Tuesday, June 24, 2014

Today's Links

1--Memo on drone killings of US citizens makes case for presidential dictatorship, wsws

The US Court of Appeals for the Second Circuit on Monday released a redacted version of the hitherto secret Obama administration memo arguing for the legality of presidential assassinations, without charges or trial, of US citizens. The 47-page memo, dating from July 2010, was drafted and signed by then head of the Justice Department’s Office of Legal Counsel, David Barron, and addressed to Attorney General Eric Holder.

The memo constitutes prima facie evidence of crimes against international law, the US Constitution, and the democratic rights of the American people. It could serve as a key exhibit in impeachment proceedings and criminal prosecutions against high-level American officials, beginning with President Barack Obama, Attorney General Holder, US intelligence and military leaders and the author of the memo, Barron....

It is notable that the document deals only cursorily with the Fifth Amendment to the US Constitution, which states: [N]or shall any person…be deprived of life, liberty, or property, without due process of law.” (These words are not cited in the memo). It is also striking that most of the redactions in the released document occur in the section dealing with the constitutional rights of US citizens.

Instead, the memo restates the now standard pseudolegal argument that in prosecuting the “war on terror” against Al Qaeda and “associated forces,” the president and his unelected military/intelligence aides have virtually unlimited powers, including the power to wage war and carry out killings, kidnappings and indefinite detention anywhere in the world, including within the US itself. It ignores the fact that the so-called “war on terror” was never declared by Congress and has no geographical or temporal limit.

The memo repeatedly cites the congressional Authorization for Use of Military Force, passed three days after the 9/11 attacks, as legal support for any and all actions taken in the name of fighting terrorists, including the assassination of US citizens and other repressive measures against Americans. At the time it was passed, the AUMF was presented as a narrowly defined sanction for retaliation against those responsible for the attacks.
It also cites the 2004 Supreme Court ruling in Hamdi vs. Rumsfeld, even though the court ruled 8 to 1 against the Bush administration’s asserted right to detain people without trial or due process

2--Senate Democrats confirm drone memo author for second-highest US court, wsws

3---Poll Finds Dissatisfaction Over Iraq, NYT

The poll found that 58 percent of Americans disapprove of the way Mr. Obama is handling foreign policy, a jump of 10 points in the last month to the highest level since Mr. Obama took office in 2009. The spike in disapproval is especially striking among Democrats, nearly a third of whom said they did not approve of his handling of foreign policy

4--Will lower business tax aid economy?, JT

5--Record Japan Buybacks Salvaging Stocks Left Out of Rally , Bloomberg

Japanese businesses left behind this year as global equities rallied to a record found a winning strategy in buying back shares the rest of the world preferred to avoid....

“It’s a pretty big sea change,” said Kieran Calder, head of equities for Asia at Coutts & Co., which manages about 28.5 billion pounds ($48.6 billion). “Corporate mindsets are definitely changing,” he said. “It makes Japan more of a normal market.” ....

“Share buybacks have the effect of supporting the market when it’s weak,” Daiwa Securities Group Inc. quantitative analyst Masahiro Suzuki wrote in a report on June 10. “Return to shareholders is a big theme.”
Companies’ purchases of their own equity can be seen as a vote of confidence by executives that their stock has room to rise. The buybacks can also suggest a company has run out of things to spend money on, curbing its growth potential.
While gross domestic product expanded 6.7 percent in the first quarter, it’s forecast to contract 4.4 percent in the second, reflecting buying before a tax increase. Japan’s exports fell in May for the first time in 15 months on weak demand from the U.S. and Asia.

6---Gallup: Public Confidence in TV News at All-Time Low , gallup

Only 18 percent of the Americans surveyed expressed either a “great deal” or “quite a lot” of confidence in that news medium.
Gallup has been asking the following question annually since 1993: “Now I am going to read you a list of institutions in American society. Please tell me how much confidence you, yourself, have in each one--a great deal, quite a lot, some or very little?”  (See Gallup Confidence Survey.pdf) One of the institutions listed is "television news."
In the latest survey, conducted June 5-8, only 10 percent said they had “a great deal” of confidence in T.V. news, and 8 percent said they had “quite a lot” of confidence.
television news

In 1993, the first year Gallup asked Americans about their confidence in T.V. news, 46 percent said they had a great deal or quite a lot of confidence in it. It's never been that high again.

