Tuesday, December 30, 2014

Today's Links

Today's Howler: America's never been in the business of colonizing other countries and grabbing their resources… we've never been in the business of bullying folks into doing things that we can't do for ourselves,” Obama said, adding that when such things were done, they “never worked out all that well. That's not our best tradition.”
America’s best tradition is to lead by example, to be strong and secure to stand up for “what we believe in,” Obama said, emphasizing that the US is “in a great position to do that right now.”

1--Afghan ‘kill list’ leak: NATO risked civilian lives by targeting low-level Taliban fighters, RT

2---Ukraine in ‘full-blown financial crisis’ – National Bank head, RT

3--Financial Times points to US regime-change intrigue in Sri Lanka, wsws

4--Snap elections in New Year following fall of Greek government, wsws

Events in Athens have further exposed the EU as a dictatorial entity, intent on looting the Greek people to bail out the banks and super-rich. Samaras himself had likened the prospect of new elections to terrorism, while stating candidly that “markets do not want elections.”...

Samaras’ decision to call the presidential vote early came after his government failed to reach agreement with the “troika” for a further tranche of loans required to keep Greece from defaulting on its €319 billion debt. Instead, the troika authorised a two-month extension, until February, of its current loan agreement. In the words of the Financial Times, this was to ensure “further tough measures including tax rises and pension cuts...

SYRIZA, which adamantly supports the EU, has spent the last two years ingratiating itself with the banks and the military-intelligence apparatus of the major imperialist powers. SYRIZA leaders, including Tsipras, have made numerous trips to Washington, Berlin, Paris and London.

5--It’s Official: Inflated Home Prices Strangle US Housing Market , wolf street

6--The $9 Trillion US Dollar Carry Trade Blew Up Oil, Russia, and Brazil… What's Next?, zero hedge

7---Abenomics: The Looting Continues, JT

the ruling coalition on Tuesday adopted tax reform policies for next year entailing corporate tax cuts and expansion of tax breaks to the wealthy.
By bolstering the profitability of big firms and promoting asset transfers from the elderly to the younger generation, Prime Minister Shinzo Abe hopes to strengthen his “Abenomics” policy mix and energize local economies across the nation.
But the reform plan, crafted by Abe’s Liberal Democratic Party and its junior coalition partner Komeito, does not contain drastic measures to support lower income earners and smaller companies, both dogged by price rises following last April’s consumption tax hike and the weaker yen....

aggressive monetary easing and massive fiscal spending, has undermined the yen’s value and pushed up import costs and domestic fuel prices, dealing a blow to resource-poor Japan.
In the tax reform plan for the fiscal year starting April 1, the ruling coalition will slash the current 34.62 percent effective corporate tax rate to 32.11 percent in fiscal 2015 and to 31.33 percent in fiscal 2016.
The LDP and Komeito, however, have failed to come up with stable financial resources to cover the revenue that would be lost in the tax cuts, sparking fears about the outlook for Japan’s fiscal health — the worst among major industrialized economies.

8---Abenomics: Unmitigated disaster for working people, wsj

The Nikkei Stock Average is up 80% since the start of 2013. In the first nine months of 2014, profits for companies on the broad Topix exchange were more than double the same period two years earlier.
The government added to the push with another $29 billion fiscal stimulus approved Saturday, including spending vouchers and coupons for consumers, welfare checks for low-income families with small children and heating-oil subsidies. It’s all meant to put more spending power in the economy.
Part of what has dogged Abenomics so far is that workers haven’t joined the party. After years of falling, wages have ticked up slightly, but have been overwhelmed by April’s three-percentage-point consumption-tax increase, causing declines in actual purchasing power. This, in turn, has kept spending weak, undermining Japan’s economic turnaround.
Average worker incomes have been rising at a mild pace for most of this year. They fell 1.5% from a year earlier in November...

Regardless, wages are clearly not keeping up with core consumer prices, which rose 2.7% in November from a year earlier. Of that, around two percentage points are due to April’s value-added-tax hike.

9--Dollar hits fresh highs in thin trade on year-end bets, Reuters
The U.S. dollar hit fresh highs against the euro not touched in nearly 29 months on Monday as traders expecting tighter monetary policy in the United States compared to other economies saw little reason to halt this year's rally in the greenback.
The euro fell to $1.2142 against the dollar, its lowest level in nearly 29 months, on the continued belief that the Federal Reserve may raise interest rates as soon as next year while other economies are putting looser policies into effect.

10--Running in place...No getting ahead under Obama, david kay Johnston

The investor class should be thrilled. Under Obama, the Dow has risen an astonishing 126 percent, to a record high of 18,030. Under President George W. Bush, the index fell by a quarter, from 10,587 to 7,949.
Corporate America should exult. Profits, both before and after taxes, have doubled since Obama took office in 2009.

Fiscal hawks should cheer, because the federal budget deficit is down from 10 percent of the economy in Obama’s first year to less than 3 percent in fiscal year 2015, which began Oct. 1. With continued job growth, this might even turn into a surplus before Obama leaves. And while Bush was a spendthrift, Obama has been the most tightfisted president in the last half-century in terms of discretionary federal spending.

Health insurance companies should be laughing all the way to the bank, because Obama ignored advice to pursue a single-payer system, which would have eliminated the industry, and instead won approval for the Affordable Care Act, which guarantees health insurers a lucrative future.
Wall Street banks should be exuberant for two reasons. First, Obama and his attorney general, Eric Holder, refused to prosecute easily proved crimes, including mail, mortgage, securities and wire fraud and commercial bribery. Second, this month Obama signed into law the CRomnibus budget bill, which approved derivatives gambling with taxpayer-insured bank deposits. Derivatives are the complex financial products that contributed to the 2008 financial crisis...

Anti-government tea partyers should be pleased too. Since Obama took office, the federal workforce has shrunk 2.4 percent, taking the number of federal workers below where it stood when Bush took office almost 15 years ago. (Bush added federal workers.) State and local government workforces are also smaller under Obama, partly because of reduced federal revenue sharing....

Median household income was $59,139 last year, about $4,500 below 2007 but up all of $189 from 2012. As I showed in a previous column, the median wage last year was at its lowest level since 1998, and the average wage remains below its 2007 peak. ...

We would also have more jobs but for corporate greed when it comes to the benefits of increased productivity. Historically workers shared in productivity gains, but with the government rules rigged against unions, the market for labor has become distorted. Power is almost entirely on the side of big companies and their shareholders, which refuse to share productivity gains with workers.
One-sided markets are not markets at all but exploitive systems that in the long run breed economic stagnation and social unrest....

11--​Ditching US dollar: China, Russia launch financial tools in local currencies, RT

12--It’s Beginning to Look a Lot Like Christmas – of 2008 , WSOP

13---David Bird, Missing Wall Street Journal Reporter, Foresaw an Oil Crash , WSOP

Why would talk from Federal Reserve officials that the U.S. economy was strong enough to end quantitative easing impact oil consumption in emerging markets as well as impact the U.S. dollar?
International markets perceive all of the happy talk from the Fed as follows: if the U.S. economy is strong enough to stand on its own without stimulus support from the Fed, then U.S. interest rates will be rising to reflect a stronger economy. As interest rates rise in the U.S., this will attract investment inflows into the United States to capture the higher yields at a time when other developed countries are setting record low yields on their bonds. Increased capital inflows, in turn, push up the value of the U.S. dollar.

What Bird hit upon, however, was the uncharted waters of the Fed’s unprecedented and massive pump-priming operation which has quadrupled its balance sheet to over $4 trillion since the financial crash of 2008. How does one exit a stimulus program of that dimension without creating waves – or tsunamis – in interlinked markets.
The simple answer is that the fallout from the Fed’s unwind is going to be excruciatingly painful.  It is already rearing its scary head in the collapsing price of oil and other industrial commodity prices. Bird was spot on in his early instincts of how it could all play out.

As the Fed talks incessantly about higher rates looming on the horizon in the United States, it boosts the value of the U.S. dollar versus local currencies in emerging markets. Because crude oil is priced around the globe in U.S. dollars, it becomes more expensive to purchase in emerging markets as those currency values weaken versus the U.S. dollar.
As the cost of crude oil rises in emerging markets that are dependent on oil imports, two things happen: the rising costs dampen demand and slow economic growth. That, in turn, creates an ever-widening glut of oil as OPEC declines to curtail output, choosing instead to focus on grabbing market share, thus fueling more declines in the price of oil as the glut deepens.

