Friday, December 19, 2014

Today's Links

"You know, at the Valdai [International Discussion] Club I gave an example of our most recognisable symbol. It is a bear protecting his taiga. You see, if we continue the analogy, sometimes I think that maybe it would be best if our bear just sat still. Maybe he should stop chasing pigs and boars around the taiga but start picking berries and eating honey. Maybe then he will be left alone. But no, he won’t be! Because someone will always try to chain him up. As soon as he’s chained they will tear out his teeth and claws. In this analogy, I am referring to the power of nuclear deterrence. As soon as – God forbid – it happens and they no longer need the bear, the taiga will be taken over (...) And then, when all the teeth and claws are torn out, the bear will be of no use at all. Perhaps they’ll stuff it and that’s all.  So, it is not about Crimea but about us protecting our independence, our sovereignty and our right to exist. That is what we should all realize." Russian President Vladimir Putin




1--The Great Wealth Meltdown: Middle-Class Families Are Worth Less Today Than in 1969, PEW


2--Surveys suddenly weakening, Mosler


3--Defiant Vladimir Putin digs in for two-year slump, dismisses talk of palace coup, Pritchard


This is a full-blown currency crisis. People are lining up at night to convert their roubles into dollars and they are buying anything they can that keeps its value. Putin is trying every trick, but the only trick left is capital controls. They won’t announce it: they will just starting doing it quietly by forcing companies to convert dollars into roubles. It won’t work and will just lead to a vicious circle,” he said.

Per Hammarlund, from the Nordic bank SEB, said the latest stopgap measures will not support the rouble for long. “The central bank will either have to hike rates massively, potentially to between 50pc and 100pc, or impose capital controls. We think it will reluctantly opt for the latter,” he said....


Mr Hammarlund said the Kremlin will force companies to repatriate earnings, impose foreign exchange limits on citizens, freeze dividend payments and restrict purchases of hard currency by firms unless strictly needed for trade.
SEB said there is a “political tug of war” between nationalists in the finance ministry, who want to cut reliance on the outside world, and central bank officials, who see capital controls as a last resort that may only make matters worse...


Denmark’s foreign minister, Martin Lidegaard, said the West may have gone too far. “There’s a risk sanctions will destabilise Russia too much. The objective was never to collapse the Russian economy,” he said.


4---Single payer, anyone? NC


I wrote:
The key point to remember in all discussions of ObamaCare is that neither it, nor indeed the entire private health insurance “industry,” should exist. They are rent-seeking parasites, economic tapeworms. One does not improve a tapeworm; one removes it.
To understand this simple point, all we need to do is look north to Canada, where we see a single payer system — they call it “Medicare” — delivering equal or better health outcomes at dramatically lower cost, without a health insurance industry, and without ObamaCare’s bizarre, mystifying, and above all unfair Rube Goldberg-esque complexity. In fact, if we’d passed HR 676 in 2009, we would have saved hundreds of billions of dollars by now (more than enough to cover everyone) and thousands of lives, though ObamaCare apologists don’t like to talk much about the excess deaths that ObamaCare’s achingly slow rollout caused and is still causing.
To put this another way, since the mid-70s, when Canada adopted its single payer system, we’ve conducted the largest controlled experiment in the history of the world. We’ve had two political systems spanning the same continent, both nations of immigrants and once part of the British empire, both mainly English-speaking but multicultural, both with Federal systems, and both with a free market system backed by social insurance. And the results of the experiment? The “evidence”? Canadian-style single payer wins hands-down.


5--Turkey issues arrest warrant for top Erdogan rival Fethullah Gulen – state media


"We are not just faced with a simple network, but one which is a pawn of evil forces at home and abroad," the president declared last Friday.


6--Putin praises Erdoğan as ‘tough man’ for defying EU over pipeline decision, Hurriyet


Russian President Vladimir Putin has described Turkish President Recep Tayyip Erdoğan as a “tough man,” praising him for not being intimidated by a potential Western reaction against Russia’s decision to scrap the South Stream gas pipeline in favor of replacing it with a route through Turkey.

Putin surprised European countries during a visit to the Turkish capital Ankara on Dec. 1, when he announced that Moscow was scrapping the South Stream gas pipeline that was set to pass through Bulgaria, citing EU objections as the reason. He said Russia would instead build a gas hub at the border between Turkey and Greece to pump gas to southern Europe.

Speaking at his annual end-of-the year news conference on Dec. 18, the Russian president said he was aware that Europe would be infuriated by the decision and claimed to have asked Erdoğan to keep the deal confidential “for now.”

However, he said, the Turkish president refused to keep the decision under wraps, in defiance of any potential criticism.

“I had no doubt [about Europe’s reaction]. I told Erdoğan, ‘Maybe we shall keep the deal we reached a secret for now, not disclose it. Let’s not anger the Europeans. But Erdoğan is tough guy and he explained to me that we had not stolen anyone’s possession and hiding it was unnecessary,” Putin said....


“To a large extent, this depends on our European counterparts. Would they like to have stable, absolutely guaranteed, risk-free energy supplies from Russia, which they need? If so, we shall be working, and via Greece we may reach Macedonia, and further Serbia, and then to go again to Baumgartner in Austria. If they are not interested, we shall not do so,” he said.


7---Talks on Russian-Turkey gas pipeline project to start this month — energy minister, itar tass


8--
Turkey’s Erdogan moves against perceived enemies, arresting dozens of media figures

Read more here: http://www.mcclatchydc.com/2014/12/14/250004/turkeys-erdogan-moves-against.html#storylink=cpy
 McClatchy-


Throughout it all Erdogan has accused Gulen, who lives in self-exile in the Pocono mountains, of creating a “parallel structure,” infiltrating his followers into the police and the judiciary, wiretapping the prime minister’s phones and then revealing the content.
Last Friday, he again denounced Gulen’s Hizmet or “service” organization as a “parallel structure, which was talking about education, service and benevolence” and said it was involved in “dirty murders.”

“The parallel structure has never acted alone,” he said. “Occasionally even terrorist organizations and their political parties have been carrying out work with this network of treason. But this nation will set its course by its own accord.”

Read more here: http://www.mcclatchydc.com/2014/12/14/250004/turkeys-erdogan-moves-against.html#storylink=cpy


Erdogan, who’s led Turkey for 12 years, first as prime minister, and since this past summer as president, is regarded as Turkey’s most powerful leader since the Mustafa Kemal Ataturk founded modern Turkey in 1923.

Read more here: http://www.mcclatchydc.com/2014/12/14/250004/turkeys-erdogan-moves-against.html#storylink=cpy


Two days after President Recep Tayyip Erdogan pledged to “overthrow” what he called a “network of treason,” Turkey’s counter-terrorism police on Sunday arrested more than two dozen prominent media and government figures, including the editor of the country’s largest newspaper and the general manager of a major broadcasting group.
The Istanbul prosecutor said all were detained on suspicion of establishing, heading or joining an armed terrorist organization, as well as forgery and slander.
9---
In 1999, Gülen emigrated to the United States, claiming the trip for medical treatment,[26] although arguably it was in anticipation of being tried over remarks (aired after his emigration to U.S.) which seemed to favor an Islamic state.[27] In June 1999, after Gülen had left Turkey, videotapes were sent to some Turkish television stations with recordings of Gülen saying,
"The existing system is still in power. Our friends who have positions in legislative and administrative bodies should learn its details and be vigilant all the time so that they can transform it and be more fruitful on behalf of Islam in order to carry out a nationwide restoration. However, they should wait until the conditions become more favorable. In other words, they should not come out too early."
Gaza flotilla[edit]
Gülen criticized the Turkish-led Gaza flotilla for trying to deliver aid without Israel's consent. He spoke of watching the news coverage of the deadly confrontation between Israeli commandos and multinational aid group members as its flotilla approached Israel's sea blockade of Gaza. He said, "What I saw was not pretty, it was ugly." He has since continued his criticism, saying later that the organizers' failure to seek accord with Israel before attempting to deliver aid was "a sign of defying authority, and will not lead to fruitful matters ...


it is believed that many Gülenists hold positions of power in Turkey's police forces and judiciary.[52][53] Turkish and foreign analysts believe Gülen also has sympathizers in the Turkish parliament and that his movement controls the widely-read Islamic conservative Zaman newspaper, the private Bank Asya bank, the Samanyolu TV television station, and many other media and business organizations, including the Turkish Confederation of Businessmen and Industrialists (TUSKON).[54] In March 2011, the Turkish government arrested the investigative journalist Ahmet Şık and seized and banned his book The Imam's Army, the culmination of Şık's investigation into Gülen and the Gülen movement....


