Friday, June 13, 2014

Today's Links

1--Who are Isis? A terror group too extreme even for al-Qaida, Guardian

The Islamic State of Iraq in Syria has a reputation for being even more brutal than the main jihadi group of inspiration....Isis has shown its ruthlessness and brutality in the areas of Syria under its control, eastern Aleppo and the city of Raqqa. It was blamed for the February killing of a founding member of the Salafi group Ahrar al-Sham and the group's leader in Aleppo, Muhammad Bahaiah, who had close connections with senior al-Qaida leaders. It was also blamed for the assassination of Jabhat al-Nusra's leader in the Idlib governorate, Abu Muahmmad al-Ansari, along with his wife, children and relatives. It ordered the crucifixion of a man accused of murder; other forms of punishment include beheadings and amputations.

Despite its brutal reputation, Isis has shown flexibility as well in Iraq to win over disaffected Sunnis in the north against the Shia-led government of Nouri al-Maliki.

2---US secretly backs rebels to fight al-Qaeda in Syria, Telegraph
Sources tell Telegraph that America is backing 'friendly' rebels with millions in cash and non lethal aid to take on extremists in Syria

3---Whose Bombs were They?, op ed news (2006)

4---Iraq crisis threatens to ignite regional war, wsws

The overrunning of Mosul has objectively served a stated goal of US policy, which is to strengthen the forces fighting the Syrian government. The largest share of the war booty captured in Mosul, including hundreds of armored vehicles, huge quantities of arms and ammunition and hundreds of thousands of dollars in cash, has been sent back across the effectively erased border to Syria.
The net effect of Washington’s policies—waging a war of aggression in Iraq on the phony pretext of battling “terrorism,” and backing Al Qaeda-linked militias in a proxy war in Syria—has been the death, maiming or displacement of millions of innocent people on both sides of the border.
The US is reportedly beginning to evacuate some of the thousands of military and intelligence contractors deployed in the country, and there are discussions over what will be the fate of the giant US embassy in Baghdad, the largest in the world. What is unfolding is a monumental debacle engendered by the entire policy pursued by both the Bush and the Obama administrations over the course of more than a decade.

The crisis threatens to plunge Iraq into a sectarian civil war on the scale of the one provoked by the US and its allies in neighboring Syria and to engulf the entire region in bloody conflict

5---The Rand study, the Yinon plan and more, (archive) In Clearinghouse

It’s impossible to know how much of the violence we see is real and how much is “black-ops”. Divide and rule is an adage that is as old as war itself and it is certainly being used in Iraq. In fact, the Bush administration commissioned the Rand Corporation to draw up a plan which promotes this very strategy.

The Rand Study was called: “US Strategy in the Muslim World after 9-11”. The document provided “A framework to identify major ideological orientations within Islam, examines critical cleavages between Muslim groups.” The goal of the paper was to develop a Shaping Strategy for pacifying Muslim populations where the US has commercial or strategic interests. The conclusions of the document are enlightening. Rand suggests the US, “Align its policy with Shiite groups who aspire to have more participation in government and greater freedoms of political and religious expression. If this alignment can be brought about, it could erect a barrier against radical Islamic movements and may create a foundation for a stable U.S. position in the Middle East.”

Clearly, the administration is following the recommendations Rand study and has decided elevate the Shiites over the previously dominant Sunnis.

The Bush administration also appears to be applying parts of another theory which was conjured up by the fiercely nationalistic, Oded Yinon, in his “The Zionist Plan for the Middle East”. Yinon said:

"It is obvious that the above military assumptions, and the whole plan too, depend also on the Arabs continuing to be even more divided than they are now, and on the lack of any truly mass movement among them... Every kind of inter-Arab confrontation will assist us in the short run and will shorten the way to the more important aim of breaking Iraq up into denominations as in Syria and Lebanon... Syria will fall apart."

Similar to the Rand study’s recommendations, Yinon’s strategy is to pit Sunni against Shiite in a way that destroys Arab unity and to leaves the country weak and fragmented

6---Blaming Obama, Robert Perry

Though U.S. assistance to Syrian rebels has so far been limited to light arms and non-lethal supplies, U.S. allies such as Saudi Arabia, Qatar and Turkey have been the principal supporters of radical Sunni jihadists who have flocked from around the Middle East to wage war against Syria’s government, which is run by Assad, an Alawite, an offshoot of Shiite Islam.

