Thursday, August 25, 2016

Extra links

1---Dividends Are What Matter Now-- Many investors turn to high-yielding shares as interest rates slide, but risk could increase

The data highlight the stampede into dividend-paying stocks in response to the plunge of interest rates in recent years. Many investors now are supplementing slumping fixed-income payouts with high-yielding shares, a strategy that some analysts warn could expose buyers to the risk of large capital losses that could wipe out years of income.

That risk appears particularly acute in part because earnings, historically the strongest driver of stock-price gains, are in retreat and valuations are above long-term averages. Many companies are paying more in dividends than they are earning, a practice that analysts view as unsustainable for the long term....

The problem: There is only so much that companies can raise their payouts to shareholders if their profits aren’t keeping pace. And right now, U.S. corporations are struggling to boost profits.....

The S&P 500 index is near its highest level ever, remaining there even as the earnings of the companies that make up the index fell for the fifth consecutive quarter during the April-to-June period, according to FactSet.

“There are a number of companies that are being supported by the low interest-rate environment that either need to step up the fundamental earnings growth or risk lower stock prices going forward,” said James Tierney, chief investment officer of concentrated U.S. growth at AllianceBernstein Holding AB 0.09 % LP.

At the end of June, the annual dividend level of the S&P 500 components was the highest in quarterly records going back to 1936.


With dividends up and earnings down, companies are handing out an increasing amount of their earnings in such payouts to investors. During the second quarter, that measure was at its highest since 2009, according to S&P.

“I tend to think that there will come a point when dividend growth will be slowed if earnings and sales don’t improve,” said Sam Stovall, U.S. equity strategist at S&P Global Market Intelligence.

The divergence between earnings and dividends is showing up among companies such as Exxon Mobil Corp. XOM -0.64 % and Wal-Mart Stores Inc. WMT -1.40 %

Exxon’s earnings dropped to a total of $2.52 a share for the most recent four quarters from $5.62 a year earlier. The firm paid out $2.94 in dividends during those four quarters, a rise from $2.80 in the year-earlier period. The shares have gained 13% this year....

The correlation between S&P 500 earnings and dividends at the end of June was at 0.37, down from 0.90 in March of last year. It is this last metric that is causing market watchers to caution that the dividend gravy train can’t last forever.

If companies keep devoting more and more of their earnings to dividends, they will eventually reach the limits of what they can pay. At that point, many fear the relationship between stocks and earnings will re-establish its traditional hold on the market, with lower earnings resulting in lower stock prices.

“There’s not an unlimited ability to increase dividends forever if the earnings don’t follow at some point,” said Mr. Tierney of AllianceBernstein.

2---The Federal Reserve Needs New Thinking--- Its models are unreliable, its policies erratic and its guidance confusing. It is also politically vulnerable

...A simple, troubling fact: From the beginning of 2008 to the present, more than half of the increase in the value of the S&P 500 occurred on the day of Federal Open Market Committee decisions. (POMO?)....

The Fed is suffering from a marked downturn in public support. Citizens are rightly concerned about the concentration of economic power at the central bank. Long after the financial crisis, the Fed holds trillions of dollars of assets that would otherwise be in private hands. And it appears to make monetary policy with the purpose of managing financial asset prices, including bolstering the share prices of public companies. .....

3--Years of Fed Missteps Fueled Disillusion With the Economy and Washington

Once admired globally for their command of the economic system, central bankers now are blamed by the left and right for bailouts during the financial crisis and for failing to foresee and manage forces suffocating the global economy in its aftermath.

Populist protest movements called “Fed Up,” “End the Fed” and “Occupy Wall Street” lashed out at the bank’s policies, and in the case of End the Fed, its very existence. Lawmakers of both parties want to subject it to more scrutiny or curb its powers.....

confidence in the central bank’s leadership has dropped. An April Gallup poll found 38% of Americans had a great deal or fair amount of confidence in Ms. Yellen, while 35% had little or none. In the early 2000s, confidence in Chairman Alan Greenspan often exceeded 70%....

First, officials missed signs that a more complex financial system had become vulnerable to financial bubbles, and bubbles had become a growing threat in a low-interest-rate world.

Secondly, they were blinded to a long-running slowdown in the growth of worker productivity, or output per hour of labor, which has limited how fast the economy could grow since 2004.

Thirdly, inflation hasn’t responded to the ups and downs of the job market in the way the Fed expected. (100% bullshit)

“What was missing to me was the in-depth understanding of how much risk and leverage had grown in the financial system and basically how lacking in resilience the financial system as a whole was to this kind of shock,” Mr. Williams said in a recent interview.....(They have all the data, but they didn't know how leveraged the system was? Right.)

Fed models didn’t pick up on a broader economic slowdown already in train by 2004 because the people running the models also didn’t recognize productivity growth was entering an extended slowdown.

In the long run, an economy can expand only at a rate sustained by the growth of its labor force and the productivity of its workers. During the 1990s, output per hour surged, in part because companies poured money into new technologies and machinery. Many economists assumed the high-tech economy would keep fueling rapid productivity growth, but it didn’t, for reasons economists still don’t fully understand....In the decade from 1994 to 2003, U.S. output per hour worked rose annually by an average 2.8%. Since then it has grown at 1.3%, including just 0.4% since 2011....

A slow-growing economy can’t bear high interest rates, and so the Fed also hasn’t delivered as many rate increases as it said it planned. In June 2015, officials estimated their benchmark short-term rate would exceed 1.5% by the end of this year. It remains below 0.5%.

“They have held out the prospect of tighter money, and that has had a discouraging effect on demand to a greater extent than would have been ideal,” said Lawrence Summers, a Harvard professor and former Treasury Secretary. “They have lost credibility by constantly predicting tightening that, out of prudence, they didn’t deliver...

Inflation is the third ingredient in the Fed’s self-doubt. For years it has been largely unresponsive to the ups and downs of unemployment, defying the conventional view that inflation rises when unemployment falls, and vice versa. Unemployment surged during the financial crisis, but inflation didn’t fall much, as Fed models suggested it should. And when joblessness fell, inflation didn’t move up much, either. (ridiculous...Now they claim that they don't know how to create inflation)...

(Preparing the public for more of the same--)-

Still looming is potentially the biggest reversal of all in the modern conventions of central banking. If another recession hits, it isn’t clear the Fed has the tools available to mend the economy, a subject Ms. Yellen could address in Jackson Hole.

Traditionally the Fed cuts interest rates in a downturn. With its benchmark short-term rate near zero, it can’t be pushed much lower. If recession hits, the Fed will likely resort to unpopular tools used after the financial crisis, including Treasury-bond purchases and more promises to keep short-term rates low far into the future.

“We should be extremely worried,” Mr. Summers said. “We are essentially on a fairly dangerous battlefield with very little ammunition.”

Today's links

Today's quote:  "In the aftermath of the July coup, many were hopeful Turkey would realign itself geopolitically and play a more constructive and stabilising role in the region.  Instead, while citing the threat of the Islamic State and Kurdish forces along its border, a threat that its own collusion with US and Persian Gulf States since 2011 helped create, Turkey has decisively helped move forward a crucial part of US plans to dismember Syria and move its campaign of North African and Middle Eastern destabilisation onward and outward." Land Destroyer Report

1--The widening inequality chasm

The Great Recession and the subsequent recovery from it have deepened the wedge between the very wealthy and everyone else in America, plunging the poor deeper into debt and wiping out two-fifths of the wealth held by families in the heart of the middle class. The wealthiest Americans, meanwhile, appear close to regaining all their losses over the same period, according to a new analysis released Thursday by the Congressional Budget Office.