Despite Gülen's and his followers' claims that the organization is non-political in nature, analysts believe that a number of corruption-related arrests made against allies of Turkish Prime Minister Recep Tayyip Erdoğan reflect a growing political power struggle between Gülen and the prime minister.[52][56] These arrests led to the 2013 corruption scandal in Turkey, which the ruling Justice and Development Party (AKP)'s supporters (along with Erdoğan himself) and the opposition parties alike have said was choreographed by Gülen after Erdoğan's government came to the decision early in December 2013 to shut down many of his movement's private Islamic schools in Turkey.


The Erdoğan government has said that the corruption investigation and comments by Gülen are the long term political agenda of Gülen's movement to infiltrate security, intelligence, and justice institutions of the Turkish state, a charge almost identical to the charges against Gülen by the Chief Prosecutor of the Republic of Turkey in his trial in 2000 before Erdoğan's party had come into power.[54] Gülen had previously been tried in absentia in 2000, and acquitted in 2008 under Erdoğan's AKP government from these charges



10--Turkish Leader Disowns Trials That Helped Him Tame Military, NYT


Jared Genser, a human rights lawyer in Washington who has taken on the military defendants’ case pro bono, and whose filing to the United Nations resulted in a determination that the officers were being detained in violation of international law, said: “In the case of Sledgehammer, both the Gulenists and the A.K.P. were on the same page. Of course, Erdogan knew about it and was complicit.”
Moreover, the trials came to define Mr. Erdogan’s power, and what many critics regard as his recent authoritarian turn.
....
Many of the prosecutors and investigators in both cases — the corruption inquiry and the old military trials — are followers of Fethullah Gulen, an Islamic preacher who lives in exile in Pennsylvania. The adherents in his network were once partners in Mr. Erdogan’s governing coalition, but the government now considers them a “parallel state” to be rooted out through purges of the police and the judiciary.....


“They managed to get the military out of politics,” but “that was not the right way to do it.”
The reassessment of the evidence that supported the military trials is putting new light on what has been hailed, here and abroad, as Mr. Erdogan’s most important achievement: securing civilian control over the military. The way it was done, however, is now increasingly viewed as an act of revenge by Turkey’s Islamists against their former oppressors in the military, once the guardians of the secular tradition laid down by Mustafa Kemal Ataturk, the founder of modern Turkey.

After rising to power in 2002, the Islamists were always on guard for conspiracies against them, and for good reason: The military carried out three coups in the previous century.
With that history in mind, the Islamists were determined to diminish the military’s role in Turkish politics.
In 2005, years before the trials, a man affiliated with the Gulen movement approached Eric S. Edelman, then the American ambassador, at a party in Istanbul and handed him an envelope containing a handwritten document that supposedly laid out a plan for an imminent coup. But as Mr. Edelman recounted, he gave the documents to his colleagues and they were determined to be forgeries.





11---Teaching as CIA Cover–Gülen Charter Schools, Dan Burton, and State Secrets, Firedog


Sibel Edmonds an Iranian raised in Turkey before becoming a U.S. citizen—alleges a 1990s U.S./ Gülen al-Qaeda operation in Central Asian and a bribery scheme involving Indiana’s own U.S. House member Dan Burton.
Edmonds testified in candidate David Krikorian’s defense case before the Ohio Election Commission when Rep. Jean Schmidt, an Ohio Republican, filed charges against him for claiming, during a 2008 campaign bid, that she accepted money illegally from people with Turkey interests.
Edmonds’ deposition held many bombshells, since she had been translating wiretap conversations between those associated with the Turkish lobby.
It seems Gülen and the U.S. State Department, from 1997 to 2001,


had been training al-Qaeda in Central Asian, with the help of the Turkish military, Pakistani ISI, and Azerbaijan officials (96), Edmonds says in response to questions from Krikorian’s attorney, Dan Marino. In a subsequent interview with retired CIA-counter-terrorism specialist Phil Giraldi (who believes her story),  Edmonds details Gülen /U.S training missions and Turkish drug-smuggling into Chicago and Paterson, New Jersey, two hot-beds of the Gülen Movement, each containing Fethullah’s followers’ charter schools...


Edmonds, before this interview took place, had been fired from the FBI in 2002 for revealing to higher ups security breaches and Turkish espionage at the bureau’s language division. This Turkish-American conspiracy included, as well, paying off U.S. officials to leak secrets and allow nuclear weapons technology to be sold on the Pakistani, Iranian, and North Korean black markets...


Edmonds details Gülen /U.S training missions and Turkish drug-smuggling into Chicago and Paterson, New Jersey, two hot-beds of the Gülen Movement, each containing Fethullah’s followers’ charter schools:
GIRALDI: You also have information on al-Qaeda, specifically al-Qaeda in Central Asia and Bosnia. You were privy to conversations that suggested the CIA was supporting al-Qaeda in central Asia and the Balkans, training people to get money, get weapons, and this contact continued until 9/11…
EDMONDS: I don’t know if it was CIA. There were certain forces in the U.S. government who worked with the Turkish paramilitary groups, including Abdullah Çatli’s group, Fethullah Gülen.
GIRALDI: Well, that could be either Joint Special Operations Command or CIA.
EDMONDS: Maybe in a lot of cases when they said State Department, they meant CIA?
GIRALDI: When they said State Department, they probably meant CIA.
EDMONDS: Okay. So these conversations, between 1997 and 2001, had to do with a Central Asia operation that involved bin Laden. Not once did anybody use the word “al-Qaeda.” It was always “mujahideen,” always “bin Laden” and, in fact, not “bin Laden” but “bin Ladens” plural. There were several bin Ladens who were going on private jets to Azerbaijan and Tajikistan. The Turkish ambassador in Azerbaijan worked with them.
There were bin Ladens, with the help of Pakistanis or Saudis, under our management. Marc Grossman [Assistant Secretary of State for European Affairs at the time and former U.S. Ambassador to Turkey] was leading it, 100 percent, bringing people from East Turkestan into Kyrgyzstan, from Kyrgyzstan to Azerbaijan, from Azerbaijan some of them were being channeled to Chechnya, some of them were being channeled to Bosnia. From Turkey, they were putting all these bin Ladens on NATO planes. People and weapons went one way, drugs came back.
GIRALDI: Was the U.S. government aware of this circular deal?
EDMONDS: 100 percent. A lot of the drugs were going to Belgium on NATO planes. After that, they went to the UK, and a lot came to the U.S. via military planes to distribution centers in Chicago and Paterson, New Jersey. Turkish diplomats who would never be searched were coming with suitcases of heroin.
Edmonds, before this interview took place, had been fired from the FBI in 2002 for revealing to higher ups security breaches and Turkish espionage at the bureau’s language division. This Turkish-American conspiracy included, as well, paying off U.S. officials to leak secrets and allow nuclear weapons technology to be sold on the Pakistani, Iranian, and North Korean black markets. Besides Dan Burton, others she implements include Illinois Republican Dennis Hastert, Douglas Feith, Paul Wolfowitz, and Marc Grossman, Bush’s Deputy Undersecretary of State


12--Interview 809 – Sibel Edmonds Explains Erdogan’s Fall From Grace, Corbett report audio
In this exclusive interview for the Boiling Frogs Post Eyeopener report, FBI whistleblower Sibel Edmonds discusses her recent article, “Turkish PM Erdogan: The Speedy Transformation of an Imperial Puppet.” We talk about Erdogan’s falling out with Fethullah Gülen and the CIA, and how serviceable puppets are discarded by their shadow government masters when they reach their “expiration date.”