7---Greenwald: New NSA disclosure 'imminent', politico

8---In Baghdad, Kerry threatens US military action, wsws
  Speaking at the end of a day-long series of meetings in Baghdad, US Secretary of State John Kerry warned Monday that President Obama could order military strikes against Sunni militants without waiting for the political restructuring of the Iraqi government that Washington has been demanding...
Underscoring the threat of a wider war, Israeli warplanes and missiles struck nine targets within Syria Monday, the biggest military action by Israel against Syria in the three years of mounting civil war in that country. The Israeli Defense Forces claimed the attack was retaliation for an incident in which an Israeli teenager was killed near the Syrian border, allegedly by an anti-tank missile. The IDF policy is to treat any armed attack from Syria, whether conducted by Assad supporters or rebels, as an official government action, and to target the Syrian military in response..

“I think we have to understand first how we got here,” he said on CNN. “We have been arming ISIS in Syria.” He (Rand Paul) continued, “We are where we are because we armed the Syrian rebels. We have been fighting alongside al Qaeda, fighting alongside ISIS. ISIS is now emboldened and in two countries. But here’s the anomaly. We’re with ISIS in Syria. We’re on the same side of the war. So, those who want to get involved to stop ISIS in Iraq are allied with ISIS in Syria. That is the real contradiction to this whole policy. “

9---Washington’s persecution of immigrant children, wsws

The White House has vowed to set up new detention centers for children and “enhance our enforcement and removal proceedings” with its own “surge” of agents, judges and prosecutors to speed up deportations....

The Obama White House already has the ignominious distinction of having deported more people—over 2 million—than any other administration. In the last fiscal year alone, it deported 106,000 people to Guatemala, Honduras and El Salvador, in many cases tearing families apart and inflicting serious economic and emotional hardship on children.
Now its solution is to escalate these repressive measures
Washington’s policy of criminalizing and persecuting immigrants found its most horrific expression over the past week with the discovery in south Texas of mass graves into which the bodies of immigrants who died trying to make their way into the US had been dumped. The corpses were packed three to a body bag or crammed into garbage, biohazard and even shopping bags, treated worse than animals and in a fashion that ironically and hideously recalls Lazarus’s line about “wretched refuse.”
One can only imagine the response of the American corporate media if similar mass graves were found in Russia, China or Iran. The discovery of such a gruesome site in the US itself, however, was largely ignored.

Meanwhile, by the government’s count some 52,000 unaccompanied minors have arrived in the US since last October (together with 39,000 adults with children). The immigrants are being held in the most outrageous conditions, packed into windowless warehouses encircled by razor-wire fences, lacking adequate sanitation, medical care or bed space. One Arizona newspaper commented that the detention center in Nogales had “the look and feel of the livestock areas at the State Fair.”

10---Abe Unveils Japan's New Growth Strategy, wsj

The broad package calls for cutting the corporate tax rate and knocking down long-standing regulations in various aspects of the economy from employment rules to agriculture and health care. Mr. Abe also emphasized his plan would address the problems stemming from a shrinking working-age population by encouraging women to enter the workforce and bringing in more foreign workers. ....
Among the pillars of the latest package is a plan to cut the nation's 35.64% corporate tax rate to below 30% over the next few years, as well as labor reforms that would allow more flexible work patterns, changes in the health-care sector that would give patients more treatment options, and changes to Japan's agricultural cooperatives with the hope of making the farming industry more productive.

11--Bond Market Has $900 Billion Mom-and-Pop Problem When Rates Rise, Bloomberg

That concern is also revealed in BlackRock Inc.’s pitch in a paper published last month that regulators should consider redemption restrictions for some bond mutual funds, including extra fees for large redeemers.
A year ago, bond funds suffered record withdrawals amid hysteria about a sudden increase in benchmark yields. A 0.8 percentage point rise in the 10-year Treasury yield in May and June last year spurred a sell-off that caused $248 billion of market value losses on the Bank of America Merrill Lynch U.S. Corporate and High Yield Index
Now, as the Federal Reserve discusses ending its easy-money policies, concern is mounting that the withdrawal of stimulus will lead to an exodus that’ll cause credit markets to freeze up. While new regulations have forced banks to reduce their balance-sheet risk, analysts at JPMorgan Chase & Co. (JPM) are focusing on the problems that individual investors could cause by yanking money from funds.
There’s a bigger risk “that when the the Fed starts hiking in earnest, outflows from high-yielding and less-liquid debt will lead to a free fall in prices,” JPMorgan strategists led by Jan Loeys wrote in a June 20 report. “In extremis, this could force a closing of the primary market and have serious economic impact.”