14--We did it.  Russian economy attacked through oil prices – Obama RT

Pushing down global oil prices was part of Washington’s rationale to destabilize the Russian economy, US President Barack Obama said in an interview to National Public Radio, a non-profit media organization.

Oil price key to Russian economy crumbling

Answering a direct question whether it was the US that collapsed oil prices globally to create problems for Russia, Obama said that Russian economy “was already contracting and capital was fleeing even before oil collapsed.”
Obama revealed that it was a “part of our rationale” that the “only thing” keeping Russian economy “afloat” was the price of oil.
Sanctions only made Russian economy more vulnerable to the “inevitable” oil price disruptions. “They'd have enormous difficulty managing it,” Obama said.

From the transcript: 
Are you just lucky that the price of oil went down and therefore their currency collapsed or ...is it something that you did?

If you'll recall, their economy was already contracting and capital was fleeing even before oil collapsed. And part of our rationale in this process was that the only thing keeping that economy afloat was the price of oil. And if, in fact, we were steady in applying sanction pressure, which we have been, that over time it would make the economy of Russia sufficiently vulnerable that if and when there were disruptions with respect to the price of oil (wink, wink)— which, inevitably, there are going to be sometime, if not this year then next year or the year after — that they'd have enormous difficulty managing it.

Monday, December 29, 2014

Today's Links

Nick Beams, WSWS:  "The divergence between the real economy and the financial markets is rooted in the economic breakdown that began with the financial crisis of September 2008. After mobilising trillions of dollars to prevent a complete meltdown of the financial system, central banks, with the US Fed taking the lead, have continued to pump money into the sclerotic arteries of the financial system in order to maintain it....Nothing like it has been seen in history.... From its founding in 1913, it took the Fed 94 years to expand its balance sheet to $900 billion...It now stands at more than $4 trillion."

Ben Bernanke:  "As a scholar of the Great Depression, I honestly believe that September and October of 2008 was the worst financial crisis in global history, including the Great Depression …Out of maybe the 13 of the most important financial institutions in the United States, 12 were at risk of failure within a period of a week or two."

1---If Prices Keep Falling, OPEC Must Act To Restore ‘Fair’ Rate Of $70-$80, oil price

Yet there is a possibility that OPEC eventually may have to intervene if the global price of oil remains stubbornly around $60 per barrel or falls further, said Iraqi Oil Minister Adel Abdul Mahdi, one OPEC representative who allowed his name to be used in an interview with Bloomberg News.
“If prices keep falling to very low levels where the whole equation is not balanced, then definitely OPEC has to step in,” Abdul Mahdi said. But he said nothing about OPEC remedying the problem through production cuts, which Iran, along with Venezuela, have been calling for in vain.

Influential OPEC leaders such as Saudi Oil Minister Ali al-Naimi have since argued that the reason for maintaining the production level was to recoup market share lost to high-cost or “inefficient” non-OPEC oil producers such as American frackers or Russians, making oil production unprofitable for them

2--Robert Parry on propaganda, SC

Today’s coverage of the Syrian civil war or the Ukraine crisis is so firmly in line with the State Department’s propaganda “themes” that it would put smiles on the faces of William Casey and Walter Raymond if they were around today to see how seamlessly the “perception management” now works. There’s no need any more to send out “public diplomacy” teams to bully editors and news executives. Everyone is already onboard.

Rupert Murdoch’s media empire is bigger than ever, but his neocon messaging barely stands out as distinctive, given how the neocons also have gained control of the editorial and foreign-reporting sections of the Washington Post, the New York Times and virtually every other major news outlet. For instance, the demonizing of Russian President Putin is now so total that no honest person could look at those articles and see anything approaching objective or evenhanded journalism. Yet, no one loses a job over this lack of professionalism.

The Reagan administration’s dreams of harnessing private foundations and non-governmental organizations have also come true. The Orwellian circle has been completed with many American “anti-war” groups advocating for “humanitarian” wars in Syria and other countries targeted by U.S. propaganda. [See Consortiumnews.com’s “Selling ‘Peace Groups’ on US-Led Wars.”]Much as Reagan’s “public diplomacy” apparatus once sent around “defectors” to lambaste Nicaragua’s Sandinistas by citing hyped-up human rights violations now the work is done by NGOs with barely perceptible threads back to the U.S. government. Just as Freedom House had “credibility” in the 1980s because of its earlier reputation as a human rights group, now other groups carrying the “human rights” tag, such as Human Rights Watch, are in the forefront of urging U.S. military interventions based on murky or propagandistic claims. [See Consortiumnews.com’s “The Collapsing Syria-Sarin Case.”]At this advanced stage of America’s quiet surrender to “perception management,” it is even hard to envision how one could retrace the many steps that would lead back to the concept of a democratic Republic based on an informed electorate. Many on the American Right remain entranced by the old propaganda theme about the “liberal media” and still embrace Reagan as their beloved icon. Meanwhile, many liberals can’t break away from their own wistful trust in the New York Times and their empty hope that the media really is “liberal.”.....

In January 1983, President Reagan took the first formal step to create this unprecedented peacetime propaganda bureaucracy by signing National Security Decision Directive 77, entitled “Management of Public Diplomacy Relative to National Security.” Reagan deemed it “necessary to strengthen the organization, planning and coordination of the various aspects of public diplomacy of the United States Government.”...

As a result of Reagan’s decision directive, “an elaborate system of inter-agency committees was eventually formed and charged with the task of working closely with private groups and individuals involved in fundraising, lobbying campaigns and propagandistic activities aimed at influencing public opinion and governmental action,” the draft Iran-Contra chapter said. “This effort resulted in the creation of the Office of Public Diplomacy for Latin America and the Caribbean in the Department of State (S/LPD), headed by Otto Reich,” a right-wing Cuban exile from Miami.....

Repeatedly, Raymond lectured his subordinates on the chief goal of the operation: “in the specific case of Nica[ragua], concentrate on gluing black hats on the Sandinistas and white hats on UNO [the Contras’ United Nicaraguan Opposition].” So Reagan’s speechwriters dutifully penned descriptions of Sandinista-ruled Nicaragua as a “totalitarian dungeon” and the Contras as the “moral equivalent of the Founding Fathers.”
As one NSC official told me, the campaign was modeled after CIA covert operations abroad where a political goal is more important than the truth. “They were trying to manipulate [U.S.] public opinion … using the tools of Walt Raymond’s trade craft which he learned from his career in the CIA covert operation shop,” the official admitted....

Thus, the American people were spared the chapter’s troubling conclusion: that a secret propaganda apparatus had existed, run by “one of the CIA’s most senior specialists, sent to the NSC by Bill Casey, to create and coordinate an inter-agency public-diplomacy mechanism [which] did what a covert CIA operation in a foreign country might do. [It] attempted to manipulate the media, the Congress and public opinion to support the Reagan administration’s policies.”...

Gershman and his NED played important behind-the-scenes roles in instigating the Ukraine crisis by financing activists, journalists and other operatives who supported the coup against elected President Yanukovych. The NED-backed Freedom House also beat the propaganda drums. [See Consortiumnews.com’s “A Shadow Foreign Policy.”]Two other Reagan-era veterans, Elliott Abrams and Robert Kagan, have both provided important intellectual support for continuing U.S.
interventionism around the world. Earlier this year, Kagan’s article for The New Republic, entitled “Superpowers Don’t Get to Retire,” touched such a raw nerve with President Obama that he hosted Kagan at a White House lunch and crafted the presidential commencement speech at West Point to deflect some of Kagan’s criticism of Obama’s hesitancy to use military force

3--Afghans now on their own in fight against Taliban
 4--As US, NATO exit, thousands of Afghans flee returning Taliban
Thousands of Afghans are pouring into makeshift camps in the capital where they face a harsh winter as the Taliban return to areas once cleared by foreign forces, who this week are marking the end of their combat mission.
On the grimy outskirts of Kabul, hundreds of families are huddled in flimsy tents or mud shelters at the Bagrami camp. By day the children forage for fuel and food. At night the families burn garbage to try to keep warm as the icy winds sweep down from the Hindu Kush mountains surrounding the city and temperatures plunge to below freezing.

