Wednesday, July 23, 2014

Today's Links

1--More on the revolving door, zero hedge

There is no better way to describe what the recently departed CFTC commissioner Scott O'Malia just did when he bailed from the commodity watchdog to become the new head of the International Swaps and Derivatives Association, aka ISDA, the biggest banking group that has constantly opposed every intervention and attempt to regulate the swaps market by the CFTC since the Lehman crisis, than an epic farce.....

Even an otherwise impartial Reuters appears outraged by this blatant and painfully clear example of government capture of "public servants" by those who have dangle carrots of money in exchange for lobby (and future employment promise) favors, and thus set the rules, courtesy of people like O'Malia.

The speed of O'Malia's move, and ISDA's high profile, made the appointment striking even by Washington standards, where a 'revolving door' between regulators and those they oversee makes moves from one side to the other common.

"This is why Americans are so disgusted with so many high government officials and believe that Washington is in cahoots with Wall Street," said Dennis Kelleher, who heads Better Markets, a group urging tighter regulation of big banks.

O'Malia spent more than four years as a member of the CFTC, and was an outspoken critic of the rule-making process mandated by the 2010 Dodd-Frank financial reform law, which he said had been rushed, confused and lacked transparency. At the CFTC, he chaired the Technology Advisory Committee, which drives the agency's efforts to better cope with the vast amount of data it has to handle.

2---SEC Is Set to Approve Money-Fund Rules, WSJ

No redemptions for you!

3---Putin: Public Enemy Number One, Newsweek, zero hedge

great comments

4---Putin Recalls State Duma From Vacation, "Planning Something" On Ukraine Situation, zero hedge

As Ukrinform reports,

State Duma deputies, who are currently on a planned vacation, urgently come to Moscow to participate in an unscheduled meeting because of the situation in eastern Ukraine, a source in the State Duma told Ukrinform on Wednesday.

"Maybe something will happen tomorrow. Now this issue is being solved. Something is being planned, because many deputies come, probably for a quorum. Many deputies arrive... and today they already have to be in Moscow," he said.

According to the source, it is still unknown which document is to be considered by Russian deputies.

According to the source, it is clear only that Russia's top-ranking officials "planned something" on the situation in the east of Ukraine if they plan to hold an unscheduled meeting of the State Duma.

from New Insight:

Friends, this is a MUST LISTEN. The words of Sergei Glazyev, the Economic Advisor to Russian President Putin are a stunning wake up call for anyone with the capacity to think independently & critically. For those who understand the over reach of US empire and Washington fascism over the past decade alone (in the name of the precious 9/11 fable), we ignore these realities at OUR OWN peril.? ~SGT

Kiev is clearly conducting a policy of genocide to eliminate the whole population of Donbass… They’re destroying hospitals, kindergartens, schools. The fate they’re preparing for the people of Donbass is serfdom… It is obvious that the United States is fully controlling the Kiev Nazis, Poroshenko personally, and the government, and is pushing them to pursue this war against Donbass to the very end… THIS IS A WAR BY THE UNITED STATES AGAINST US… So we have to understand that the key to resolving the catastrophe of Ukraine is to be found in Washington. That’s where Nazism has to be defeated..”

- Sergei Glazyev Economic Advisor to Russian President Putin

Recorded on June 10, 2014, Glazyev discusses the massive militarization of Ukraine, intended not only to crush Donbass, but to re-take Crimea in order to start another world war for further consolidation of the US hegemony over Eurasia.

5---Malaysia Airlines MH17 crash: Pro-Russian rebel 'admits to shooting down plane', independent

6---Bottom Line:  What we do see is a zero interest rate. But that is just a zero interest rate. It is not a liquidity trap. We know this because bonds are still very much so in demand. Whereas in a liquidity trap people want to hold money instead of bonds. That is not the case today, naked capitalism

Let us first get a feel for meaning of the term ‘liquidity trap’. Here is Keynes in the original. In the General Theory he writes:
There is the possibility… that, after the rate of interest has fallen to a certain level, liquidity-preference may become virtually absolute in the sense that almost everyone prefers cash to holding a debt which yields so low a rate of interest. In this event the monetary authority would have lost effective control over the rate of interest.
So, a liquidity trap is a situation when the central bank pumps in money and the rate of interest doesn’t respond. People say: “Meh, I don’t like the look of those bonds, I’ll just hold this cash”, and so bond prices remain high.
Krugman, on the other hand, has completely confused two concepts — that of a zero-lower bound scenario and a liquidity trap. You can see this clearly in his 1998 paper where he writes:
A liquidity trap may be defined as a situation in which conventional monetary policies have become impotent, because nominal interest rates are at or near zero: injecting monetary base into the economy has no effect, because base and bonds are viewed by the private sector as perfect substitutes. (p141)
Um, no. A liquidity trap is when people say “nah, I don’t want bonds, I want money”. It is a situation in which the rate of interest on bonds do not respond to an increase in base money. Let us be clear: in a liquidity trap people do not want to hold bonds. In a liquidity trap cautious investors spit bonds back onto the market, their prices fall and their yields rise.