13--Physicians’ group details psychologists’ role in CIA’s “extensive system of torture”, wsws


14--US-Cuban rapprochement: The lessons of history, wsws


Thrown overboard was the fundamental thesis adopted by the First International under Marx that “The liberation of the workers shall be the task of the workers themselves.” The revisionist trend claimed that, on the contrary, Castro’s coming to power proved that the socialist revolution could be achieved by means of “blunted instruments”—that is, without a Marxist revolutionary party and without the active and conscious participation of the working class at all. Armed bands of peasant-based nationalist guerrillas would suffice, with their leaders emerging in the process as “natural Marxists.” The workers and the oppressed masses were relegated to the role of passive bystanders.


Long before the Cuban Revolution, Trotsky had explicitly rejected the facile identification of nationalizations undertaken by petty-bourgeois forces with the socialist revolution. In response to the expropriations carried out by the Kremlin regime in the course of its invasion of Poland (in alliance with Hitler) in 1939, Trotsky wrote: “The primary political criterion for us is not the transformation of property in this or another area, however important these may be in themselves, but rather the change in the consciousness and organization of the world proletariat, the raising of their capacity for defending former conquests and accomplishing new ones.”


The essence of the Pabloite position, the International Committee warned, was 1) the rejection of the central and leading role of the working class in the socialist revolution; and 2) the denial of the necessity for the building of a Trotskyist party to develop within the working class the consciousness required for the conquest of political power.


15--Russian president downplays economic crisis, wsws


When asked by one reporter, “What’s happening now with our economy—is this payback for Crimea?” Putin responded, “No, this is not payback for Crimea. This is payback, or rather, this is payment for our natural desire to preserve ourselves as a nation, as a civilization, as a state ... After the fall of the Berlin wall, after the collapse of the Soviet Union ... we completely opened ourselves up to our partners. And what did we see? Direct, full-scale support for terrorism in the north Caucuses.”....


The contradictory character of Putin’s positions are rooted in the fact that his regime, borne out of the reintegration of the Soviet Union into the world capitalist economy and its subordination to global finance capital, cannot find a way out of the intensifying conflict with the US. The oligarchic elite, on whose behalf Putin works, is seeking to preserve its wealth first and foremost by finding a compromise with the West.
Immense social anger exists over the ill-gotten riches of this layer, and Putin’s ability to manage the internal and external pressures facing his regime is increasingly being called into question.
On several occasions reporters inquired about Putin’s use of the term a “fifth column,” referring to forces working inside Russia to undermine the government on behalf of foreign powers.


16--The Crazy US "Group Think" on Russia, Robert Parry


On Sept. 26, 2013, Gershman took to the op-ed page of the Washington Post and pronounced Ukraine “the biggest prize” and an important interim step toward toppling Putin and putting down the resurgent and willful Russia that he represents.


Gershman, whose NED is financed by the U.S. Congress to the tune of about $100 million a year, wrote: “Ukraine’s choice to join Europe will accelerate the demise of the ideology of Russian imperialism that Putin represents. … Russians, too, face a choice, and Putin may find himself on the losing end not just in the near abroad but within Russia itself.”http://www.atimes.com/atimes/Middle_East/MD14Ak02.html


In other words, from the start, Putin was the target of the Ukraine initiative, not the instigator. Beyond Gershman’s rhetoric was the fact that NED was funding scores of projects inside Ukraine, training activists, supporting “journalists,” funding business groups.
Then, in November 2013, Ukraine’s elected President Viktor Yanukovych balked at an association agreement with the European Union after learning that it would cost Ukraine some $160 billion to separate from Russia. Plus, the International Monetary Fund was demanding economic “reforms” that would hurt average Ukrainians.


Yanukovych’s decision touched off mass demonstrations from western Ukrainians who favored closer ties to Europe. That, in turn, opened the way for the machinations by neocons inside the U.S. government, particularly the scheming of Assistant Secretary of State for European Affairs Victoria Nuland, the wife of arch-neocon Robert Kagan.
Before long, Nuland was handpicking the new leadership for Ukraine that would be in charge once Yanukovych was out of the way, a process that was ultimately executed by tightly organized 100-man units of neo-Nazi storm troopers bused in from the western city of Lviv. [See Consortiumnews.com’s “NYT Discovers Ukraine’s Neo-Nazis at War.”]...


17--Dumping the dollar, Crosstalk (video)


18--Turkey, crosstalk


19--Libya all about oil, or central banking?   Ellen Brown, Asia Times 


Several writers have noted the odd fact that the Libyan rebels took time out from their rebellion in March to create their own central bank - this before they even had a government. Robert Wenzel wrote in the Economic Policy Journal:
I have never before heard of a central bank being created in just a matter of weeks out of a popular uprising. This suggests we have a bit more than a rag tag bunch of rebels running around and that there are some pretty sophisticated influences.
Alex Newman wrote in the New American:
In a statement released last week, the rebels reported on the results of a meeting held on March 19. Among other things, the supposed rag-tag revolutionaries announced the "[d]esignation of the Central Bank of Benghazi as a monetary authority competent in monetary policies in Libya and appointment of a Governor to the Central Bank of Libya, with a temporary headquarters in Benghazi...


And that brings us back to the puzzle of the Libyan central bank. In an article posted on the Market Oracle, Eric Encina observed:
One seldom mentioned fact by western politicians and media pundits: the Central Bank of Libya is 100% State Owned ... Currently, the Libyan government creates its own money, the Libyan Dinar, through the facilities of its own central bank. Few can argue that Libya is a sovereign nation with its own great resources, able to sustain its own economic destiny. One major problem for globalist banking cartels is that in order to do business with Libya, they must go through the Libyan Central Bank and its national currency, a place where they have absolutely zero dominion or power-broking ability. Hence, taking down the Central Bank of Libya (CBL) may not appear in the speeches of Obama, Cameron and Sarkozy but this is certainly at the top of the globalist agenda for absorbing Libya into its hive of compliant nations.
Libya not only has oil. According to the International Monetary Fund (IMF), its central bank has nearly 144 tonnes of gold in its vaults. With that sort of asset base, who needs the BIS, the IMF and their rules...


In a 2002 article in Asia Times Online titled "The BIS vs national banks" Henry Liu maintained:
BIS regulations serve only the single purpose of strengthening the international private banking system, even at the peril of national economies. The BIS does to national banking systems what the IMF has done to national monetary regimes. National economies under financial globalization no longer serve national interests.

... FDI [foreign direct investment] denominated in foreign currencies, mostly dollars, has condemned many national economies into unbalanced development toward export, merely to make dollar-denominated interest payments to FDI, with little net benefit to the domestic economies.
He added, "Applying the State Theory of Money, any government can fund with its own currency all its domestic developmental needs to maintain full employment without inflation." The "state theory of money" refers to money created by governments rather than private banks.                 
So is this new war all about oil or all about banking? Maybe both - and water as well. With energy, water, and ample credit to develop the infrastructure to access them, a nation can be free of the grip of foreign creditors. And that may be the real threat of Libya: it could show the world what is possible.