"Violence has forced us out of our homes but here misery and poverty have made our life even more difficult," said Abdul Qayyum, 52, who fled here with his wife and eight children. "Such a life is not worth living."
The insurgents are now once again on the move, and have extended the summer fighting season as foreign forces have handed over front-line combat responsibility to Afghan security forces. This week the U.S. and NATO are formally ending their combat mission, 13 years after the invasion that toppled the Taliban in the wake of the Sept. 11 attacks.
The insurgents have taken advantage of the vacuum and seized territory across the country, redrawing battle lines through urban areas and putting civilians at greater risk. The Sangin fighting began in June after Afghan forces replaced withdrawing U.S. troops

5--Taliban Declare 'Defeat' of US, Allies in Afghanistan , VOA

Taliban insurgents in Afghanistan on Monday declared the “defeat” of the U.S. and its allies in the 13-year-old war, a day after the coalition officially marked the end of its combat mission.
The NATO-led International Security Assistance Force is shifting to a support mission for Afghan army and police more than a decade after an international alliance ousted the Taliban government for sheltering the planners of the Sept. 11, 2001, attacks on American cities.
“ISAF rolled up its flag in an atmosphere of failure and disappointment without having achieved anything substantial or tangible,” Taliban spokesman Zabihullah Mujahid said in an statement emailed on Monday.

About 13,000 foreign troops, mostly Americans, will remain in the country under a new, two-year mission named “Resolute Support” that will continue the coalition's training of Afghan security forces to fight the insurgents, who have killed record numbers of Afghans this year.
While the U.S. and its allies say the Afghan army and police have been able to prevent the Taliban from taking significant territory, violence has shot up as the insurgents seek to gain ground.
For Afghanistan's new president, Ashraf Ghani, keeping government control of territory and preventing security from further deteriorating is a top priority.

Vowing to restore their former hard-line Islamist regime, Taliban spokesman Mujahid vowed that “the demoralized American-built forces will constantly be dealt defeats just like their masters.”
The Taliban have launched increasingly deadly attacks this year. Nearly 3,200 Afghan civilians were killed in the conflict between the militant group and the army in 2014, and more than 4,600 Afghan army and police died in Taliban attacks.

6---Following the income leads us to wonder how the 99% of households whose income is declining in real terms can borrow and spend more every year.


Foreign investors have had just about enough of Abenomics.
After pumping record amounts of cash into Japanese shares last year, they’ve hardly added to holdings in 2014. Inflows are down 94 percent this year to 898 billion yen ($7.5 billion), on pace for the smallest annual amount since the 2008 global financial crisis. The month of April 2013 alone registered almost three times as much foreign investment in the stock market as all of 2014.
These figures provide the clearest look at how global investors have become disillusioned with Prime Minister Shinzo Abe after he pushed through a tax increase in April that sent Japan into recession...

Fund flows from the central bank and GPIF underpin Morgan Stanley MUFG Securities Co.’s forecast for the Topix to climb to 1,680 by the end of 2015, an 18 percent jump from the last close. A lower currency will buoy earnings and return on equity is improving, according to the brokerage. The median projection of 10 analysts and investors surveyed by Bloomberg is for the Topix to gain 16 percent to 1,650. ...

The government approved 3.5 trillion yen of extra spending to aid the economy over the weekend, including shopping vouchers, subsidized heating fuel for the poor and low interest loans for small businesses hurt by rising input costs. A panel will submit a draft plan for a company tax cut of “slightly more than” 2.5 percentage points for the next fiscal year, NHK reported Dec. 26

8---They're coming for your deposits, Max Keiser
"Adequacy of loss absorbing capacity of global systematically important banks in resolution"

9--Ditching US dollar: China, Russia launch financial tools in local currencies, RT
China and Russia have effectively switched to domestic currencies in trading using financial tools as swaps and forwards, as they seek to reduce the influence of the US dollar and foreign exchange risks.
The agreement signed in the end of October comes into force Monday, December 29, and provides a currency swap of CNY150 billion (up to US$25 billion).

The country’s Foreign Exchange Trade System will carry out similar transactions with the Malaysian ringgit and the New Zealand dollar.
From now on yuan swaps are available for 11 currencies on the foreign exchange market.
“China won’t stop yuan globalization or capital account opening because of the volatility in emerging market currencies,” Ju Wang, a senior currency strategist at HSBC Holdings Plc in Hong Kong told Bloomberg.
China has set up bilateral currency swap lines with more than 20 countries and regions since 2009, including Switzerland, Brazil, Hong Kong, Indonesia and South Korea, Xinhua News reported in July.

10--​West behind falling ruble, oil prices - Russian spy chief, RT

11--Taliban claims victory in Afghan War as NATO ends combat mission, RT

“We consider this step a clear indication of their defeat and disappointment,” the terror group said in a statement, arraigning the US-led mission of “barbarism and cruelty” that left “a pool of blood” behind.
The comment from the Taliban comes a day after NATO marked the end of its combat mission with a low-key ceremony in Kabul, arranged in secret due to the threat of a militant attack.

“America, its invading allies... along with all international arrogant organizations have been handed a clear-cut defeat in this lopsided war,” claimed the Taliban, which ruled Afghanistan from 1996 to 2001. ...

No fewer than 12,500 NATO troops - among them 10,000 US personnel - will remain in Afghanistan through 2016, as part of a ‘Resolute Support Mission’ assistance program.

The Taliban promised to continue its fight “for the establishment of a pure Islamic system by expelling the remaining invading forces unconditionally.”
Afghan President Ashraf Ghani has said recently that his administration is open to peace talks with the Taliban, but the group turned down the proposal, saying it would “continue its jihad and struggle so long as a single foreigner remains in Afghanistan in a military uniform.”

12--Phyllis Bennis: I think there is no possibility of anything remotely resembling peace without negotiations. The US was not able to impose peace when it had 100,000 troops on the ground at one time in Afghanistan with another 45,000 international NATO troops. Now when it has 11,000 troops and about 2,000 international troops it certainly isn’t going to be able to militarily impose anything remotely resembling peace. What we will see is a gradual erosion of the security situation even further. The people in Afghanistan are facing a horrific escalation in violence already and I'm afraid it’s going to get worse. The possibility is going to be there for a negotiated settlement, it’s not a good thing. The Taliban still represents an extremist version of social life that they would impose where they are in control. But of course we have to take into account that the current government of Afghanistan - new President, new Prime Minister are not - is also made up largely of former warlords who themselves share many of those same very misogynistic anti-women and socially very backward, in my view, views on human rights. So when we look at the Taliban it’s a terrible situation, but when we look at the government and in particular the warlords’ presence in the government of Afghanistan, it’s not much better.

12--The Dow at 18,000: Contradictions mount in world economy, WSWS

The divergence between the real economy and the financial markets is rooted in the economic breakdown that began with the financial crisis of September 2008. After mobilising trillions of dollars to prevent a complete meltdown of the financial system, central banks, with the US Fed taking the lead, have continued to pump money into the sclerotic arteries of the financial system in order to maintain it....

The growth of fabulous wealth at the heights of society, the result of speculation and parasitism, together with worsening conditions for the overwhelming majority, signifies a build-up of enormous tensions that will erupt in social and political struggles.
At the same time, the conditions are being created for another financial crisis that could set these struggles in motion. The actions of the central banks in fuelling the insatiable demands of finance have created a massive financial asset bubble that threatens to burst if the supply of cheap cash is turned off or reduced.
As a recent report by the credit strategy department at Deutsche Bank put it: “The problem for central bankers is that they have inflated certain asset prices to levels where, if they reined in their actions too much, then they would likely see adverse market moves and a loss of confidence in the system.” The report concluded that those in charge of monetary and economic policy were nowhere nearer to finding a solution than they were in 2008–2009.

Nothing like it has been seen in history, as even a brief review of the amounts involved makes clear. From its founding in 1913, it took the Fed 94 years to expand its balance sheet to $900 billion, where it stood on the eve of the financial crisis. Just six weeks after the collapse of Lehman Brothers, it had doubled in size.
By the end of the year, it had tripled. It now stands at more than $4 trillion
As the year draws to a close, there is an ever-widening gap between what is taking place in financial markets and the state of the underlying real economy. Wall Street has reached record highs, with the Dow topping 18,000 this week, while the world economy remains largely in the grip of tightening recessionary conditions.

