propaganda of the day threw serious doubt on the validity of the assumptions underlying parliamentary democracy as a whole.” – British Superspy for the Soviets Kim Philby (1912-1988), explaining his reasons for becoming a Communist instead of turning to the Labour Party
- US Supreme Court Justice Louis Brandeis (1856-1941): “We may have democracy in this country, or we may have wealth concentrated in the hands of a few, but we cannot have both.”
- “We don’t need to run America like a business or like the military. We need to run America like a democracy.” – Jill Stein, Green Party presidential candidate 2012
- Democracy Now!, October 30, 2013
- Huffingfton Post, May 3, 2012
- Department of State, Foreign Relations of the United States, 1958-1960, Volume VI, Cuba(1991), p.885 (online here)
- For the complete detailed list, see U.S. Department of State, Nonproliferation Sanctions
- U.S. Department of State, “Country Reports on Terrorism 2012, Chapter 3: State Sponsors of Terrorism,” May 20, 2013
Something almost universally omitted from the discussion about the Ebola crisis in West Africa is the question how the outbreak started. The Establishment speculates that it started with infected bats but admit they have no evidence to support the contention  (somehow the bat took off on its northerly trek out of its terre natal, the Congo, skipped over the five or six countries between there and West Africa, and alighted in eastern Guinea, where it’s deadly hemorrhagic hitchhiker got off and caught another ride!). In the alternative media, the bat theory is echoed briefly in a Counterpunch article entitled “The Origins of the Ebola Crisis” before the article veers off to harp on the many shortcomings of capitalism which have aggravated the situation.
The wayward turn taken in the Counterpunch article is indicative of the silence of the alternative media in general on the subject of how the Ebola outbreak started. Only a few – most notably the curmudgeons at the Canadian site, Global Research – have pursued the issue with any diligence. This is especially surprising as there are plenty of buffs out there who can see a conspiracy in the fact the sun rises in the East every morning and the evidence that the United States war machine is behind the outbreak, while circumstantial, is more substantive than things like pegmatite bits in the Twin Towers’ debris or the starless night sky in photos taken by astronauts supposedly on the moon.
Two months before Ebola appeared in West Africa a Canadian company, Tekmira, began clinical trials on humans of their Ebola vaccine, TKM-Ebola, which they had previously tested on animals. Their self-congratulatory press release announcing the start of the trials, issued on January 14, 2014, failed to mention where the human guinea pigs resided. Nor is it stated in the National Institutes of Health description of the clinical trial (Curiously, the NIH suspended the trials in July, just when the push to come up with a vaccine went viral, so to speak). If the trials were conducted in West Africa anywhere near the place where the virus first appeared, I’d say we have a smoking gun, or, more apropos, a squirting hypodermic needle. Yet I have not heard of anyone in the media – alternative or corporate – who has asked Tekmira where they were performing the tests, which in itself is circumstantial evidence of a sort.
Further evidence lies in the almost total lack of mention of Tekmira and its human trials in the hubbub over the urgency to come up with a treatment for Ebola, including a vaccine. Even such supposedly well informed experts as William Schaffner, a specialist in infectious diseases at Vanderbilt’s School of Medicine, seems never to have heard of Tekmira, as he told the Voice of America in October there had not been a way to conduct human clinical trials until the current crisis. This despite Reuter’s having reported on Tekmira’s initiation of trials on humans in March. Do fewer people read Reuter’s dispatches than watch my public access TV show, i.e., a handful of fitful insomniacs who fell asleep with the channel on?
The fact that Tekmira was developing its vaccine under a $140 million contract with the Department of Defense does nothing to weaken the case for occult DoD shenanigans. And the contract wasn’t with the Department’s Office of Community Relations and World Peace. It was with the BioDefense Therapeutics (BDTX) Product Manager within the Medical Countermeasure Systems (JPM-MCS) branch of the Joint Program Executive Office for Chemical and Biological Defense. Can you spell “biological warfare”? Are we trying to weaponize Ebola? Have we succeeded? That the West African outbreak is qualitatively different from all previous outbreaks suggests we have.
