Monday, September 2, 2013

Today's links

1--- The Syria Farce, wsws

There is no democratic content to the official debate over going to war against Syria. The entire Congress—Democratic and Republican, House and Senate—is a political instrument of the US financial aristocracy. Every member accepts the basic premise that the US government has the right to invade any country it chooses, without any regard to national sovereignty or international law.

Obama himself claims that he retains the power to order an attack on Syria even if Congress votes against it. Administration spokesmen and congressional Democrats cited the precedent of the Kosovo War in 1999. At that time, the Republican-controlled House of Representatives voted against a resolution to authorize US air strikes, but the Clinton administration ignored the vote and continued the bombing.

The corporate-controlled media echoes administration lies about chemical weapons even more shamelessly than eleven years ago, when the Bush administration launched a similar campaign on “weapons of mass destruction” to prepare for the invasion and conquest of Iraq.

2---No, to war with Syria, wsws

...The hypocritical claims of the Obama administration to be motivated by “humanitarian” motives are exposed by its long and bloody record in the Middle East. Most recently, the US had no trouble accepting the mass killing carried out last month by the Egyptian military, funded with billions of dollars in US subsidies.....

Among the central lies being employed by the Obama administration is the claim that military action will be “limited,” aimed only at punishing Syrian President Bashar al-Assad for using chemical weapons.
There is nothing limited about the massive bombardment that will be unleashed against Syria. In his Rose Garden speech, Obama stated that the attacks would seek to “degrade [the] capacity” of the Syrian military. This will require the large-scale destruction of equipment and the killing of thousands of soldiers and civilians. The US military plan will be a repeat in all but name of the “shock and awe” tactics employed against Iraq in 2003.

US military action will continue until it meets its strategic aims: reversing the course of civil war in Syria in favor of the US-backed opposition, killing President Assad if possible, crippling the regime and clearing the way for the installation of a puppet government of the United States.

Beyond Syria, the aim is to undermine the influence of Iran, Russia and other US competitors in the region. The war against Syria will lead rapidly to a military confrontation with Iran. The New York Times reported on Sunday that Obama told his staff that the most “compelling” reason for seeking Congressional authorization was that “acting alone would undercut him if in the next three years he needed Congressional authority for his next military confrontation in the Middle East, perhaps with Iran.”

3---Report links US-backed Syrian opposition to Ghouta gas attack, wsws
A report by Minneapolis-based Mint Press News (MPN) links the chemical weapons attack in the Damascus suburb of Ghouta to US-backed opposition forces fighting the Syrian regime. This flatly contradicts unsubstantiated US allegations that Syrian President Bashar al-Assad is responsible for the Ghouta attack—the claim Washington is using as its pretext to attack Syria....

MPN published an article with interviews with opposition fighters on the ground in Ghouta. Its two authors are Jordanian freelance journalist Yahya Ababneh and Dale Gavlak—a longtime correspondent for the Associated Press, based in Amman, Jordan for more than two decades, who currently reports for AP and National Public Radio, as well as MPN.

Those interviewed included Abu Abdel-Moneim, whose son was among 13 opposition fighters killed in a tunnel used to store what were apparently chemical weapons.
Abdel-Moneim said the weapons were supplied by a Saudi named Abu Ayesha, who leads a rebel battalion. He described some of the weapons as having a “tube-like structure,” while others were like a “huge gas bottle.” They were stored in tunnels, while the opposition fighters themselves slept in nearby mosques and private homes.

A female fighter who spoke with the news service complained, “They didn’t tell us what these arms were or how to use them. We didn’t know they were chemical weapons. We never imagined they were chemical weapons.”

She added, “When Saudi Prince Bandar gives such weapons to people, he must give them to those who know how to handle and use them.”
Prince Bandar is the former longtime Saudi ambassador to the United States, who returned from decades in Washington, where he had the closest ties to the US military-intelligence apparatus, to head the Saudi intelligence service. He is reportedly the main Saudi sponsor, fundraiser and arms supplier for Syrian opposition forces. At least a dozen opposition fighters interviewed in the MPN report said they were on the payroll of Saudi Arabia.