This disparity portends the eruption of economic and social contradictions.
Throughout this year, financial markets have followed a basic pattern: periods of sudden turbulence followed by a new surge. The most serious was the bond market “flash crash” of October 15, when conditions emerged resembling those following the collapse of Lehman Brothers in September 2008.
But at every point, financial markets have been revived with the promise that the supply of cheap money from central banks would continue. At the same time, stagnation and outright recession continue across much of the world.

13---108,000 Private Contractors Are in Afghanistan and We Have No Idea What They're Doing, policy

Two recently released reports, one by the Congressional Research Service (CRS) and one by the Government Accountability Office (GAO), show that not only is the number of private contractors in Afghanistan increasing, but the Pentagon is also unable to tell what they are even doing there. Citing the reports, David Francis of the Fiscal Times points out that there are now 108,000 private contractors in Afghanistan (over 30,000 of whom are Americans), far more than the 65,700 U.S. troops still there,and the number was counted at 110,404 last month. That amounts to 1.6 contractors, roughly 18,000 of which are private security contractors, for every American soldier.

Although the U.S. presence in Afghanistan is ostensibly winding down towards an eventual handover to Afghan security forces, as Francis argues, "the increase in the contractors to troop ratio is yet another indication that although the vast majority of troops are leaving Afghanistan, a private army will remain in the country for years."

According to the CRS, the U.S. wars in Iraq and Afghanistan show the increasing reliance of the military on private contractors. But replacing the military with private contractors is not necessarily a good thing. Highlighting the abuses committed by private military contractors, Angela Snell of the University of Illinois College of Law has called this trend a "convenient way for the U.S. government to evade its legal obligations, including the responsibility to protect the human rights of civilians in war and peace, by allowing private individuals, rather than official state actors, to perform services on behalf of the U.S. military."
Not only does the growing use of private contractors give lie to the idea of a withdrawal from the country, but they are also very costly. Although still dwarfed by the ever-mounting total costs of the wars in Iraq and Afghanistan, CRS reports that "over the last six fiscal years, DOD [Department of Defense] obligations for contracts performed in the Iraq and Afghanistan areas of operation were approximately $160 billion and exceeded total contract obligations of any other U.S. federal agency."

Moreover, Francis points out that the CRS and GAO did not just measure the number of contractors and the cost, but the reports also assessed the Pentagon's ability to monitor the work of contractors. And the results are damning. According to Francis, taken together the reports:

The U.S.-led wars in Iraq and Afghanistan have been massive, and destructive, wastes of lives and money. Although the U.S. and its allies say that they plan to remove combat troops from Afghanistan by 2014, this will in no way be the end of the West's presence in the country. Francis reports that much of the work currently done by the military will be done by the private contractors after the military leaves. So while the attention paid to Afghanistan is likely to continue to dwindle even further, as has been the case in Iraq, as the military withdrawal picks up, the foreign occupation, by what one analyst has called "a de facto army," looks set to continue on.

14---Runs still threaten the repurchase market: 2014 in review, repowatch

In the early 21st century, lenders (on the repurchase market) lost faith in the solvency of their borrowers  (investment banks) and suddenly demanded their money back. But the banks didn’t have the money any more. They had re-used it to make loans and investments. This created a panic that threatened to bankrupt the investment banks and the economy.
As Federal Reserve Governor Daniel Tarullo, the governor with the most responsibility for post-crisis reforms, explained in a November 20 speech  about progress that’s being made toward preventing runs:
The financial turbulence of 2008 was largely defined by the dangers of runs–realized, incipient, and feared. Facing deep uncertainty about the condition of counterparties and the value of assets serving as collateral, many funding markets ground to a halt, as investors refused to offer new short-term lending or even to roll over existing repos and similar extensions of credit. In the first instance, at least, this was a liquidity crisis. Its fast-moving dynamic was very different from that of the savings and loan crisis or the Latin American debt crisis of the 1980s. The phenomenon of runs instead recalled a more distant banking crisis–that of the 1930s....

With the collapse of these financial giants, the potential damage to thousands of their trading partners, and the runs that then hit the broad financial markets, the U.S. economy came close to Armageddon, Federal Reserve Chairman Ben Bernanke told the Financial Crisis Inquiry Commission.
As a scholar of the Great Depression, I honestly believe that September and October of 2008 was the worst financial crisis in global history, including the Great Depression …Out of maybe the 13 of the most important financial institutions in the United States, 12 were at risk of failure within a period of a week or two. 

15--The Big Money World of Mercenaries and Private Security, global research

The world’s most powerful mercenary armies:
• G4S: employs 625,000
• Presence in more than 125 countries
• 2nd largest employer in the world (after WalMart)
• Unity Resources Group: 1,200 employees
• Strong presence in Iraq
• Erinys: more than 15,000 (unofficial)
• Asia Security Group, employs 600. Formerly owned by Karzai, president of Afghanistan.
• Dyncorp: staff in excess of 5,000.

Just two years ago, the International Energy Agency (IEA) predicted that Iraq would be able to double its oil production by the end of the decade, raising output to 6.1 million barrels per day. Even more compelling is the fact that the IEA also believes that Iraq will make up an inordinate share of global supply growth over the long term – more than U.S. shale, more than other OPEC members.

But that looks increasingly unlikely for two major reasons. First is the onslaught from ISIS, which has torn the country apart. The militant group’s advance has been halted and is slowly being rolled back, but nevertheless, the presence of violence and the lack of security are already deterring investment in new production.
The chief economist of the IEA warned in November that ISIS threatens the stability of oil markets. “Suddenly a new parameter has come into the oil markets,” Fatih Birol told the FT in an interview. “In the past we talked about prices, supply, demand and economic growth. Now there is a new parameter: Isis.”

The other factor holding back Iraq’s oil potential is lower prices, an unexpected trend that is draining cash from Iraqi government coffers. As a result, Iraq’s government approved a trimmed down 2015 budget in late December, opting to spend 123 trillion dinars (US$103 billion), down from an original level of 141 trillion dinars. The spending cuts could hurt investment in new oil projects.
In fact, the Iraqi government is already coming to the realization that its original estimates for oil production increases over the next five years may have been too ambitious. With the threat of ISIS, the Iraqi government will need to divert more money to security. But the fall in oil prices is shrinking the pie of resources. Taken together, they amount to a double whammy for Iraq’s oil prospects.

Friday, December 26, 2014

Today's Links

1-- Japan's Economy Implodes, zero hedge

Japan..real consumer spending dropped 2.5% yoy in November. While this was less than the 4.0% fall in October, this still marked the eighth straight month that real consumer spending has dropped yoy since the consumption tax hike....

Real disposable income of workers’ households in November slid 3.9% yoy, declining further from a -2.4% yoy decline in October. On a seasonally adjusted basis, real disposable income came in at -1.3% (October: +3.1%). The continuous yoy decline in real income and its instability is restraining household spending. ...

real wages (nominal wages less the CPI inflation) came in at -4.3% yoy (October: -3.0%), as the extent of the decline widened in step with the fall in nominal wages. This was the largest decline since the 4.8% recorded in December 1998. That's right: Abenomics is now responsible for the biggest drop in Japanese wages on record....

Japan’s inflation slowed for a fourth month in November, and industrial production and retail sales unexpectedly dropped, pointing to further weakness in an economy Prime Minister Abe is trying to revive from recession

In energy markets, oil prices rose modestly as dealers reacted to a surprise Islamist attack on Libya's main oil terminals that left 22 soldiers dead.  Since fresh clashes between government forces and the jihadists erupted on December 13, Libya's oil production has dropped to nearly 350,000 barrels per day compared with 800,000 previously, according to industry experts.

2--Russia says ruble crisis over as reserves dive, inflation climbs, Reuters
Those measures included a hike in interest rates to 17 percent from 10.5 percent, curbs on grain exports and informal capital controls.
"The key rate was raised in order to stabilize the situation on the currency market. ... That period has already, in our opinion, passed. The rouble is now strengthening," Finance Minister Anton Siluanov told the upper house of parliament on Thursday.
He added that interest rates would be lowered if the situation remained stable.
Standard & Poor's credit ratings agency said this week it could downgrade Russia to junk as soon as January due to a rapid deterioration in "monetary flexibility".

