Saturday, March 1, 2014

Today's Links

Today's quote:  "The putsch engineered by Washington in alliance with corrupt oligarchs and fascist gangs has set in motion events that bring Russia into direct opposition to the US and European powers on issues of an existential character. The prospect of Ukraine falling into the orbit of the US and the European Union, with the possible loss of Sevastopol as a naval base, is dangerous enough for Putin. The ambitions of the Obama administration and its allies do not stop there, however." Chris Marsden, "Ukraine alleges Russian “invasion” of Crimea as Obama warns of “costs”, wsws

1---Here comes the dumb money: Small Investors Exuberant, Margin Debt And Risk Of Crash Soar , Testosterone Pit

Small investors – including desperate retirees who saw their income from their life savings dwindle to near zero since the Fed decided to sacrifice them on the altar of the banks – have jumped back into the stock market. Suddenly, they don’t want to miss out on the rally they’ve been missing out on for the past five years.

E*Trade reported that daily client trades in the fourth quarter, after three years of malaise, had jumped 25% from a year earlier; and in January 27%. At TD Ameritrade, trades soared 24% in the third quarter and 28% in January. At Charles Schwab, trades rose 8% in the third quarter but then jumped 17% in January to a five-year high.
Small investors are having fun again. To speed up their gains, they’re leveraging up their portfolios. And margin debt is spiking beautifully.

Leverage speaks of investor confidence. Of exuberance even. Borrowing money to buy stocks creates demand and drives up prices. Higher prices encourage players to borrow even more. And the stock market hobbles from one high to the next, with no end in sight. That’s the beauty of leverage. It’s free money. Nothing can ever go wrong.

“People are feeling excited and back in the game,” explained Kim Githler, CEO of MoneyShow, which managed the International Traders Expo in New York, one of the innumerable investor conferences that have been popping up around the country. “The energy is so different,” she said.
So their buying stocks, and trading stocks to make a living is in vogue again, just like during the last two bubbles, and they’re piling on margin debt. In January, despite the rough spots that stocks went through, margin debt rose by $6.4 billion. Over the past six months, it spiked $68.4 billion to $451.3 billion, 18% above the prior bubble peak:

Alas, margin debt, after it starts spiking, has a disturbing habit of peaking right around the time the bubble turns into a crash. In September 1987, margin debt peaked at $44 billion, or 0.88% of GDP. On October 19, stocks headed south. Brokers got on the phone and told their frazzled clients with suddenly too much margin debt to put more money into their accounts (Right now? You gotta be kidding!) or sell their holdings. And as margin debt was unwound by dumping whatever could be dumped at whatever price, the selloff turned into a plunge

2---The C- economy, trimtabs

Charles: “As you know, we track withheld income and employment taxes derived from all wages and salaries. Wages and salaries were boosted about three percent at the start of the year by all the carry-forward of bonus income from 2012 to avoid higher 2013 tax rates. So wages and salaries grew 5 percent. Minus the 3% boost actual wage growth was 2%. So right now, we have a -3 % year over year headwind. That is why we’re seeing negative year-over-year growth of -1.9 percent. And so if you add 3% to -1.9% that equals all of 1.1%. In other words incomes are barely growing. We have a lousy economy that’s barely growing and to me, that’s why many of this quarter’s earnings reports are lousy. What’s more, Mark Hanson said that California home sales in December plunged – that year-over–year home sales in California were actually down in 2013 after being up the first half of the year. So yeah, home prices are still higher, but activity is plunging. I don’t think people are taking into account that the real estate market this year is going to be a head wind not a tail wind. In addition the rest of the word is growing a lot slower than people are fantasizing about. What do you think?” -

3--Why the Stimulus Just Couldn't Do it, Dean Baker

we have no simple formula for getting the private sector to replace the demand lost from the collapse of the bubble.
Contrary to what Republican politicians tell us, private businesses don't run out and create jobs just because we throw tax breaks at them and profess our love. If the government doesn't create demand, then we will be doomed to a long period of high unemployment -- just as we saw in the Great Depression. The government could fill the demand gap by spending on infrastructure, education and other areas, but in a political world where higher spending is strictly verboten, that doesn't seem likely.

The one alternative, which has been successfully pursued by Germany, is to reduce the supply of labor through work sharing. Companies reduce all their employees' hours and pay so everyone keeps their jobs. The government then pays the workers part-time unemployment benefits -- cheaper than paying someone full-time unemployment.
Germans have used this route to lower their unemployment rate to 5.2%, even though their nation's growth has been slower than ours....