Prior to the West African case, the greatest number killed in an Ebola epidemic had been 280 (while all eyes have been on West Africa, the Congo suffered an outbreak – now contained – in which 49 people died). The total number of cases in the current outbreak exceeds by far all the cases from 1977 to the present. Remember that we denied weaponizing anthrax until someone sent some through the mail post-9/11. Also consider that the grandfather of the Ebola virus, the Marburg virus, first appeared in the labs of the German pharmaceutical company, Hoechst, an offshoot of the Nazi-era conglomerate, IG Farben, whose managers were prosecuted at Nuremberg for testing drugs on concentration camp inmates.
There are reports (which I have been unable to confirm) that we have biological weapons labs in West Africa, including a biosecurity level 2 bioweapons research lab at the hospital in Kenema, Sierra Leone at the center of the outbreak. Is this why we sent troops to West Africa instead of doctors – to protect, or remove all trace of, our bio-warfare labs? Is this why angry mobs attacked a clinic in Guinea? Do the Guineans know better what’s going on than we Americans? Does this explain why the World Health Organization’s had a delayed response to the crisis, hoping it could be contained quietly before too many people knew about it?
More telling evidence: when the outbreak became public knowledge in March, Tekmira’s stock, which had been rising steadily, took a tumble. It plummeted from $30.94 a share in mid-March to $10.59 in mid-May. Why would Tekmira’s stock go down right when the need for their product took on the aspect of a Big Pharmacist’s wet-dream? Is this as much a sign of insiders in the know as those put options placed on American and United Airlines stock immediately prior to 9/11? Were those savvy traders afraid the truth would get out, making Tekmira’s stock worthless?
If we are responsible for the appearance of Ebola in West Africa, we owe the West Africans a lot more than the $6.2 billion Obama has committed to the fight. The blood money (literally) would total in the hundreds of billions, not tens. But the cost to the bio-warriors would, hopefully, be even greater. It might mean the end of their mad science if it provoked the all-too-trusting, kept-in-the-dark, non-bellicose public to demand a real end to all mucking around with biological weapons. The anthrax case and now, perhaps, the Ebola outbreak have made clear that existing conventions and treaties meant to accomplish this end have failed (mimicking the Great Powers ban on the use of poison gas… agreed to a decade before they all used it in World War I).
Speaking of the First World War, during the war and immediately thereafter the Spanish flu killed 3-5% of the world’s population. If Ebola was unleashed on the world by us and it killed a similar number, say, 300 million worldwide including 15 million in the USA, would we ‘fess up to it? History is not reassuring. There have been a number of instances where military-related biologic tests have gone awry without the public being any the wiser for decades. e.g, the army’s spraying of a supposedly harmless aerosol into the San Francisco sky in 1950, which resulted in at least one death and which did not become public knowledge until it was revealed in Senate hearings in 1977.
How the “Spanish” flu got its name is also instructive. The flu appeared in Great Britain, France, and the United States while World War I raged on, but fearful of the impact on public morale, the censors kept a lid on it (national security trumps everything, even the public’s health!). The flu also struck in Spain, which was neutral, so nobody worried about public morale there and the outbreak was freely reported on, forever linking Spain with one of the deadliest epidemics in history.
Whether the current Ebola outbreak can be attributed to the US military or not, so long as our Frankenstein wannabes continue to concoct, in the name of national security, scourges more biblical than anything God ever dreamed up, the possibility of an inadvertent global pandemic horrific in scale exists. That it will happen someday is as great a surety as the certainty that all those nuclear weapons the world has accumulated will someday be used, unless we get rid of them. We’re not making much progress toward nuclear disarmament but can’t we at least get the facts on what our military is up to in West Africa – especially the facts surrounding that curiously-timed human testing by Tekmira. Otherwise, the fourth horseman of the Apocalypse, loosed upon the world not by God but by ourselves, may someday ride roughshod over us on his way to Armageddon.