Keen to avert a downgrade, Russia said it had started talks with ratings agencies to explain the government's actions. Siluanov said the budget deficit next year would be "significantly more" than the 0.6 percent of gross domestic product originally planned.
The ruble slumped to 80 per dollar in mid-December from an average of 30-35 in the first half of 2014. It has strengthened in the last few days to trade as strong as 52 per dollar on Thursday, in part thanks to government pressure on exporters to sell hard currency.

Russians have tracked the exchange rate closely since the collapse of the Soviet Union, when hyper-inflation wiped out their savings over several years in the early 1990s. The central bank had to spend heavily in recent months to prop the currency.
Last week, Russia's gold and foreign currency reserves dropped by as much as $15.7 billion to below $400 billion for the first time since August 2009 and down from over $510 billion at the start of the year...

But he added that the bank had seen depositors returning in large numbers after most lenders ramped up their deposit rates, some offering as much as 20 percent in annual interest.

3--Trouble in Libya sends oil higher, Reuters

Oil edged further above $60 a barrel on Friday as unrest in Libya cut supplies, offsetting a growing supply glut in top consumer the United States and weak imports by Japan.
Fighting in Libya has cut output there to 352,000 barrels a day, a state oil company spokesman said on Thursday, or about half November's average. This countered the U.S. Department of Energy's (DOE) report showing a big stockbuild

4---Russia's South Stream move empowers Turkey, al monitor

The idea to empower other crucial regional states to create a multipolar world has long been on Russia's global agenda, and it has recently signed milestone deals with China, Turkey and India during visits by President Vladimir Putin......

The calculations were by no means emotional. In its original form, the South Stream was going to be an extremely costly, technically complicated project engaging too many states with diverging policies and interests. By "outsourcing" the project to Turkey, Moscow is making the Europeans deal with Ankara — a much tougher negotiator....

With several crucial pipelines running through Turkish territory, including those from the Caspian basin, it is Turkey that is now becoming an energy superpower without having vast energy resources itself. If the deals to increase supply to Europe by purchasing gas from Iran and Iraqi Kurdistan go through, Turkey will be Europe’s primary energy hub. In fact, it will cover the whole southern flank, accumulating energy resources from Russia, Central Asia and the Middle East. This will make Turkish influence on the European energy market equal to that of Saudi Arabia on the global one....

In general, Russia’s decision has greatly increased Turkey's geopolitical significance, from Europe to the Middle East. If China was the biggest winner of what Putin once called the "Crimean spring," Turkey is the biggest winner in the "South Stream autumn."

5--Make No Mistake, the Oil Slump Is Going to Hurt the US Too, Casey

the US is clearly headed for a recession, because the US owes nearly all the jobs that have been created in the last few years to the shale boom. All those related jobs in equipment, manufacturing, and transportation are also at stake. It’s no accident that all new jobs created since June 2009 have been in the five shale states, with Texas home to 40% of them.
Even if oil were to recover to $70, $1 trillion of global oil-sector capital expenditure—in fields representing up to 7.5 million bbl/d of production—would be at risk, according to Goldman Sachs. And that doesn’t even include the US shale sector!
Unless the price of oil miraculously recovers, tens of billions of dollars worth of oil- and gas-related capital expenditure in the US is going to dry up next year. While US oil and gas capex only represents about 1% of GDP, it still amounts to 10% of total US capex...

There will be spillover into the financial arena, as well. Energy junk bonds may only account for 15% of the US junk bond market, or $200 billion, but the banks are also exposed to $300 billion in leveraged loans to the energy sector. Some of these lenders are local and regional banks, like Oklahoma-based BOK Financial, which has to be nervously eyeing the 19% of its portfolio that’s made up of energy loans.
If oil prices stay at $55 a barrel, a third of companies rated B or CCC may be unable to meet their obligations, according to Deutsche Bank. But that looks like a conservative estimate, considering that many North American shale oil fields don’t make money below $55. And fully 50% are uneconomic at $50.
So if oil falls to $40 a barrel, a cascading 2008-style financial collapse, at least in the junk bond market, is in the cards. No wonder the too-big-to-fail banks slipped a measure into the recently passed budget bill that put the US taxpayer back on the hook to insure any ill-advised derivatives trades!

6--Biderman on CNBC: Global Zero Interest Rates Creating Global Recession

7--Boris Volkhonsky: Yes, but as for the trends in the global politics, I think that really the new centers of power are emerging. China, as you correctly said, has overcome the US in terms of the purchasing power, but not in the absolute figures, of course. I think that the total GDP of BRICS has overcome or is close to overcoming that of the EU. So, that means that the monopoly that the US felt during the second half of the 20th century is coming to an end....

Boris Volkhonsky: Well, we are coming to the issue of war and peace, because many analysts say that the only way for the US to recover is a new global war, which I hope will not happen. So, I wouldn’t like to see that kind of recovery.....

to survive it perhaps it could be a good idea for them to adopt a more conciliatory stance in the global matters.
Boris Volkhonsky: Well, but that doesn’t even depend on who will be the next president in the US. It depends on some other forces which are acting from behind the scene in the US. And those forces are still preserving that inertia of the old way of thinking, I'm afraid. So, I'm not over optimistic about the future of the global relationship.
Russia and India are not just establishing or developing the bilateral relationship, but they are the pillars of a new very important and very influential center of power, which is the BRICS. The two countries are equally opposed to the unipolar world order and developing the relationship in the multilateral format is very important to oppose these attempts to retain the unipolar world order.

Also, what is very important is that during the summit Russia expressed its willingness and desire to see India as a permanent member of the Shanghai Cooperation Organization, which is also kind of an alternative to this unipolar world order I was talking about before. So, the BRICS is on the global arena and the SCO is in Eurasia, which also means that it is a global phenomenon....

there is a project called International Northwest Transport Corridor which would connect the Indian sea ports on its western coast to the sea ports in Iran, then by the land routes they will go northwards via the Caucasus and the Central Asia to Russia and to the northern Europe. This project was launched around the year of 2000, I'm not exactly sure which year, but it was about 15 years ago. And its principle initiators were India, Russia and Iran. And now there are more than 15 countries participating in the project, but the project as such has not been realized yet.
The need for activating the project was also stressed in the joint statement. I think this is really a significant fact, if it is added to India joining the Shanghai Cooperation Organization, and Iran is also waiting for a membership in the SCO. So, if the project is launched and is launched in its full capacity, then it will mean that the barriers will be overcome....

 I'm positively sure that the events in Ukraine, it was not a coincidence that they started after the BRICS countries decided to establish a common bank with the interactions in the local national currencies..... this means a severe blow to the monopoly of the US dollar, first of all, and to all the other remnants of the Bretton Woods system.....

And I think that for the US, probably, the main task, the main objective they follow in its dealings with the other countries is to break this unity of BRICS countries. And it adopts different approaches to different members of the BRICS group. With Russia it is a direct confrontation. With China it is more or less concealed threats on some matters that might seem minor, like the intellectual property or something like this, hacking and so on. And with India it has adopted a policy of courting India and trying to bring it into its orbit

8---Lethal US diplomacy in Ukraine, sputnik

This week, US President Barack Obama signed the “Ukraine Freedom Support Act of 2014.” “Lethal” American military aid to Ukraine is the current stage of the ongoing trade war. The modern dispute began with Yanukovych’s decision to forego signing the EU trade agreement, and has escalated into a civil war in Donbas.

In one of the final votes of the year and without general debate, both Houses of Congress passed the “Ukraine Freedom Support Act of 2014.” The legislation is part of a larger effort by the American foreign policy apparatus to dictate policy in Ukraine

9--China To Launch Yuan Swap Trading With Russian Rubles On Monday, zero hedge

So while the US continues to parade with "destroying" the Russian economy, even if it means crushing the shale industry, aka the only bright spot, and high-paying job-creating industry in the US economy over the past 5 years, Russia and China continue to be nudged by the west ever closer monetarily and strategically, until one day, as we have long predicted, China and Russia will announce a joint currency, one backed by both China's "surprising" gold reserves and Russia's commodity hoard. Then things will get interesting.