The analysis shows the wealthiest 10 percent of Americans now hold three-quarters of the nation's wealth, up from two-thirds in 1989, and a three percentage-point increase from the start of the recession. Most Americans found themselves with less wealth in 2013 than Americans of a similar age had in 1989; the only age group doing better than its counterparts from a quarter-century ago was senior citizens

2--(Today's "must read") Central bankers eye public spending to plug $1 trillion investment gap : Yellen to speak at Jackson Hole viper's den

In the past few weeks, Yellen and three of the Fed's other four Washington-based governors have called in speeches and Congressional hearings for government infrastructure spending and other efforts to counter weak growth, sagging productivity improvements, and lagging business investment.
The fifth member has supported the idea in the past.

The Fed has no direct influence over fiscal policy and its officials traditionally refrain from discussing it in detail. Having its top officials - from Yellen to former investment banker and Bush administration official Jerome Powell - speak in one voice sends a strong signal to the next president and Congress about the limits they face in setting monetary policy and what is needed to improve the economy's prospects.
The Fed's annual conference in Jackson Hole, Wyoming, where Yellen speaks on Friday, is due to focus on how to improve central banks' "toolkit," but the unanimous message from the Fed's top policymakers is that those tools are not enough.
"Monetary policy is not well equipped to address long-term issues like the slowdown in productivity growth," Fed vice chair Stanley Fischer said on Sunday. He said it was up to the administration to invest more in infrastructure and education.

Behind Fischer's statement lies a troubling feature of the recovery - business investment has fallen below levels in prior years and companies seem to have stopped responding to low borrowing costs.
As a share of gross domestic product, U.S. annual business investment since 2008 has averaged nearly a full percentage point below the previous decade's average, government data shows. Reuters calculations indicate the investment shortfall has blown a hole in annual GDP that has grown to as much as one trillion dollars a year compared with what it would have been if the previous trend continued. (Graphic:

Little suggests a rebound any time soon. Fixed business investment has fallen in three successive quarters as a share of GDP. Researchers and analysts blame the slide on everything from doubts about future economic growth to distortions caused by Fed policy itself in helping boost the value of financial assets.

Companies have run up share buybacks to record levels of around half a trillion dollars a year, and held onto record amounts of cash, despite cheap financing that should in theory spur long-term investment. Research by Fed board economists Steven A. Sharpe and Gustavo Suarez suggest a reason: executives are putting little stock in interest rates when making investment decisions, and are not adjusting expected rates of return to fit the emerging low-growth world.

Based on data collected from chief financial officers, their study found the internal rate of return needed to justify capital projects has "hovered near 15 percent for decades," and barely budged even as global interest rates have fallen. Such targets made sense during spells of strong growth, but may be inconsistent with the current low-growth, low-interest rate environment, and hold back corporate spending, the Fed economists argue.

That challenges the core monetary policy notion that low short-term rates spur investment by making long-term returns more attractive (Investment based on returns, not rates!!!)

The Jackson Hole conference will likely take stock of several unconventional solutions proposed as a way of breaking out of the cycle of subdued demand, weak investment and low growth that has followed the 2007-2009 recession.
U.S. and global central bankers have brought into the mainstream such ideas as GDP targeting or "helicopter" cash injections to generate demand and inflation, and have been testing negative interest rates in Europe and Japan.

Fiscal policy is not on this year's agenda, which is dedicated to the details of monetary policy operations. But the idea that governments need to pick up the slack with infrastructure spending or other initiatives has been gaining traction among central bankers.
Well-targeted public investment, the argument goes, could in effect pay for itself through higher productivity and growth, and in doing so make any additional public debt comparatively less onerous. (very misleading. The goal of monetary policy is earning which have dropped for 5 quarters straight)

In the United States, the need for investing in the nation's aging infrastructure is a rare point where both presidential candidates seem to agree. Democrat Hillary Clinton is proposing a $275 billion package; Republican Donald Trump is calling for about twice that.
Not everyone agrees though, that more public spending is the best cure, or that an infrastructure program would pinpoint projects with a positive return.

“Economic policy should bolster private investment. Yet, it is striking that most academics and policymakers are pushing another big government spending stimulus package," said former Fed governor and Hoover Institution fellow Kevin Warsh

3--"Prolonged stagnation" could last forever, monthly review, archive

4--Russia’s Nord Stream-2 pipeline is a 'bad deal' for Europe - Biden: A buffoon on a mission

According to the report, the US regards Nord Stream-2 as a Russian political tool designed to drive a wedge between European countries with different Russian gas supply needs. In addition, it is seen by Washington as a way to cut off Ukraine from transit revenue for Russian gas.
In May, Russian Foreign Minister Sergey Lavrov accused the US of trying to thwart the gas pipeline. He called America’s attempts to block the project entirely political. Lavrov said Nord Stream-2 will increase Europe's energy supplies and improve the continent's energy security....

Initially, Gazprom intended to hold a 50 percent stake in the project with the other shares divided equally between Royal Dutch Shell, Germany’s E.ON and BASF, Austria’s OMV and France’s Engie. On August 12 the companies left the joint venture under pressure from the Polish Office of Competition and Consumer Protection. A statement on the Nord Stream-2 website said all the participants will “individually contemplate alternative ways to contribute.”

Nord Stream-2 is not the first Russian pipeline to face harsh opposition from the US. In 2014, Bulgaria stopped the South Stream pipeline project on the recommendation of the EU, but the decision was announced after the country was visited by US senators John McCain, Chris Murphy and Ron Johnson. This August, Bulgaria changed its position on the pipeline, indicating it is willing to resume talks with Moscow 

5--China in Syria?

"The Chinese Armed Forces lack serious combat experience. It cannot be ruled out that Chinese military trainers and even special forces would be deployed to Syria. The Chinese military is closely watching Russia’s actions in Syria. For China, Syria would be a perfect place to gain combat experience and test its weapons," he pointed out

6--Hillary's no-fly zones in Syria

"Moscow is seriously concerned by the developments on the Syrian-Turkish border, and is especially alarmed by the prospect that the situation in the conflict zone will continue to deteriorate, resulting in greater civilian losses and heightened ethnic tensions between Arabs and Kurds," Russia's Foreign Ministry statement says.

7--Pivot to the North: NATO Trying to Move Closer to Russia's Borders

8--New flashpoint in escalating war: Turkey shells ISIS and Kurdish forces in Syria

On Tuesday, Syrian state media and the Kurdish Hawar News Agency both announced the implementation of a cease-fire in Hasakeh, evidently brokered by Russia. However, while the Kurdish statement said government forces had agreed, as part of the cease-fire terms, to withdraw from the town and leave it under the control of the local Kurdish police force, the Syrian statement made no mention of a withdrawal.

There were other indications of a moderation of the animus between the Assad regime and Turkey. On Friday, the Syrian military’s General Command, in an evident concession to Turkey, released a statement referring to the Kurdish Asayesh internal police in Hasakeh as the “military wing of the Kurdistan Workers Party.” Turkey has long pressed Damascus to declare the Syrian Kurdish forces to be an extension of the PKK.

From the other side, Turkish Prime Minister Binali Yildirim, speaking to foreign media Saturday in Istanbul, spelled out a shift in Turkey’s posture toward Assad, saying for the first time that while Assad could not be part of a long-term solution to the crisis in Syria, Ankara was willing to accept a role for him in a transitional government. At the same time, Yildirim stressed that Turkey would intervene more actively in the Syrian crisis and would not permit the country to be divided along ethnic and sectarian lines—an implicit criticism of US policy toward the Syrian Kurds.