An opposition leader in Ghouta told MPN that the Al Nusra Front, one of the main Islamic fundamentalist militias operating in Syria, had custody of the chemical weapons. “They do not share secret information. They merely used some ordinary rebels to carry and operate this material,” he said. “We were very curious about these arms. And unfortunately, some of the fighters handled the weapons improperly and set off the explosions.”

4---Multiples Grow at Fastest Pace Since Dot-Com Bubble, Bloomberg (today's "must read")

Price gains of stocks in the Standard & Poor’s 500 Index (SPX) are outpacing profits by the fastest rate in 14 years as the bull market extends beyond the average length of rallies since Harry S. Truman was president

The benchmark gauge for U.S. equities has risen 14 percent relative to income over the past 12 months to 16 times earnings, according to data compiled by Bloomberg. Valuations last climbed this fast in the final year of the 1990s technology bubble, just before the index began a 49 percent tumble. The rally that started in March 2009 has now outlasted the average gain since 1946, the data show.
Bears say the failure of earnings to keep up with prices signals the bull market is in its last stages, as companies from Caterpillar Inc. and Danaher Corp. (DHR) forecast slower profit growth and the Federal Reserve prepares to reduce stimulus. Optimists point to expanding multiples as proof individual investors are growing confident enough in the economy to return to stocks. History shows the final phases of rallies have provided some of the biggest gains.

“Markets have been running away,” Robert Royle, who helps oversee $21 billion as manager of the North American Trust at Smith & Williamson Investment Management LLP in London, said by telephone on Aug. 20. “Everyone is hoping for a second-half recovery in fundamentals,” he said. “I am just not sure what will drive the recovery.”

Labor Market

The S&P 500 advanced 0.5 percent to 1,663.5 last week as global manufacturing and the American labor market showed signs the economy is improving. The index is up 17 percent this year, the largest advance over a comparable period since 1997, and climbed to an all-time high of 1,709.67 on Aug. 2.

The S&P 500 has risen 146 percent since bottoming in 2009. The 53-month gain has surpassed the average length of bull markets since 1946 by about four months, data compiled by Bloomberg show. The index gained 0.3 percent at 11:04 a.m. in New York today.
Combined profit at S&P 500 companies surged 37 percent in 2010, 19 percent in 2011 and slowed to 2.3 percent last year, Bloomberg data show. Earnings increased 3.6 percent and 3.7 percent in the first and second quarters. Analysts have cut projections for 2013 profit by 0.7 percent this year to $110.22, a 9 percent increase from last year, based on more than 11,000 estimates compiled by Bloomberg.

Dot-Com Crash

The last time gains in stocks outpaced profit expansion by this much was in 1999, when equity valuations surged 19 percent in a year to 30 times reported profit, according to data compiled by Bloomberg. That bull market ended the following year, with the S&P 500 tumbling 49 percent from March 2000 through October 2002 as the dot-com bubble burst.
In 1987, prices rose so fast, valuations increased 43 percent through August, about twice the pace of the year before. That month marked the peak in a five-year rally, followed by a 34 percent loss through December 1987.

U.S. equities have been whipsawed since May, when Fed Chairman Ben S. Bernanke first indicated that the central bank may start to reduce its quantitative easing bond buying this year. The S&P 500 fell 5.8 percent from a high on May 21 through June 24 and rallied 8.7 percent through Aug. 2, before declining 2.7 percent.
Corporate earnings need to accelerate to justify the surge in equities as the central bank begins to scale back its unprecedented monetary stimulus, according to Joost van Leenders of BNP Paribas Investment Partners in Amsterdam.

‘Negative Outlooks’

“There’s been a lot of hope and expectations that things will improve in the second half,” Van Leenders, who helps oversee $660 billion as a strategist at BNP Paribas, said by phone on Aug. 22. “The improvement in earnings growth has been delayed from the third quarter to the fourth quarter. Not many companies are giving forward guidance, and those that are, are giving negative outlooks.”
While U.S. stocks may be in the final leg of a bull market, that’s often the stage with the biggest gains as bears capitulate, according to Laszlo Birinyi, president of Birinyi Associates Inc. In this last phase, which Birinyi calls exuberance, equity markets have surged 39 percent on average.