10--Fleeing their country’s civil war, Ukrainian Jews head for Israel, WA Post

No mention of Nazism

11--Important details on shadow banking, NC

When the central bank starts tightening, what normally gets choked off first is the most speculative activities. Indeed, in 2004, Countrywide predicted that its mortgage originations would fall in 2005. Instead, as prime mortgage originations fell, subprime mortgage originations rose. Why?

The culprit was CDOs. They were insulated from the Fed’s tightening because the bulk of the CDO was rated AAA, which made it less vulnerable to the effects of the Fed’s tightening. Worse, for Eurobanks and even some US firms, retaining an AAA tranche hedging it with an AAA rated counterparty allowed book all discounted future profits in the current period. These were massively profitable trades, and a big reason why so many banks were stuck with so many toxic CDOs when the music stopped. Another big contributor was the heavily synthetic CDOs (as in made largely of credit default swaps) devised by Magnetar, which drove demand to the very worst mortgages.

None of the financial regulators had any idea that this was happening. Indeed, as the crisis was escalating, the authorities were still not looking in the right places for trouble. For instance, it was clear that when Bear Stearns was rescued, one of the big reasons was concerns about its credit default swaps counterparty exposures. As we said at the time, the Fed, in concert with the Bank of England and the ECB, should have gone into overdrive to understand the who was exposed to whom, and in what types of risks. Instead, they went into Mission Accomplished mode.....

And the Fed is as in the dark about shadow banking now as it was in 2006. As the Wall Street Journal wrote earlier this week:
The so-called shadow-banking system is growing again in the U.S. after declining from 2008 through 2011 in the wake of the financial crisis. The value of U.S. financial assets held by money-market funds, hedge funds, trust companies and financial firms other than banks reached $25.2 trillion in 2013, for the first time exceeding the precrisis peak of $24.9 trillion, according to a November report by the Financial Stability Board, an international body of regulators.
U.S. shadow-banking assets accounted for about one-third of the global total of $75.2 trillion in 2013, which was up from $70.5 trillion the year before. And in the U.S., shadow banking is bigger than the more tightly regulated traditional banking system, which according to the FSB had $20.2 trillion in assets as of 2013

12--CBR launches SWIFT alternative for domestic payments, RT

The Central Bank of Russia (CBR) has launched a new SWIFT-style payment service aimed at moving away from Western financial dominance. The system is already operating, and will be fully functional within six months.
"The new service was launched in order to ensure smooth and safe transmission of financial messaging within the country, and is another step towards improving the system of services provided by the Bank of Russia,” said the bank statement Friday.
The regulator said the new service will allow credit institutions to transmit messages in a SWIFT format through CBR to all Russia’s regions without restrictions.
The calls to disconnect Russian banks from the global interbank SWIFT system came amid the deterioration of relations between Russia and the West and the introduction of sanctions...

SWIFT is a global banking transaction system used by most international banks. The information the system carries, including payment instructions, is securely exchanged between financial institutions. It began operating in 15 countries in 1973 and is now used in 210 countries

13---Russia’s new military doctrine lists NATO, US as major foreign threats, RT

Domestically, Russia faces threats of “actions aimed at violent change of the Russian constitutional order, destabilization of the political and social environment, disorganization of the functioning of governmental bodies, crucial civilian and military facilities and informational infrastructure of Russia,” the doctrine says.
Moscow sees international cooperation with countries sharing its effort to increase security, particularly members of BRICS, the OSCE, the Shanghai Cooperation Organization and others as the key to preventing military conflicts, the doctrine states.

14--Abenomics 2.0---Austerity Japanese-Style, Jack Rasmus

15--Saudi oil chief: No conspiracy behind oil prices, USA Today

Saudi Arabia maintains it is opposed to cutting production because of fears its market share could erode.
"The best thing for everybody is to let the most efficient produce," Saudi Petroleum Minister Ali Naimi said in the United Arab Emirates capital of Abu Dhabi. He was addressing the Arab Energy Conference, a gathering held every four years....

Earlier this month, Iranian President Hassan Rouhani said the sharp fall in global oil prices was the result of "treachery," a remark interpreted as a reference to Saudi Arabia.
"I want to say from this podium that talk about a Saudi conspiracy has no basis of accuracy at all and points to a misunderstanding," Naimi said.

16---The Islamic State of Iraq and Syria has lopped off the heads of about 20 people as of Nov. 27 — two US journalists, two British aid workers and 16 Syrian soldiers. Meanwhile, Saudi Arabia has beheaded 59 people since January, Newsweek reported, but nary a word of criticism from Western sources.

Historically, oil prices have spiked in a countertrend to a rising dollar only when economic or geopolitical uncertainties have heightened, especially in the Middle East. Today, in spite of the Middle East being affected by wars, militancy and political turbulence, oil prices have fallen steeply. The inconsistency points to manipulation. The probability of a US-Saudi collusion is quite high and nothing new. The world has been at the mercy of this collusion via the petrodollar and the Saudi-dominated OPEC cartel for decades. OPEC does not have to control 100% of the world oil production. With 81% of global crude oil reserves and 43% of world production, it can undercut non-OPEC producers by dumping and underpricing. It is doing both today.
 there are three main reasons for the oil price collapse: drop in demand, excess supply (especially the surge in US shale oil production) and US-Saudi collusion directed at Russia.

The fall in demand is due to declining economic outputs of major oil consumers like China, India, EU and the US. For the US, this may seem contrary to the rosy GDP growth put out in official statistics. But a disproportionate share of US GDP growth comes from non-oil-intensive activities, e.g., commercial services, finance, insurance, real estate, etc. On the supply side, US shale production has boomed in recent years, due mainly to high international crude prices and ultra cheap credit.

These fundamentals alone do not account for the massive drop in oil prices. The last such collapse was in 2008-2009, when oil prices fell from $147/barrel to $32/barrel in less than a year. There was no supply glut at the time, nor any massive collapse in real demand which would have been indicated by widespread factory closures, layoffs and a dramatic fall in movement of goods and people. These things followed the oil price collapse, they did not lead it. The main reason was the huge drop in dollar liquidity that drove speculators in oil derivatives (paper oil) rushing for the exit door. Along with oil prices, stocks also collapsed for the same reason.

Today, stock markets are at or near all-time peaks in spite of the oil price collapse. Dollar liquidity is not an issue. Changes in real demand and supply have been gradual, so they cannot account for such a swift, steep and selective downturn in oil prices alone. This makes deliberate manipulation very plausible. Call it conspiracy or economic war, this is an engineered move capitalizing on negative fundamentals. The US has an enormous stake in and influence on the price of oil via its petrodollar pact with Saudi Arabia. It is currently waging a kitchen sink economic war against Russia. As Sherlock Holmes observed, "when you have eliminated the impossible, whatever remains, however improbable, must be the truth

Wednesday, December 24, 2014

Today's Links

"The integration of Ukraine into NATO would bring NATO forces nearly as far east as Hitler’s armies reached in the days leading up to the battle of Stalingrad, 72 years ago...
Hitler conquered virtually the entire territory of present-day Ukraine, a feat which German Chancellor Angela Merkel and the US President Barack Obama seek to duplicate, not through open invasion, but by the use of cash, political subversion and neo-Nazi gangs."

From zero hedge comments (Ironmace): "Did the US and the Saudis conspire to drop oil prices and destroy the Russian economy?
Gee, ya' think?"

1--The Fed is heading for another catastrophe, Peter Roach

Central banking has lost its way. Trapped in a post-crisis quagmire of zero interest rates and swollen balance sheets, the world’s major central banks do not have an effective strategy for regaining control over financial markets or the real economies that they are supposed to manage. Policy levers — both benchmark interest rates and central banks’ balance sheets — remain at their emergency settings, even though the emergency ended long ago

2--How Putin Stopped the Ruble's Collapse, Bloomberg

The current rate of less than 55 per U.S. dollar seems miraculous after last week's "Black Tuesday," which saw the ruble almost reach 80 per U.S. dollar. That decline followed a surprise decision by the Russian Central Bank to increase its key lending rate 6.5 percentage points to 17 percent, and it appeared the monetary authorities could do nothing short of introducing currency controls to halt the rout....

