Sunday, November 23, 2014

Today's Links

1--Why Oil Is Plunging: The Other Part Of The "Secret Deal" Between The US And Saudi Arabia, zero hedge


Saudi Arabia to pressure Russia, Iran with price of oil

Saudi Arabia will force the price of oil down, in an effort to put political pressure on Iran and Russia, according to the President of Saudi Arabia Oil Policies and Strategic Expectations Center.

Saudi Arabia plans to sell oil cheap for political reasons, one analyst says. 

To pressure Iran to limit its nuclear program, and to change Russia's position on Syria, Riyadh will sell oil below the average spot price at $50 to $60 per barrel in the Asian markets and North America, says Rashid Abanmy, President of the Riyadh-based Saudi Arabia Oil Policies and Strategic Expectations Center. The marked decrease in the price of oil in the last three months, to $92 from $115 per barrel, was caused by Saudi Arabia, according to Abanmy. 

With oil demand declining, the ostensible reason for the price drop is to attract new clients, Abanmy said, but the real reason is political. Saudi Arabia wants to get Iran to limit its nuclear energy expansion, and to make Russia change its position of support for the Assad Regime in Syria. Both countries depend heavily on petroleum exports for revenue, and a lower oil price means less money coming in, Abanmy pointed out. The Gulf states will be less affected by the price drop, he added.

The Organization of the Petroleum Exporting Countries, which is the technical arbiter of the price of oil for Saudi Arabia and the 11 other countries that make up the group, won't be able to affect Saudi Arabia's decision, Abanmy maintained.

The organization's decisions are only recommendations and are not binding for the member oil producing countries, he explained.


2--Russia, oil, Bloomberg


They certainly were a quarter of a century ago. Plunging oil prices in the latter half of the 1980s helped pave the way for the breakup of the Soviet Union by robbing it of revenue it needed to survive. The depressed market also may have influenced Iraqi leader Saddam Hussein’s decision to invade fellow producer Kuwait in 1990, triggering the first Gulf War


Russia again looks likely to suffer from the fallout in oil markets, along with Iran and Venezuela, while the U.S. and China come out ahead.

‘Geopolitically Important’

Oil is “the most geopolitically important commodity,” said Reva Bhalla, vice president of global analysis at Stratfor, an advisory company in Austin, Texas. “It drives economies around the world” and is located in some “usually very volatile places.”


3---Saudi oil – the secret weapon against Russian encroachment, CapX


Much more credible – although impossible to prove – is that the US and Saudi Arabia have indeed agreed to depress oil prices to rein in Russia. This theory has lately become a staple of Russian state media, which generally depicts the West as a conspiracy of evil capitalists and fascists bent on destroying Russia along with running dogs such as Ukraine and Estonia. The irony is that in this specific instance, they may be spot on.
For the Saudis this is more than quid pro quo for help dealing with ISIS. Russia has also become a domestic pest in the Middle East, where it gives extensive direct military assistance to the Syrian regime and does what it can to prop up Iran. Iran too is vulnerable to low oil prices, and the sensitive juncture in nuclear negotiations is a good time to apply leverage: the IMF calculates that Iran needs an oil price of $153.40/barrel for its budget to break even


4---Mexico on the Brink, wolf street


The sheer extent of U.S-Mexican security cooperation was confirmed today (Sat. Nov. 22) by revelations from the Wall Street Journal that agents of the U.S. Justice Department are disguising themselves as Mexican Marines to take part in armed raids against drug suspects in Mexico. Naturally, almost all the emphasis was placed on the “significant risk” to U.S. personnel; much less mention was made of the blatant infringement on Mexican sovereignty.


Despite its glaring failures and countless innocent victims, the U.S.’s War on Drugs continues to expand, with the Mérida Initiative now including signatories from across Central America and the Caribbean. For the U.S., the War on Drugs has served as a means of expanding its influence over the governments, police forces and armies of Latin American countries. For Mexico, by contrast, the War on Drugs, together with endemnic corruption, rampant poverty and political impunity, has brought society to the very edge of the abyss.


Whether it is able to bring itself back from the brink will depend on the extent to which its deeply divided society can unite behind a common agenda of peaceful resistance against the heavily armed forces of a corrupt, failing state and ruthless drug cartels, often in league with one another. The challenge is immense, the stakes immeasurably high but change is no longer an option; it is a necessity


5---High yield madness signals end of stock rally?, zero hedge


Why should 'equity' investors care? The last few years' gains in stocks have been thanks massively to record amounts of buybacks (juicing EPS and also providing a non-economic bid to the market no matter what happens). This financial engineering - for even the worst of the worst credit -  has been enabled by massive inflows into high-yield and leveraged loan funds, lowering funding costs and allowing CFOs to destroy/releverage their firms all in the goal of raising the share price.
Simply put - equity prices cannot rally for long without the support of high-yield credit markets - never have, never will


6--Meixo's disappeared students , WSWS


7--Endgame: Pettis on Spain  mish


8--High yield blinking red, macronomy


Time to pay attention to the warning signs


9--Why has Riyadh deployed an oil weapon?, press tv


As the world learned in 1986 when oil prices plunged over 50 percent, if Saudi Arabia wants to start a price war to affirm its ascendency, it has both the resources and infrastructure to do just that.
The 1986 oil price freefall engineered by the Saudis was simply to increase their share of the market, but this time, Riyadh’s price war could make fracking and deepwater drilling as well as alternative energy sources such as solar and wind power economically unfeasible in America.  But does Riyadh really intend to strike a blow at the US economy?


Saudi Arabia has the fiscal reserves to tolerate oil prices as low as $70 a barrel for two years without undue hardship.  With reserves of almost $750 billion—double the amount held five years ago—Riyadh is clearly in a position to test the resolve of the world’s largest importer of oil, the United States, in maintaining its shale oil production at the current levels despite prices well below the $100 a barrel profit benchmark. 


And if the Saudis hold oil prices below $90 a barrel, shale oil extraction in the US will be rendered unprofitable, which would lead to production cutbacks and greater reliance on imported oil.
It is no secret that Washington and Riyadh have been at odds over a number of issues recently, among them the Saudi perception of a lack of political will in the US administration to topple the Assad government, exasperation due to the US refusal to either strike Iran directly or back an Israeli assault, and utter dismay over President Barack Obama administration’s efforts to reach an agreement on Iran’s peaceful nuclear program. 


10--What Really Happened in Beijing: Putin, Obama, Xi And The Back Story The Media Won’t Tell You" Patrick L. Smith, info clearinghouse


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. Last week they dropped the price of Arab Light by 45 cents a barrel, Bloomberg News just reported. This has proven a market mover, sending prices to $78 a barrel at writing. 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.

The Russians, meantime, are reported to be sending soldiers and artillery back across, or maybe just across, the Ukrainian border. This we read, but we read nothing as to why this may be so, assuming for argument’s sake it is. We are invited to accept that there is no reason worth reporting."  What Really Happened in Beijing: Putin, Obama, Xi And The Back Story The Media Won’t Tell You" Patrick L. Smith

11--Stakes are high as US plays the oil card against Iran and Russia , Larry Eliot, Guardian

That, though, is not the whole story. The fourfold increase in oil prices triggered by the embargo on exports organised by Saudi Arabia in response to the Yom Kippur war in 1973 showed how crude could be used as a diplomatic and economic weapon. History is repeating itself.
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.