20--NATO’s Destruction of Libya, SC


21--Russia's central Bank---The Bank of Greatest Russia was founded on July 13, 1990....
According to the constitution, the Bank of Russia is an independent entity, with the primary responsibility of protecting the stability of the national currency, the ruble. ...


The Bank of Russia owns a 57.58% stake in Sberbank,[5] which creates potential conflicts of interest both in the competitive landscape as well as in the regulatory policy of the Russian banking sector.


The Central Bank of the Russian Federation is the principal shareholder and founder of Sberbank of Russia, holding 50% of the share capital plus one voting share. Both international and Russian investors feature among the shareholders of Sberbank of Russia.
Sberbank today is the circulatory system of the Russian economy, accounting for one third of its banking system. The Bank provides employment and a source of income for every 150th Russian family.
The leader of Russian banking industry accounts for 29.7% of aggregate banking assets (as of August 1, 2014).
The Bank is the key lender to the Russian economy and the biggest receiver of deposits in Russia: 46.4% of retail deposits, 34.7% of retail loans and 33.9% of loans to corporate customers account for Sberbank as of August 1, 2014.
Sberbank today is 16 territorial banks and over 17 thousand branches throughout the country in all 83 constituent entities of the Russian Federation located across 11 time zones.


22--Sergei Glazyev vs CBR, Larouche


Academician Sergei Glazyev, an adviser to President Vladimir Putin, keynoted the meeting with a scathing follow-on to his recent, sensational article, "U.S. Sanctions and the Bank of Russia: a Double Blow against the National Economy."


Glazyev argues that the Central Bank, with its declared battle against inflation, is strangling the already credit-starved Russian economy. He calls for capital controls and the denomination of foreign trade in rubles, as well as earmarked Central Bank lending for productive investment an idea repeated by Putin in his Dec. 4 annual Message to the Federal Assembly. But, reports vestifinance.ru, Deputy Chairman of the Central Bank Xenia Yudayeva (an MIT PhD in mathematical economics) does not agree with Glazyev’s recommended measures, which she objects "would bring isolation from the Western world." And major banks, according to Moscow sources, continue to funnel the funds they borrow from the Central Bank not into productive investment, but onto the currency markets....


Dec. 16 began with an after-midnight announcement by the Central Bank of a drastic increase of the key rate, to 17%, a jump of 6.5 percentage points! "In effect, this means a ban on lending," one observer in Moscow put it.


23--Putin advisor calls for anti dollar alliance, zero hedge


24-Glazyev: Russia needs to establish a system of domestic credit, sputnik-




Russia needs to establish a system of domestic credit and improve the efficiency of public administration, so that the economy could successfully develop amid Western sanctions, Russian Presidential Aide Sergei Glazyev said Tuesday.


MOSCOW, October 7 (RIA Novosti) - Russia needs to establish a system of domestic credit and improve the efficiency of public administration, so that the economy could successfully develop amid Western sanctions, Russian Presidential Aide Sergei Glazyev said Tuesday.
"If we want to survive the war that is being waged against Russia, we need to create an internal system of credit, which is aimed at modernizing economic growth. To do this, we need to dramatically increase the quality, competence and efficiency of public administration," Glazyev said at the IX National Congress "Modernization of Russian Industry: Development Priorities" in Moscow.


"With the sanctions, the European countries and the United States are clearly telling us that we can no longer rely on foreign investment, so the state is the only source, which can give the necessary amount of credit to the economy. Today, the government only uses fiscal policy, and even then to the detriment, withdrawing more money from the economy than it gives," the presidential aide said.
"If we are going to lend money to the Western economy, as we did before (Russia is the donor of the world economic system, having lent more than a trillion dollars abroad), then we will not be able to solve the problems of modernization. We will not even be able to solve the problem of maintaining the current standard of living and the country's defense. It is necessary to create a domestic credit system, and we need to do it quickly," Glazyev said.
Additionally, he reiterated the need to introduce restrictions on the export of capital from Russia.


25---CBR assists speculation against the ruble? Larouche


Glazyev, in an interview to BFM.ru yesterday, repeated his charge that the plunge of the ruble was caused by speculative operations of Russian banks; and called for imposing foreign currency regulations.
Glazyev stated,


"Naturally, that's what the bankers are doing. The Central Bank has given the commercial banks 6 trillion rubles [this is $171 billion, at a rate of 35 rubles to the dollar; note, the rate was 69 rubles to the dollar at close of Dec. 15]. Practically two-thirds of this money was diverted onto the currency market, using this essentially government money against the ruble...The Central Bank has a simple tool for stopping this speculation: impose regulations on foreign-currency positions. This was done in 1998. The banks were simply forbidden to have more foreign currency in their accounts at the end of the day, than at the start. It's simple and effective."


In a related development, State Duma deputy Yevgeny Fyodorov has called for the Russian Prosecutor General to launch a criminal investigation into recent actions by the Russian Central Bank, on the grounds they violated the constitutional mandate for the bank to "defend and insure the stability of the ruble." Fyodorov charged that by floating the ruble and allowing the markets to set the rates, the bank acted illegally.


26--Three Members of Congress Just Reignited the Cold War While No One Was Looking, Truthdig


27--Obama Authorizes Sanctions Against Venezuelan Socialists, truthdig


               




















Thursday, December 18, 2014

Today's Links


 Going Nuclear:  "Were Russia to deploy this “nuclear” financial option, the Western financial system would not be able to absorb a shock of default. And that would demonstrate – once and for all - that Wall Street speculators have built a ‘House of Cards’ so fragile and corrupt that the first real storm turns it to dust." Pepe Escobar




I have no doubt that the entire situation with pumping up passions and anti-Russian feelings among the Western public is well-coordinated,” Russian Foreign Minister Sergey Lavrov told the LifeNews channel.
“Was there malice in the actions of some of our Western colleagues, who started interpreting the content of confidential conversations in a way that turned interpretation into misinterpretation? Or have some folks simply decided to ride before the hounds or demonstrate their full loyalty to the campaign unfolding in Europe with a lot of input from their transatlantic allies?” the minister wondered


1--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." ...


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.”
Since then, with OPEC declining to cut production despite an accelerating fall in prices, oil has dropped to under $60 a barrel.
 Alex Lantier, Imperialism and the ruble crisis, wsws
http://www.wsws.org/en/articles/2014/12/18/pers-d18.html





“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


2--The markets are rigged, PCR, counterpunch


Apparently, Putin has been sold, along with his internal enemies the Atlanticist integrationists, on “free trade globalism.”  Globalism destroys the sovereignty of every country except the world reserve currency country that controls the system.


As Michael Hudson has shown, neoliberal economics is “junk economics.”  But it is also a tool of American financial imperialism, and this makes neoliberal Russian economists tools of American imperialism.....


The stock market is high because corporations are the biggest purchases of stock. Buying back their own stock supports or raises the share price, enabling executives and boards to sell their shares or cash in their options at a profitable price.  The cash that Quantitative Easing has given to the mega-banks leaves ample room for speculating in stocks, thus pushing up the price despite the absence of fundamentals that would support a rising stock market.
In other words, in America today there are no free financial markets. The markets are rigged by the Federal Reserve’s Quantitative Easing, by gold price manipulation, by the Treasury’s Plunge Protection Team and Exchange Stabilization Fund, and by the big private banks...