(By the way, I do believe Copernican theory is sufficient to explain the sun’s rising in the East, but if you have a more sinister explanation, do run it by me.)
Little Eli Waller will never grow up to be president. The four-year-old New Jersey boy will never grow up to be anything because enterovirus D68 took his life — quite possibly because a boy who did grow up to be president, but not really a man, invited the virus into our country.
How many American children have to die in deference to the Democrats’ voter-importation, demographic-warfare effort? We often hear that you have to break a few eggs to make an omelet, but how much Ebola, enterovirus D68 (EV-D68), Chagas Disease, malaria and tuberculosis is an acceptable price to pay to maintain Barack Obama’s open-borders-über-alles policy? These are relevant questions now, especially with a recent report confirming what was always just common sense:
The deadly EV-D68 epidemic in America was likely the result of Obama’s insistence on flooding our country with tens of thousands of illegal-alien minors.
Reports Neil Munro at The Daily Caller, “The evidence includes admissions from top health officials that the epidemic included multiple strains of the virus, and that it appeared simultaneously in multiple independent locations.”
This isn’t something hard to prove or disprove. All you need do is ascertain if the strain prevalent in the US is the same as one found south of the border. This is simple epidemiology, and there’s only one reason we don’t know:
The powers that be don’t want us to know.
Can you imagine the revolutionary uproar that would have ensued if, just when EV-D68 was big in the news, it had been revealed that Obama’s lawless abdication of his responsibility had led to American deaths?
Can you imagine what would be said if it were proven that Obama has blood on his hands?
And let’s consider the EV-D68 toll to this point. As Munro writes:
So far, that virus has been found in nine people — including at least three American kids — who died from illness. It has apparently inflicted unprecedented polio-like paralysis in roughly 50 kids, and it has put hundreds of young American kids into hospital emergency wards and intensive care units throughout more than 40 states. Most of the dead have not been publicly identified.
This, not to mention the toll taken by Ebola and the others diseases brought in by Obama’s strengthening diversifiers.
And how serious is the conspiracy of silence on the EV-D68 issue? Munro reports that a “series of government researchers, health experts and academics refused to comment, or else urged self-censorship, when they were pressed by TheDC for statistical and scientific data that would exonerate Obama and his deputies.” One of these is Columbia University researcher and top EV-D68 expert Rafal Tokarz, who, as he put it, “would really rather not comment.” Another is Professor Lone Simonsen, research director of George Washington University’s Global Epidemiology Program, whose cop-out was, “I would just steer away from that — it is not helpful, so why bring it up?”
Answer: because if Americans know that a given policy allowed EV-D68’s spread, they’ll realize the policy isn’t helpful and needs to be changed.
But this certainly is not helpful to Simonsen. As Munro pointed out, perpetuating the invasion of our country “is a top priority for the Democratic leaders, who have the power to make life difficult for grant-dependent American scientists who discover politically damaging information.”
Money, by the way, is part of the root of today’s scientific evil. As to the significance of this factor, consider that BMJ.com (formerly the British Medical Journal) reported in 2012, “One in seven UK based scientists or doctors has witnessed colleagues intentionally altering or fabricating data during their research or for the purposes of publication….” (In case you were wondering, this is how you get Al Gorleone’s gaggle of greedy global-warming gangsters.)
So we have here a confluence of scientific malpractice and political malpractice. And this brings us to Munro’s quoting of scientist and Enterovirus Foundation board member Nora Chapman: “Epidemics happen when populations mix, or when viruses mutate and combine to overcome peoples’ evolved immune defenses….”
Or when populations are mixed.
As when a president seeds various parts of the country with his carriers and redistributes disease. Hey, why keep the epidemic all in one place?