12--Pipeline Geopolitics: The Russia German Nord Stream Strategic Gas Pipeline, Dmitry Minin, Global Research
 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.


the rebellion in Syria began to grow two years ago, almost at the same time as the signing of a memorandum in Bushehr on June 25, 2011 regarding the construction of a new Iran-Iraq-Syria gas pipeline… It is to stretch 1500 km from Asaluyeh on the largest gas field in the world, North Dome/South Pars (shared between Qatar and Iran) to Damascus. The length of pipeline on the territory of Iran will be 225 km, in Iraq 500 km, and in Syria 500-700 km. Later it may be extended along the bottom of the Mediterranean Sea to Greece. The possibility of supplying liquefied gas to Europe via Syria’s Mediterranean ports is also under consideration. Investments in this project equal 10 billion dollars


It was planned to run the Nabucco pipeline from Iraq, Azerbaijan and Turkmenistan through the territory of Turkey. At first Iran was also considered as a resource base, but later it was excluded from the project. After the signing of the memorandum on the Islamic Pipeline, the head of the National Iranian Gas Company (NIGC), Javad Oji, stated that South Pars, with recoverable reserves of 16 trillion cubic meters of gas, is a «reliable source of gas, which is a prerequisite for the building of a pipeline which Nabucco does not have».It is easy to observe that about 20 billion cubic meters per year will remain from this pipeline for Europe, which would be able to compete with Nabucco’s 30 billion, but not the 63 billion from the South Stream.


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 new «unholy alliance» which formed between them shamelessly declared its goal to be «protecting democratic values» in the Middle East, although logically speaking the U.S. and its allies ought to begin this with their own partners in the coalition against Syria from among the monarchies of the Persian Gulf, which are questionable in this regard.


Qatar, in Engdahl’s opinion, has other plans for its share in the South Pars gas field and is not eager to join efforts with Iran, Syria and Iraq. It is not at all interested in the success of an Iran-Iraq-Syria pipeline, which would be completely independent of the transit routes of Qatar or Turkey leading to Europe. In fact, 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. (2)


Qatar’s resolve is fed by the discovery by Syrian geological exploration companies in 2011 of Syria’s own large gas-producing area near the Lebanese border, not far from the Mediterranean port of Tartus which Russia leases, and the detection of a significant gas field near Homs. According to preliminary estimates, these discoveries should substantially increase the country’s gas reserves, which previously amounted to 284 billion cubic meters. The fact that the export of Syrian or Iranian gas to the European Union could take place through the port of Tartus, which has ties to Russia, is unsatisfactory to Qatar and its Western patrons as well. (3)


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. The capacity of such a pipeline is not mentioned, but considering the resources of the Persian Gulf and Eastern Mediterranean region, it could exceed that of both the Islamic Pipeline and Nabucco, directly challenging Russia’s South Stream. The main developer of this project is Frederick Hoff, who is «in charge of gas issues in the Levant» and a member of the U.S. «Syrian Crisis Committee». 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 it is in the vicinity of this city and its «key», Al-Qusayr, 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....


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». ...


in February 2013 Iraq declared its readiness to sign a framework agreement which would enable the construction of the pipeline
http://www.globalresearch.ca/the-geopolitics-of-gas-and-the-syrian-crisis-syrian-opposition-armed-to-thwart-construction-of-iran-iraq-syria-gas-pipeline/5337452


Washington has put major pressure on EU countries as well as Turkey to build an alternative to Russia’s South Stream gas line, called Nabucco, that would eliminate Russia. To date Nabucco has little backing in the EU and insufficient sources of gas to fill the pipeline.
Completion of South Stream would weld a major geopolitical bond between the countries of the EU, Central Europe and Russia, something that would represent for Washington a geopolitical nightmare. US policy since World War II has been to dominate western Europe first by fanning the Cold War with the Soviet Union, and after 1990, by extending NATO eastwards to the borders of Russia. An increasingly independent western Europe turning east rather than across the Atlantic, could spell a major defeat for continued US “sole Superpower” domination


2010  http://www.globalresearch.ca/pipeline-geopolitics-the-russia-german-nord-stream-strategic-gas-pipeline/20080
zhedge
Putin gave the neo cons a good taste of Russian realpolitik.  By reclaiming Crimea, he blocked the whitestream pipeline, acquired hundreds of billions in offshore Natgas and Oil, and gave Russia dominance over the black sea.  Then the stupid Ukies, following state department diktat, attacked the Donbass, and got their asses kicked by the novorossiyans. Losing billions of dollars and thousands of soldiers, the  Ukraine lost its domestic supply of coal and nat gas, and is now reduced to a bankrupt rump state. Better yet, Ukie terrorism against the Donbass gave Putin the perfect excuse to crush the traitorous russian fifth columnists, who were supporting the Ukraine and were trying to trigger a color revolution. With 88% domestic approval, based in part on endless headline stories showing murdered russians killed by ukie fascists armed by the west, Putin has destroyed his opposition, and has united Russia against the west. In China, 92% of the population admires him while less than 20% respect Obama. After this fuck up, Nuland/Nudelman deserves a major promotion, as befits the peter principle


 

Saturday, November 22, 2014

Today's links

Today's quote:   "The biggest problem with any central bank trading in the financial markets is it completely destroys the integrity of the market.  Market is an allocation of a finite resource i.e. money.  Money is an infinite resource for central banks and thus destroys the entire function of efficient market valuation. (price distortion)  As we see in the markets today.  Everything is rigged." BIHM


"The most significant thing about these exposés is that they have no repercussions. Detailed and damning evidence is presented showing that the likes of JPMorgan, Goldman, Morgan Stanley, Bank of America, Citigroup, etc.—and their top executives—lied, cheated, broke laws and, in general, profited handsomely from the economic and social disasters produced by their actions. But no bank or top banker is prosecuted, let alone jailed. No measures are taken to rein in the banks. The sporadic exposés assume the character of harmless rituals. The banks are and remain above the law." WSWS


1--Can-Kicking hits 7-year high, oc housing
2,759,000 loans still delinquent


2---Existing home sales decline 5% in West despite low rates, oc housing


home-sales-1999-2014
Here is another way to visualize the problem:
Purchase Index and US Population







3--Biderman Discusses Major Disconnect Between Stock Market and Economy on CNBC -
excellent short video


4---No retirement for you, Burning Platform
http://www.mybudget360.com/wp-content/uploads/2014/11/20130620__figure9.jpg


5---Mexican military threatens intervention amidst mass protests over disappeared normalistas, wsws


All the major parties have also backed Peña Nieto’s “Pact for Mexico,” aimed at introducing free market “reforms” and restructuring the economy to benefit the ruling class and foreign capital.
As the Mexican ruling class prepares to suppress social opposition domestically, it can count on the full support of its counterparts in the United States.
In a February 2014 press conference with President Peña Nieto held in Toluca, Mexico, US President Barack Obama touted “our shared commitment to democratic values and human rights” and praised the “enormous sacrifices” made by the Mexican security forces in the fight against drug cartels.


While the US has remained largely silent about the normalistas, US State Department spokesperson Jen Psaki addressed the Ayotzinapa massacre earlier this month, urging “all parties to remain calm throughout the process,” as though peaceful demonstrators and those responsible for the murder of the normalistas stood on equal ground. Noting that the US government is “concerned about the tensions on the ground,” Psaki added the US was “engaged, also, closely with officials there.” This, no doubt, includes top officials in the Mexican military.


