It was a crummy week for the world’s major stock markets:
One, volatility came roaring back. ....
The Nasdaq, after dropping 4.5% for the week, the worst since May 2012, closed on Friday below its 200-day moving average. So did the Dow....


The Nikkei deserves a special word: it dropped 2.6% for the week and is now down 6% for the year. It has been in the red practically all year. The historic money-printing binge that came with Abenomics caused stocks to soar for the first seven months after it became clear in late 2012 that Shinzo Abe and his economic religion would run the show. Then the sheen wore off. What’s left? The same old economy, huge government deficits, an untenable national debt, and consumers who are learning the meaning of what I call “inflation without compensation,” the gradual process of impoverishment via inflation....


Oh, and at a time when annual inflation is 3.3% (goods inflation at 4.9%, service inflation at 1.8%), 10-year Japanese Government Bonds yield 0.50%. It’s the world’s most brutal financial repression. So, despite the pile of money the Bank of Japan has been printing, the Nikkei is now below where it was in May 2013....


This despite the all-out ZIRP and QE central banks have inflicted on conservative investors and aging baby boomers in order to force them into stocks and junk-bond funds and asset-backed securities and other chimera of Wall Street. The purpose was to drive up asset prices. And it worked. Now that these folks have stashed their money in stocks at peak valuations, the whole thing is unraveling.


The bitter irony in all this? The global economy is drifting off despite massive and global application of policies that have consistently been described as “bold actions” to stimulate the economy: dizzying government deficits, massive QE, and brutal ZIRP. These “bold actions” have driven up asset values, but that’s all they’ve done. And now as things are once again wobbling, global organizations like the IMF along with various central bankers and of course the wusses on Wall Street are clamoring for more “bold action.”


5---Gov't arms extremist groups including ISIL, AK Party founder says, TZ


According to Fırat, the government has made substantial concessions to several extremist groups in an effort to hamper Kurds' efforts to establish autonomy in Rojava -- an area in the north of Syria densely populated by Kurds. Fırat said these concessions include arming and supplying financial assistance to these groups, adding, "All these miscalculated policies have brought Turkey to the point we are facing now."


6---Dropping Oil Prices Send Shockwaves Through Energy Sector, nc


7---Why is the recovery so weak? It’s the austerity, stupid, WA Post
Fiscal Impact Measure
Source: Hutchins Center
Welcome to Austerity U.S.A., where the deficit is back below 3 percent of GDP and growth is still disappointing—which aren't unrelated facts.


It started when the stimulus ran out. Then state and local governments had to balance their budgets amidst a still-weak economy. And finally, there was the debt ceiling deal with its staggered $2.1 trillion of cuts over the next decade. Add it all up, and there's been a big fiscal tightening the past few years, something like 4 percent of potential GDP. Indeed, as Paul Krugman points out, real government spending per capita has been falling faster now than any time since the Korean War demobilization.


And, as you can see above, all this austerity has been hurting GDP growth since 2011. It shows the Hutchins Center's new "fiscal impact measure," which looks at how much total government tax-and-spending decisions have helped or harmed growth. The dark blue line is what policy has actually done, and the light blue one is what a neutral policy would have done. So, in other words, if the dark blue line is below the light blue one, like it has the last three years, then policy has subtracted from growth


Now there are two caveats here. The first is that this doesn't account for what economists call "monetary offset." That's the idea that the Federal Reserve, which is always trying to keep inflation near its 2 percent target, might raise rates to undo any government spending that heats up the economy too much. In that case, more spending during a boom wouldn't help the economy as much, or at all, as this measure says it would.


The second, though, is that this doesn't include any fiscal multipliers, either. See, when interest rates are zero, monetary offset isn't as much of an issue, and government spending might boost the economy more than the amount it actually spends. That's because there might be spillover effects, as the people the government pays go out and spent that money themselves, and so on and so forth. Recent research suggests these multipliers might be as high as 3.1—that is, $1 of government spending increases GDP by $3.10—during a deep recession like our last one. In other words, this chart probably understates how much damage austerity has done.


8---Nearly half of American households are financially insecure, marketplace


Financial insecurity is on the rise in American urban areas, even as the economy slowly recovers from the Great Recession, as unemployment falls, as foreclosures dwindle and as home prices rise again in many markets.
Federal Reserve Chair Janet Yellen highlighted the problem in an address, delivered by video, to the nonprofit Corporation for Enterprise Development’s 2014 Assets Learning Conference in Washington, D.C.


“The financial crisis and the Great Recession demonstrated in a dramatic and unmistakable manner how extraordinarily vulnerable are the large share of American families with very few assets to fall back on,” Yellen said. “We have come far from the worst moments of the crisis, and the economy continues to improve. But the effects of the recession are still being felt by many families, particularly those that had very little in savings and other assets beforehand.”


9---The Ingredients of a Market Crash
John P. Hussman, Ph.D.
All rights reserved and actively enforced



As conditions stand, we currently observe the ingredients of a market crash. ...