Within this explosive mix of great power brigandage and conflicting geo-political interests, which in general is becoming increasingly unfavorable to the realization of Washington’s imperialist aims, the US is preparing to escalate its military violence.

On Monday, the new US commander, General Townsend, said Washington would step up its operations in support of its proxy forces as they prepared offensives to retake Mosul in Iraq and Raqqa in Syria from ISIS. He said the escalation would include intensified air and artillery strikes and increased efforts to equip and train local forces. He left open the possibility of an enlargement of the US troop presence in the two countries.

9--The great unravelling;  - Hilsenrath Slams The Fed: "Years Of Fed Missteps" Foster US Populism, Disillusion

10--Top Turkish, Russian soldiers to meet in Ankara: 2 days after Biden visit?

The chiefs of general staff of Turkey and Russia will meet in Ankara on Aug. 26, two days after the Turkish Armed Forces (TSK) launched a cross-border operation into northern Syria along with Syrian moderate groups, the Anadolu Agency reported on Aug 25.

Turkish Chief of General Staff Gen. Hulusi Akar will host his Russian counterpart Gen. Valery Gerasimov at the country’s military headquarters, the agency said, without giving details.

The meeting between the two top soldiers comes as part of the normalization in ties between Ankara and Moscow, which also agreed recently to increase cooperation in Syria. A mechanism composed of diplomats, soldiers and intelligence to coordinate the fight against the Islamic State of Iraq and the Levant (ISIL) as well as the political transition process in Syria has been set by the two countries.

Gerasimov’s visit comes shortly after the Free Syrian Army (FSA) seized control of Jarablus from ISIL with the support of the Turkish army. The operation was believed to continue until the Turkish-Syrian border is fully cleared of ISIL elements. Russia did not oppose the operation but expressed its concern over growing tension on the border.

“Syria demands the end of this aggression. Any party conducting a battle against terrorism on Syrian soil must do so in coordination with the Syrian government and the Syrian army, who have been fighting this war for five years,” the foreign ministry said.

According to Russian Defense Minister Sergei Shoigu, the snap exercises are holding in accordance with decision of the Supreme Commander, Russian President Vladimir Putin, from 25 to 31 August.

During regrouping of troops, “the readiness of the Southern Military District to deploy in short time self-contained groups of forces for containment of crisis situations will be assessed,” the Interfax news agency reported, citing Shoigu. The Western and the Central Military Districts will be checked for possibility “to increase efforts in the south-western strategic direction.”

13--Comment by the Information and Press Department on the escalation of tensions on the Syrian-Turkish border

In the morning of August 24, Turkey announced the start of a military operation in neighbouring Syria. Media outlets have reported that Turkish tanks and troops, including special forces, entered Syria in a joint operation with the allied Syrian opposition groups. According to Ankara, the operation has been launched to combat ISIS and Kurdish rebels.
Moscow is seriously concerned by the developments on the Syrian-Turkish border, and is especially alarmed by the prospect that the situation in the conflict zone will continue to deteriorate, resulting in greater civilian losses and heightened ethnic tensions between Arabs and Kurds.
We firmly believe that the Syrian crisis can be settled exclusively on the solid foundation of international law through an inclusive intra-Syrian dialogue involving all ethnic and religious groups, including the Kurds, and based on the June 30, 2012 Geneva Communique, as well as UN Security Council resolutions, including Resolution 2254, initiated by the International Syria Support Group.

Aug 24 Russia's Foreign Ministry said in a statement on Wednesday Moscow was deeply worried by the escalation of tension on the Turkish-Syria border after Ankara sent military forces into Syrian territory.
Turkish special forces, tanks and jets backed by planes from the U.S.-led coalition launched their first co-ordinated offensive into Syria on Wednesday to try to drive Islamic State from the border and prevent further gains by Kurdish militia fighters

There was no resistance to the move. The Islamic State, which had been informed of the attack, had evacuated all fighters and their families out of Jarablus.... No shots were fired. As one commentator remarked: They even left mints on the pillows. The toleration of ISIS by Turkey, which includes some not so secret support, will likely continue.

The claimed aim of the Turkish move is to close the Turkish border to ISIS. That claim is obviously nonsense. The border can be closed on the Turkish side. To move the crossing point a few kilometers south does not change anything. The second, more plausible claimed aim, is to prevent the movement of the Kurdish YPG forces, under the U.S. assigned label SDF, towards west-Syria. Such a move would create a Kurdish statelet all along the Turkish border and endanger Turkey itself while it is fighting a Kurdish insurgency on its own ground.
The Kurds had announced the move west and recently taken the city of Manbij away from the Islamic State. This with the help of heavy U.S. bombardment...

There has been little protest by the Syrian government against the Turkish move on Jarablus. It lamented a lack of coordination in fighting terrorism. Not that it could have done much else. After five years of war there is no capacity left to oppose its big northern neighbor. No protest at all came from Syria's allies Russia and Iran. Blunt words were reserved for U.S. behavior on the Syria issue and its support for al-Qaeda. There clearly is some kind of agreement between Russia, Iran, Syria and Turkey to accommodate the Turkish invasion

16-- Following US Orders, Kurdish Forces Withdraw from Manbij, Other Areas East of Euphrates River

The Syrian Kurdish forces, known as the People’s Protection Units (YPG) or the Syrian Democratic Forces (SDF), have withdrawn from Manbij and other east of the Euphrates river in order to “prepare for the eventual liberation of Raqqa.”
This move is de-facto transfers Manbij and nearby areas to the control of the Turkish-backed militants. Yesterday, the YPG officially claimed that the group will never withraw from the area. However, it was not able to ingore the US order to do so

17---Clintonites Prepare for War on Syria

Veterans for Peace, one of the most influential and respected peace organizations, has recently sharpened its understanding and position. Following a recent visit to Syria, the Vice President of Veterans for Peace, Jerry Condon, has said, “Everything we read about Syria in the US media is wrong. The reality is that the U.S. government is supporting armed extremist groups who are terrorizing the Syrian people and trying to destroy Syria’s secular state. In order to hide that ugly reality and push violent regime change the U.S. is conducting a psychological warfare campaign to demonize Syria’s president, Bashar al Assad. This is a classic tactic that veterans have seen over and over. It is shocking, however, to realize how willingly the media repeat this propaganda, and how many people believe it to be true.”...

There is a clear solution to the Syrian tragedy: the countries who have been supplying tons of weapons and paying tens of thousands of mercenary terrorists should stop. The conflict would soon end. The foreigners would depart with much less fanaticism than what they came with. Many Syrian rebel terrorists would accept reconciliation.
There needs to be a global campaign but there is much responsibility in the US since our government is the greatest threat to peace....

DemocracyNow and other leading alternative media need to start including different analyses. To a sad extent, their coverage of Syria has echoed NPR and CNN. If DemocracyNow is truly an “Exception to the Rulers”, it needs to start including more critical examinations. DN producers should be studying publications such as Consortiumnews, Global Research, AntiWar, MoonOfAlabama, Al Masdar News, Al Mayadeen, CounterPunch, DissidentVoice, American Herald Tribune, 21stCenturyWire, Black Agenda Report, the Canary, RT, PressTV and TruePublica (not corporate ProPublica). They should be bringing the observations and analysis of journalists such as Sharmine Narwani, Edward Dark, Eva Bartlett, Brad Hoff, Vanessa Beeley, Stephen Sahiounie to name just a few. Syrian academics such as Issa Chaer (UK) and Nour al Kadri (Canada) could be interviewed. Followers of DN have heard Hillary Clinton as Secy of State and other US officials speaking about Syria countless times. Why have Amy and Juan not interviewed the Syrian Ambassador to the UN

18---Turkey Invades Northern Syria — Truth of Turkish "Coup" Revealed?