It is thus obvious that a liquidity trap occurs when the rate of interest gets ‘stuck’ and does not respond to an increase in base money. As I have argued before, we saw this in 2009-2010 when interest rates on risky assets failed to respond to Fed intervention. But we do not see this today. The central bank have not today, as Keynes puts it, “lost control over the rate of interest”. After 2009 interest rates came down across the board in response to actions by the central bank. Today it is well-known to even the most myopic mainstream economist that we live in a low yield environment.

7---Sanctions? Not so fast.  More MH17, naked capitalism

The second story in the right column, EU rifts scupper new Russia sanctions, explains:
Europe’s foreign ministers failed to agree new sanctions against Russia for its alleged role in the downing of MH17 despite a push by Britain, Sweden and a group of eastern European countries for an arms embargo to be imposed on the Kremlin.
The ministers instead asked EU officials to draw up wider-ranging measures – but only if Russia fails to co-operate with the West in the future. The US and several European allies believe a Russian-supplied missile system was used by Ukrainian separatists to shoot down the Malaysia Airways airliner over eastern Ukraine last Thursday.
Recall that we pointed out yesterday that the apparent aim of the rush to pin the destruction of the plane on Russia was to get Europe to join in the tougher sanctions that the US imposed on Russia last week. It looks as if the US has lost this round.
Mind you, the depressurization may prove to be short lived. But trying to push France to the wall via trying to get it to cancel its contract to Mistral helicopter gunships to Russia was more than France was prepared to tolerate, from both an economic and national sovereignity standpoint. The French also got their rhetorical licks in by pointing out British hypocrisy in the dependence of its banks and the London real estate market on cash from Russian oligarchs. And if I were Germany or Italy, I might take pause from the specter of the US resorting to bare-knuckle tactics....

Rampant Speculation … Few Facts
U.S. officials said earlier today that Malaysian Airlines flight 17 was probably shot down by mistake … and there was no proof that Russia was directly involved.
The Los Angeles Times reports:
U.S. intelligence agencies have so far been unable to determine the nationalities or identities of the crew that launched the missile. U.S. officials said it was possible the SA-11 was launched by a defector from the Ukrainian military who was trained to use similar missile systems.
In other words – despite the incessant beat of the war drums and false claims – the U.S. has little evidence that Russia is responsible.
Update: Moreover, former AP and Newsweek report Robert Parry reported last week:
I’m told that some CIA analysts cite U.S. Regarding the shoot-down of the Malaysian jetliner on Thursday, I’m told that some CIA analysts cite U.S. satellite reconnaissance photos suggesting that the anti-aircraft missile that brought down Flight 17 was fired by Ukrainian troops from a government battery, not by ethnic Russian rebels who have been resisting the regime in Kiev since elected President Viktor Yanukovych was overthrown on Feb. 22
What we do see is a zero interest rate. But that is just a zero interest rate. It is not a liquidity trap. We know this because bonds are still very much so in demand. Whereas in a liquidity trap people want to hold money instead of bonds. That is not the case today. Today people are desperate to get their hands on bonds because holding money is eroding their portfolios due to the substantial negative yield being incurred. But in a liquidity trap, as Keynes says, “almost everyone prefers cash to holding a debt...

Let’s just get that straight: the key symptom that indicates that there is a liquidity trap is that people want to hold cash instead of bonds. Let me state that one more time in a different way: a liquidity trap is when there is a panic across financial markets, people rush to cash and no matter how much cash the central bank issues the demand for financial assets remains depressed....

Clever Handle
I’ve been reading the comments sections on German news articles to get a sense of what they’re talking about. It’s not good for the US government. Even Die Zeit, the latest article of which is a full throated defense of the “separatists did it” case, is flooded by skeptics. A lot of them link to a German article that sources Robert Parry.
Die Zeit article:
Article that sources Parry:
They’ve been lied to too many times. So have we, but we’re slower on the uptake.

Abe, NYC
A few comments on the unidentified military jet:
1. According to Russians’ own radar data it was below 5,000m at the time of the hit. It couldn’t have been shadowing the Boeing, which was above 10,000m.
2. They suspect it was a Su-25 but can only make a guess based on its characteristics as recorded by the radar.
3. The Boeing disintegrated in the air. This is unlikely to have been caused by an R-60 air-to-air missile mentioned by the Russians, which has a warhead of 3kg. By comparison, the warhead on a missile fired by Buk systems is 72kg.
However, the presence of a military jet in the vicinity of the Boeing is significant because:
1, Ukrainains claimed they had no military aircraft in the area. (But they later said there was an IL-76 in the area at the time of the incident).
2. The insurgents may have targeted it and hit the Boeing instead.
3. Ukrainians previously claimed that Russian military aircraft were operating in the area. The jet in question may have been Russian, which Ukrainians targeted and hit the Boeing instead.