Given this background, it was easy to see that the stimulus was far too small. It was designed to create about 3 million jobs, which might have been adequate given the Budget Office projections. Since the package Congress approved was considerably smaller than the one requested, the final version probably created about 2 million jobs. This was a very important boost to the economy at the time, but we needed 10 million to 12 million jobs to make up for jobs lost to the collapse of the bubble.

The arithmetic on this is straightforward. With the collapse of the bubble, we suddenly had a huge glut of unsold homes. As a result, housing construction plunged from record highs to 50-year lows. The loss in annual construction demand was more than $600 billion. Similarly, the loss of $8 trillion in housing equity sent consumption plunging. People no longer had equity in their homes against which to borrow, and even the people who did would face considerably tougher lending conditions. The drop in annual consumption was on the order of $500 billion.

 The collapse of the bubble in nonresidential real estate cost the economy another $150 billion in annual demand, as did the cutbacks in state and local government spending as a result of lost tax revenue. This brings the loss in annual demand as a result of the collapse of the bubble to $1.4 trillion.

Compared with this loss of private sector demand, the stimulus was about $700 billion, excluding some technical tax fixes that are done every year and have nothing to do with stimulus. Roughly $300 billion of this was for 2009 and another $300 billion for 2010, with the rest of the spending spread over later years.

In other words, we were trying offset a loss of $1.4 trillion in annual demand with a stimulus package of $300 billion a year. Surprise! This was not enough.

4--From the Kremlin website{ Putin' request

From the Kremlin website:

Vladimir Putin made an appeal to the Council of the Federal Assembly of the Russian Federation.
“In connection with the extraordinary situation in Ukraine, the threat to the lives of citizens of the Russian Federation, our compatriots, the personnel of the military contingent of the Armed Forces of the Russian Federation deployed in the territory of Ukraine (Autonomous Republic of Crimea) in accordance with an international treaty, and pursuant to Article 102-1(d) of the Constitution of the Russian Federation, I hereby submit to the Federation Council of the Federal Assembly of the Russian Federation a letter on the use of the Armed Forces of the Russian Federation in the territory of Ukraine pending normalisation of the public and political situation in that country"...

RT--The leader of Federation Council, Russia’s upper house, said the use of military force in the former Soviet nation could be justified after the opposition swept into power in Kiev last weekend.

5---US, NATO, EU lecture Russia on Ukraine , Nation

Militants, who still haven’t surrendered arms and not vacated administrative buildings, announced their intention to ‘bring order’ to all Ukrainian regions,” the Russian ministry said.

The agreement to jointly investigate violence, as well as to form a national unity government “fell into oblivion,” Moscow said. “Instead, as it was announced on [Kiev’s] Maidan ‘a government of winners’ has been established which includes nationalist extremists.”

 Russia urged foreign partners who encouraged the opposition rallies in Ukraine and then initiated the February 21 settlement agreement, to realize their responsibility to work towards its fulfillment.

Moscow says it is ready to cooperate with the West on Ukraine, just as it had been offering to do long before the crisis in the country descended to bloody unrest.

“But we are ready to cooperate if there is a clear understanding that the cooperation should be honest, and based on an ability to make agreements as well as to fulfil them. And agreements should take into consideration interests of all the Ukrainian people as well as of all Ukraine’s partners,” the ministry’s statement reads.

...on Thursday, NATO’s chief Anders Fogh Rasmussen urged Russia “not to take any action that could escalate tension or create misunderstanding.”

His statement was echoed by American Defense Secretary Chuck Hagel who said that Moscow must be transparent about military exercises along the Ukrainian border and not take any steps that could be misinterpreted or "lead to miscalculation during a delicate time."

US Secretary of State John Kerry warned Moscow Wednesday to be “very careful” with its approach to Ukraine and respect its territorial integrity.

A similar sentiment came from the head of another NATO member-state, British Prime Minister David Cameron.

"We are particularly concerned by the situation in Crimea - every country should respect the territorial integrity and sovereignty of Ukraine," Cameron added at a joint briefing with German Chancellor Angela Merkel in London on Thursday.

 Lawmakers in Ukraine’s Autonomous Republic of Crimea voted Thursday to hold a referendum to determine the region’s future. According to the parliament’s spokeswoman as a result of “the unconstitutional seizure of power in Ukraine by radical nationalists supported by armed gangs,” Crimea’s peace and order is “under threat.” Ethnic Russians form around 58.3 percent of the population of the peninsula on the Black Sea.

Turmoil in the region began after the new Ukrainian authorities ousted President Yanukovich and revoked a 2012 law that allowed regions to use minority languages, including Russian, as second language.

On Thursday, NATO defense ministers and Ukraine’s first deputy defense minister gathered in Brussels to discuss the Ukrainian crisis, while the parliament in Kiev was busy forming the new Cabinet.