In the aftermath of the July coup, many were hopeful Turkey would realign itself geopolitically and play a more constructive and stabilising role in the region.

Instead, while citing the threat of the Islamic State and Kurdish forces along its border, a threat that its own collusion with US and Persian Gulf States since 2011 helped create, Turkey has decisively helped move forward a crucial part of US plans to dismember Syria and move its campaign of North African and Middle Eastern destabilisation onward and outward.

The response by Syria and its allies in the wake of Turkey's cross-border foray has so far been muted. What, if any actions could be taken to prevent the US and its allies from achieving their plans remain to be seen.

While the toppling of the government in Damascus looks unlikely at the moment, the Balkanisation of Syria was a secondary objective always only ever considered by US policymakers as a mere stop gap until eventually toppling Damascus as well. Conceding eastern and parts of northern Syria to US-led aggression will only buy time.

 Syria's conflict has escalated into dangerous new territory as Turkish military forces cross the Turkish-Syrian border in an attempt to annex the Syrian city of Jarabulus. The operation includes not only Turkish military forces, but also throngs of Western-backed militants who will likely be handed control of the city before expanding operations deeper into Syria against Syrian government forces.

Regarding US joint operations with Turkey specifically, the BBC in its article, "Syria Jarablus: Turkish tanks roll into northern Syria," would report:
An unnamed senior US official in Washington told BBC News before the start of the Turkish operation that it was "partly to create a buffer against the possibility of the Kurds moving forward".

"We are working with them on that potential operation: our advisers are communicating with them on the Jarablus plan.

"We'll give close air support if there's an operation."
It would be likewise difficult to believe that Turkey truly suspected the US of an attempted decapitation of the nation's senior leadership in a violent, abortive coup just last month, only to be conducting joint operations with the US inside Syria with US military forces still based within Turkish territory.

What is much more likely is that the coup was staged to feign a US-Turkish fallout, draw in Russia and allow Turkey to make sweeping purges of any elements within the Turkish armed forces that might oppose a cross-border foray into Syria, a foray that is now unfolding...

With Turkey now moving into northern Syria, backing militant forces that will go on to fight Syrian forces and prolong the conflict from a new forward base of operations inside Syria and with NATO protection, this is precisely what has now happened.

Building Long-Desired Militant Safe-Havens 

The crossing of Syria's border constitutes the fulfilment of longstanding plans predating both the Kurdish offensive and the rise of the Islamic State.

The plans laid by Washington and its regional allies seek to establish a buffer zone or "safe-haven" within Syrian territory unassailable by Syrian forces from which Western-backed militants can launch operations deeper into Syrian territory. Currently, these operations are launched from Turkish territory itself.

With militants being incrementally pushed out of Aleppo and Syrian forces making advances everywhere west of the Euphrates River, it appears that the US is attempting to use Kurdish forces to annex eastern Syria while Turkey's latest move is aimed at finally creating a long-desired northern safe-haven in order to prevent a full collapse of fighting within the country.....

British special forces, meanwhile, are reportedly in southern Syrian attempting to carve out a similar haven for militants along Jordan and Iraq's borders with Syria....

Plans for such safe-havens were disclosed as early as 2012, with US policymakers in a Brookings Institution paper titled, "Assessing Options for Regime Change," stating (our emphasis):
An alternative is for diplomatic efforts to focus first on how to end the violence and how to gain humanitarian access, as is being done under [Former UN Secretary General Kofi Annan's] leadership. This may lead to the creation of safe-havens and humanitarian corridors, which would have to be backed by limited military power. This would, of course, fall short of U.S. goals for Syria and could preserve Asad in power. From that starting point, however, it is possible that a broad coalition with the appropriate international mandate could add further coercive action to its efforts.
This is now precisely what is being created, starting in Jarabulus, and likely to extend westward toward Azaz, directly north of the contested Syrian city of Aleppo. Since 2012, various pretexts have been invented, abandoned and then revisited in order to justify a cross-border operation like the one now unfolding.

Creating a Pretext — Staged Terror Attack Was an Option 

This included Ankara itself plotting attacks on its own territory to look like cross-border terrorism that could be used as impetus for the creation of a Turkish-controlled Jarabulus-Azaz corridor

19--Russian President Vladimir Putin said that the goals of the campaign had been completed (in March)

Syria has been mired in civil war since 2011, with government forces fighting numerous opposition factions and radical Islamist groups, including Daesh.Russia conducted its anti-Daesh air campaign in Syria for six months, between September 2015 and March 2016 at the request of Damascus. Moscow started withdrawing aircraft and personnel from bases in Syria after Russian President Vladimir Putin said that the goals of the campaign had been completed

20---17--Hillary's war whoop

the Oval Office?  Well, more war, of course. Check it out:
The United States and our international coalition has been conducting this fight for more than a year. It’s time to begin a new phase and intensify and broaden our efforts to smash the would-be caliphate and deny ISIS control of territory in Iraq and Syria. That starts with a more effective coalition air campaign, with more allies’ planes, more strikes, and a broader target set…..And we should be honest about the fact that to be successful, air strikes will have to be combined with ground forces actually taking back more territory from ISIS.
Like President Obama, I do not believe that we should again have 100,000  American troops in combat in the Middle East. (“A Conversation With Hillary Clinton“, Council on Foreign Relations)

---(Archive) Why the Arabs don’t want us in Syria

They don’t hate ‘our freedoms.’ They hate that we’ve betrayed our ideals in their own countries — for oil....

we must recognize the Syrian conflict is a war over control of resources indistinguishable from the myriad clandestine and undeclared oil wars we have been fighting in the Mideast for 65 years. And only when we see this conflict as a proxy war over a pipeline do events become comprehensible. It’s the only paradigm that explains why the GOP on Capitol Hill and the Obama administration are still fixated on regime change rather than regional stability, why the Obama administration can find no Syrian moderates to fight the war, why ISIL blew up a Russian passenger plane, why the Saudis just executed a powerful Shiite cleric only to have their embassy burned in Tehran, why Russia is bombing non-ISIL fighters and why Turkey went out of its way to shoot down a Russian jet. The million refugees now flooding into Europe are refugees of a pipeline war and CIA blundering....

Let’s face it; what we call the “war on terror” is really just another oil war. We’ve squandered $6 trillion on three wars abroad and on constructing a national security warfare state at home since oilman Dick Cheney declared the “Long War” in 2001. The only winners have been the military contractors and oil companies that have pocketed historic profits, the intelligence agencies that have grown exponentially in power and influence to the detriment of our freedoms and the jihadists who invariably used our interventions as their most effective recruiting tool. We have compromised our values, butchered our own youth, killed hundreds of thousands of innocent people, subverted our idealism and squandered our national treasures in fruitless and costly adventures abroad. In the process, we have helped our worst enemies and turned America, once the world’s beacon of freedom, into a national security surveillance state and an international moral pariah

However inconvenient’ it may be for the most gung-ho (usually foreign-based) supporters of Syria to admit, Damascus and Ankara have been engaged in secret talks for months now in the Algerian capital of Algiers, as has been repeatedly confirmed by many multiple media sources ever since this spring. Moreover, Turkey just dispatched one of its deputy intelligence chiefs to Damascus a few days ago to meet with his high-level Syrian counterparts, so this might explain the reason why Russia and Iran aren’t condemning Turkey’s incursion into Syria, nor why the Syrian officials aren’t loudly protesting against it either. More and more, the evidence is pointing to Turkey’s operation being part of a larger move that was coordinated in advance with Syria, Russia, and Iran. Nevertheless, for domestic political reasons within both Syria and Turkey, neither side is expected to admit to having coordinated any of this, and it’s likely that bellicose rhetoric might be belched from Ankara just as much as it’s predictable that Damascus will rightfully speak about the protection of its sovereignty

What’s most important, though, isn’t to listen so much to Turkey and Syria, but to watch and observe what Russia and Iran say and do, since these are the two countries most capable of defending Syria from any legitimate aggression against its territory and which have been firmly standing behind it for years now, albeit to differing qualitative extents though with complementary synergy ...