Short-sellers have become hesitant to bet against the ruble, knowing that some big foreign currency sales are coming. Here's how the number of short ruble contracts on CME, the world's biggest derivatives marketplace, has dropped lately:
That gives the Russian monetary authorities some breathing space, but that's all

3---A Timeline of CIA Atrocities, Steve Kangas

Operation PAPERCLIP – While other American agencies are hunting down Nazi war criminals for arrest, the U.S. intelligence community is smuggling them into America, unpunished, for their use against the Soviets. The most important of these is Reinhard Gehlen, Hitler’s master spy who had built up an intelligence network in the Soviet Union. With full U.S. blessing, he creates the "Gehlen Organization," a band of refugee Nazi spies who reactivate their networks in Russia. These include SS intelligence officers Alfred Six and Emil Augsburg (who massacred Jews in the Holocaust), Klaus Barbie (the "Butcher of Lyon"), Otto von Bolschwing (the Holocaust mastermind who worked with Eichmann) and SS Colonel Otto Skorzeny (a personal friend of Hitler’s). The Gehlen Organization supplies the U.S. with its only intelligence on the Soviet Union for the next ten years, serving as a bridge between the abolishment of the OSS and the creation of the CIA. However, much of the "intelligence" the former Nazis provide is bogus. Gehlen inflates Soviet military capabilities at a time when Russia is still rebuilding its devastated society, in order to inflate his own importance to the Americans (who might otherwise punish him). In 1948, Gehlen almost convinces the Americans that war is imminent, and the West should make a preemptive strike. In the 50s he produces a fictitious "missile gap." To make matters worse, the Russians have thoroughly penetrated the Gehlen Organization with double agents, undermining the very American security that Gehlen was supposed to protect.

4---A case can be made that the geopolitical shift towards Russia-China integration is arguably the greatest strategic maneuver of the last 100 years. Xi's ultimate master plan is unambiguous: a Russia-China-Germany trade/commerce alliance, Pepe Escobar

Only three days before the run on the rouble, I asked Rosneft's Mikhail Leontyev (Press-Secretary - Director of the Information and Advertisement Department) about the growing rumors of the Russian government getting ready to apply currency controls. At the time, no one knew an attack on rouble would be so swift, and conceived as a checkmate to destroy the Russian economy. After sublime espressos at the Tazza d'Oro, right by the Pantheon, Leontyev told me that currency controls were indeed a possibility. But not yet.

What he did emphasize was this was outright financial war, helped by a fifth column in the Russian establishment. The only equal component in this asymmetrical war was nuclear forces. And yet Russia would not surrender. Leontyev characterized Europe not as a historical subject but as an object: "The European project is an American project." And "democracy" had become fiction.   ...

Russia could always deploy an economic "nuclear" option, declaring a moratorium on its foreign debt. Then, if Western banks seized Russian assets, Moscow could seize every Western investment in Russia. In any event, the Pentagon and NATO's aim of a shooting war in the European theater would not happen; unless Washington was foolish enough to start it.

Still, that remains a serious possibility, with the Empire of Chaos accusing Russia of violating the Intermediate-Range Nuclear Forces Treaty (INF) even as it prepares to force Europe in 2015 to accept the deployment of US nuclear cruise missiles.

Russia could outmaneuver Western financial markets by cutting them off from its wealth of oil and natural gas. The markets would inevitably collapse - uncontrolled chaos for the Empire of Chaos (or "controlled chaos", in Putin's own words). Imagine the crumbling of the quadrillion-plus of derivatives. It would take years for the "West" to replace Russian oil and natural gas, but the EU's economy would be instantly devastated. 
Just this lightning-bolt Western attack on the rouble - and oil prices - using the crushing power of Wall Street firms had already shaken European banks exposed to Russia to the core; their credit default swaps soared. Imagine those banks collapsing in a Lehman Brothers-style house of cards if Russia decided to default - thus unleashing a chain reaction. Think about a non-nuclear MAD (Mutually Assured Destruction) - in fact warless. Still, Russia is self-sufficient in all kinds of energy, mineral wealth and agriculture. Europe isn't. This could become the lethal result of war by sanctions.....

At the APEC meeting in November, he doubled down, promoting an "Asia-Pacific dream".

Meanwhile, frenzy is the norm. Apart from the two monster, US$725 billion gas deals - Power of Siberia and Altai pipeline - and a recent New Silk Road-related offensive in Eastern Europe, [4] virtually no one in the West remembers that in September Chinese Prime Minister Li Keiqiang signed no fewer than 38 trade deals with the Russians, including a swap deal and a fiscal deal, which imply total economic interplay.

A case can be made that the geopolitical shift towards Russia-China integration is arguably the greatest strategic maneuver of the last 100 years. Xi's ultimate master plan is unambiguous: a Russia-China-Germany trade/commerce alliance. German business/industry wants it badly, although German politicians still haven't got the message. Xi - and Putin - are building a new economic reality on the Eurasian ground, crammed with crucial political, economic and strategic ramifications.

5--George Thorogood and the Destroyers
So move it on over
Rock it on over
Move over little dog
A mean old dog is movin' in
6--Another MH17 Cover-Up: Hiding a Key Autopsy, eric zuesse

Decisive evidence as to how the July 17th shooting-down of the MH17 Malaysian airliner occurred is being hidden by the four-nation team that’s doing the official ‘investigation’ into the plane-downing incident.
This decisive evidence is the coroner’s report on the corpse of the airliner’s pilot. If the pilot was killed by bullets, then the standard ‘explanation’ of the downing (that the plane was downed by a ground-fired missile) isn’t just false, it’s an outright hoax. So: where’s the pilot’s autopsy?...

According to London’s Daily Mail on December 5th, a video documentary from a Russian journalist “suggested” that, “pieces of 30mm rounds were found in the bodies of the pilots.” 30mm bullets are the same size of bullets that come from the types of fighter-jet planes that are in the Ukrainian Air Force, including the following jets: Su-25, Su-27, and Mig-29. 30mm bullets are very different from missile-shrapnel, which the U.S. and Ukraine allege had brought down this airliner.

A retired Lufthansa pilot, Peter Haisenko, examined a remarkably clear photo of the key piece of evidence on the downing, which is the side-panel of the fuselage right next to the pilot; this panel was riddled with what he said were 30mm bullet holes, shot right into the spot where the pilot’s belly would be. Apparently (if Haisenko is correct), the airliner’s pilot was machine-gunned to death, his belly was ripped into by a hail of bullets, after which the attacking jet or jets fired a missile into the airliner’s body, and the airliner then promptly plummeted to earth. No ground-fired missile was involved. (The ground-fired “Buk” would have been 33,000 feet below, much too far away for precise targeting at the plane’s pilot; and shrapnel-holes are not round; they’re very different from bullet-holes.)

7---Russia has Evidence From Ukraine Military Defector Kiev Was Responsible For MH-17 Crash, zero hedge

Russia’s Investigative Committee says it has uncovered evidence Ukraine was involved in the crash citing a military defector from the Ukraine.
The RIC said, as summarized by Bloomberg, that it interrogated a Ukraine military defector who has evidence the Boeing jet shot down in July may have been targeted by Ukrainian military SU-25 plane, according to website statement. The witness claims to have spoken to SU-25’s pilot, according to whom the SU-25 in question was carrying R-60 air-to-air missiles.  The SU-25 returned to base after flight without its missiles.  The pilot summarized that "MH-17 was in wrong place at wrong time." Tell that to the families of over two hundred innocent casualties of war.....

The witness, who was not named, worked at an airfield in the Ukrainian city of Dnipropetrovsk where he claimed to have seen a warplane take off on July 17 with air-to-air missiles and return without them. An Investigative Committee statement said the testimony of the man "is important proof that Ukrainian military was implicated in the crash of the Boeing-777".

8---But there is no respite for the American oil patch. The price of oil has plunged 50% since June, the price of propane is down 50% since its recent high in mid-September, and natural gasoline is down 32% since recent high in mid-November. None of the fancy charts natural gas drillers have shown to investors work at these prices.

9--China helps stabilize currencies and assumes role as reserve currency, wolf street

China is taking yet another a strategic step to embed the yuan more firmly in international trade and in doing so dislodge the US dollar from its dominant position as the global transaction and reserve currency.....