But don’t expend all your energy worrying about EV-D68 — save some of it for worrying about Ebola, of which scientists now predict there will be approximately 130 US cases by year’s end.
And how many next year?
How much blood will Obama have on his hands then?
If you think the ObamaCare disaster is bad, wait ’til you see the one wrought by ObamaDoesn’tCare.
Here we go again.
Last week, the country’s biggest mortgage lenders scored a couple of key victories that will allow them to ease lending standards, crank out more toxic assets, and inflate another housing bubble. Here’s what’s going on.
On Monday, the head of the Federal Housing Finance Agency (FHFA), Mel Watt, announced that Fannie and Freddie would slash the minimum down-payment requirement on mortgages from 5 percent to 3 percent while making loans more available to people with spotty credit. If this all sounds hauntingly familiar, it should. It was less than 7 years ago that shoddy lending practices blew up the financial system precipitating the deepest slump since the Great Depression. Now Watt wants to repeat that catastrophe by pumping up another credit bubble. Here’s the story from the Washington Post:
“When it comes to taking out a mortgage, two factors can stand in the way: the price of the mortgage,…and the borrower’s credit profile.”
On Monday, the head of the agency that oversees the mortgage giants Fannie Mae and Freddie Mac outlined … how he plans to make it easier for borrowers on both fronts. Mel Watt, director of the Federal Housing Finance Agency, did not give exact timing on the initiatives. But most of them are designed to encourage the industry to extend mortgages to a broader swath of borrowers.
Here’s what Watt said about his plans in a speech at the Mortgage Bankers Association annual convention in Las Vegas:
Saving enough money for a downpayment is often cited as the toughest hurdle for first-time buyers in particular. Watt said that Fannie and Freddie are working to develop “sensible and responsible” guidelines that will allow them to buy mortgages with down payments as low as 3 percent, instead of the 5 percent minimum that both institutions currently require.”
Does Watt really want to “encourage the industry to extend mortgages to a broader swath of borrowers” or is this just another scam to enrich bankers at the expense of the public? It might be worth noting at this point that Watt’s political history casts doubt on his real objectives. According to Open Secrets, among the Top 20 contributors to Watt’s 2009-2010 campaign were Goldman Sachs, Bank of America, Citigroup Inc., Bank of New York Mellon, American bankers Association, US Bancorp, and The National Association of Realtors. (“Top 20 Contributors, 2009-2010“, Open Secrets)
Man oh man, this guy’s got all of Wall Street rooting for him. Why is that, I wonder? Is it because he’s faithfully executing his office and defending the public’s interests or is it because he’s a reliable stooge who brings home the bacon for fatcat bankers and their brood?
This is such a farce, isn’t it? I mean, c’mon, do you really think that the big banks make political contributions out of the kindness of their heart or because they want something in return? And do you really think that a guy who is supported by Goldman Sachs has your “best interests” in mind? Don’t make me laugh.
The reason that Obama picked Watt was because he knew he could be trusted to do whatever Wall Street wanted, and that’s precisely what he’s doing. Smaller down payments and looser underwriting are just the beginning; teaser rates, balloon payments, and liars loans are bound to follow. In fact, there’s a funny story about credit scores in the Washington Post that explains what’s really going on behind the scenes. See if you can figure it out:
“Most housing advocates agree that a bigger bang for the buck would come from having lenders lower the unusually high credit scores that they’re now demanding from borrowers.
After the housing market tanked, Fannie and Freddie forced the industry to buy back billions of dollars in loans. In a bid to protect themselves from further financial penalties, lenders reacted by imposing credit scores that exceed what Fannie and Freddie require. Housing experts say the push to hold lenders accountable for loose lending practices of the past steered the industry toward the highest-quality borrowers, undermining the mission of Fannie and Freddie to serve the broader population, including low- to moderate- income borrowers.