The most hostile subset of market conditions we identify couples overvalued, overbought, overbullish extremes with a breakdown in market action: deterioration of breadth, leadership and other market internals, along with a shift toward greater dispersion and weakening price cointegration across individual stocks, sectors and security types (what we sometimes call “trend uniformity”). The outcomes are particularly negative, on average, when that shift is joined by a widening of credit spreads. That’s a shift we observed in October 2000. It’s a shift we observed in July 2007. It’s a shift that we observe today. ...

what we are concerned about here and now is the steeply negative average behavior of the market in historical periods that match present conditions, as well as the decided skew of that probability distribution, which features extreme negative observations far more often than would be expected under a “normal” bell-shaped distribution. Interestingly, the 3-day average implied skew embedded in S&P 500 index option prices surged last week to the highest level on record. The potential for a “fat-tail” event should be taken seriously here.....

Our concerns at present mirror those that we expressed at the 2000 and 2007 peaks, as we again observe an overvalued, overbought, overbullish extreme that is now coupled with a clear deterioration in market internals, a widening of credit spreads, and a breakdown in our measures of trend uniformity. These negative conditions survive every restriction that we’ve implemented in recent years that might have reduced our defensiveness at various points in this cycle.
 
My sense is that a great many speculators are simultaneously imagining some clear exit signal, or the ability to act on some “tight stop” now that the primary psychological driver of speculation – Federal Reserve expansion of quantitative easing – is coming to a close. Recall 1929, 1937, 1973, 1987, 2001, and 2008. History teaches that the market doesn’t offer executable opportunities for an entire speculative crowd to exit with paper profits intact. Hence what we call the Exit Rule for Bubbles: you only get out if you panic before everyone else does....
 
 it has become urgent for investors to carefully examine all risk exposures. When extreme valuations on historically reliable measures, lopsided bullishness, and compressed risk premiums are joined by deteriorating market internals, widening credit spreads, and a breakdown in trend uniformity, it’s advisable to make certain that the long position you have is the long position you want over the remainder of the market cycle. As conditions stand, we currently observe the ingredients of a market crash.
 
The Ingredients of a Market Crash
John P. Hussman, Ph.D.
     


After top-level talks with US officials last week, Ankara has made only limited concessions to Washington’s demands. Turkish officials announced on Saturday that the country would allow the training of at least 2,000 Syrian anti-Assad fighters by American and Turkish special forces on Turkish soil. Saudi Arabia has already agreed to a similar plan. Yesterday, Defence Secretary Chuck Hagel spoke by phone to his Turkish counterpart Ismet Yilmaz to secure the use of Turkish air bases, including at Incirlik, for the US bombing campaign against Syria.

The Obama administration’s differences with the Turkish government are not over the targeting of the Assad regime, but over its timing and manner. The US has secured the support of Turkey, Saudi Arabia, Jordan and various Gulf states on the understanding that the main objective of the war was not the destruction of ISIS, but the removal of the Iranian-backed Assad regime. All of these US allies have been supporting the so-called Syrian rebels, including ISIS, over the past three years for precisely that purpose.


The civil war in Syria, as in Iraq, has an openly sectarian character. The largely Sunni-based opposition militias are targeting Syria’s Alawite Shiite sect to which Assad belongs, along with other ethnic minorities. Saudi Arabia, in particular, regards the removal of Assad as essential to weaken its arch-rival for regional influence, Iran’s Shiite fundamentalist regime. In turn, Iranian leaders are warning against any military intervention against Assad. As reported by the Independent, they have specifically said that “Turkey will pay a price” if it invades Syrian territory.


12---Clowns terrorize Bakersfield, RT
"I am unaware of any crimes committed by clowns," Sgt. Ian Chandler told KGET News. "I am looking into it. It's my understanding there is a Twitter account and possibly a Facebook account in this.

"We have had no reports of any assaults by a clown nor have we any arrests of any clowns at any time I have been here and I have been here two years."



13--FT cannot muster political will to publish Russian Ambassador’s letter on Ukraine, RT


14--Afghan war box score: Has America won or lost?, RT


15--No fly zone over Syria? RT


Establishing a no-fly zone, however, stretches an already thin US case for conflict even further. The Obama administration used post-9/11 extraordinary powers to go after Al-Qaeda in Iraq and Syria without Congressional approval – but the Islamic State is technically no longer part of Al-Qaeda after splitting from the terrorist network to pursue the establishment of a fundamentalist Sunni caliphate.
Internationally, the US-led military campaign is also in murky legal waters. There is no UNSC approval for use of force in Syria nor a request from Damascus to intervene (US planes reportedly met ‘passive’ Syrian defense systems when launching air strikes against ISIS.
Iran and Russia argue the US is just a hair’s breadth away from an illegal invasion of a sovereign nation on a pretext of fighting terrorism.