Washington intends to subvert Russia and to turn Russia into a vassal state like Germany, France, Japan, Canada, Australia, the UK and Ukraine.  If Russia is to survive, Putin must protect Russia from Western economic institutions and Western trained economists.
It is too risky for the US to take on Russia militarily.  Instead, Washington is using its unique symbiotic relationship with Western financial institutions to attack an incautious Russia that foolishly opened itself to Western financial predation."...


No country dependent on foreign capital is sovereign.  A country dependent on foreign capital, especially from enemies seeking to subvert the economy, is subject to destabilizing currency and economic swings.  Russia should self-finance.  If Russia needs foreign capital, Russia should turn to its ally China.  China has a stake in Russia’s strength as part of China’s protection from US aggression, whether economic or military.


The falling oil price has brought concern that oil derivatives are in jeopardy. Citigroup has a provision in the omnibus appropriations bill that shifts the liability for Citigroup’s credit default swaps to depositors and taxpayers. It was only six years ago that Citigroup was bailed out to the tune of a half trillion dollars.  Already Citigroup is back for more while nothing whatsoever is done to bail the American people out of their hardships caused by Citigroup and the other financial gangsters.
What we are experiencing is not a repeat of the past. The ability or, rather, the audacity of the US government itself to manipulate the major financial markets is new. Can this new trend continue?  The government is supposed to be the enforcer of laws against market manipulation but is itself manipulating the markets.




3---Upper House plans probe into Central Bank role in ruble crash, RT


4--Ukrainian Soldier Confirms: Ukraine’s Military Shot Down Malaysian MH17 Plane, eric Zuesse


5--Hitler vs. Bernanke, CP


Enter Hitler, who had been sworn in as chancellor under President Paul von Hindenburg in January, 1933. Hitler appointed German economist and banker, Hjalmar Schacht, as President of the Reichsbank and Minister of Economics. Schacht, in turn, launched a groundbreaking fiscal stimulus program that rebuilt the nation’s worn infrastructure and put millions of people back to work. At the same time, Schacht took steps to strengthen the currency, jettison the gold standard, and impose capital controls, all of which served to reinforce Germany’s economic independence. Here’s a little background from C.K.Liu’s Asia Times article “Nazism and the German Economic Miracle”:
“The Nazis came to power in Germany in 1933, at a time when its economy was in total collapse, with ruinous war-reparation obligations and zero prospects for foreign investment or credit. Yet through an independent monetary policy of sovereign credit and a full-employment public-works program, the Third Reich was able to turn a bankrupt Germany, stripped of overseas colonies it could exploit, into the strongest economy in Europe within four years, even before armament spending began.” (“Nazism and the German Economic Miracle,” Henry C. K. Liu, Asia Times)
6--Japan auto lobby sounds alarm over weak domestic sales, Reuters


Ike, who also serves as Honda chairman, said Prime Minister Shinzo Abe's stimulus policies - known as Abenomics and designed to end years of deflation - had failed to encourage spending on big-ticket items like cars.


"Abenomics is not having clear traction across the country and even though as an industry we benefit from the weaker yen, we feel a sense of crisis about the fact that cars are actually not selling," he said.
Ike also said plunging emerging-market currencies were having an "undeniable" impact on Japan's auto sector. 


7--Is Russia ready to impose capital controls?, Bloomberg


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 Mohamad, a Putin- like authoritarian figure, 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.


8--Obama signs Russia sanctions bill, no plans to use it for now, RT


US entities would be forbidden from investing in gas giant Gazprom, and the company would face additional sanctions if it broke off supplies to key eastern European countries, with whom it has squabbled repeatedly over price. Other sanctions would involve Russia’s arms exporter Rosoboronexport.


Perhaps most crucially, organizations in the country’s embattled financial sector would be barred from dealing with any US banks, a measure similar to that faced by Iran at the low point of the fallout over its nuclear program.


In a related move, the bill authorizes Obama to supply anti-tank weapons, surveillance drones and other sophisticated equipment for Petro Poroshenko's government in Kiev, though White House officials said the President had no immediate plans to allow US weapons to be used to put down the uprising in the east of the country....


But two factors appear to have put a brake on the plan. Obama is loathe to impose new measures without backing from Brussels, where there is no unity on the need for future sanctions, with Francois Hollande even suggesting on Thursday that existing ones should be lifted, if Russia displays positive "gestures."


9--Even slaves had it better:  Inequality In U.S. Today Is Worse than in Apartheid South Africa or 1774 Slaveholding Colonial America … and TWICE As Bad As In Ancient Slaveholding Rome, WA Blog


10--What Putin is not telling us, pepe escobar


And then there’s a “nuclear” option – which Putin didn’t even have to mention. If Russia decides to impose capital controls and/or imposes a “holiday” on repayment of larger debt tranches coming due in early 2015, the European financial system will be bombed – Shock and Awe-style; after all, much of the Russian bank and corporate funding was underwritten in Europe.


Exposure to Russia per se is not the issue; what matters is the linkage to European banks. As an American investment banker told me, Lehman Brothers, for instance, brought down Europe just as much as New York City - based on inter-linkages. And yet Lehman was based in New York. It’s the domino effect that counts.


Were Russia to deploy this “nuclear” financial option, the Western financial system would not be able to absorb a shock of default. And that would demonstrate – once and for all - that Wall Street speculators have built a ‘House of Cards’ so fragile and corrupt that the first real storm turns it to dust. ...


Putin was so cool, calm, collected – and eager to delve into details - at his press conference because he knows Moscow is able to move in total autonomy. This is – of course – an asymmetrical war – against a crumbling, dangerous empire. What those intellectual midgets swarming the lame duck Obama administration are thinking? That they can sell American – and world – public opinion the notion Washington (European poodles, actually) will brave nuclear war, in the European theater, in the name of failed state Ukraine?


11--Fueled by Recession, U.S. Wealth Gap Is Widest in Decades, Study Finds, NYT
I love the way the media makes it sound like it was all a big mistake.


12--Lender’s fear of strategic default will prevent future housing bubbles , oc housing

Monday, December 15, 2014

More links


1---Turkey Detains 27 Tied to President’s Rival  wsj
Crackdown on Supporters of U.S.-Based Cleric Gülen Is Seen as Bid to Tighten Grip on Power Before Elections in June,  wall street journal


2--Strong dollar threatens global economy, warns BIS , Guardian


Concerns greet rise of dollar to seven-year high amid fears of emerging economies’ dependence on US currency Strong dollar threatens global economy, warns BIS

The Switzerland-based BIS also revealed that issuance of collateralised debt obligations – the controversial securities once likened to financial weapons of mass destruction – has surpassed levels recorded before the crisis. Activity in the leveraged loans market – a type of CDO – was running at $250bn (£161bn) per quarter in the year ending September 2014, compared with an average of $190bn in 2005-07....

Against this backdrop, the BIS is concerned that some emerging economies could come unstuck because of a growing dependence on loans taken out in US dollars.

Offshore lending in US dollars has hit $9tn, roughly double its 2008 value. Emerging economies have taken out $3.1tn in cross-border loans, mostly in US dollars. Since the end of 2012 alone, dollar loans to China have doubled to $1.1tn, and Chinese citizens have borrowed more than $360bn in debt securities...

But this puts borrowing economies in a vulnerable spot. As the dollar appreciates in value against the local currency, the loan becomes more expensive to repay, raising the risk of default and economic instability. The dollar has been rising against the euro and the yen since the US Federal Reserve announced an end to its stimulus programme and hinted at an interest-rate rise next year. In contrast, the European Central Bank and Bank of Japan have loosened monetary policy and signalled greater stimulus.
“The appreciation of the dollar against the backdrop of divergent monetary policies may, if persistent, have a profound impact on the global economy, in particular on [emerging market economies]. For example, it may expose financial vulnerabilities as many firms in emerging markets have large US dollar-denominated liabilities,” BIS said.