Meanwhile, the United States military and intelligence agencies continue to deepen their already close ties with their Mexican counterparts, under the cover of the “war on drugs.” A report yesterday in the Wall Street Journal noted that officials from the Department of Justice were donning the uniforms of the Mexican Marines and taking part in armed raids in Mexican territory. The US has supplied the Mexican state with some $2 billion in arms aid under the pretext of fighting crime.
Representatives of international finance capital have also responded with concern over the demonstrations.


6---Top incomes soared as tax rates fell, David Cay Johnston


Several dozen Americans, disclosure documents show, earn annual incomes of $1 billion or more. But they do not show up in the top 400 reports because Congress does not require them to report their full incomes or pay taxes immediately. For cash to live on these people typically borrow against their assets, paying interest rates of 2 percent or less.
In contrast to these unlimited and open-ended deferrals, Congress requires that taxes be withheld from most workers before they get paid


7--What Record Stock Buybacks Say About Economic Growth, zero hedge


8--Trust in Mass Media Returns to All-Time Low, Gallup


9--Wall Street banks and commodities fraud, wsws




The document focuses on the role of three of the largest banks—Goldman Sachs, Morgan Stanley and JPMorgan Chase—in the physical control of commodities, including energy resources and metals. “The current level of bank involvement with critical raw materials, power generation and the food supply appears to be unprecedented in US history,” the report states.


After the deregulation of the commodities markets in the late 1990s—part of a broader banking deregulation under the Clinton administration—trading in commodity-related assets increased enormously. A vast array of derivatives were developed to allow for speculation on commodities, with the market in these assets increasingly divorced from its initial purpose of enabling producers and buyers to hedge against shifts in commodity prices. Markets such as the Commodity Mercantile Exchange in Chicago are now dominated by speculators, who control as much as 70 percent of all assets.


A great deal of money is made buying and selling financial instruments tied to the prices of such basic necessities as oil and wheat. The growth in the direct control of physical goods by banks has allowed them not only to influence the prices consumers pay, but also to leverage their control of commodities to manipulate the prices of the financial instruments on which they gamble. The consequences can be deadly. Speculation in food prices, for example, is a major factor in price swings that can throw millions of people into poverty and hunger all over the world.
Some figures from the report give a sense of what is involved. At one point, the investment bank Morgan Stanley “controlled over 55 million barrels of oil storage capacity, 100 oil tankers, and 6,000 miles of pipeline.”...


The most significant thing about these exposés is that they have no repercussions. Detailed and damning evidence is presented showing that the likes of JPMorgan, Goldman, Morgan Stanley, Bank of America, Citigroup, etc.—and their top executives—lied, cheated, broke laws and, in general, profited handsomely from the economic and social disasters produced by their actions. But no bank or top banker is prosecuted, let alone jailed. No measures are taken to rein in the banks. The sporadic exposés assume the character of harmless rituals. The banks are and remain above the law....


Just last week, JPMorgan, Citigroup, Bank of America, UBS, Royal Bank of Scotland and HSBC agreed to a collective fine of $4 billion for their role in manipulating foreign exchange rates. This followed similar settlements over the banks’ manipulation of the most important interest rate in the world, the London Interbank Offer Rate (Libor).
Previous deals were reached to settle charges of money-laundering for drug cartels, deceit and fraud in the sale of mortgage-backed securities, concealment of losses from derivatives trading, complicity in the Bernard Madoff Ponzi scheme, fraud in the foreclosure of homes, and other crimes.


After the Permanent Subcommittee’s release of a 640-page document in 2011 on the 2008 financial collapse, the committee’s chairman, Senator Carl Levin, declared that the investigation had found “a financial snake pit rife with greed, conflicts of interests and wrongdoing.” The longest chapter of the report was a detailed, fact-filled review of Goldman Sach’s unloading of toxic sub-prime loans in 2007 and 2008 to counterparties who were not informed that Goldman was betting against the very securities it was hailing as sound investments...


Nevertheless, the Obama administration announced in 2012 that it was ending its investigation of Goldman Sachs for manipulating the sub-prime mortgage market and would file no charges against the bank.
The Subcommittee’s second major report on banking fraud, published in 2013, focused on fraud and deception by JPMorgan Chase over $6.2 billion in losses from speculative trades in financial derivatives (the so-called “London whale” trades). Despite documentary evidence that the bank’s top management, including Chairman and CEO Jamie Dimon, deliberately concealed information from investors about the loss, no one was prosecuted or held accountable


10---High Yield Is Flashing A "Sell Signal", Says Barclays, zero hedge


in 2007, as hints of the financial crisis were unveiled, spreads in the high yield market increased sharply. Meanwhile, the equity market climbed to a new record high. Had equity investors heeded the warning being sent from high yield, significant losses may have been avoided... and currently high yield sell signals suggest equity investors should position defensively!
Click image for massive legible version


Why should 'equity' investors care? The last few years' gains in stocks have been thanks massively to record amounts of buybacks (juicing EPS and also providing a non-economic bid to the market no matter what happens). This financial engineering - for even the worst of the worst credit -  has been enabled by massive inflows into high-yield and leveraged loan funds, lowering funding costs and allowing CFOs to destroy/releverage their firms all in the goal of raising the share price.
Simply put - equity prices cannot rally for long without the support of high-yield credit markets - never have, never will


11---Mexico’s disappeared students, wsws


The horrific episode has exposed how, under the cover of a so-called “war on drugs,” state institutions and security forces have been taken over by and integrated with the drug cartels. The process is described by Mexicans with terms like narcopolitica and narcoestado, in which all of the bourgeois parties, from the right to the so-called "left," are implicated.


The massacre has also underscored the rising inequality and savage violence that have gone hand in hand with Mexico’s free market “reforms.” This process has steadily deepened over the past three decades, culminating in the “Pact for Mexico” introduced by the current PRI (Institutional Revolutionary Party) president, Enrique Peña Nieto, with the backing of all the other major parties...


The normalistas, Mexico’s idealistic future teachers, were among the most militant opponents of this kind of capitalist “reform.” It is hardly a coincidence that they were targeted for unspeakable violence.
The massacre in Iguala is not an isolated incident. Since the so-called drug war was launched in 2006 under Peña Nieto’s predecessor, President Felipe Calderón, an estimated 130,000 Mexicans have lost their lives, while, according to the government’s own figures, 22,322 “disappeared” remain missing.
Just last June, in the town Tlatlaya, Mexican troops summarily executed 21 unarmed civilians, including a 15-year-old girl, a massacre that the government unsuccessfully attempted to cover up.


These methods are clearly not just a matter of a war on drugs, but grow inevitably out of a society characterized by unsustainable levels of inequality. Mexico is the most unequal of the 34 member countries of the Organization for Economic Cooperation and Development (OECD), with the richest 10 percent of the population having an average income almost 30 times as high as the bottom 10 percent. While Mexico is home to the world’s second richest man, Carlos Slim, and at least 15 other billionaires, approximately half of its population lives in poverty. The country’s minimum wage has not been increased since 1976, losing 77 percent of its purchasing power in the meantime




Notably silent on the Iguala massacre is the Obama administration in Washington. US imperialism has major interests in Mexico, which is the United States’ third-largest trading partner. Mexico provides US corporations with a huge army of cheap labor employed in the maquiladora assembly plants, auto production and other industries directed to the US market. US finance and oil corporations are eagerly awaiting the privatization of the Mexican oil industry and the profit opportunities this will open up.
Washington is also deeply implicated in the bloody repression in Mexico, supplying some $2 billion in arms aid to the country under the so-called Merida Initiative, while training security forces and sending US “advisors” across the border. It is entirely possible that the cops involved in the Iguala massacre were trained and armed by the US, and by no means excluded that the aid found its way into the hands of the United Warriors gang as well.
In the weeks since the massacre, the only official statements from Washington have been to warn American tourists to stay away from protests over the disappeared normalistas. This silence is a clear expression of direct complicity in the violent suppression of the struggles of the Mexican working class.