Today, the average credit score on a loan backed by Fannie and Freddie is close to 745, versus about 710 in the early 2000s, according to Moody’s Analytics. And lenders say they won’t ease up until the government clarifies rules that dictate when Fannie and Freddie can take action against them.” (Washington Post)
Can you see what’s going on? The banks have been requiring higher credit scores than Fannie or Freddie.
But why? After all, the banks are in the lending business, so the more loans they issue the more money they make, right?
Right. But the banks don’t care about the short-term dough. They’d rather withhold credit and slow the economy in order to blackmail the government into doing what they want.
And what do they want?
They want looser regulations and they want to know that Fannie and Freddie aren’t going to demand their money back (“put backs”) when they sell them crappy mortgages that won’t get repaid. You see, the banks figure that once they’ve off-loaded a loan to Fannie and Freddie, their job is done. So, if the mortgage blows up two months later, they don’t think they should have to pay for it. They want the taxpayer to pay for it. That’s what they’ve been whining about for the last 5 years. And that’s what Watt is trying to fix for them. Here’s the story from Dave Dayen:
“Watt signaled to mortgage bankers that they can loosen their underwriting standards, and that Fannie and Freddie will purchase the loans anyway, without much recourse if they turn sour. The lending industry welcomed the announcement as a way to ease uncertainty and boost home purchases, a key indicator for the economy. But it’s actually a surrender to the incorrect idea that expanding risky lending can create economic growth.
Watt’s remarks come amid a concerted effort by the mortgage industry to roll back regulations meant to prevent the type of housing market that nearly obliterated the economy in 2008. Bankers have complained to the media that the oppressive hand of government prevents them from lending to anyone with less-than-perfect credit. Average borrower credit scores are historically high, and lenders make even eligible borrowers jump through enough hoops to garner publicity. Why, even Ben Bernanke can’t get a refinance done! (Actually, he could, and fairly easily, but the anecdote serves the industry’s argument.)
(“The Mortgage Industry Is Strangling the Housing Market and Blaming the Government“, Dave Dayen, The New Republic)
Can you see what a fraud this is? 6 years have passed since Lehman crashed and the scum-sucking bankers are still fighting tooth-and-nail to unwind the meager provisions that have been put in place to avoid another system-shattering disaster. It’s crazy. These guys should all be in Gitmo pounding rocks and instead they’re setting the regulatory agenda. Explain that to me? And this whole thing about blackmailing the government because they don’t want to be held responsible for the bad mortgages they sold to the GSE’s is particularly irritating. Here’s more from Dave Dayen:
“After the housing market tanked, Fannie and Freddie forced the industry to buy back billions of dollars in loans. In a bid to protect themselves from further financial penalties, lenders reacted by imposing credit scores that exceed what Fannie and Freddie require. ….And lenders say they won’t ease up until the government clarifies rules that dictate when Fannie and Freddie can take action against them.”
So the industry has engaged in an insidious tactic: tightening lending well beyond required standards, and then claiming the GSEs make it impossible for them to do business. For example, Fannie and Freddie require a minimum 680 credit score to purchase most loans, but lenders are setting their targets at 740. They are rejecting eligible borrowers….so they can profit much more from a regulation-free zone down the line.
So, I ask you, dear reader; is that blackmail or is it blackmail?
And what does Watt mean when he talks about “developing sensible and responsible guidelines’ that will allow them (borrowers) to buy mortgages with down payments as low as 3 percent”?
What a joke. Using traditional underwriting standards, (the likes of which had been used for the entire post-war period until we handed the system over to the banks) a lender would require a 10 or 20 percent down, decent credit scores, and a job. The only reason Watt wants to wave those requirements is so the banks can fire-up the old credit engine and dump more crap-ass mortgages on Uncle Sam. That’s the whole thing in a nutshell. It’s infuriating!
Let me fill you in on a little secret: Down payments matter! In fact, people who put more down on a home (who have “more skin in the game”) are much less likely to default. According to David Battany, executive vice president of PennyMac, “there is a strong correlation between down payments to mortgage default. The risk of default almost doubles with every 1%.”