3--- Qatar Stocks Enter Bear Market as Dubai Erases 2014 Gains on Oil, Bloomberg


Qatar’s QE Index (DSM) lost 5.9 percent to 11,114.43 at the close in Doha, bringing its decline since September’s record high to 23 percent. Dubai’s DFM General Index (DFMGI) lost 7.6 percent, the most since October 2008. The shares have retreated 34 percent this quarter, turning one of the world’s best gains in 2014 into a 1.4 percent loss. The measure, along with indexes in Saudi Arabia, Kuwait and Oman fell into a bear market in the past three weeks. .....


Saudi Arabia’s Tadawul All Share Index fell 3.3 percent to 8,119.08, the lowest close in 13 months. Abu Dhabi’s ADX General Index (ADSMI) slipped 3.6 percent, taking its retreat from a May peak to almost 20 percent. The measure has erased gains this year to slide 1.9 percent. The exchange today announced a five-minute trading halt if a stock moves by 5 percent to “prevent rash decisions,” according to an e-mailed statement.
Kuwait’s SE Price Index lost 2.9 percent, Oman’s benchmark declined 3.2 percent and Bahrain’s measure fell 0.6 percent.


“Oil is a major source of revenue for government budgets in the region,” Tariq Qaqish, fund manager at Al Mal Capital PSC, said by telephone from Dubai. “Lower oil prices mean lower spending. Lower spending means less economic growth.”
Governments in the region need a break-even oil price of about $80 a barrel for this year, according to International Monetary Fund estimates.


4--The Ultimate Guide to Mainstream Media: American TV Networks, RT
5--Russia Shocks With Emergency Rate Hike, Boosts Interest Rate From 10.5% To 17%, zero hedge


6---China, Russia Dump US Treasurys In October As Foreigners Sell Most US Stocks Since 2007, zero hedge


7--
1--Ruble gets hammered, Morningstar


Russia's central bank on Thursday raised its key interest rate to 10.5% from 9.5%, and its deposit rate to 9.5% from 8.5%, in an effort to halt the ruble's slide. However, economists broadly agree such a move isn't enough.
"In my view, the risk of a full-scale currency crisis is still high and the Bank of Russia may have to use all tools at its disposal to stem ruble rout," said Piotr Matys, a currency strategist at Rabobank. He said he had been expecting a 2.5-percentage-point increase in the key interest rate. "The decision taken proved insufficient."

Strategists at Sberbank also said that they weren't convinced that the rate increase would have a significant impact.
"Unless the Central Bank decides to step in with bolder actions, we wouldn't expect its policy adjustments to alter the ruble's trajectory," they write in a note.
The ruble was battered earlier this year by geopolitical conflict and resulting sanctions, but its decline has been exacerbated in recent months by the oil-price shock, especially after the 12-member Organization of the Petroleum Exporting Countries last month rejected calls for drastic action to cut their output. Around 50% of Russia's annual budget revenue stems from oil and gas exports.


An economic cycle is coming to an end, a cycle that began in the early 1970s with the birth of what Yanis Varoufakis calls the “global minotaur,” the monstrous engine that ran the world economy from the early 1980s to 2008. The late 1960s and the early 1970s were not just the times of oil crisis and stagflation; Nixon’s decision to abandon the gold standard for the U.S. dollar was the sign of a much more radical shift in the basic functioning of the capitalist system. By the end of the 1960s, the U.S. economy was no longer able to continue the recycling of its surpluses to Europe and Asia: Those surpluses had turned into deficits. In 1971, the U.S. government responded to this decline with an audacious strategic move: Instead of tackling the nation’s burgeoning deficits, it decided to do the opposite, to boost deficits. And who would pay for them? The rest of the world! How?

By means of a permanent transfer of capital that rushed ceaselessly across the two great oceans to finance America’s deficits: The United States has to suck up a half-billion dollars daily to pay for its consumption and is, as such, the universal Keynesian consumer who keeps the global economy running. This influx relies on a complex economic mechanism: The United States is “trusted” as the safe and stable center, so that all others, from the oil-producing Arab countries to Western Europe to Japan, and now even China, invest their surplus profits in the United States. Since this “trust” is primarily ideological and military, not economic, the problem for the United States is how to justify its imperial role—it needs a permanent state of war, offering itself as the universal protector of all other “normal”—as opposed to “rogue”—states.....


From the Centre for Research on Globalization’s blog:
America is on a war footing. While a World War Three Scenario has been on the drawing board of the Pentagon for more than 10 years, military action against Russia is now contemplated at an ‘operational level.’ We are not dealing with a ‘Cold War.’ None of the safeguards of the Cold War era prevail. The adoption of a major piece of legislation by the U.S. House of Representatives on Dec. 4, 2014 (H.R. 758) would provide (pending a vote in the Senate) a de facto green light to the U.S. president and commander in chief to initiate—without congressional approval—a process of military confrontation with Russia. Global security is at stake. This historic vote—which potentially could affect the lives of hundreds of millions of people worldwide—has received virtually no media coverage. A total media blackout prevails.  On December 3, the Ministry of Defence of the Russian Federation announced the inauguration of a new military-political entity which would take over in the case of war. Russia is launching a new national defense facility, which is meant to monitor threats to national security in peacetime, but would take control of the entire country in case of war.


3---Did Wall Street Need to Win the Derivatives Budget Fight to Hedge Against Oil Plunge?


Much of the recent energy boom has been financed with junk debt and a good portion of that junk debt ended up in collateralized loan obligations. CLOs are also big users of credit default swaps, which was an important target of the Dodd Frank push-out. In addition, over the past 6 months banks were unable to unload a portion of the junk debt originated and so it remained on bank balance sheets. That debt is now substantially underwater. To hedge, banks are using CDS. Hedge funds are actively shorting these junk debt financed energy companies using CDS (it’s unclear where the long side of those CDS have ended up – probably bank balance sheets and CLOs).


Finally, junk financed energy companies have been trying to offset the falling price of oil by hedging via energy derivatives. As it turns out, energy derivatives are also part of the DF push-out battle.
Conditions in the junk and energy markets are pretty dire right now as a result of the collapse in oil, as you know. I suspect there are some very anxious bank executives looking at their balance sheets right now.

Since the derivatives push-out rule of Dodd Frank was scheduled to go into affect in 2015, the potential change in managing their exposure may be causing a lot of volatility for banks now – they need to hedge in large numbers at the best rates possible. Is it possible that bank concerns (especially Citi and JP Morgan) about the potential energy-related losses are why Dodd Frank has to be changed now?

naked capitalism



Most provocatively the legislation authorizes the distribution of $350 million in military aid to the Kiev regime over the next three years. Included in this potential cache are anti-tank and anti-armor weapons, grenade launchers, mortars, machine guns, as well as surveillance drones. The Obama administration has so far resisted official calls from the regime in Kiev for the distribution of lethal military aid....

The bill also authorizes sanctions to be placed on individuals that make investments in special Russian crude oil projects; sanctions against Gazprom if it is determined to be withholding significant natural gas supplies from any NATO member state as well as Ukraine, Moldova or Georgia; and additional licensing requirements on exports from Russia’s energy sector....

According to the latest figures from the UN, more than 4,600 people have been killed and more than 10,000 wounded in fighting between Ukrainian forces and pro-Russian separatists in eastern Ukraine. The November ceasefire has largely held, with the last week seeing some of the lowest numbers of casualties since the outbreak of the conflict.
Fighting broke out in eastern Ukraine not long after a US and German supported fascist-backed coup ousted the democratically elected President Victor Yanukovich in February after he refused to sign an Association Agreement with the EU.
The UN estimates that more than 1 million people have been displaced since fighting began in April. More than 540,000 Ukrainians have been internally displaced and another 560,000 externally displaced, with the majority fleeing to Russia.