12---Nebojsa Malic:  I think the objective was to create the conflict, to create the chaos, RT


Personally I think the objective was to create the conflict, to create the chaos, to create disorder, suffering and misery, so that the US government and the EU could bow in as liberators or knights in shining arms rescuing people, except there hasn’t been any rescue as they are neither capable of it, nor do they actually intend to perform it. If I was in charge of US foreign policy, I would chalk it up as a massive failure, if the objectives were, as officially stated, to create order and stability. But I’m not in charge and the objectives are not what they were officially stated. ....


so long as Kiev believes that it has unconditional support of the West to do whatever it wants, including what it rightly classified as war crimes, they will continue being aggressive and belligerent, refusing any sort of compromise or dialogue. They believe their rights are absolute, they believe they can do whatever they want and they will continue behaving accordingly. This is not a prescription for peace; this is a prescription for further conflict.


13---US, Canada & Ukraine vote against Russia’s anti-Nazism resolution at UN, RT


UN General Assembly’s Third Committee passed a Russia-proposed resolution condemning attempts to glorify Nazism ideology and denial of German Nazi war crimes. The US, Canada and Ukraine were the only countries to vote against it...


“The fact that the US, Canada and Ukraine voted against, while delegations from EU member states abstained in the vote on this draft resolution, which was supported by an overwhelming majority of the UN member states, is extremely regrettable,” the Russian Foreign Ministry said in a statement.
“Ukraine’s position is particularly dispiriting and alarming. One can hardly understand how a country, the people of which suffered their full share of the horrors of Nazism and contributed significantly to our common victory against it, can vote against a resolution condemning its glorification,” the ministry said


14---Lavrov: "We're not anti-American", RT


“The EU is our largest partner," Lavrov said. "Nobody is going to shoot himself in the foot and reject cooperation with Europe, but everyone understands that it won’t be business as usual anymore.
“But we don’t need the kind of business we had. [That] was like ‘Russia must do this and must do that,' and we want to cooperate as equals,” he added.


He added that while some take Russia’s opposition to America’s global influence as anti-Americanism, this is not the case.
“It’s not about anti-Americanism or forming some sort of anti-American coalition. It’s about the natural desire of an increasing number of nations to ensure their vital interests and doing it in a way they see right, not the way they are being told by a foreign party,” he said.


15--Crackdown? RT


Russian President Vladimir Putin has said that forces willing to reshape the world often used extremism as a tool in so-called “color revolutions” and urged law enforcement to use international experience to fight such tendencies in Russia.
In the modern world extremism is used as a geopolitical tool for redistribution of spheres of interest. We can see the tragic consequences of the wave of the so-called color revolutions, the shock experienced by people in the countries that had went through the irresponsible experiments of hidden, or sometimes brute and direct interference with their lives,” Putin told the Security Council on Thursday.
This is a lesson and a warning for us,” Putin said. “We will do everything to never let this take place in Russia.”


16--Russia and Saudi Arabia against ‘politicized’ oil prices – Lavrov, RT


Venezuelan Foreign Minister Rafael Ramirez says it is pretty clear there are attempts to damage Russia, Iran, and other oil producing countries by manipulating oil prices.
“It is a particular geopolitical position of some powerful political players in the world. But the common interest of all oil producing countries is to have a fair price. We believe its $100 per barrel,” Ramirez said in Caracas Friday.


Tumbling oil prices have hit the Russian currency hard; in November the ruble lost nearly 45 percent of its value before recovering slightly. On Friday at 15:30MSK the ruble improved to 45.52 against the dollar, and 56.59 against the euro.
On November 7, the ruble hit its record low of 60 rubles to the euro, and grazed just above 48 against the dollar. Soon after the Central Bank announced it was abolishing automatic currency interventions, to protect the ruble from heavy speculation


17---China Backs Russia on Ukraine, the diplomat


Wednesday, November 19, 2014

Today's Links

1--Maduro: Suadis drive down price of oil "To hurt Russia", Reuters


Masoud Mirkazemi, an Iranian lawmaker and former oil minister, said Riyadh was helping the G20 group of major economies. "Saudi Arabia, which intends to manage OPEC, serves the interests of the G20 group," he said.

"GLOBAL OIL WAR"?
In Russia, the idea of a Saudi-U.S. plot against Moscow has become common currency as the economy struggles under the effects of low oil prices and Western sanctions imposed over its annexation of Crimea and support for rebels in eastern Ukraine.


Leonid Fedun, a co-owner of private oil firm Lukoil, cited President Barack Obama's visit to Riyadh in March. "Obama travelled to meet the king of Saudi Arabia just after the Crimea events to push him to these actions (to lower the oil price)," Fedun, whose firm has large U.S. assets, said last month.
Russia and Iran routinely allege U.S. plots against their economies, but the conspiracy theories are spreading.
"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?" New York Times columnist Thomas Friedman, wrote last month.


When Naimi finally spoke on Nov. 12, he said Riyadh's desire for stable markets had not changed. "Saudi oil policy... have been subject a great deal of wild and inaccurate conjecture in recent weeks. We do not seek to politicise oil ... For us it's a question of supply and demand, it's purely business," he said.
According to four market and diplomatic sources, who asked not to be named, Saudi officials briefed OPEC watchers privately in New York and Riyadh in September and October.
Nasser al-Dossary, Saudi Arabia's national representative to OPEC, Naimi's deputy Prince Abdulaziz bin Salman and the kingdom's OPEC governor Mohammed Al-Madhi attended at least one of these meeting to give the message that, with its large currency reserves, the kingdom was prepared to withstand oil prices as low as $70-$80 per barrel for up to a year.


Benchmark Brent crude oil slipped to $79 on Tuesday.
Most members of the cartel apart from Saudi Arabia need much higher prices to balance their budgets but ironically are unable or unwilling to reduce their output to counter a global glut caused by slowing economic growth in China and Europe, just as U.S. oil production booms.



SEEING OFF SHALE OIL
Should the Saudis tell fellow OPEC members, badly suffering from the oil price collapse, that they will not cut output, debate will intensify on what prompted the policy shift.
One possibility is Riyadh wants to see off U.S. shale oil, which is believed to need much higher prices than conventional production to remain competitive. "They are after U.S. shale," said one participant in the meetings with Saudi officials.