Liquidity Risk

Last week, Fed Chair Janet Yellen said she didn’t see more than a moderate level of risk to financial stability from leverage or the ballooning volumes of debt. Even though it may be concerning that Bank of America Merrill Lynch index data shows yields on junk bonds have plunged to 5.6 percent, the lowest ever and 3.4 percentage points below the decade-long average, the outlook for defaults does look pretty good.

12--- Record Stock Buybacks: First In The US, Now In Japan, zero hedge

It was a month ago when Zero Hedge first revealed that as QE was "tapering", a just as powerful and even more indiscriminate force had stepped in to make up for the loss of Fed buying of last resort: corporations themselves, almost exclusively on a levered basis (issuing debt whose use of proceeds are stock buybacks). Specifically, we showed that the total amount of stock bought back by corporations in Q1 was the highest since the bursting of the last credit bubble. In fact it was the highest ever.

This was promptly noticed by both the WSJ and the FT. What the two financial media outlets likely have not grasped is that based on trading desk commentary, according to which the bulk of "flow" now originates almost exclusively at C-suites ordering banks to continue the buyback activity, the Q2 stock repurchase totals will be even greater than Q1, and likely surpass $200 billion. This means that every month this quarter companies are buying back about $70 billion of their own stock: an amount which at this runrate will surpass the Fed's original QE(3) amount of $85 billion within a quarter!

But while the "mysterious, indiscriminate" buyer of US stocks has been fully unmasked now, what most likely do not know is that just this is happening at a comparable record pace nowhere else but the place which is mirroring and repeating every single Fed mistake tit for tit.


According to Bloomberg, companies in the Topix index are acquiring their own stock at the fastest pace ever, led by NTT Docomo Inc. and Toyota Motor Corp., with $25 billion of announced purchases so far this year, data compiled by Bloomberg show. The buybacks are limiting losses in the world’s worst-performing developed equity market: Companies using the strategy have gained even as the Topix slid.

13---Investment Bank: The End Of US Economic Growth, Testosterone Pit

The conundrum is this: Real incomes of 80% of American households, including the beleaguered middle class, have been declining since 1995; and income has been transferred to the top 5% who have a relatively low propensity to consume and a relatively high propensity to save. Those two factors should have caused the economy to stall.
But growth – with exception of some dry spells – has been more or less strong. How is this possible in a consumption-based economy when 80% of the consumers have less purchasing power than before?

Monetary stimulus, said a new report by Natixis, the asset management and investment banking division of Groupe BPCE, the second largest bank in France. Alas, that stimulus – the only thing that kept GDP growing over the period – is about to disappear.
The US Census reported late last year that in 2012, 46.5 million people were living in poverty, the largest number ever. The poverty rate has been rising from a low of 11.3% in 2000 to 15% in 2012. Many researchers claim that the official poverty rate understates the actual problem. For example, a study found that 38% of Americans lives from paycheck to paycheck – including parts of the maxed-out middle class.

Based on the Census data, the real incomes of the lowest 20% of households has edged down since 1980 to $11,490. The next quintile experienced a 4.3% increase spread over the 32 years – the definition of stagnation. The third quintile saw a gain of 8.5% over that 32-year period. The fourth quintile was up 18.8%. The top quintile was up 47%. But the top 5% – the happy campers in this economy – saw their incomes soar 72.5% to $318,052.

The scenario since 1997 has been even drearier: the purchasing power of the bottom 80% – a sign of our crazy times that these kinds of expressions are now common – declined or remained stuck. Only the top quintile saw an increase in purchasing power. And even within this group, the increase was concentrated at the top 5%. But these people have a high propensity to save, instead of blowing all their scarce money on bare essentials – which is what the vast majority of Americans have to do.

14---Was Iraq War worth the cost? 75% of Americans say no - poll, RT

15--Putin asks Upper House to repeal decision allowing use of military force in Ukraine, RT

The EU welcomed Putin’s decision to reject the right to use military force to settle the crisis in Ukraine and welcomes its earliest realization, the press-secretary of EU foreign affairs chief Catherine Ashton stated. ....