7--Oil's Crash Is the Canary In the Coal-Mine for a $9 TRILLION CRISIS, zero hedge
Dollar rally makes it harder to pay back borrowed dollars


8---Wall Street’s Revenge, by Paul Krugman, Commentary, NY Times:


One of the goals of financial reform was to stop banks from taking big risks with depositors’ money. ... If banks are free to gamble, they can play a game of heads we win, tails the taxpayers lose. ..


Dodd-Frank tried to limit this kind of moral hazard in various ways, including a rule barring insured institutions from dealing in exotic securities, the kind that played such a big role in the financial crisis. And that’s the rule that has just been rolled back. ...
What just went down isn’t about free-market economics; it’s pure crony capitalism. And sure enough, Citigroup literally wrote the deregulation language that was inserted into the funding bill.
Again, in itself last week’s action wasn’t decisive. But it was clearly the first skirmish in a war to roll back much if not all of the financial reform. And if you want to know who stands where in this coming war, follow the money: Wall Street is giving mainly to Republicans for a reason. ... 
9--A Foreign Policy of Russophobia, Pat Buchanan


10--Energy firms in crisis amid collapsing oil prices, insolvencies treble, RT

A Pullback From Junk Bonds Can Be Harbinger That Risk Is Being Reassessed
 

The oil bust is exposing cracks in the $1.3 trillion junk-bond market, putting pressure on a key source of corporate financing and potentially crimping economic growth.
U.S. junk-bond prices have fallen 8% since late June, according to data from Barclays PLC. One-third of that drop has come this month alone, putting the market on track for its worst annual performance since the financial crisis.
While much of the stress has been in the energy sector on the heels of the sharp decline in oil prices, lately the woe is spreading across the junk market.
Each of the 21 high-yield sectors in a U.S. junk-bond index tracked by J.P. Morgan Chase & Co. registered losses in the five days ended Dec. 9.


“Oil prices have crushed the energy sector and it’s leaking elsewhere,” said Andrew Herenstein, co-founder of Monarch Alternative Capital LP, which manages $5 billion and is among the largest investors in distressed debt.
Debt is generally deemed to be distressed when investors view it as at high risk of missing bond payments or of a restructuring, at least at some point.
A pullback from junk bonds is often a harbinger of a broader reassessment of risk across financial markets, raising the possibility that investors could turn more wary of stocks and other assets.
Skeptics warned earlier this year that the junk market was becoming overheated, pointing to the risk of a larger-than-expected retreat.


A raft of postcrisis rules have hit securities-dealing banks, hampering the ability of those middlemen to cushion a selloff, especially in risky assets. Many say the changing role of those dealers is exaggerating the price drops, raising the risk of indiscriminate selling, or “fire sales.”
“The problem with high yield is often that investors have to sell what they can, not what they want to,” said Peter Tchir, managing director at Brean Capital LLC, an investment bank and asset manager.
The junk selloff comes as investors are uneasy about the global economy and Federal Reserve interest-rate increases that many expect to begin next year.
Junk bonds, like stocks, have mostly proved resilient, bouncing back after modest pullbacks. Both these bonds, and stocks, could again resist a deep drop.



12--Congress Authorizes War With Russia, sic semper tyrannis 

The United States Congress, silently, speedily and with no public debate has passed a motion authorizing the supply to Ukraine of American lethal weapons and other forms of support which ratchet up, in my opinion, the probability of a direct military confrontation between NATO and Russia.

Sunday, December 14, 2014

Today's Links

1--How To Tell If The Next Financial Crisis Is Upon Us, zero hedge


The unknown is how much of the $2.77 trillion of junk CDS on bank balance sheets on June 30 this year was energy-related. If history is any indicator, the CDS in the distressed energy sector already far outweighs its 18% share of the junk bond market.
But if we watch for the following three signposts, we’ll know that the crisis play is happening again:
  • One sign would be for non-energy junk bonds to begin dropping in price. That would mean large holders are exiting from all junk bonds, not just those companies affected by low oil prices.
  • Another sign would be sudden drops in share prices for banks or insurance companies that hold small amounts of energy-related bonds or bank loans, a clue that some market participants think they have derivative exposure.
  • A third sign to look for would be the rumors or news that the big, investment-grade energy companies are having trouble renewing their Commercial Paper, bank loans or maturing bonds (the Exxon-Mobils and Shells of the world).
If we see all these signs in a matter of days or weeks, then our global financial system is being tested once again by the small community of speculators that profit from betting against industries, countries, or markets. They made a fortune betting against mortgages. Most of them didn’t retire to enjoy that wealth. They moved on to the next trade, and every day they try to repeat their investing success....


Do we need to remind ourselves that Fannie and Freddie were the Exxon-Mobil and Shell of the mortgage business? Or that no target is too big if trillions of dollars can be used to make the bets?
So where will the “next trade” be?
Anywhere there might be weakness.
This month, it’s in energy companies that borrowed more than $200 billion while planning on oil prices staying over $100 a barrel, and gasoline staying over $3 a gallon.
Only time will tell whether there have been enough bets against those optimistic energy companies to make it a problem for everyone, and not just them.


2--Blinking Red:  The Crude Crash Comes To Wall Street: Counterparty Risks Rear Their Ugly Heads Again, zero hedge


Credit decouples from stocks and oil prices


3---Warren speech: Break up Citigroup


“A century ago, Teddy Roosevelt was America’s trustbuster.  He went after the giant trusts and monopolies in this country, and a lot of people talk about how those trusts deserved to be broken up because they had too much economic power.  But Teddy Roosevelt said we should break them up because they had too much political power.  Teddy Roosevelt said break them up because all that concentrated power threatened the very foundations of our democratic system.”


“And now we’re watching as Congress passes yet another provision that was written by lobbyists for the biggest recipient of bailout money in the history of the country.   And it’s attached to a bill that needs to pass or else the entire federal government will grind to a halt.”


“Think about this kind of power.  A financial institution has become so big and so powerful that it can hold the entire country hostage.  That alone is a reason enough for us break them up.  Enough is enough


4---What the Heck Just Transpired in the Global Markets? , wolf street


Low oil prices are good for consumers who drive a lot, and it brings down prices of related products. But they are wreaking havoc in the American oil patch. The shale revolution was funded with debt – much of it junk rated. That debt is now deteriorating. And companies that need more money are hitting a wall of resistance. Defaults will follow. And the energy junk-bond debacle has already begun to ooze into other areas.


5---Americans are 40% poorer than before the recession, marketwatch


The net worth of American families — the difference between the values of their assets, including homes and investments, and liabilities — fell to $81,400 in 2013, down slightly from $82,300 in 2010, but a long way off the $135,700 in 2007, according to a new report released on Friday by the nonprofit think-tank Pew Research Center in Washington, D.C.
“The Great Recession, fueled by the crises in the housing and financial markets, was universally hard on the net worth of American families,” the report found.