However, the source added that the Saudis might also regard low prices as an opportunity to put even more pressure on Iran and Russia for supporting Syrian President Bashar al-Assad, an arch-enemy of Riyadh, in the country's civil war.
Several Saudi oil sources have denied over the past month that geopolitics are now driving the policy, but they have failed to stifle theories that Riyadh and Washington are working together to hold down prices.
"What is the reason for the United States and some U.S. allies wanting to drive down the price of oil? To harm Russia," Nicolas Maduro, president of fellow OPEC member


2---China’s Central Bank Makes Even the Heroic Fed Look Like a Bunch of Amateurs , wolf street


central-bank-balance-sheets
No central bank – not even the Fed with its heroic efforts at the printing press – is a match for the PBOC. Its balance sheet has maintained that number one position in terms of growth since 2003. Its expansion continues unabated and with renewed vigor. It makes the heroic Fed look like a bunch of amateurs.
These balance sheets are additive, forming a multi-trillion-dollar pile of newly created money, the largest monetary experiment ever that created the greatest asset bubbles ever, to which any form of non-catastrophic exit remains elusive. But hey, no problem. Full speed ahead.


3---It’s Official: Party Now, Apocalypse Later , wolf street


4---Why Quantitative Easing (QE) May Lead to Deflation, Washington's blog


...the third round of quantitative easing (“QE3″) in the U.S. failed to raise inflation expectations.
And QE hasn’t worked in Japan, either...


japan has since gone “all in” on staggering levels of quantitative easing … and yet is still mired in deflation.
The UK engaged in substantial QE. But inflation rates are falling there as well.
And China engaged in massive amounts of QE.  But it’s also falling into deflation.
Indeed, despite massive QE by the U.S., Japan and China, there is now a worldwide risk of deflation.
...
Economists also note that QE helps the rich … but hurts the little guy. QE is one of the main causes of inequality (and see this and this).    And economists now admit that runaway inequality cripples the economy.  So QE indirectly hurts the economy by fueling runaway inequality.
A high-level Federal Reserve official says QE is “the greatest backdoor Wall Street bailout of all time”.  And the “Godfather” of Japan’s monetary policy admits that it “is a Ponzi game”.


5---Stay Away From Kiev, antiwar (springtime for Hitler)
https://www.youtube.com/watch?v=kHmYIo7bcUw


Vadim Troyan, has been appointed the city of Kiev’s chief of police. Troyan is a member of the "Patriot[s] of Ukraine," a paramilitary group associated with the Social-National Assembly – an umbrella group, founded in 2008, uniting a number of ultra-rightist and openly neo-Nazi Ukrainian organizations. The appointment was made by Interior Minister Arsen Avakov, a member of the "moderate" People’s Front party of Ukrainian Prime Minister Arseniy Yatsenyuk.


While both Troyan and the Ukrainian government deny any association with neo-Nazis, the Human Rights Group of Kharkiv says he "ran for Ukraine’s parliament this year as a member of the People’s Front.  He is described on their site as being a member of ‘Patriot of Ukraine.’" Before Troyan’s elevation to the top law enforcement position in the country’s capital, he and his fellow neo-Nazis were quite well-known to the police in Kharkiv, where they regularly beat up their political opponents as well as foreign students, migrants, and homosexuals.


So if you’re going to Kiev, perhaps to do a little sight-seeing, or maybe to attend a conference, and you’re a foreign student, or a homosexual – or even if you just look a little out of place – be forewarned: it’s not safe.
And if you’re a reporter covering the conflict in Ukraine, and you have any interaction with the Ukrainian government – specifically the Ukrainian intelligence service known as the SBU – be advised that you will be dealing with Yuri Michalchyshyn, formerly the chief ideologist of the neo-fascist Svoboda party, who has been appointed head of the SBU’s "Department of Propaganda."


6---Richest 1% of people own nearly half of global wealth, says report , Guardian


The richest 1% of the world’s population are getting wealthier, owning more than 48% of global wealth, according to a report published on Tuesday which warned growing inequality could be a trigger for recession.


According to the Credit Suisse global wealth report (pdf), a person needs just $3,650 – including the value of equity in their home – to be among the wealthiest half of world citizens. However, more than $77,000 is required to be a member of the top 10% of global wealth holders, and $798,000 to belong to the top 1%.


“Taken together, the bottom half of the global population own less than 1% of total wealth. In sharp contrast, the richest decile hold 87% of the world’s wealth, and the top percentile alone account for 48.2% of global assets,” said the annual report, now in its fifth year.


7--Bank Of Japan Warns Abe Over "Fiscal Responsibility" While Monetizing All Its Debt, zero hedge


Kuroda is making it crystal clear the government has to tackle the debt problem and if fiscal trust is lost that’s not going to be on the BOJ,” said Shirakawa, a former BOJ official. “This is true, but he used to highlight that the BOJ and the government were working together. Abe might have created an enemy by postponing the sales-tax hike.”




8---Why is Anyone Surprised that Abenomics Failed?, NC


(from comments: " Thirty-five percent plus decline in the value of the nation’s currency over two years )


By announcing the rise in the sales tax from five to eight percent in advance the government spurred a sharp increase in consumption of durable goods prior to the increase. By moving government funds from safer investments to stock purchases the government spurred a rise in the stock market.

Japan did not fall “unexpectedly” into recession from the perspective of financially literate economists. It fell into a recession that it was warned was a grave risk given its adoption of austerity through a sharp increase in the sales tax (with a further increase scheduled for next October that will likely now be suspended). Contrary to what Alderman’s column implies, Japan has not even reached its inflation target of two percent. Austerity was madness in these circumstances. We certainly never expected it to work in Japan.
“‘The numbers are absolutely awful, beyond-description awful,’ said Peter Tasker, a longtime analyst of Japan’s economy and a supporter of Abe’s policies. ‘It’s clear that the tax hikers and the fiscal hawks have tanked the economy.’”..


So understand full well why austerity gets such favorable treatment. In its current version, where central banks use QE and super-low interest rates to offset its bad effects, the result is rip-roaring asset prices and a continued shift of income and wealth to the rich


9---US policy - number one driver of terrorism in the Mideast, around the world’, Eric Draitser


10--Mano e mano: Leader of  Lugansk People's Republic challenges Poroshenko to a fight, RT
(It takes two to tango)


The leader of the self-proclaimed Lugansk People's Republic (LPR) Igor Plotnitsky has thrown down the gauntlet to the Ukrainian President Petro Poroshenko, pledging that "the one who wins, will set his terms" for ending the bloody conflict in the region.
"I suggest you consider just one, but a very good scenario," Plotnitsky wrote in an open letter to Poroshenko. “Let's (following the example of the ancient Slavic leaders and glorious Cossack chieftains) get together in a fight: whoever wins will dictate terms to the opposite side


11--Warmongering Merkel threatens Russia following G20 summit;  Merkel’s “Hun Speech” against Russia, wsws


“We also know from history that one cannot afford to be too peaceable, that one has to take seriously what is said and listen carefully,” Merkel continued.
When a German head of government says history teaches that Germany must not be “too peaceable” towards Russia, one’s blood runs cold. Seventy-five years ago, Germany carried out a war of annihilation against the Soviet Union, committing the most heinous crimes in the history of mankind, including the Holocaust, the murder of 27 million Soviet citizens, and the devastation of large parts of Eastern Europe.


Merkel said the conflict over Ukraine “cannot be solved militarily,” but then added threateningly, “On the other hand, one can’t say: Because we cannot solve the crisis militarily, we can’t solve it at all.”
The German ruling elite is very aware of its historic crimes. In Sydney, Merkel recalled “the beginning of World War II 75 years ago and the collapse of civilization embodied in the Shoah, and even more importantly, the beginning of the First World War 100 years ago.”
But all her talk of “diplomatic” and “not military” solutions, supposedly based on the experiences of the wars of the last century, is crude propaganda. It is aimed at cloaking the return of Germany to militarism and great power politics, and, as under Kaiser Wilhelm, portraying an aggressive war policy as the “politics of peace.”