7---The Islamic State of Iraq and Greater Syria---Two Arab countries fall apart, Economist

An extreme Islamist group that seeks to create a caliphate and spread jihad across the world has made dramatic advances on both sides of the Syrian-Iraqi border

8---Your Questions About Iraq's Oil Infrastructure Answered, zero hedge

9--Laugh Along With Putin, zero hedge

10--Americans being evacuated from Iraqi air base, yahoo

11--ISIS "success" facilitated by betrayal, Iraqi government inadequacies, alakhbar

12--Spending Worries?, House of Debt

Census retail sales for May came out today, and they missed the consensus forecast slightly on the downside. But there is another pattern that may be more concerning. Let’s take a closer look at what has been going on with household spending.

First, new auto purchases have been an important driver of household spending for the past two years. The chart below plots year over year spending (in nominal terms) from January to April for 2013 and 2014. The blue bar shows total spending, and the red bar shows spending excluding new auto purchases.
Over the past two years, nominal spending growth has been about 3% on a year-over-year basis. But if we exclude auto sales, the numbers are much worse, especially for 2014. Spending excluding autos in the first four months of 2014 has been less then 1.5% nominal, which implies a decline in real terms. This includes March and April, so it is hard to argue that weather alone explains this weakness.

So purchases of new vehicles have been an important boost to household spending and the overall economy. But what is driving this great performance of auto sales? A clue comes from looking across zip codes that differ in credit scores.
In the chart below, we plot the year-over-year growth in new auto purchases for the lowest and highest credit score zip codes. These are the bottom and top quartile of the overall credit score distribution, where the quartiles are population weighted to ensure we are looking at the same number of people.
The growth in new auto purchases has been much stronger in low credit score zip codes over the past two years. In 2014, the growth was more than twice as strong in low credit score zips relative to high credit score zips.
So total spending is being driven in large part by auto purchases, and auto purchases are being driven in large part by purchases by low credit score individuals. What explains this pattern?

A very sharp rise in auto loans, especially to low credit score individuals. We showed this pattern in a previous post. It also makes intuitive sense. Wage growth has been pretty stagnant, especially among middle and lower income Americans. So it makes sense that the only way low credit score individuals are able to buy cars is by taking on debt. They certainly haven’t seen improved income.
So what is the big picture? One view is that all of this is benign. Credit conditions were overly tight during the Great Recession, and now credit is flowing back to low credit score individuals who are purchasing cars at a fast clip. We should expect durable purchases by low credit score individuals to help fuel a spending recovery.

Another view, closely related to the secular stagnation idea, is that the only way we can generate real demand is by lending to individuals that have low income and low income prospects. The financial system is channeling funds toward individuals for whom economic circumstances remain poor, which offers only a fleeting boost to spending. This is closely related to arguments we make in our new book, House of Debt.
Can debt-fueled purchases of new autos continue to drive the spending recovery? This is a pattern worth watching closely.

Global Housing Prices.jpg

15--Ukrainian APC with troops breaches Russian border, RT

16--Russia to cut off gas to Ukraine, RT

If the Russian gas giant does not receive US$1.951 billion overdue payment by that time, Ukraine would have to pay for its gas supplies in advance.

If nothing has been paid, nothing will be supplied,” Gazprom CEO Aleksey Miller said on Thursday.
Kremlin spokesman Dmitry Peskov on Friday said that Moscow has no information on whether the gas talks with Ukraine will continue. Russia has not received any response to what Peskov said were “more than flexible offers” during the negotiations.

Debt and price dispute

Ukraine’s gas debt currently exceeds $4 billion. The latest price proposed by Russia stands at $385 per thousand cubic meters, a market-level price paid by the majority of other European countries, and $100 discount from the original offer. This is roughly the same price that was agreed on by former Prime Minister Yulia Timoshenko back in 2009.

The Battle for Iraq Is a Saudi War on Iran, Info Clearinghouse

When the revolt against Bashar al-Assad grew in 2011 -- and Riyadh's concern at Iran's nuclear program mounted -- Saudi intelligence re-opened its playbook and started supporting the Sunni opposition, particularly its more radical elements, a strategy guided by its intelligence chief, former ambassador to Washington, Prince Bandar bin Sultan. The operation's leadership changed in April, when Bandar resigned in apparent frustration over dealing with the cautious approach of the Obama administration, but Saudi support for jihadi fighters appears to be continuing. (The ISIS operation in Iraq almost seems the sort of tactical surprise that Bandar could have dreamt up, but there is no actual evidence.)

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