6---Elizabeth Warren on Citigroup
Enough is enough


7--Bail-In and the Financial Stability Board: The Global Bankers' Coup , ellen brown


8--Mikhaïl Khazine sur allocution de Poutine//Mikhail Khazin about Putin's speech 4. Dec. 2014, "Must see"


9---Opec willing to push oil price to $40 says Gulf oil minister, Telegraph
Senior Opec ministers says cartel has no fear of oil prices falling to levels as low as $40 per barrel amid price war with Russia and US shale


10---The Secret Stupid Saudi-US Deal on Syria, F William Engdahl, BFP


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 unintended consequence will be to push Russia even faster to turn east to China and Eurasia. - ....


the long-time US ally inside OPEC, the kingdom of Saudi Arabia, has been flooding the market with deep discounted oil, triggering a price war within OPEC, with Iran following suit and panic selling short in oil futures markets. 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. [1] 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.[2] When combined with the financial losses of Russian state natural gas sales to Ukraine and prospects of a US-instigated cutoff of the transit of Russian gas to the huge EU market this winter as EU stockpiles become low, the pressure on oil prices hits Moscow doubly. 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 oil weapon is accelerating recent Russian moves to focus its economic power on national interests and lessen dependence on the Dollar system. If the dollar ceases being the currency of world trade, especially oil trade, the US Treasury faces financial catastrophe. For this reason, I call the Kerry-Abdullah oil war a very stupid tactic. -



Saturday, December 13, 2014

Today's links

1--U.S. Stocks Tumble to Cap Dow’s Worst Week Since 2011 Bloomberg


U.S. stocks sank, with the Dow Jones Industrial Average capping its biggest weekly drop in three years, as oil continued to slide and Chinese industrial data raised concern over a global economic slowdown. ...


The S&P 500 lost 1.6 percent to 2,002.33 at 4 p.m. in New York, extending losses in the final hour to cap a weekly drop of 3.5 percent. The Dow sank 315.51 points, or 1.8 percent, to 17,280.83. The Dow slid 3.8 percent for the week, its biggest decline since November 2011.
“Clearly the oil situation is driving things,” Randy Warren, who manages more than $100 million at Exton, Pennsylvania-based Warren Financial Service and Associates Inc., said in a phone interview. “At first it was just oversupply of oil. But now it’s that, plus fear of a world economy that’s growing too slow. Those fears are definitely outweighing the positive signs we’re seeing domestically...


More than $1 trillion was erased from the value of global equities this week as oil prices tumbled, raising concern over the strength of the global economy. Oil extended losses today amid speculation that OPEC’s biggest members will defend market share against U.S. shale producers. The International Energy Agency cut its forecast for global oil demand for the fourth time in five months.
The Chicago Board Options Exchange Volatility Index, a measure of the cost of options on the S&P 500 known as the VIX (VIX), jumped 78 percent this week, its biggest weekly rally in more than four years.
Stocks around the world fell today after November Chinese factory production growth slowed more than estimated. Data showing a 7.2 percent gain from the year before missed the 7.5 percent median estimate in a Bloomberg News survey. The Stoxx Europe 600 Index plunged 2.6 percent today and 5.8 percent over five days, its worst week in three years. ...


A separate report showed wholesale prices fell more than forecast in November, led by the biggest drop in energy costs in more than a year, signaling inflation pressures remain weak even as the world’s largest economy is expanding. The 0.2 percent decrease in the producer-price index followed a 0.2 percent advance in the prior month, the Labor Department data showed.

Fed Policy

Oil at a five-year low and slowing overseas markets will subdue prices in the production chain that feed into the cost of living. Persistently weak inflation has allowed Federal Reserve policy makers, who are scheduled to meet next week, room to keep interest rates near zero after ending monthly asset purchases in October as the economy strengthens.
“With falling oil prices and the stronger dollar, pipeline pressures are minimal,” Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, said before the report. “There’s no real threat of higher inflation. The Fed has a lot more leeway.”
All 10 major groups in the S&P 500 declined today, with raw-material, energy and financial companies dropping more than 2 percent.


2--Strong dollar hits US corporate profits, FT

The dollar, which climbed nearly 8 per cent against the euro and yen in the quarter to September 30, has proved an added hitch for companies dependent on foreign sales, particularly as economic growth in Europe and Asia disappoints.
“The top and bottom line are heavily impacted by foreign exchange,” said Wolfgang Koester, chief executive of FiREapps. “This problem of currency exposure is not just 220 currency pairs — the dollar between each country, etc — but rather to a much higher power as companies move currencies between different countries.”


3--US Dollar Index 2014: Three Reasons Why A Strong Dollar Could Hurt US Economy, IBT


A Stronger Dollar Hurts U.S. Manufacturing


Dollar Strength Weighs On Corporate Profits 


Fewer Foreign Tourists


4---Duck and Cover, David Stockman


This time the carnage could be much worse because the most recent tsunami of central bank credit was orders of magnitude larger and more virulent than during the run-up to the Lehman event or the dotcom implosion.
Moreover, the central banks are now out of dry powder—– impaled on the zero-bound. That means any resort to a massive new round of money printing can not be disguised as an effort to “stimulate” the macro-economy by temporarily driving interest rates to “extraordinarily” low levels. They are already there.
Instead, a Bernanke style balance sheet explosion like that which stopped the financial meltdown in the fall and winter of 2008-2009 will be seen for exactly what it is—-an exercise in pure monetary desperation and quackery.
So duck and cover. This storm could be a monster.


5---Russia’s Proposed Interbank System Threatens Global Economy , wolf street


.... a Russian interbank system would also be an important part of the framework for an alternative global economic and financial system that rejects U.S. rules. Indeed, Russia has already joined the New Development Bank, an alternative to the International Monetary Fund and the World Bank.
The participating countries (Russia, South Africa, China, India and Brazil) comprise more than 3 billion people, 41.4% of the world’s population, and account for more than 25% of global GDP. It’s not hard to imagine them constituting an alternative trading bloc similar to the old Soviet-aligned countries of the Cold War.


6--Falling oil signals broader demand shock to global economy, NYT


“People are scared that the drop in oil demand is the first leg down for the global economy that had been led by the growth in the emerging markets,” said Nancy T. Schmitt, president of Taum Sauk Investments. “That growth has evaporated. The demand has gone away, and we are seeing it first with oil prices.”


7--Derivatives law precedes global bust and bail ins,  Fiscal Times


That goes beyond letting big banks gamble on derivatives inside their taxpayer-insured depository institutions, or allowing wealthy donors to flood party committees with contributions. Yes, these pieces are egregious — so much so that, in the case of the campaign finance provision, nobody will even cop to having written it; we know that Citigroup wrote the derivatives provision.


Preventing the riskiest derivatives from being pushed away from big banks and into separately capitalized entities simply gives derivatives traders a taxpayer-funded backstop, and a subsidy from creditors. Saying that it’s no big deal doesn’t square with how furiously banks have sought the change. And claiming the CRomnibus makes up for this by increasing the budget of the chief derivatives regulator, the Commodity Futures Trading Commission, makes no sense: It hardly matters that the CFTC will now have more money to do things it is prohibited from doing. Moreover, allowing deregulatory measures to be hidden inside spending bills sets an awful precedent for the future. So Warren and her confreres were right to fight this
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8--Americans still losing confidence in basic US institutions, WSOP


9--The derivatives giveaway:  Citigroup Wrote the Wall Street Giveaway The House Just Approved  MJ
                        
The bill, drafted almost entirely by Citigroup, would allow banks to do more high-risk trading with taxpayer-backed money.


10--"The Most Egregious Sections Of Law I've Encountered During My Time As A Representative", zero hedge


11--Obama Asks Congress For Unlimed War Authority, moon of Alabama


12--WSWS---The language in this section, permitting banks to use federally insured deposits to gamble in the swaps and derivative markets, was literally drafted by the banks. According to an analysis by the New York Times, 70 of the 85 lines in that section of the bill come directly from Citibank, which spearheaded the lobbying by Wall Street on this issue.
The four largest Wall Street banks conduct 93 percent of all US derivatives trading, so the measure is a brazen demonstration of the subservience of Congress to the big banks. According to the Washington Post, Jamie Dimon, CEO of JP Morgan Chase, another of the big four banks, personally telephoned individual congressmen to urge them to vote for the amendment to Dodd-Frank.