With reference to the “primal catastrophe of the 20th century,” Merkel asked, “Ladies and gentlemen, how could things go so far between peoples and nations one hundred years ago?”
Merkel should know. Today, just as then, the ruthless and aggressive imperialist policies of the great powers threaten to cast humanity into the abyss. The Western-orchestrated putsch in Ukraine, the military encirclement of Russia and China, and the renewed war in the Middle East have turned the world into a powder keg that could explode at any time. As in the first half of the last century, Germany is now playing an especially aggressive role.


12---Abenomics; Stocks up, wages down under Abe. New anti-worker reforms expected soon, wsws


On the economic front, Abe has made clear that he intends to press ahead with his “third arrow” of so-called structural reform. Such “reform” is the watchword of governments internationally for a deepening assault on the working class. The LDP has foreshadowed a list of such measures, which include:


* Establishing six special strategic zones where government regulations, including labour laws, will not apply and other concessions will be made to investors. The zones, in which “burdensome rules” will be lifted for business, will test out policies that will be applied throughout the country.
* A “debate” on further dismantling the lifelong employment guarantee for workers. Already the proportion of employees in low-paid, part-time and temporary work has risen dramatically, from 26 percent in 2000 to 38 percent of the workforce.


* Slashing corporate tax from an effective rate of about 35 percent to the “twenties”—a huge concession to big business that will be paid for by making further inroads into social spending.
Abenomics has already widened the gulf between rich and poor. While the wealthy elite has profited as quantitative easing has driven up share values by 65 percent since Abe assumed office, wages have continued to slump. Between 1997 and August 2014, real wages fell by 9 percent, including 2 percent under the Abe government....


The political crisis in Japan, the world’s third largest economy, is an expression of the impact of the global economic breakdown on social and political relations around the world. The deepening assault on the working class is paralleled by sharply rising geo-political tensions as the major powers seek to offload the crisis onto their rivals.
These tensions are particularly acute in East Asia, where the Abe government has consciously sought to remilitarise Japan, revive the reactionary traditions of Japanese militarism and confront China, in league with the US and its aggressive “pivot to Asia.”


13--QE: The basics
What exactly is quantitative easing?
Tim Mullaney, USA TODAY, September 18, 2013
[Quantitative Easing (QE) is] the technical term for the Federal Reserve’s policy of buying bonds and other assets in order to pump money into the economy.
The most recent strategy, called QE3, had the Fed buying $85 billion of bonds every month.
Does bond buying really pump money into the economy? Imagine your neighbor owns a Treasury bond. You buy it from him. Have you pumped money into the economy?
When your neighbor bought that T-bond, two of his accounts changed: His bank checking account was debited and his T-bond account, at the Federal Reserve Bank (FRB), was credited. A T-bond account is very much like a bank savings account.
In essence, when your neighbor bought that T-bond, all he did was transfer dollars from his checking account to his savings account. Did the amount of money in the economy change? Clearly, not.


14--US Defense Department organizing covert operations against "the general public, wsws


Large numbers of informers and FBI agents infiltrated the Occupy Wall Street protests in 2011.....


the report amounts to an acknowledgment by the leading media organ of the US ruling class that the American government is deploying a vast, forward-deployed counter-insurgency machine to target the US population at large.


Coming directly from the horse's mouth, the Times report makes clear that espionage, deception, and covert operations are now primary instruments of the US government's domestic policy and are actively deployed by the military and security agencies against the civilian population. In preparation for a massive upsurge in the class struggle, the US ruling class is mobilizing the entire federal bureaucracy to carry out systematic and targeted political repression against the working class in the US and around the world.


In addition to the DOD, at least 39 other federal security and civilian agencies, including the Drug Enforcement Agency (DEA), the Department of Homeland Security (DHS), the Department of Education and the Internal Revenue Service (IRS), have developed increasingly ambitious forms of covert operations involving the use of undercover agents, which now inhabit “virtually every corner of the federal government,” according to unnamed government officials and documents cited by the New York Times....


This sprawling apparatus of spying, disruption and manipulation implicates the state in a mind-boggling range of criminal and destructive activities....


The ATF was notorious for its operations in the 1980s where it used agents provocateurs to frame up and jail militant workers involved in industrial strikes. In one infamous case in Milburn, West Virginia an ATF informer was exposed after he tried unsuccessfully to convince striking coal miners to blow up an abandoned processing facility....


15--Domestic spying in the US police state, NYT


The federal government has significantly expanded undercover operations in recent years, with officers from at least 40 agencies posing as business people, welfare recipients, political protesters and even doctors or ministers to ferret out wrongdoing, records and interviews show.

Tuesday, November 18, 2014

Today's Links



1--Media “Shocked” by Japan’s GDP Fiasco? , wolf street


... the yen has lost about 35% of its value against the dollar since Abenomics became a word!
The destruction of the purchasing power and wealth of the people also drags down the real economy.


In the July-September quarter – the second quarter in Japan’s fiscal year – GDP dropped 1.6% on an annual basis, or 0.4% from prior quarter. That April-June quarter had already been the worst quarter since the financial crisis with a 7.3% plunge on an annual basis, or 1.9% plunge on a quarterly basis. It was worse even than the two quarters of and following the terrible earthquake and tsunami of March 11, 2011, that briefly brought the economy to a halt. That April-June quarter was so bad that the media-darling  economists predicted that some kind of bounce would be inevitable.
But no.
Japan-GDP_2010-2014-Q3






The chart shows how the hype of Abenomics initially created a lot of excitement. Then reality set in. This was followed by the brief but thrilling era before the consumption tax hike that triggered a vast bout of front-loading, much like the prior consumption tax hike 17 years ago had triggered. This was not a surprise, not to readers of WOLF STREET. But Abenomics apologists were claiming at the time that Abenomics was performing miracles.


2---Abe to pledge more stimulus, wsj


Recession in the world’s third-largest economy has Japanese Prime Minister Shinzo Abe readying another major economic stimulus and preparing to call snap elections amid rising clamor over the wisdom of his “Abenomics” reforms.


A surprise announcement early Monday that the economy contracted for a second straight quarter makes it “absolutely necessary to take countermeasures,” said Etsuro Honda, an architect of Mr. Abe’s economic policy, in an interview with The Wall Street Journal. He called for a new $25 billion in cash handouts and tax cuts


3---The richest of the rich, Robert Reich


According to new research by Emmanuel Saez of the University of California at Berkeley and Gabriel Zucman of the London School of Economics, the richest one-hundredth of one percent of Americans now hold over 11 percent of the nation’s total wealth. That’s a higher share than the top .01 percent held in 1929, before the Great Crash....


But the top .01 percent have also been investing their money in politics. And these investments have been changing the game.
In the 2012 election cycle (the last for which we have good data) donations from the top .01 accounted for over 40 percent of all campaign contributions, according to a study by Professors Adam Bonica, Nolan McCarty, Keith Poole, and Howard Rosenthal....


Their political investments have paid off in the form of lower taxes on themselves and their businesses, subsidies for their corporations, government bailouts, federal prosecutions that end in settlements where companies don’t affirm or deny the facts and where executives don’t go to jail, watered-down regulations, and non-enforcement of antitrust laws.
...