Despite the “unilateral ceasefire” announced by Kiev the fighting in eastern Ukraine continued, and there have been clashes in some areas, the Lugansk People’s Republic said in a statement. It was reported that an artillery shell hit the roof of a kindergarten in Kramatorsk, partly destroying the building. At the same time, self-defense troops of the Donetsk People’s Republic targeted Ukrainian armed forces positions at Karachun Mountain, Itar-Tass reports.

16--​ISIS in Iraq stinks of CIA/NATO ‘dirty war’ , William Engdahl

ISIS, as in the ancient Egyptian cult of the goddess of fertility and magic. The media picture being presented adds up less and less. ...

Details leaking out suggest that ISIS and the major military ‘surge’ in Iraq - and less so in neighboring Syria - is being shaped and controlled out of Langley, Virginia, and other CIA and Pentagon outposts as the next stage in spreading chaos in the world’s second-largest oil state, Iraq, as well as weakening the recent Syrian stabilization efforts....

In 2009, US ‘Iraqi surge’ General David Petraeus, at the time heading the US Central Command, claimed to reporters that Douri was in Syria. Iraqi parliamentarians claimed he was in Qatar. The curious fact is that despite being on the US most wanted list since 2003, Douri has miraculously managed to avoid capture and now to return with a vengeance to retake huge parts of Sunni Iraq. Luck or well-placed friends in Washington?
The financial backing for ISIS jihadists reportedly also comes from three of the closest US allies in the Sunni world—Kuwait, Qatar and Saudi Arabia. ...

Key members of ISIS it now emerges were trained by US CIA and Special Forces command at a secret camp in Jordan in 2012, according to informed Jordanian officials. The US, Turkish and Jordanian intelligence were running a training base for the Syrian rebels in the Jordanian town of Safawi in the country’s northern desert region, conveniently near the borders to both Syria and Iraq. Saudi Arabia and Qatar, the two Gulf monarchies most involved in funding the war against Syria’s Assad, financed the Jordan ISIS training. ....

Iranian journalist Sabah Zanganeh notes, "ISIS did not have the power to occupy and conquer Mosul by itself. What has happened is the result of security-intelligence collaborations of some regional countries with some extremist groups inside the Iraqi government."

Iraq’s Chechen commander

The next bizarre part of the ISIS puzzle involves the Jihadist credited with being the ‘military mastermind’ of the recent ISIS victories, Tarkhan Batirashvili. If his name doesn’t sound very Arabic, it’s because it’s not. Tarkhan Batrashvili is a Russian - actually an ethnic Chechen from near the Chechen border to Georgia. But to give himself a more Arabic flair, he also goes by the name Emir (what else?) Umar al Shishani. The problem is he doesn’t look at all Arabic. No dark swarthy black beard: rather a long red beard, a kind of Chechen Barbarossa.

According to a November, 2013 report in The Wall Street Journal, Emir Umar or Batrashvili as you prefer, has made the wars in Syria and Iraq “into a geopolitical struggle between the US and Russia.”
That has been the objective of leading neo-conservatives in the CIA, Pentagon and State Department all along. The CIA transported hundreds of Mujahideen Saudis and other foreign veterans of the 1980s Afghan war against the Soviets in Afghanistan into Chechnya to disrupt the struggling Russia in the early 1990s, particularly to sabotage the Russian oil pipeline running directly from Baku on the Caspian Sea into Russia. James Baker III and his friends in Anglo-American Big Oil had other plans. It was called the BTC pipeline, owned by a BP-US oil consortium and running through Tbilisi into NATO-member Turkey, free of Russian territory...

Very revealing is the fact that almost two weeks after the dramatic fall of Mosul and the ‘capture’ by ISIS forces of the huge weapons and military vehicle resources provided by the US to the Iraqi army. Washington has done virtually nothing but make a few silly speeches about their ‘concern’ and dispatch 275 US special forces to allegedly protect US personnel in Iraq.
Whatever the final details that emerge, what is clear in the days since the fall of Mosul is that some of the world’s largest oilfields in Iraq are suddenly held by Jihadists and no longer by an Iraqi government determined to increase the oil export significantly. More on this aspect in an upcoming article

17---Japan: inflation is not a sensible policy , FT

Deflation is usually bad for investment, but not for consumption. It is often claimed consumers postpone their spending when they expect prices to fall, ie, they increase their savings. The evidence is strongly against this....