In closing, the author would like to refer the reader to his article from over a month ago about how “Regional War Looms As “Kurdistan” Crosses The Euphrates”, in which it was forecast that Russia would assemble a multipolar “Lead From Behind” coalition in pushing back against the US’ attempts to carve the second ‘geopolitical Israel’ of “Kurdistan” out of northern Syria, with it specifically being written that “it can be reasonably assumed that there’s an invisible Russian hand gently coordinating their broad regional activities” in stopping this. With Turkey crossing into Syria to preempt the YPG from unifying all of its occupied territory in northern Syria and breathing sustainable geopolitical life into the US’ latest divide-and-rule project in the Mideast, and keeping in mind the fast-paced diplomacy between Russia, Iran, and Turkey and the months-long ongoing secret negotiations between Ankara and Damascus, all empirical evidence suggests that this latest development in the War on Syria is less a unipolar conspiracy and more a multipolar coordinated plan to bring an end to this conflict and preempt the internal partitioning of Syria

Wednesday, August 24, 2016

Extra Links

1---New Home Sales Surge Most Since 2007, Median Price Down 5.1%, January-to-July Sales at 1963 Level

... new home sales report where July’s headline surged, up a monthly 12.4 percent to a 654,000 annualized rate....New-home sales in July were up 31.3% from a year earlier. The latest figure brings new-home sales back to the level recorded just before the recession began.
But the pace remains well below the peak level of 1.39 million in July 2005. (Still less than half the total of 2005)

2--US Sanctions Fail: The Woman Who Revived Russia’s Markets
(Hmmm. Nice sanctions you got there)

Russian markets are red hot again.
Two years after plunging oil prices and Western economic sanctions fueled an investor exodus, the Micex stock index on Tuesday hit an all-time high. It is up 25% this year in dollar terms, making Russia the sixth-best performer among 23 emerging countries tracked by MSCI Inc. MSCI 0.52 %
The ruble has gained 13% against the dollar this year, ranking third among all emerging currencies. Russia’s local-currency bonds rank third this year in performance out of 15 countries tracked by J.P. Morgan Chase & Co....

Global investors this year have added $1.3 billion to funds that invest in Russian bonds and stocks, according to EPFR Global. The share of foreigners among government bondholders rose to 24.5% as of June 1, its highest level since late 2012, according to the Russian central bank.

3--Hitting the exits-- QE fails to attract investors

While U.S. equity indexes have notched record highs, the Stoxx Europe 600 remains some 17% adrift of its April 2015 record. It is down 6.1% year-to-date and little changed since early February....

In Europe, by contrast, investors are finding it easier to find reasons for worry rather than hope for the future. Political risk hasn’t dented the economy notably—the PMIs in particular have shown no reaction to the Brexit vote—even if such risks still loom large on the radar. Europe’s banking system remains a source of perennial concern too

4--No buyers in forlorn Europe-- Political Risks Loom Large on European Markets

Stocks in Europe are looking pretty cheap—but this time, investors aren’t rushing in.
With lackluster corporate profits, tepid economic growth and a fragile banking system, the market is vulnerable to a range of political risks in the coming months that could derail the region’s feeble recovery, investors say....

Some investors have already lost interest. Outflows from the region’s equities have continued for 28 consecutive weeks, with net redemptions exceeding $90 billion over that period, according to fund-tracker EPFR Global....

Italian bank shares are down nearly 50% this year, while the Euro Stoxx banks index is down roughly 30%.
European stock markets tend to be heavily weighted to the financial sector, which means a sustained recovery without a stabilization of the region’s banks is unlikely.
That comes amid a weak backdrop for European earnings more broadly. The forecast 12-month forward earnings per share for the Stoxx Europe 600 is $19.20, according to FactSet, compared with a forecast of $20.71 a year ago. As of Friday, the forward price-to-earnings ratio of the Stoxx Europe 600 was 15.2, compared with 17.1 for the S&P 500, FactSet said.

5--A credit bazooka?? Next Stop on ECB QE Adventure: $980 Billion Corporate Debt (march 10, 2016)

6--Read it and weep:  Europe’s Bankers Got 95 Percent of Greek Debt Payments

One might think that US$440 billion in loans would have helped Greece recover from the global recession of 2008-09, the second European recession of 2011-13 that followed, and the Europe-wide chronic, stagnant economic growth ever since. But no, the US$440 billion in debt the Troika piled on Greece has actually impoverished Greece even further, condemning it to eight years of economic depression with no end in sight.

To pay for the US$440 billion, in three successive debt agreements the Troika has required Greece to cut government spending on social services, eliminate hundreds of thousands of government jobs, lower wages for public and private sector workers, reduce the minimum wage, cut and eliminate pensions, raise the cost of workers’ health care contributions, and pay higher sales and local property taxes. As part of austerity, the Troika has also required Greece to sell off its government owned utilities, ports, and transport systems at ‘firesale’ (i.e. below) market prices.....

In exchange for the 95 percent paid to the Troika and banker-investor friends, the austerity measures accompanying the Troika loans has meant the following: Greece’s unemployment rate today, in 2016, after eight years is still 24 percent. The youth jobless rate still hovers above 50 percent. Wages have fallen 24 percent for those fortunate enough to still have work.....

last August Greece had to implement the following even more severe austerity measures:
Generate a budget surplus of 3.5 percent of GDP from which to repay Troika debt-i.e. around US$8 billion a year. Raise sales taxes to 24 percent, plus more tax hikes on “a widening tax base” (i.e. higher taxes for lower income households). Introduce what the Troika calls “holistic pension reform”—i.e., cut pensions up to 2.5 percent of GDP, or around US$5 billion a year, and abolish minimum pensions for the lowest paid and the annual supplemental pension grants. Introduce a “wide range” of labor market reforms, including “more flexible” wage bargaining, easier mass layoffs, new limits on worker strikes, and thousands more teacher layoffs as part of “education reform”. Cut health care services and convert 52,000 more jobs to part time. And introduce what the Troika called a more “ambitious” privatization program. And this is just a short list.

Europe’s Bankers Got 95 Percent of Greek Debt Payments....