We’re talking about 16,000 people, each worth at least $110 million.


4--Stocks Headed Higher, David Kotok


For financial markets the next year is easy to forecast. All four central banks will keep their short-term policy interest rates below 1%. Their GDP-weighted average will be below 0.5%......Corporate borrowers are really flush with cash......


Were Congress to pass repatriation tax relief as it did in 2004, the amount of transfer into the US would be huge. Capitol Economics notes that the 2004 legislation resulted in about 3% of GDP being repatriated in that one-year window and that most of it was used “to fund dividend payouts and share buybacks rather than boost investments.”  The latest estimate is that a repatriation tax relief bill would have four times the impact today than it did in 2004......


We open this commentary with a link to the October 31 policy statement of the Government Pension Investment Fund of Japan. Any serious investor who has not read it is invited to go to this link right now.
Simply put, one of the G4 has made its position clear with great transparency. The Pension Fund of Japan is going to raise its allocation to stocks, both domestically and internationally. It is going to reduce its allocation to government bonds denominated in its own currency. Internally, that means selling JGBs and buying an ETF that comprises 400 stocks. Meanwhile, the Bank of Japan will maintain a policy of very low interest rates so that the reallocation does not disrupt Japanese financial markets. For Japanese investors this is very bullish. Japanese stocks are headed higher – maybe a lot higher.  The recent recession news means that this policy will be in place even longer and more robustly than expected just one week ago.


5---WHAT THE FED HAS WROUGHT, Burning Platform


The chart below might be the most powerful indictment of the Federal Reserve and our corporate fascist empire of debt ever created. Some people don’t get charts. Charts tell a story. This chart tells the story of elitist bankers supporting the agenda of a corporate fascist state, resulting in the gutting of the middle class. Anyone who views this chart in a positive manner is either a Federal Reserve banker or their paycheck is dependent upon the continuation of the pillaging of the working class. Corporate profits are at all-time highs. Profit margins have always reverted to the mean throughout modern history. If they remain at all-time highs then something is terribly wrong.

Here is the story I see in that chart. Corporate profits as a percentage of GNP have averaged 6.5% over the last 67 years. As you can see, it is a volatile figure. Corporate profits rise during expansions and fall during recessions. That has been a given over time. The reason corporate profits have always reverted to the mean was due to the basic tenets of free market capitalism. When a company is generating outsized profits, that industry will then attract new competitors, resulting in price competition and lower profits. From 1950 through 1971, corporate profits as a percentage of GNP fluctuated in a narrow range between 5% and 7%. This was a reflection of a market driven by competition, a non-interventionist Federal Reserve, and a government not captured by corporate interests.


6---G-20 summit intensifies threat of war against Russia, wsws


The responsibility for the danger of nuclear war, which could mean the end of humanity, lies with the imperialist powers, in particular, the US and Germany. For years they have shifted the boundaries of NATO eastwards, incorporating numerous Eastern European states. Now they are seeking to incorporate Ukraine and finally Russia itself into their sphere of influence, while reducing Russia to the status of a semicolony.


The driving force behind this process is the crisis of world capitalism. As was the case a hundred years ago with the outbreak of World War I, the imperialist powers are responding to an economic impasse by fighting to redivide the world and struggling for control over raw materials, markets and strategic influence. Now, as then, a deepening social crisis at home is intensifying the war drive abroad, as the ruling classes seek to divert internal conflicts outwards against an external enemy....


The military and financial pressure, in the form of economic sanctions, exerted on Russia is designed to destabilize the country and lead to regime-change and the installation of a government completely subordinate to the will of the imperialist powers.


7--With the foreclosure crisis past, why are foreclosures rising? , oc housing


Mortgage delinquencies and foreclosures will rise again, and they will remain elevated above historic norms for much longer than anyone currently anticipates. This will “surprise” economists and others who accept the financial media spin without understanding why and how the mortgage delinquency rates were lowered in the first place, through temporary measure and can-kicking. Despite reports to the contrary, permanent loan modifications did not permanently solve the delinquency and foreclosure crisis.


The next wave of foreclosures won’t be as damaging as the 2008 tsunami. The whole point of lender can-kicking was to meter out these foreclosures over time, and in that regard, they succeeded. We likely won’t see substantive price declines from the upcoming REOs, but it will be welcome added supply that may help sales volumes....


Six years after the housing bust, lenders are still offloading homes that have been in foreclosure limbo. And they’re stepping up their efforts.
In October alone, nearly 60,000 of those homes were scheduled to be auctioned off by banks, up 24 percent from the previous month and seven percent from a year ago, according to RealtyTrac, a housing data firm. That’s the highest level since May 2013. …
imrs.php
In the post Bold California housing market predictions for 2014, I said “Foreclosure processing will increase from 2013 levels. The conventional wisdom states the foreclosure problem is behind us. Forecasters nearly universally agree foreclosure processing will decline because borrowers are going back to work and catching up on their mortgage payments. I believe they will be proven wrong.”
Here we are...


Separately, lenders also had an incentive to delay, said Greg McBride, chief financial analyst at Bankrate.com. They were basically waiting for home prices to rise, as they have in the past two years. That way they could get a better return on those homes, McBride said



One of the few acknowledgments of can-kicking I’ve read in the mainstream media.
While there is no longer a deluge of foreclosures hobbling the housing market, the auctions that are underway are a reminder of the residual effects of the crisis. “The rise in foreclosure auctions indicates that the banks and the courts are preparing for a spring cleaning,” Blomquist said






Monday, November 17, 2014

Today's Links

 
"German economists roughly fall into two groups: those that have not read Keynes, and those that have not understood Keynes."  Wolfgang Munchau



1--Stakes are high as US plays the oil card against Iran and Russia, Guardian


2--Saudi oil price plunge, Info clearinghouse


3--Pipeline Geopolitics: The Russia German Nord Stream Strategic Gas Pipeline, Engdahl 2010


4--The Geopolitics of Gas and the Syrian Crisis: Syrian “Opposition” Armed to Thwart Construction of Iran-Iraq-Syria Gas Pipeline, global research


5--Stephen Roach Warns The Fed's Fixation With Markets Is "A Potentially Deadly Trap, zero hedge


6--Washington’s Iron Curtain in Ukraine, CP


7--EFI paid Indian employees working in US less than $2 an hour, 7 News


8---Unemployed Americans increasingly abandoning job search, RT


9--Not alone: New radar data indicates other jets on MH17 course before crash, RT


10--Richard Koo's latest, Nomura


11--West concerned about Russia and China economic ties, RT


12--Canada PM 'hid in a closet' during Ottawa gun attack , Telegraph
Stephen Harper was 'shoved into a closet' for as much as 15 minutes while firefight erupted in nearby hallway in Ottawa parliament building on Wednesday


13--Global Public Downbeat about Economy, PEW


14--Japan's Inflation Slips in August, WSJ


15--Kissinger warns of West’s ‘fatal mistake’ that may lead to new Cold War, RT


16--Why are the Ukrainian SS being allowed to march to the Cenotaph in London on Sunday?,


17--Is The Political System Broken Beyond Repair? atlantic
The majority of Americans say that compromise in Congress is necessary, but unlikely
congress approval at 9%


Saturday, November 15, 2014

Today's links

1---Letting the cat out of the bag; With midterms over, Obama prepares to topple Assad, wsws


According to CNN, the White House has convened a series of meetings of national security principals on the crisis in Syria and has concluded that, “ISIS may not be defeated without a political transition in Syria and the removal of President Bashar al-Assad.”