As Japan needs more consumption and less investment (a subject I plan to write about later), inflation is unlikely to help.
Another much misunderstood aspect of inflation is the claim that it helps reduce the national debt relative to GDP. This is only true under two conditions. First that debt is not much more than 100 per cent of GDP or second, that interest rates do not rise in line with inflation.
If real interest rates do not change, then nominal rates will rise by the same amount as inflation. If debt is below 100 per cent of GDP this will mean that interest payments rise more slowly than nominal GDP and, if debt is above 100 per cent, they will rise more rapidly....

Japan has a gross national debt of 230 per cent of GDP and is therefore likely to find that within a year or so inflation will increase rather than reduce the fiscal deficit. A small rise in inflation to, say, 2 per cent would probably have little impact. But anything above that is likely to cause a panic in the bond market.

18--Stanford economist warns of Japanese fiscal crisis, Stanford

19--Japan: increase in household savings keeps yen strong, macronomy

What so far has been hindering the Japanese reflation story has been Mrs Watanabe's household savings even though the dollar-yen rate has been seriously impacted by the Bank of Japan's aggressive monetary stance as displayed in the below Bloomberg graph:

Of course the depreciation story has led as well Japanese CPI higher in conjunction with higher durable goods prices and furniture and utensils prices - graph source Bloomberg:

20---Welcome to Jihadistan!, Gilbert Mercier, counterpunch

Who might ultimately profit from fueling a fratricidal war within Islam? Could this be a strategy of ash and ruins, preliminary to the expansion of the Jewish state into the so-called Greater Israel?...

Iraqi Prime Minister Nouri al-Maliki has rightly accused Saudi Arabia and Qatar of having sponsored the Jihadists of ISIS for about three years, ever since the start of the Syrian civil war. Al-Maliki should also blame the US and its European allies. By invading Iraq in 2003, toppling Saddam Hussein, and then fostering and sponsoring of the Jihadists in Syria since 2011, Qatar, Saudi Arabia and the US have opened a geopolitical pandora’s box. Out of it came ISIS. United States foreign policy has been schizophrenic for decades, but it recently reached the apex of contradiction: to please Saudis and Qataris, Washington has supported the Jihadist fighters against Assad in Syria, and simultaneously in Iraq, Washington has supported (sort of) al-Maliki’s government against those same Jihadists.

The outcome was predictable, and one could wish that top policymakers would be held accountable for this crime of astonishing stupidity. As early as February 2012, we were raising concerns that Syria’s civil/proxy war could easily become a full-blown regional sectarian war between Sunnis and Shiites. Again, on June 26, 2012, I commented in a Russia Today (RT) interview that the US was backing up a de facto Talibanization of the Middle East, just like the Reagan administration did in Afghanistan during the 1980s...

 Those who should be most concerned about the Jihadists’ blitzkrieg in Iraq might be ISIS’ own biological fathers: the kings and sheiks of the Gulf States. If ISIS takes Baghdad, who can stop the Jihadist march on Doha (Qatar), Riyadh (Saudi Arabia), or even Amman (Jordan), in a most unwelcome return of the prodigal son.

21--Obama hopes to fix Iraq - and Syria, too, M K Bhadrakumar   

Washington may not after all wait for Iraqi politicians to form a new government before taking further military action.

22--Dennis Ross on Syria-Iraq, LA Times

The Qatar pipeline theory makes sense but is entirely consistent with Isis as a western intelligence front. Europe wants that gas, now more than ever. The only quibble between us is to what degree the CIA subcontracts it's work to Qatar. An interesting question, but hardly one that refutes the main point; Isis is a US sponsored creation that does its bidding.

For the Qatari plan to work, though, you have to overthrow the Syrian government. Which ultimately means a NATO bombing campaign. Isis, combined with bombing in Iraq provides a distraction. Compared with the political situation of August and September of 2013, this is a much better position that the US can attack from. And Syria's chemical arsenal is gone.
This doesn't mean they will attack or their goals will be achieved, but there should be no mistaking what they want to do.
Posted by: Lysander

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