Economist Dean Baker says the same thing in a recent blog post:
“The delinquency rate, which closely follows the default rate, is several times higher for people who put 5 percent or less down on a house than for people who put 20 percent or more down.
Contrary to what some folks seem to believe, getting moderate income people into a home that they subsequently lose to foreclosure or a distressed sale is not an effective way for them to build wealth, even if it does help build the wealth of the banks.”
(“Low Down Payment Mortgages Have Much Higher Default Rates“, Dean Baker, CEPR)
Now take a look at this chart from Dr. Housing Bubble which helps to illustrate the dangers of low down payments in terms of increased delinquencies:
Data on mortgage delinquencies by downpayment. Source: Felix Salmon
“When the mortgage industry starts complaining about the 14 million people who would be denied the chance to buy a qualified mortgage if they don’t have a 5% downpayment, it’s worth remembering that qualified mortgages for people who don’t have a 5% downpayment have a delinquency rate of 16% over the course of the whole housing cycle.” (“Why a sizable down payment is important“, Dr. Housing Bubble)
So despite what Watt thinks, higher down payments mean fewer defaults, fewer foreclosures, fewer shocks to the market, and greater financial stability.
And here’s something else that Watt should mull over: The housing market isn’t broken and doesn’t need to be fixed. It’s doing just fine, thank you very much. First of all, sales and prices are already above their historic trend. Check it out from economist Dean Baker:
“If we compare total sales (new and existing homes) with sales in the pre-bubble years 1993-1995, they would actually be somewhat higher today, even after adjusting for population growth. While there may be an issue of many people being unable to qualify for mortgages because of their credit history, this does not appear to be having a negative effect on the state of market. Prices are already about 20 percent above their trend levels.” (“Total Home Sales Are At or Above Trend“, Dean Baker, CEPR)
Got it? Sales and prices are ALREADY where they should be, so there’s no need to lower down payments and ease credit to start another orgy of speculation. We don’t need that.
Second, the quality of today’s mortgages ARE BETTER THAN EVER, so why mess with success? Take a look at this from Black Knight Financial Services and you’ll see what I mean:
“Today, the Data and Analytics division of Black Knight Financial Services … released its November Mortgage Monitor Report, which found that loans originated in 2013 are proving to be the best-performing mortgages on record…..
“Looking at the most current mortgage origination data, several points become clear,” said Herb Blecher, senior vice president of Black Knight Financial Services’ Data & Analytics division. “First is that heightened credit standards have resulted in this year being the best-performing vintage on record. Even adjusting for some of these changes, such as credit scores and loan-to-values, we are seeing total delinquencies for 2013 loans at extremely low levels across every product category.”
Okay, so sales and prices are fine and mortgage quality is excellent. So why not leave the bloody system alone? As the saying goes: If it ain’t broke, don’t fix it.
But you know why they’re going to keep tinkering with the housing market. Everyone knows why. It’s because the banks can’t inflate another big-honking credit bubble unless they churn out zillions of shi**y mortgages that they offload onto Fannie and Freddie. That’s just the name of the game: Grind out the product (mortgages), pack it into sausages (securities and bonds), leverage up to your eyeballs (borrow as much as humanly possible), and dump the junk-paper on yield-chasing baboons who think they’re buying triple A “risk free” bonds.
Garbage in, garbage out. Isn’t this how the banks make their money?
You bet it is, and in that regard things have gotten a helluva a lot scarier since last Wednesday’s announcement that the banks are NOT going to be required to hold any capital against the securities they create from bundles of mortgages.
You read that right. According to the New York Times: “there will be no risk retention to speak of, at least on residential mortgage loans that are securitized.”