Neoliberalism is constantly evolving and with it forms of imperialist exploitation as well. It starts as a free trade zone or ‘customs’ union. A single currency is then added, or comes to dominate, within the free trade customs union. A currency union eventually leads to the need for a single banking union within the region. Central bank monetary policy ends up determined by the dominant economy and state. The smaller economy loses control of its currency, banking, and monetary policies. Banking union leads, of necessity, to a form of fiscal union. Smaller member states now lose control not only of their currency and banking systems, but eventually tax and spending as well. They then become ‘economic protectorates’ of the dominant economy and State-such as Greece has now become

7--The Household Debt Bubble (archive)

It is an inescapable truth of the capitalist economy that the uneven, class-based distribution of income is a determining factor of consumption and investment. How much is spent on consumption goods depends on the income of the working class. Workers necessarily spend all or almost all of their income on consumption. Thus for households in the bottom 60 percent of the income distribution in the United States, average personal consumption expenditures equaled or exceeded average pre-tax income in 2003; while the fifth of the population just above them used up five-sixths of their pre-tax income (most of the rest no doubt taken up by taxes) on consumption.1 In contrast, those high up on the income pyramid—the capitalist class and their relatively well-to-do hangers-on—spend a much smaller percentage of their income on personal consumption. The overwhelming proportion of the income of capitalists (which at this level has to be extended to include unrealized capital gains) is devoted to investment.

It follows that increasing inequality in income and wealth can be expected to create the age-old conundrum of capitalism: an accumulation (savings-and-investment) process that depends on keeping wages down while ultimately relying on wage-based consumption to support economic growth and investment. ....

Under these circumstances, in which consumption and ultimately investment are heavily dependent on the spending of those at the bottom of the income stream, one would naturally suppose that a stagnation or decline in real wages would generate crisis-tendencies for the economy by constraining overall consumption expenditures. There is no doubt about the growing squeeze on wage-based incomes. Except for a small rise in the late 1990s, real wages have been sluggish for decades. The typical (median-income) family has sought to compensate for this by increasing its number of jobs and working hours per household.

Nevertheless, the real (inflation-adjusted) income of the typical household fell for five years in a row through 2004. The bottom 95 percent of income recipients experienced decreasing real average household income in 2003–04 (with the top 5 percent, however, making sharp gains). In 2005 real wages fell by 0.8 percent.3
Nevertheless, rather than declining as a result, overall consumption has continued to climb.

Today's Links

Today's quote: "“America’s long-term scheme for the region is detrimental to all nations and countries, particularly Iran and Russia, and it should be thwarted through vigilance and closer interaction,” Supreme Leader Ali Khamenei told Vladimir Putin during the Russian’s visit to Tehran last November.

1--Revealed: ECB Secretly Hands Cash to Select Corporations

2--Obamacare is Rapidly Becoming the Poster Child for American Inequality

The best thing about Obama (from an oligarch’s perspective), is his uncanny ability to push through upward redistributive wealth policies while still maintaining a phony aura of caring about the little guy amongst so many of his apparently lobotomized supporters.
...what’s most embarrassing for the President’s legacy, is the fact that Obamacare itself is rapidly becoming the poster child for the dramatic wealth and income inequality that has so characterized his entire administration.

3--The average American family had the same amount of wealth in 2013 as it did in 1989

...theCongressional Budget Office.
The analysis shows the wealthiest 10 percent of Americans now hold three-quarters of the nation's wealth, up from two-thirds in 1989, and a three percentage-point increase from the start of the recession. Most Americans found themselves with less wealth in 2013 than Americans of a similar age had in 1989; the only age group doing better than its counterparts from a quarter-century ago was senior citizens.

4--The Economist wants to re-privatize the mortgage market--How America accidentally nationalised its mortgage market (Hey, let's let the banks blow up the system again!)

At $26 trillion America’s housing stock is the largest asset class in the world, worth a little more than the country’s stockmarket. America’s mortgage-finance system, with $11 trillion of debt, is probably the biggest concentration of financial risk to be found anywhere. It is still closely linked to the global financial system, with $1 trillion of mortgage debt owned abroad. It has not gone unreformed in the ten years since it set off the most severe recession of modern times. But it remains fundamentally flawed....

Some 65-80% of all new home loans are repackaged by organs of the state. The structure of these loans, their volume and the risks they entail are controlled not by markets but by administrative fiat. (so we should hand over the mortgage business to the crooked banks?)....

The vacuum left by the thrifts was filled by the new technology of securitisation, which seemed, for a while, to make the risk vanish altogether. There are several steps. Mortgages are originated, or agreed, with millions of homeowners. The loans thus underwritten are then spruced up to look more attractive or realise some profits; for example sometimes insurance may be taken out against defaults, or the rights to “service” loans (collect interest payments) sold off. Next the loans are guaranteed and securitised. The bundles of bonds thus produced are then flogged to investors. After all this, derivatives contracts are created whose value is linked to these bonds.
The machine blew up in 2006-10 for a host of reasons, the most important of which was wild and sometimes fraudulent underwriting. There was a run on mortgage bonds and on the firms that issued or owned them. (Repeat: The system blew up because of fraud!)...

First, banks have partially withdrawn from the mortgage game after facing swathes of new rules and $110 billion of fines for misconduct. (The banks paid $110 billion of fines while the US taxpayer paid trillions in losses)

American officials who served during the crisis tell war stories about trying to persuade their counterparts in China and elsewhere not to dump all their mortgage bonds. As a result of their efforts foreign central banks, private banks and financial firms still hold 15% of all mortgage bonds; Barclays’ mortgage-bond holdings are worth 22% of the bank’s core capital. The rest are mainly owned by domestic investment funds and the Federal Reserve which, due to its asset-purchasing scheme, holds $1.8 trillion of government mortgage bonds, or 27% of the total. (a mortgage bond firesale could still blow up the system)

More than half the people outside the government who met with Hillary Clinton while she was secretary of state gave money — either personally or through companies or groups — to the Clinton Foundation. It's an extraordinary proportion indicating her possible ethics challenges if elected president.

At least 85 of 154 people from private interests who met or had phone conversations scheduled with Clinton while she led the State Department donated to her family charity or pledged commitments to its international programs, according to a review of State Department calendars released so far to The Associated Press. Combined, the 85 donors contributed as much as $156 million. At least 40 donated more than $100,000 each, and 20 gave more than $1 million

6--Hillary Clinton parties with Cher, while Jill Stein meets with flooding victims in Louisiana

7--Turkey formally requests US to extradite ‘coup-plotting’ Gulen – State Dept

8--Washington's Conundrum in Syria: Russia, Iran and China Team Up

10--Turkey invades Syria


The Syrian government has condemned Turkey’s decision to send forces across the Syrian border and considered this move a violation of Syria’s sovereignty, SANA news agency reported Wednesday citing a senior Foreign Ministry source.
“Syria condemns the movement of tanks and armored vehicles from Turkey across the border toward the town of Jarablus, with air support from the US coalition, and considers this to be a blatant violation of sovereignty,” the source said. “What is happening in Jarablos now isn’t fighting terrorism as Turkey claims; rather it is replacing one type of terrorism with another.”
According to SANA Syria requests putting an end to this aggression and calls Turkey and the US-led coalition to respect international resolutions, particularly those related to closing borders and drying up the sources of terrorism.....

On August 24, Turkish military, accompanied with some 1,500 Turkish-backed militants from the Free Syrian Army, launched a military operation to liberate the strategic city of Jarablus in northeastern Syria. According to Turkish authorities, the operation is also supported by the US-led coalition air power. Since August 24 morning, the Turkish army’s artillery has hit ISIS targets near the city over 400 times. The military advance began at around 4 a.m. local time with Turkish special forces crossed the Syrian border. In case of the success, the Turkish operation will undermine any hopes of the US-backed Democratic Union Party (PYD) to expand control along the Syrian-Turkish border and set a de-facto independent state in northeastern Syria

11--Houthi forces encircle Saudi Army in strategic city (Najran Dam)

12---Biden’s blank check to the Baltic states: US will wage war on Russia in your defense 

On Tuesday, US Vice President Joseph Biden traveled to Latvia to reaffirm the commitment of the United States to go to war with Russia in the event of a conflict between Moscow and the Baltic states.