German Defense Minister Ursula von der Leyen said it was important “that we prevent a breakup of the Ukraine, and that special forces in the country are strengthened,” Ruptly TV reported.

“NATO stands ready to support democratic development, defense reforms, military cooperation and democratic control over the security sector,” Rasmussen said after the session of the NATO-Ukraine Commission. NATO, which “has a long-standing partnership” with Ukraine is set to continue its engagement and support the country “on the path of democratic and inclusive reforms,” he added.

6---Putin requests senators’ approval to send troops to Crimea - nation

The Russian government has so far been careful in its assessment of the new self-proclaimed Ukrainian government in Kiev. Matvienko said the reason for that was Russia counting on its Western partners, who vowed to guarantee the February 21 agreements between Ukrainian President Viktor Yanukovich and the opposition.

Russia did not interfere in the situation in Ukraine for a very long time and showed restraint, assuming that the Western states, which became backers of the agreements, would see that strict compliance with the deal is observed,” she said.

However, after “violent upheaval” took place in Ukraine, the Western states did not come up with “any reasonable measures or responses,” Matvienko said.
Russia, in contrast, for a very long time has urged the situation to be resolved by lawful means, and called for the anti-coup sentiments in Crimea and in eastern Ukraine to be heard, she said.
Not seeing an adequate reaction from the West, we could no longer maintain status quo,” the speaker concluded.

7---Pierre Omidyar co-funded Ukraine revolution groups with US government, documents show, mark ames

8---EU prepares poisoned loan for Ukraine, pravda

The EU has a wealth of experience in providing financial assistance to its members in such a way that this assistance is not seen by these countries," told Pravda.Ru Serbian economist Branko Pavlovic. "In the case of Greece, it was only formally aid to Greece, but in reality funds were allocated to banks owned by legal entities from Germany and France. For example, Romania was allocated 8 billion euros, but Romania did not manage to fulfill the conditions under which it could spend the money, so in reality it only managed to use one billion euros.

Third, when the recipient country manages to get money from the EU, 85 percent of the funds received should be later returned to legal entities of the countries involved in their provision. In fact, funding by the EU is at best a cover for the financing of the economies of the first tier and never leads to the development of the economy of the countries receiving the assistance. Moreover, the economy weakens and debts only increase

NATO ministers in Brussels issued similar warnings. A statement said they'll "continue to support Ukrainian sovereignty and independence, territorial integrity, democratic development and the principle of inviolability of frontiers, as key factors of stability and security in Central and Eastern Europe and on the continent as a whole."

US-led NATO is a killing machine. It threatens world peace. It's responsible for turning peaceful countries into dystopian wastelands.... 

It wants them plundered for profit. It wants their people ruthlessly exploited. Moscow urged NATO to stop issuing provocative statements.

Russia's Foreign Ministry said "(w)hen NATO starts giving a consideration of the situation in Ukraine, it sends out the wrong signal."

Ever since the dissolution of the Soviet Union in 1991 the crack-para-military UNA-UNSO members have been behind every revolt against Russian influence. The one connecting thread in their violent campaigns is always anti-Russia. The organization, according to veteran US intelligence sources, is part of a secret NATO “GLADIO” organization, and not a Ukraine nationalist group as portrayed in western media.

 According to these sources, UNA-UNSO have been involved (confirmed officially) in the Lithuanian events in the Winter of 1991, the Soviet Coup d’etat in Summer 1991, the war for the Pridnister Republic 1992, the anti-Moscow Abkhazia War 1993, the Chechen War, the US-organized Kosovo Campaign Against the Serbs, and the August 8 2008 war in Georgia. According to these reports, UNA-UNSO para-military have been involved in every NATO dirty war in the post-cold war period, always fighting on behalf of NATO. “These people are the dangerous mercenaries used all over the world to fight NATO’s dirty war, and to frame Russia because this group pretends to be Russian special forces. THESE ARE THE BAD GUYS, forget about the window dressing nationalists, these are the men behind the sniper rifles,” these sources insist.

 If true that UNA-UNSO is not “Ukrainian” opposition, but rather a highly secret NATO force using Ukraine as base, it would suggest that the EU peace compromise with the moderates was likely sabotaged by the one major player excluded from the Kiev 21 February diplomatic talks—Victoria Nuland’s State Department.[8] Both Nuland and right-wing Republican US Senator John McCain have had contact with the leader of the Ukrainian opposition Svoboda Party, whose leader is openly anti-semitic and defends the deeds of a World War II Ukrainian SS-Galicia Division head.[9] The party was registered in 1995, initially calling itself the “Social National Party of Ukraine” and using a swastika style logo. Svoboda is the electoral front for neo-nazi organizations in Ukraine such as UNA-UNSO.