An anti-ISIS no-fly zone would also target the Syrian army, which the US and its allies accuse of war crimes against civilians. The US has pledged to train and arm so-called ‘moderate’ Syrian rebels fighting Assad’s government.
Any direct confrontation with Damascus in Syria will fuel suspicion that the US campaign against Islamic State is a pretext to weaken Assad. When NATO received a UN mandate to enforce a no-fly zone over Libya in 2011, it effectively militarized North Africa, decimated Muammar Gaddafi’s armed forces, leading to his brutal murder and the disintegration of the country into a fragmentary tribal/Islamist civil war


16---Iraq ‘Absolutely Against’ Foreign Troops, Bases on Its Territory: Foreign Minister, ria novosti


Iraq has never asked for foreign troops to be sent in and is strongly against the presence of foreign military forces and bases on its territory, Iraqi Foreign Minister Ibrahim Jaafari told the RT news channel Monday.
"We are absolutely against foreign military bases and the presence of foreign military forces. Yes, we did ask for help, but it concerned air cover," Jaafari said.
"The question of sending troops in was discussed several times and we were very frank and stated clearly that we are completely against the deployment of foreign troops on our territory, as it can cause justifiable fears and concerns among the Iraqi population," the foreign minister noted.


17---US Middle East Strategy in Tatters, cp


Turkey is demanding a high price from the US for its co-operation in attacking Isis, such as a Turkish-controlled buffer zone inside Syria where Syrian refugees are to live and anti-Assad rebels are to be trained. Mr Erdogan would like a no-fly zone which will also be directed against the government in Damascus since Isis has no air force. If implemented the plan would mean Turkey, backed by the US, would enter the Syrian civil war on the side of the rebels, though the anti-Assad forces are dominated by Isis and Jabhat al-Nusra, the al-Qaeda affiliate.


It is worth keeping in mind that Turkey’s actions in Syria since 2011 have been a self-defeating blend of hubris and miscalculation. At the start of the uprising, it could have held the balance between the government and its opponents. Instead, it supported the militarisation of the crisis, backed the jihadis and assumed Assad would soon be defeated. This did not happen and what had been a popular uprising became dominated by sectarian warlords who flourished in conditions created by Turkey. Mr Erdogan is assuming he can disregard the rage of the Turkish Kurds at what they see as his complicity with Isis against the Syrian Kurds. This fury is already deep, with 33 dead, and is likely to get a great deal worse if Kobani falls.


18--Poltorak’s nomination for Ukraine’s defense minister victory for party of war , itar tass


19--US says Turkey OKs use of bases, training Syria militants , press tv


20---“If anyone fuels the fire in this regard, he or she will definitely be helping sinister America and Britain which are the creators of the ISIL and al-Qaeda,” .... Ayatollah Seyed Ali Khamenei  "ISIL and al-Qaeda were, in fact, created to confront Iran and the wave of Islamic awakening in the Middle East and Africa, adding the militant groups have now turned against their creators."

The enemies of Islam have always sought to drive a wedge between Shias and Sunnis in order to deflect their attention from the real enemy, the Leader underlined.


21--Abenomics continues to gut the economy, JT


The fresh drop in the yen, which briefly sank to its lowest value in over six years against the dollar last month, will push up import costs but take six to eight months to be reflected in the price index, says Junichi Makino, chief economist at SMBC Nikko Securities Inc.
He expects the BOJ to decide on further stimulus at its policy meeting from Dec. 18 to 19.
Once the government decides to go ahead with the doubling of the consumption tax to 10 percent, it will likely pressure the BOJ into additional easing to soften the impact, economists said.


The government may have to rely on another monetary push because efforts to restore Japan’s fiscal health, the worst among all advanced economies, will leave it little room for drastic spending to underpin the economy.
Prime Minister Shinzo Abe is to make the final decision on the second stage of the tax hike by the end of the year. If he gives the green light, it will hit 10 percent in October 2015.
The damage to the economy from the April tax hike is evident. Japan’s GDP shrank by an annualized real 7.1 percent in the April-June quarter, marking the biggest drop since the global financial crisis unfolded in 2008.


22---The Alternative to Long-Term Austerity, alan Nasser, cp


Private investment, private consumption and exports will not contribute to growth in the real economy that will greatly raise employment and wages. The only remaining source of a reversal in the fortunes of working people is public investment, government spending. The financialization of both the domestic and the global economy is premised on the cardinal tenet of neoliberalism, that government spending for social purposes is taboo. This is now a defining feature of post-Keynesian financialized capitalism.

The majority of economists know that massive public investment in employment-generating projects is possible. They prefer to be in tune with capital’s current key signature, so they opt instead for the only alternative consistent with the imperatives of neoliberalism, the perpetuation of financial bubbles. Asset inflation is fine. Product-market inflation, an essential concomitant of a revived real economy, is the archenemy of banks and their chief lobyist, the Federal Reserve. Wage inflation is the worst of all. Capital has painted the rest of us into a corner. The only acceptable alternative is bubbles ad aeternam....

The economic surplus can only be conveived as public-investment- and (household) consumption-seeking if working people are to have the well-being that is objectively within reach. The need for large-scale government spending to create jobs for infrastructure projects, education, health care, green technologies and more, is acknowledged by just about everyone. These are not just better ideas. They appear to be the sole means of averting persistent stagnation and creating the kind of society we want to live in.