“I want to make it absolutely clear to all the people in the Baltic states: we have pledged our sacred honor, the United States of America… to the NATO treaty and Article 5,” Biden said, after meeting with Lithuanian President Dalia Grybauskaite and other Baltic leaders.

The plain meaning of Biden’s words is this: Should any one of these tiny states, headed by fanatically anti-Russian regimes, stage a provocation against Russia leading to a border clash, the “sacred honor” of the United States requires that the American people be plunged into war against the world’s second largest nuclear power

13---The tangled web we weave: New flashpoint in escalating war: Turkey shells ISIS and Kurdish forces in Syria

This latest explosive turn in the tangle of shifting alliances and conflicts among the global powers intervening in Syria threatens to bring Turkey into direct conflict with Washington’s chief proxy force in northern Syria, the Kurdish People’s Protection Units, or YPG, which is the backbone of the Syrian Democratic Forces (SDF).

Earlier this month, the SDF, backed by intensive and deadly US air support, drove ISIS out of the strategic town of Manbij. This alarmed the government of Turkish President Recep Tayyip Erdogan, which is waging a brutal war against the Kurdish separatist Kurdistan Workers Movement (PKK) within Turkey. It fears that the YPG victory in Manbij will further consolidate a de facto Kurdish enclave in northern Syria that is being set up with the tacit support of the United States.

Turkey and the US, NATO allies, are increasingly working at cross purposes in Syria, further frustrating Washington’s central aim in the horrific war it has inflicted on the country, the removal of the pro-Iranian and pro-Russian regime of Syrian President Bashar al-Assad and the installation of a US puppet government. The looming confrontation in Jarablus follows Turkey’s accusations of US complicity in the failed military coup of July 15, Erdogan’s turn to a rapprochement with Russia and Iran, and Ankara’s softening of its opposition to Assad.

It also coincides with the visit today of US Vice President Joseph Biden to meet with top Turkish officials under conditions that were already fraught with tension...

The New York Times on Tuesday quoted Nasswer Haj Mansour, an SDF official on the Syrian side of the border, as saying the forces gathering in Turkey included “terrorists” as well as Turkish Special Forces. A statement from the SDF declared that “we are prepared to defend the country against any plans for a direct or indirect occupation.”...

On Tuesday, Syrian state media and the Kurdish Hawar News Agency both announced the implementation of a cease-fire in Hasakeh, evidently brokered by Russia. However, while the Kurdish statement said government forces had agreed, as part of the cease-fire terms, to withdraw from the town and leave it under the control of the local Kurdish police force, the Syrian statement made no mention of a withdrawal.

There were other indications of a moderation of the animus between the Assad regime and Turkey. On Friday, the Syrian military’s General Command, in an evident concession to Turkey, released a statement referring to the Kurdish Asayesh internal police in Hasakeh as the “military wing of the Kurdistan Workers Party.” Turkey has long pressed Damascus to declare the Syrian Kurdish forces to be an extension of the PKK.

From the other side, Turkish Prime Minister Binali Yildirim, speaking to foreign media Saturday in Istanbul, spelled out a shift in Turkey’s posture toward Assad, saying for the first time that while Assad could not be part of a long-term solution to the crisis in Syria, Ankara was willing to accept a role for him in a transitional government. At the same time, Yildirim stressed that Turkey would intervene more actively in the Syrian crisis and would not permit the country to be divided along ethnic and sectarian lines—an implicit criticism of US policy toward the Syrian Kurds....

(Plan B?)  On Monday, the new US commander, General Townsend, said Washington would step up its operations in support of its proxy forces as they prepared offensives to retake Mosul in Iraq and Raqqa in Syria from ISIS. He said the escalation would include intensified air and artillery strikes and increased efforts to equip and train local forces. He left open the possibility of an enlargement of the US troop presence in the two countries

Tuesday, August 23, 2016

Today's Links

Today's quote:  “Everything feels distorted and unnatural; you know the source of that is the central banks but equally there’s nothing to stop them carrying on,” said Matt King, head of credit strategy at Citigroup." WSJ

1--Droopy business investment signals recession

...belt-tightening by businesses on investment in new equipment and buildings could be a sign of a deeper slowdown ahead, according to economists at Credit Suisse.

"Extended periods of falling real business investment are strongly associated with US recessions," they wrote in a note to clients. "That's why the recent three consecutive quarters of contraction are concerning."

In fact, the last time business investment contracted over a prolonged period, without a recession following soon, was in 1986-87. That investment pullback also followed a sharp drop in oil prices, much like the recent collapse in spending and investment on oil and gas drilling.
But cuts in business spending and investment have spread beyond the oil patch, the Credit Suisse economists noted. In the past few quarters, investment in agricultural machinery has fallen hard.

2-It’s Getting Scarily Quiet in the Stock Market   --With the S&P 500 remarkably tranquil, the danger is not so much complacency about markets but complacency about central banks (Stocks hit news highs on historic low volume)

Calm has descended on the U.S. stock market.

The past 30 days have been the least volatile of any 30-day period in more than two decades. Only five days during the most recent stretch saw the S&P 500 move by more than 0.5% in either direction, the lowest since the fall of 1995.

Back then, the Federal Reserve was paused between rate cuts. This time around, a combination of the summer lull in trading and super-easy global monetary policy has helped drive volatility to levels seen only a dozen times in the past half-century.
“Last week and the week before, you had to make sure your machine was actually on because it was flashing so infrequently,” said Jared Woodard, a strategist at Bank of America Merrill Lynch, referring to the changes in stock prices on computer terminals.

(Calm before the storm?)

Previous periods of very low volatility were in early 2011, before the U.S.’s near-default and loss of triple-A status, and January 2007, a few months before the collapse of two Bear Stearns Cos. hedge funds marked the beginning of the credit crunch....

“Everything feels distorted and unnatural; you know the source of that is the central banks but equally there’s nothing to stop them carrying on,” said Matt King, head of credit strategy at Citigroup.

3--Fed Admits Another $4 Trillion In QE Will Be Needed To Offset An "Economic Shock"

In a Fed Staff working paper released over the weekend titled "Gauging the Ability of the FOMC to Respond to Future Recessions" and penned by deputy director of the division of research and statistics at the Fed, the author concludes that "simulations of the FRB/US model of a severe recession suggest that large-scale asset purchases and forward guidance about the future path of the federal funds rate should be able to provide enough additional accommodation to fully compensate for a more limited [ability] to cut short-term interest rates in most, but probably not all, circumstances

4--Seller’s Paradise: Companies Build Bonds for European Central Bank to Buy   -- Two European firms have sold debt directly to the ECB through private placements, a startling example of how the market is adapting to extremes of monetary policy

5--BOJ shows the world how to fu** up a perfectly decent stock market

"The market is driven completely by the BOJ's buying rather than views on each companies' earnings," said a fund manager at a Japanese asset management firm...

More than three years of massive monetary stimulus has already resulted in the central bank cornering the Japanese government bond (JGB) market and distorting interest rates.

"The increased BOJ purchasing provides a very favorable demand environment for listed equities," said Michael Kretschmer, chief investment officer at Pelargos Capital in the Hague. "Nevertheless, in the long run we strongly doubt these type of monetary gimmicks aimed at price setting of risk assets can have a sustained positive impact on economic growth."...

Some liken the increased purchases by the BOJ - the only central bank in the world that buys stocks at the moment - to failed government efforts over more than two decades to prop up the market by pressing government-related financial institutions to buy after the bursting of the late-1980s asset bubble.