But how can that be, after all, it wasn’t subprime mortgages that blew up the financial system (subprime mortgages only totaled $1.5 at their peak), but the nearly $10 trillion in subprime infected mortgage-backed securities (MBS) that stopped trading in the secondary market after a French Bank stopped taking redemptions in July 2007. (a full year before the crisis brought down Lehman Brothers) . That’s what brought the whole rattling financial system to a grinding halt. Clearly, if the banks had had a stake in those shabby MBS— that is, if they were required to set aside 5 or 10 percent capital as insurance in the event that some of these toxic assets went south– then the whole financial collapse could have been avoided, right?
Right. It could have been avoided. But the banks don’t want to hold any capital against their stockpile of rancid assets, in fact, they don’t want to use their own freaking money at all, which is why 90 percent of all mortgages are financed by Uncle Sugar. It’s because the banks are just as broke as they were in 2008 when the system went off the cliff. Here’s a summary from the New York Times:
“Once upon a time, those who made loans would profit only if the loan were paid back. If the borrower defaulted, the lender would suffer.
That idea must have seemed quaint in 2005, as the mortgage lending boom reached a peak on the back of mushrooming private securitizations of mortgages, which were intended to transfer the risk away from those who made the loans to investors with no real knowledge of what was going on.
Less well remembered is that there was a raft of real estate securitizations once before, in the 1920s. The securities were not as complicated, but they had the same goal — making it possible for lenders to profit without risking capital.
The Dodd-Frank Act of 2010 set out to clean that up. Now, there would be “risk retention.” Lenders would have to have “skin in the game.” Not 100 percent of the risk, as in the old days when banks made mortgage loans and retained them until they were paid back, but enough to make the banks care whether the loans were repaid.
At least that was the idea. The details were left to regulators, and it took more than four years for them to settle on the details, which they did this week.
The result is that there will be no risk retention to speak of, at least on residential mortgage loans that are securitized.
“…..Under Dodd-Frank, the general rule was to be that if a lender wanted to securitize mortgages, that lender had to keep at least 5 percent of the risk…….But when the final rule was adopted this week, that idea was dropped.” (“Banks Again Avoid Having Any Skin in the Game”, New York Times)
No skin in the game, you say?
That means the taxpayer is accepting 100 percent of the risk. How fair is that?
Let’s review: The banks used to lend money to creditworthy borrowers and keep the loans on their books.
They don’t do that anymore, in fact, they’re not really banks at all, they’re just intermediaries who sell their loans to the USG or investors.
This arrangement has changed the incentives structure. Now the goal is quantity not quality. “How many loans can I churn-out and dump on Uncle Sam or mutual funds etc.” That’s how bankers think now. That’s the objective.
Regulations are bad because regulations stipulate that loans must be of a certain quality, which reduces the volume of loans and shrinks profits. (Can’t have that!) Therefore, the banks must use their money to hand-pick their own regulators (“You’re doin’ a heckuva job, Mel”) and ferociously lobby against any rules that limit their ability to issue credit to anyone who can fog a mirror. Now you understand how modern-day banking works.
It would be hard to imagine a more corrupt system.
Continuing to allow airplane flights into America loaded with people streaming out of Ebola-ravaged Africa must be the dumbest act that Congress, the Center for Disease Control and Barack Obama could possibly perpetrate on the American people.
To send 3,000 of our young men and women over to Ebola-ravaged Africa with some kind of insane idea that we could stop the epidemic, must be the second dumbest idea of Barack Obama and his band of incompetent advisors. Anyone with a room-temperature IQ and an ounce of common sense would take logical action in the face of such a virulent virus.
As a superintendent of a school system, you wouldn’t invite sick students with chicken pox, small pox, mumps, measles and polio into your school. You would mandate they stay home to protect the students and teachers in your school. Why? Infectious diseases guaranteed to jump from student to student!
If I stood at the helm in the White House: I would immediately stop all flights into the United States from Africa. I would not subject one single American to Ebola unnecessarily.