Birinyi, one of the first money managers to advise clients to buy in 2009, wrote in a Aug. 7 report that the rally in U.S. equities was poised to slow after the 17 percent surge this year. He predicted that the S&P 500 may climb to a new high of 1,740 by December, 4.6 percent above the current level. The S&P 500 exceeded Birinyi’s forecast of 1,600 in May. ...

Investors have paid up for stocks in anticipation that earnings growth will rebound, and companies must now deliver for the equities rally to continue, according to Franz Wenzel, who helps oversee $759 billion as a strategist at Axa Investment Managers in Paris.
“Over the last two years we saw equity markets jump through liquidity and re-rating; this story is behind us,” Wenzel said by phone on Aug. 21. “We don’t think further multiple expansion is feasible. We need the economic underpinning.”

5---Four Reasons the Fed Should Start Tapering in September , WSJ

6---Putin on Syria, Reuters

"Is it in the United States' interests once again to destroy the international security system, the fundamentals of international law? Will it strengthen the United States' international standing?

We need to remember what's happened in the last decade, the number of times the United States has initiated armed conflicts in various parts of the world. Has it solved a single problem?" Putin asked reporters on Saturday in the city of Vladivostok.
"Afghanistan, as I said, Iraq ... After all, there is no peace there, no democracy, which our partners allegedly sought," he said during a tour of Russia's far east.
Denying as "utter nonsense" the idea that Assad's forces would use chemical weapons when they were winning the civil war, Putin looked steely and confident.

After months of pressure to abandon Assad, he is sending a message to the West that he is ready to do battle over Syria in St Petersburg and sees an opportunity to portray the United States as the bad boy on the block.
"Of course the G20 is not a formal legal authority. It's not a substitute for the U.N. Security Council, it can't take decisions on the use of force. But it's a good platform to discuss the problem. Why not take advantage of this?" he said.
"Is it in the United States' interests once again to destroy the international security system, the fundamentals of international law? Will it strengthen the United States' international standing? Hardly," he said.

7---2013Q2: Faster GDP Growth, econbrowser

...consider the fact that in fact the government spending (all levels) on goods and services declined even more than first estimated....

Returning to the government sector, it’s important to recall government spending on goods and services doesn’t summarize the entire effect of spending cuts. Transfers have also been reduced. Figure 8 illustrates the drag coming from a reduction in government expenditures (spending, transfers) relative to GDP.
Figure 8: Log government total spending to GDP ratio (blue), and to potential GDP (red

8---Dubious Intelligence and Iran Blackmail: How Israel is driving the US to War in Syria, global research

9---Obama's Failure, Dean Baker

We are almost 9 million jobs below the trend level of employment. The number of people involuntarily working part-time is still up by almost 4 million from its pre-recession level. Wages have been stagnant for a decade and show no signs of increasing any time soon. And, according to the Congressional Budget Office, the economy is still operating more than $1 trillion (6 percent) below its potential. Oh, and by the way, the financial sector is more concentrated than ever, with top honchos drawing the same sort of paychecks they did before the crisis.

10---Dispatches from the Currency Wars, project syndicate

11---Why Abenomics won't work (Target gold prices?), project syndicate

12---The Global QE Exit Crisis, Stephen Roach (repeat) project syndicate

13---The American Consumer is Not Okay, project syndicate

14---Chart: QE3 is ineffective in growing credit in the US, sober look
Based on the data from the Federal Reserve Bank of St. Louis here is a single chart that shows credit growth in the US is continuing to decline while the Fed's balance sheet is expanding.

“For lenders, the path of least resistance will be to continue issuing conforming mortgages which are bought or guaranteed by Fannie Mae and Freddie Mac, which automatically count as QMs and will now meet the QRM standard. In the long-run, that’s going to make it harder to reduce the industry’s reliance on Fannie and Freddie and encourage the entry of private capital,” Diggle wrote


1 comment:

  1. American corporations that export jobs, sometimes laying off American workers while their profits are booming, should pay a higher income tax rate than corporations that are investing their profits in domestic growth and hiring more American workers year by year. That is the tax policy I advocate in my book, Job Creation Tax Plan.

    What this can do is provide an incentive for corporations to hire more American workers while empowering those companies already hiring to grow faster, thus producing jobs at a faster rate.