The BOJ has sought to boost economic activity and dispel decades of deflation by flooding the system with cash through massive asset purchases. These have been mostly JGBs, but have included real-estate investment trusts, corporate bonds, commercial paper and stocks, in the form of exchange-traded funds, or ETFs.
The BOJ decided on July 29 to expand this stimulus by increasing its annual purchases of ETFs to 6 trillion yen ($60 billion) from 3.3 trillion yen....

Some worry the stock market could start to resemble the bond market, where the BOJ's purchases - about 110-120 trillion yen annually - have made traders fixate on its bond buying and pay scant attention to economic data.
The BOJ's tactics "could weaken the market's function in the long run," said Keita Matsumoto, head of investor sales at Citigroup Global Markets Japan. "I'm worried that could lead to a 'JGB-ification' of stocks...

Analysts estimate the central bank allocates about 60 percent of its buying in ETFs that track the Nikkei, 30 percent to the broader Topix .TOPX and the rest to the new JPX 400 .JPXNK400. That reflects the size of available ETFs but disproportionately benefits the 225 companies in the Nikkei over the nearly 2,000 companies listed in the Topix.

The Nikkei and Topix should roughly track each other, but the Nikkei has risen 0.7 percent while the Topix has fallen 0.3 percent since the BOJ's announcement.
Moreover, the Nikkei is a simple average, not weighted by market capitalization, as the Topix is. That means a handful of high-priced shares that have outsized weightings in the Nikkei benefit the most.

6--Monetary policy has nationalized the Japan stock market: CLSA

Even a resurgent yen hasn't dampened Japan's stock rally over the past couple months, but that's not necessarily because investors like the market.
The Nikkei 225 index has surged around 10 percent since late June, even as the yen has climbed against the dollar, with the pair testing levels under 100.

Normally this would be bad news for stocks as a stronger yen is a negative for exporters as it reduces their overseas profits when converted to local currency. So what explains the buoyant stock market?
Analysts attributed the gains to the Bank of Japan (BOJ), not fundamentals.

In a report titled, "BOJ nationalizing the stock market," Nicholas Smith, an analyst at CLSA, said that the central bank's exchange-traded fund (ETF) buying program was distorting the market. ...

The BOJ's purchases of Japan real-estate investment trusts (J-REITs) had also lost market-based "price discovery," analysts at Deutsche Bank said in a note Friday.

7---Bank loans, Japan savings, Comments on the economy

... the economy is most likely already in a recession and there never was a viable economic recovery. Investors need to keep their eyes open as equity prices march further into all-time high territory. And, most importantly, have a strategy to protect their portfolios once sanity returns to the market.

8--...proof that the economic recovery is over-- This begs the salient question: If the employment condition is booming why are payroll taxes falling?

However, according to the Treasury Department, the deficit came in at $112.8 billion in July, the highest since February's $192.6 billion. For the first ten months of the fiscal year, which ends Oct. 1, the budget deficit was $513.7 billion, up from $465.5 billion a year earlier.

Obviously, the government runs a deficit when it spends more than it collects in taxes and other revenue, as is almost always the case. But this year the Congressional Budget Office (CBO) is predicting the 2016 deficit will total $590 billion, up more than 34 percent from last year's budget shortfall. Most importantly, this growing gap comes primarily because of lower-than-expected receipts to the Treasury

A closer look at tax receipts over the past few years reveals that the growing number of employed has not had the effect on cash flows to the Treasury that you would expect. Receipts from the Federal Unemployment Tax Act (FUTA) have been falling steadily since 2012, according to the Office of Management and Budget, moving counter to the growing number of people employed. The FUTA tax is levied at 6 percent on the first $7,000 of an employee's wage...

In 2012 receipts totaled $66.6 billion, in 2013 those receipts fell to $56.8b, in 2014 they were down to $54.9b, and in 2015 they dropped to $51.8b.
The decrease in the FUTA rate in July of 2011 from 6.2 percent, to 6.0 percent may explain some of the shortfalls, but FUTA has continued its decline since 2012 despite the steady rise in employed persons.

This begs the salient question: If the employment condition is booming why are payroll taxes falling?
There are a couple of answers to that question and neither is favorable. The BLS numbers are either wrong or the quality of new jobs created must be very poor. The latter response seems the most credible; a combination of an increase in the proportion of part-time workers and full-time jobs that provide lower compensation.

The true employment condition, as well as the quality of those jobs, can be found in the tax receipt story, which is more comprehensive than the BLS's estimate. But it's not just payroll taxes that have declined; corporate tax receipts have fallen 12.8 percent year-to-date, while individual taxes are down 0.4 percent...

The bottom line is that our standard of living cannot be improving when productivity has been negative for three quarters in a row. The economy isn't getting better while earnings on S&P 500 companies have been negative five quarters in a row, and are projected to come in negative for the 6th time. There can be no real growth when tax policy remains unchanged and receipts are falling.

9--Turkey prepared to work with Assad

The comments were the latest signal from Ankara it is now prepared to work actively with world powers that have so far shared radically different viewpoints on the Syria conflict.

Russia and Iran are the major backers of Syrian President Bashar al-Assad, whose ouster Ankara has always said is essential for ending the over five-year civil war.

Yıldırım had on Aug. 20 recognized, for the first time, that al-Assad was “one of the actors” in Syria and could remain temporarily in a transition period.

10-- Turkey gets its act together on Syria-- Onward to Jarablus!

A weakened and fragmented Syria becomes a liability for Turkey. If the report is true that the deputy head of the Turkish intelligence traveled to Damascus on Sunday to discuss the security of Syria’s northern regions, it only dramatically underscores an emergent convergence of interests.
Equally, if Foreign Minister Mevlut Cavusoglu had to travel to Tehran Thursday for a sensitive conversation, because phone lines have become so very insecure and Big Brothers might eavesdrop, it only shows how there are wheels within wheels....

Turkey’s rethink on Syria has the following elements: a) Turkey must re-establish ties with Syria; b) Turkey cannot allow the IS or Kurds to control the border regions with Syria; c) Turkey is a stakeholder in Syria’s unity and stability; d) Turkey must promote a government that ensures Syria will remain a secular country with genuine power-sharing that disallows domination by any ethnic group or region.
Of course, the core issue concerns the Kurdish problem in Syria. Turkey fears that a Kurdistan will be detrimental to its own stability. Arguably, this is the starting point of Turkey’s rethink on Syria.....

Ankara, pending Biden’s visit, has drawn up the operational plans to inject its own proxy groups into the northern Syrian town of Jarablus and practically cut off the westward march of Syrian Kurds. If push comes to shove, and a clash ensues between Syrian Kurds and Turkish proxy groups, of course, there is no need to second guess where Ankara’s loyalty would lie.
Turkey has widely publicized the Jarablus offensive. Some reports say Ankara even notified the Russians and the Americans in advance that Turkey may be left with no choice but to create new facts on the ground in northern Syria.

11--Propaganda rules supreme!  Secret British Papers on Afghanistan Reveal Parallels With Syria Tactics

12--French intelligence orchestrated Ghouta poison gas attack: Syria

13--The Obamacare counterrevolution six years on

By Kate Randall
22 August 2016
More than six years after it was signed into law, and nearly four years after it began operation, the Affordable Care Act (ACA) is increasingly acknowledged to be a disaster. The viability of the scheme it authorized is openly being called into question, even by its proponents. The Obama administration’s signature domestic “achievement” stands exposed as a plan concocted by and for the insurance companies and corporate America to slash their costs and increase their profits.

14--Twenty years since Clinton’s welfare “reform”