The president’s authorizing a call-up of the reserves or the National Guard to fight a virulent disease like Ebola in Africa with no idea of the outcome—must rank up there with the movie, “Dumb and Dumber.” Instead of saving Africa from itself, those 3,000 troops may well become disease vectors themselves that bring Ebola back to America in greater numbers, or, simply kill a bunch of our country’s finest soldiers.
“Africa’s biggest problem is not drought, disease, or dictators,” Dr. Don Boys. “But drinking and defecation are the biggest problem! This is true of India, Asia, and areas of South America. Eighty per- cent of diseases in developing countries are caused by unsafe water and poor sanitation. Africa, India, and some areas in South America are open cesspools where children play, parents wash clothes and get drinking water, workers irrigate crops, etc. In those areas, fresh water is unknown and open defecation (OD) is common.”
Very few Americans comprehend the gutter-level hygiene that encourages diseases like Ebola, cholera, dysentery, tuberculosis and other bugs that proliferate in third world countries. Africa suffers incredibly contaminated water, food and soil.
“Now for the first time in human history most people live in cities, often in the slums,” said Boys. “More than 70 percent of Africa’s urban population lives in slums! Around one-third of the urban population in developing countries, nearly one billion people, live in slums. There is one toilet for every 500 people in the slums of Nairobi, Kenya. However, the biggest problem is in rural areas where the problem can be more quickly solved but not without difficulty. Nearly 540 million people, more than 60 percent of Africa’s population, currently practice open defecation according to the African Development Bank Group.”
Americans stand no chance of changing African culture to leap into the 21st century standards of sanitation. You might as well ask a mosquito to fly to the moon.
The same stands true for countries like India where 1,000 children die 24/7 of diarrhea and dysentery. Utter misery faces citizens of Pakistan, Nepal and Mexico every day of the year.
The World Health Organization Public Health Director lamented, “What is shocking…is this picture of someone practicing open defecation and in the other hand having a mobile phone.”
I remember hiking in Asia when I saw water buffalo defecating along the trail. Women immediately grabbed the pile of dung in their hands to take it off to a drying rack for fuel. When you see it firsthand, you gag, but then, you get used to it. It’s sickening, but that’s how they operate in the third world. Several billions of people around this planet don’t use a toilet, but do use the land as their latrine.
Is it any wonder that diseases like TB kill 2,000,000 (million) people annually? That Chagas infects 14 million in South America? That AIDES killed 25 million in 30 years in Africa?
So, does it make sense to you that Obama, Congress and the CDC expect to import more and more Ebola patients back into the USA? Are you excited that your kids or you could very well become the next victims? Are you going to stand by to wait for it to happen in your community?
For this obviously incompetent man sitting in the White House to send our soldiers over to a hot zone of Ebola infections must rate with a madman thinking he can walk into an AIDS ward to have sex with all the victims and walk out untouched with the disease.
But in this case, Obama sends our kids over to Ebola hot zones in Africa, not his kids.
Right now, two innocent nurses in Texas face death because of the importation of Mr. Duncan from Liberia who later died. Who allows this kind of insanity?
If nurses can’t fend off the disease in a hospital while wearing haz-mat suits, how in the name of common sense and rational thought will 3,000 soldiers fend off Ebola with M-16’s? Somebody in high places shows criminal stupidity on a scale heretofore unimaginable.
You can see on the CDC website we find this unsettling phrase:
“No FDA-approved vaccine or medicine (e.g., antiviral drug) is available for Ebola.”
As with the Iraq War, few Americans protested the stupidity of invading that country under the lie of “Weapons of Mass Destruction.” As with 9/11, our presidents and Congress failed to stop illegal immigration.
Call your Congressman/woman; governor; senator; newspaper, radio and TV station to scream that you want all flights cancelled coming in from Africa. Scream that you don’t want 3,000 of our kids to go over to Africa to be infected by Ebola.
To sit silent and let the incompetent in the White House and incompetents in Congress invite America’s Ebola epidemic—makes no sense whatsoever.