The US-backed coup in Ukraine represents the high point of a protracted process of intervention in Eastern Europe in the wake of the dissolution of the Soviet Union 25 years ago.

To claim that “territorial integrity” has been some inviolable principle advanced by US imperialism in this aggressive venture would be ludicrous. On the contrary, US intervention began in the former Yugoslavia with the bellicose promotion of separatist movements and support for secession and wholesale “ethnic cleansing” to carve out new ethnic-based statelets under Washington’s domination. Twice in the 1990s, this led to US-NATO wars that saw thousands killed and wounded and hundreds of thousands driven from their homes.

In these cases, Washington’s position was clear: existing states had no right to defend their territorial integrity against US designs, and if they tried, the American military would bomb them.

Nor is this anything new for US imperialism. It grabbed Panama and the site of the future canal from Colombia at the beginning of the 20th century by creating its own secessionist movement and making it clear it would attack Colombia if it resisted.

Over the past decade, Washington has rode roughshod over the “territorial integrity” of Afghanistan, Iraq, Libya and Syria with direct invasions and proxy wars for regime change.

One can be assured that the supposedly sacred principle of “territorial integrity” will go by the wayside in relation to Russia itself, where Washington is sure to follow up its adventure in Ukraine with the stoking of ethnic and national conflicts with the aim of dismembering and subjugating Russia.

The putsch engineered by Washington in alliance with corrupt oligarchs and fascist gangs has set in motion events that bring Russia into direct opposition to the US and European powers on issues of an existential character. The prospect of Ukraine falling into the orbit of the US and the European Union, with the possible loss of Sevastopol as a naval base, is dangerous enough for Putin. The ambitions of the Obama administration and its allies do not stop there, however.

Poland’s Foreign Minister Radoslaw Sikorski played a key role in organising the putsch in Kiev, reflecting both Poland’s own long-term designs on Ukrainian territory it ruled prior to World War II and, more importantly, his role as a political ally of the US.

After playing a part as a student in the 1981 strike organised by the Solidarity trade union movement, Sikorski was granted asylum in the UK. At Oxford, he was groomed as a Western political/security asset. He eventually became a resident fellow of the American Enterprise Institute in Washington, D.C., executive director of the New Atlantic Initiative and a member of the Board of Advisors of the American Committees on Foreign Relations.

Reuters reports, “The Polish government has been funding civil society projects in ex-Soviet countries such as Ukraine, Belarus, Georgia and Moldova, with much of the aid channelled through a fund controlled by Sikorski’s ministry. Recipients of Polish government money include opposition television stations operating in exile from Belarus, giving Poland influence in a country that, after Ukraine, could be the scene of the next confrontation between Russia and the West.”
Sikorski described the seizure of administrative buildings in Crimea as “a drastic step” that could escalate: “I’m warning those who did this and those who allowed them to do this, because this is how regional conflicts begin.”

Georgia is also set on association with the European Union, which Yanukovych acted to block in Ukraine, setting up the moves to depose him. Defence Minister Irakli Alasania said of Ukraine’s rejection of Russia, “There’s no way back for Ukraine. It's a first strategic failure for Putin. This is a tectonic geopolitical shift in eastern Europe.” It would embolden other countries in the region, he said, and have a ripple effect.

Arsen Avakov, the new interior minister and member of Fatherland, the party of oligarch Yulya Tymoshenko, alleged that the international airport in Sebastopol in the Crimea had been blocked by Russian forces. He wrote on Facebook, “I regard what is happening as an armed invasion and occupation in violation of all international treaties and norms. This is a direct provoking of armed bloodshed on the territory of a sovereign state.”

His choice of words aims to provide a casus belli justifying Western military intervention in Ukraine. He is invoking terms of a 1994 agreement, the Budapest Memorandum—signed by US President Bill Clinton, UK Prime Minister John Major, Russia’s Boris Yeltsin and Leonid Kuchma for Ukraine—promising to uphold the territorial integrity of Ukraine in return for Ukraine giving up its nuclear weapons.

Article one of the Budapest Memorandum reads: “The United States of America, the Russian Federation, and the United Kingdom of Great Britain and Northern Ireland, reaffirm their commitment to Ukraine ... to respect the Independence and Sovereignty and the existing borders of Ukraine.”

Sir Tony Brenton, the former British Ambassador to Moscow from 2004 to 2008, warned that if Russia was found to have invaded Ukraine, then war could be an option “if we do conclude the Memorandum is legally binding.”


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