8---Should Markets Be Discounting Conflict?, naked capitalism

9--No Russian  link to plane crash, Huff Post

10---Ukrainian crisis will not split Russia and Europe - Medvedev, RT

11---Top parliamentarian vows to thwart US plans to isolate Russia, RT

Statements are being made in Washington that the United States are starting to implement a global isolation policy for our country. Now the US administration attempts to attract the European Union to the isolation policy. The ultimate objective is to create a new tectonic rift between Russia and Europe in the spirit of the new Cold War,” the senior MP said in the interview.

However, such a scheme would not work, primarily due to the strong economic and financial ties between Russia and Europe that are important for both parties. “We are an important and large country; they have to do business with us. We also need this and we have to prevent the USA from creating the rift,” Pushkov emphasized.

To achieve this goal Russian leaders must find more countries that oppose the isolation policy and not necessarily in Europe, the Duma official said. “China is one such country. President Putin’s trip to China and the position taken by Beijing is very important in the current situation. India, South Africa, and Brazil – all BRICS nations have also defined their positions. We must consolidate the relations with the countries that refuse to follow the US isolation policy.”
Right here and right now the global balance of forces are being checked. And one parameter here is whether the USA will be able to create an effective mechanism to isolate Russia,” Pushkov noted.

12---Ukraine caught in third lie, mish

13---No Evidence - Administration's MH17 Case Against Russia Falls Apart, Moon of Alabama

The federalists fighting in east Ukraine just took down two more SU-25 ground attack fighters that were bombing their positions. The weapons used against these planes are either simple air-defense guns or short ranged missiles unlike the missiles that allegedly took down the Malaysian passenger jet.
The case the Obama administration made against the federalists and Russia in connection with that MH-17 flight is completely falling apart.
Even the aggressive State Department spokesperson has to admit (vid) there is no real evidence at all. The "mountain of evidence" Secretary of State Kerry talked about is nothing but doctored photos and sound files provided by the Ukrainian coup government. One photo, for example, is supposed to show a missile system in federalists hands in a town in east Ukraine. But two reporters asking locals there can not find anyone who has seen the bulky and loud system. The photo is therefore likely a montage.
After being public criticized for showing no real evidence the Obama administration trotted out some "senior intelligence officials" who then admitted that they have nothing, NOTHING, to connect the case to Russia and only vague circumstantial "social media evidence" that federalists COULD have downed the jet:
But the officials said they did not know who fired the missile or whether any Russian operatives were present at the missile launch. They were not certain that the missile crew was trained in Russia, although they described a stepped-up campaign in recent weeks by Russia to arm and train the rebels, which they say has continued even after the downing of the commercial jetliner. In terms of who fired the missile, "we don't know a name, we don't know a rank and we're not even 100 percent sure of a nationality," one official said, adding at another point, "There is not going to be a Perry Mason moment here," a referenc to a fictional detective who solved mysteries.
Most damning for the case may be this:
The senior intelligence officials said spy agencies were not aware that an SA-11 system was in eastern Ukraine until the attack had happened.
So the alleged transfer of such a big weapon system from Russia was either not observable for the multi-billion dollar, all seeing, all hearing U.S. intelligence or it never happened. Case closed.
But the neolibcons in the Obama administration do not despair yet. The murky Ukrainian company that hired Vice President Biden's son is now paying more lobbyists in Washington. The bribes will flow in bigger amounts. The lies from the Obama administration, and especially from Kerry, will continue as its tries everything possible to restart a Cold War against Russia or, if possible, even a hot one.
Let the Europeans bleed. As long as the U.S. is safe everything is hunky dory

14--Could this explain the 14killometer detour Mh17 took that Russian intelligence can't explain or I'm I being too conspiratorial??
Boeing Patents Airliner Anti-Terrorist System ---Autopilot Autolands Aircraft For Incapacitated Crew

new "uninterruptible" autopilot developed by Boeing and patented in Canada purportedly flies and lands the aircraft in case the crew is incapacitated.
An autopilot that can fly and land an airliner isn't new, but one that activates itself when it senses excessive force on the cockpit door is (the crew may also activate it manually).
Even that feature isn't as controversial as this: once initiated, the system may not be disengaged by anyone aboard the aircraft.

Once engaged, Boeing's system will accept directions from ground-based controllers. The controversy stems from concerns over what might happen should the system malfunction -- or worse, should terrorists gain control of an aircraft from the ground.
Or this:
Boeing wins patent on uninterruptible autopilot system,
Boeing’s is, of course, not the first autopilot technology in existence, but this one has been designed with counterterrorism first and foremost in mind. Not only is it “uninterruptible” — so that even a tortured pilot cannot turn it off — but it can be activated remotely via radio or satellite by government agencies. The system might even include senors on the cockpit door that activate the autopilot of a certain amount of force is used against it. “There is a need for a technique that ensures the continuation of the desired path of travel of a vehicle by removing any type of human decision process that may be influenced by the circumstances of the situation, including threats or further violence onboard the vehicle,” the patent application explains. To make it fully independent, the system also has its own power supply, independent of the aircraft’s circuit breakers

15---US: No link to Russian gov't in plane downing, Yahoo

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