In part, according to the report, the administration is responding to mounting pressure from its regional allies, particularly Turkey, Saudi Arabia and the Gulf States—backers of the Islamist militias in Syria, whose main interest is the overthrow of Assad.
“Among the options being discussed are a no-fly zone on the border with Turkey and accelerating and expanding the Pentagon program to vet, train and arm the moderate opposition,” according to CNN.
....
Meanwhile, the Iraqi military remains largely in disarray, despite recent sackings of dozens of generals and other senior officers by the new government of Prime Minister Haider al-Abadi. A classified assessment of the state of the Iraqi military conducted by the Pentagon in July concluded that barely half the existing units were even fit to be trained by US “advisers.” It warned, moreover, that many units were infiltrated by both Sunni militants and Shia militiamen, raising a distinct threat that US personnel training them could come under the kind of “insider” attacks that became commonplace in Afghanistan.


2--What happened in Detroit; financial dictatorship slashed health care for retirees, wsws


The official approval of the Detroit bankruptcy plan has evoked anger and disgust among city workers. The landmark ruling by federal bankruptcy judge Steven Rhodes on November 7 opens the way for massive attacks on retiree pensions in violation of the state constitution and the wholesale privatization of city assets. Health care benefits have already been virtually eliminated for retirees.


The ruling is the outcome of a process in which democratic procedures were suspended and the city placed under a de facto financial dictatorship. Overseeing the process has been Detroit Emergency Manager Kevyn Orr, installed under terms of an anti-democratic law overturned by Michigan voters in a 2012 referendum.
The imposition of cuts previously considered impossible was facilitated by the collaboration of the unions, particularly the American Federation of State, County and Municipal Employees (AFSCME), which blocked the mobilization of the working class against the assault on workers and retirees. The unions backed the bankruptcy plan in exchange for control of a half-billion dollar retiree health care trust fund.


3--American jihad, US saber rattling at G20 meeting in Brisbane, wsws


Quite apart from the lies and distortions involved, the language employed, or perhaps more accurately deployed, by the two leaders was highly provocative. It was not the measured, nuanced language of diplomacy, but that of militarism, aggression and war. That is not to say that such words are never used at summits—behind closed doors. But in this case, it was out in the open, before the G20 leaders had even begun to formally meet.....


At the APEC summit this week in Beijing, Obama provocatively hosted a meeting of Trans Pacific Partnership (TPP) members that pointedly did not include the host nation. Obama is also waging what US economic analyst Fred Bergsten described to the Australian Financial Review as “Washington’s jihad” to undermine China’s plans for a regional infrastructure bank.
For the past five years, Obama has been engaged in a confrontational “pivot to Asia” aimed against China that was formally announced on the floor of the Australian parliament in November 2011. The American president will deliver a keynote speech in Brisbane today on American leadership in the Asia Pacific that will set the stage for a further escalation of tensions in the region.


4---Putin's speech at the Valdai Club - full transcript , Saker


5--Russian media release images showing ‘jet shooting MH17’, press tv


6--Not alone: New radar data indicates other jets on MH17 course before crash, RT


7---US fomenting war in Syria to deny Iran of strategic ally: Analyst , press tv


8--US continues efforts to stop Southstream


With Bulgaria suspending the South Stream energy project, allegedly because of U.S. pressure, will Russia find other ways to tackle this new challenge
http://www.counterpunch.org/2014/06/06/washingtons-iron-curtain-in-ukraine/


http://www.globalresearch.ca/malaysian-airlines-mh17-downed-by-ukrainian-military-aircraft-kiev-regime-false-flag/5414173


http://www.globalresearch.ca/pipeline-geopolitics-the-russia-german-nord-stream-strategic-gas-pipeline/20080


http://euobserver.com/economic/125924
http://www.novinite.com/articles/164787/'How+Bulgaria%E2%80%99s+New+Prime+Minister+Buries+South+Stream'


9--Stakes are high as US plays the oil card against Iran and Russia , guardian


The fourfold increase in oil prices triggered by the embargo on exports organised by Saudi Arabia in response to the Yom Kippur war in 1973 showed how crude could be used as a diplomatic and economic weapon. History is repeating itself.
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.




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 destabilise 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.
Turning on the oil spigots comes at a cost. The Saudis, like all other producers, have become accustomed to oil above $100 a barrel. The Arab spring in Libya and Egypt raised fears that the political unrest would spread. Oil revenues financed higher public spending, so Saudi Arabia needs the price to be above $90 a barrel to balance the books.


But a bit of pain is acceptable. The Saudis are gambling that they can live with a lower oil price for longer than the Russians and the Iranians can, and that therefore the operation will be relatively short-lived.
There is no question that this new manifestation of cold war muscle is hurting Russia. Oil and gas account for 70% of Russia’s exports and the budget doesn’t add up unless the oil price is above $100 a barrel. Moscow has foreign exchange reserves, but these are not unlimited. The rouble fell by 10% last week. That adds to the debt servicing costs of Russian firms, and the central bank is under pressure to push up interest rates, which should help stabilise the currency, but only at the expense of a deeper recession.


10--Engdahls Crystal Ball; Completion of South Stream would weld a major geopolitical bond between the countries of the EU, Central Europe and Russia, something that would represent for Washington a geopolitical nightmare, global research


Gazprom is also advancing a second major gas pipeline project, South Stream, to bring gas from Russia’s south coast under the Black Sea to Bulgaria, eventually ending up in Italy. On July 7, the Bulgarian government agreed after long negotiations to participate in the South Stream Gazprom project.


South Stream gas pipeline will transport Russian gas to western Europe, bypassing Ukraine, where Washington in recent years has expended considerable effort to push the country into an anti-Russian pro-NATO position. As a remnant from the Soviet era when the economies of the two countries operated as an integrated entity, most Russian gas pipelines transited Ukraine to the west, leaving Moscow highly vulnerable when a US-backed “Orange Revolution” in January 2005 brought Washington’s candidate, Viktor Yushchenko to power on a pro-NATO anti-Moscow platform. Recent elections there have eased tensions between Moscow and Kiev considerably as the new President,Viktor Yanukovych, has moved Ukraine to a more neutral stance between Moscow and NATO, keeping ties to both. The offshore part of the South Stream gas pipeline, jointly operated by Russia’s Gazprom and Italy’s ENI, will run from Russia’s mainland under the Black Sea to the Bulgarian coast. Under the new agreement with Bulgaria, pre-existing gas pipelines through Bulgaria will be used for the transit.


Washington has put major pressure on EU countries as well as Turkey to build an alternative to Russia’s South Stream gas line, called Nabucco, that would eliminate Russia. To date Nabucco has little backing in the EU and insufficient sources of gas to fill the pipeline.
Completion of South Stream would weld a major geopolitical bond between the countries of the EU, Central Europe and Russia, something that would represent for Washington a geopolitical nightmare. US policy since World War II has been to dominate western Europe first by fanning the Cold War with the Soviet Union, and after 1990, by extending NATO eastwards to the borders of Russia. An increasingly independent western Europe turning east rather than across the Atlantic, could spell a major defeat for continued US “sole Superpower” domination.