While Chinese support doesn’t fix the main problems in either country, namely capital outflow unmatched by inward investment, poor access to global markets due to sanctions (Russia) or the default (Argentina), and now plunging oil prices, the intervention caused both the peso and the ruble to rebound.
In both cases, China has elected to exchange its relatively valuable currency for one that is remarkably unstable and likely to lose value. For each tranche swapped, it will have to hold the pesos or rubles for up to one year before swapping it back for yuan. And China is taking the risk that in one year possibly Argentina or Russia might not have the purchasing power to buy yuan on world markets in the event of a currency crisis. So why would China take these risks in countries where other lenders or investors have shied away?

Resources. And consumer bases.
By swapping yuan for rubles or pesos, China is putting yuan in the hands of two countries with significant consumer bases. And what are yuan used for besides propping up flailing currencies? Buying Chinese stuff!
Argentina and Russia are both resource exporters. Argentina’s economy pretty much hinges on exporting agricultural products, and also possesses oil and gas, precious and base metals, and bulk commodities. Russia’s economy is oil and gas. China can use the swapped pesos and rubles to buy these valuable and needed commodities from its trading partners

10--Oil Crash: Don’t Believe the Happy Clatter , WSOP

It might be helpful to remember that the Dow Jones Industrial Average went from 12,000 to 13,000 between March and May of 2008 before entering a plunge that would take it to the 6500 range by March of 2009. (It should be noted, however, that frothy markets can become frothier than the current one before reality sets in.)...

If this price collapse were happening in just crude oil, it could be shrugged off as a supply glut problem attributable to growing shale production in the U.S. and over production among OPEC members. But other industrial commodities are in freefall as well. Iron ore prices are down 49 percent this year while copper has declined 15 percent. The price of natural gas is down 30 percent in just the past month, including a plunge of 9 percent just yesterday....

Not everyone at the Federal Reserve is part of the happy clatter crowd. On October 13, 2014, Chicago Fed President, Charles Evans, spoke before the annual conference of the National Council on Teacher Retirement in Indianapolis. Evans expressed skepticism that an economy can be robust with the tepid growth in wages happening in the United States. Evans stated:
“…it is hard to imagine a robust labor market without solid growth in wages. With productivity growth of around 1 to 2 percent and an inflation target of around 2 percent, we should be seeing wages and benefits rising at around a 3 to 4 percent rate. But that is clearly not the case. Although some in-demand occupations may be experiencing stronger wage growth, overall compensation growth has been around 2 percent over the past six years. Taken altogether, these and other measures lead me to conclude that there remains significant underutilization of labor resources — and likely somewhat more slack than what is indicated by the unemployment rate alone.”

In an unusually frank interview, Ali al-Naimi, the Saudi oil minister, tore up OPEC’s traditional strategy of keeping prices high by limiting oil output and replaced it with a new policy of defending the cartel’s market share at all costs. “It is not in the interest of OPEC producers to cut their production, whatever the price is,” he told the Middle East Economic Survey. “Whether it goes down to $20, $40, $50, $60, it is irrelevant.” He said the world may never see $100 a barrel oil again.
The comments, from a man who is often described as the most influential figure in the energy industry, marked the first time that Mr Naimi has explained the strategy shift in detail. They represent a “fundamental change” in OPEC policy that is more far-reaching than any seen since the 1970s, said Jamie Webster, oil analyst at IHS Energy. “We have entered a scary time for the oil market and for the next several years we are going to be dealing with a lot of volatility,” he said. “Just about everything will be touched by this

12--Biderman on CNBC: Global Zero Interest Rates Creating Global Recession

"If there's easy money around for the very affluent, and they want to get a return, the money has to go somewhere,  so it goes into stocks and ZOOM, or commodities and it makes "growing" a reality"....What happened in energy is it got punished by too much of a good thing for the liquidity standpoint."

zero rates stifle growth by producing excess supply (cheap money generates supply) and weak demand. (stagnant wages)

13--EIA December Crude Inventories Surge To Record Highs, zero hedge

WTI Crude is down over 3.5%, dropping back towards $55 - dismissing yesterday's dead-cat-bounce deja vu - as EIA inventory builds more than expected at 7.27 million barrels (biggest build in 2 months to 6-month highs). This is the largest inventory for the time of year since records began. Of course, while energy stocks are fading broad equity indices do not care at all...

EIA Inventories rose most in over 2 months...

14---The first underappreciated fact is that the large expansion of the monetary base under QE is temporary. The Fed has always planned to eventually return its balance sheet and, by implication, the monetary base back to the trend path it was on prior to the QE programs. This point has been communicated in several ways. First, the Fed issued exit strategy plans in its June, 2011 and September, 2014 FOMC meetings that point to a reduction in the monetary base. Here is an excerpt from the latter meeting:
The Committee intends to reduce the Federal Reserve’s securities holdings in a gradual and predictable manner...The Committee intends that the Federal Reserve will, in the longer run, hold no more securities than necessary to implement monetary policy efficiently and effectively. 
By  now you have probably noticed an inherent tension between these two underappreciated facts. On the one hand, the Fed never intended the expansion of the monetary base under the QE programs to be permanent. On the other hand, the monetary base injections needed to be permanent for the QE programs to really spur aggregate demand growth. And therein lies the Fed's dirty little secret: the Fed's QE programs were muted from the beginning. They never could on their own create the amount of catch-up aggregate demand growth needed to restore full employment. So despite all the Fed has said over the past six years, it made an explicit policy choice to avoid fully restoring aggregate nominal expenditures.

The Fed, in short, never chose to unload both barrels of its gun. And the QE barrel that it did unload depended on a portfolio channel that could only promise modest benefits at best. Had it committed to a permanent expansion of the monetary base via a level target, the Fed would have unloaded both barrels of its guns and made the QE programs far more effective.  Instead, the Fed opted for bird shot when it could have used a slug. This is the dirty little secret Fed officials would rather leave unsaid

15---What 5 Percent Means'
Via Calculated Risk, from the BEA:
Real gross domestic product -- the value of the production of goods and services in the United States, adjusted for price changes -- increased at an annual rate of 5.0 percent in the third quarter of 2014, according to the "third" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 4.6 percent.

The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 3.9 percent. With the third estimate for the third quarter, both personal consumption expenditures (PCE) and nonresidential fixed investment increased more than previously estimated 

16---Yeah, the Saudis pushed down oil prices, but there's more to it then you think, oil price (Must read)

Some commentators have offered a more conspiratorial theory for the Saudis wanting to get rid of Assad. They point to a 2011 agreement between Syria, Iran and Iraq that would see a pipeline running from the Iranian Port Assalouyeh to Damascus via Iraq. The $10-billion project would take three years to complete and would be fed gas from the South Pars gas field, which Iran shares with Qatar. Iranian officials have said they plan to extend the pipeline to the Mediterranean to supply gas to Europe – in competition with Qatar, the world's largest LNG exporter.....

As has been noted, Saudi Arabia's manipulation of the oil price has twice targeted Russia. This time, the effects of a low price have hit Moscow especially hard due to sanctions already in place combined with the low ruble. Last week, in an effort to defend its currency, the Bank of Russia raised interest rates to 17 percent. The measure failed, with the ruble dropping another 20 percent, leading to speculation the country could impose capital controls....

Of course, the Russian dalliance with China is a key part of Putin's great Eastern pivot that will keep stoking demand for Russian gas even as the Saudis and OPEC, perhaps with US collusion, keep pumping to hold down the price. The November agreement, that would see Gazprom supply Chinese state oil company CNPC with 30 billion cubic meters of gas per year, builds on an earlier deal to sell China 38 bcm annually in an agreement valued at $400 billion.
As Oilprice.com commented on Sunday, “ongoing projects are soldiering on and Russian oil output is projected to remain unchanged into 2015.”
“Russia will go down with the ship before ceding market share – especially in Asia, where Putin reaffirmed the pivot is real. Saudi Arabia and North America will have to keep pumping as Putin plans to uphold his end in this game of brinksmanship.”
The oil price drop that has dominated the headlines in recent weeks has been framed almost exclusively in terms of oil market economics, with most media outlets blaming Saudi Arabia, through its OPEC Trojan horse, for driving down the price, thus causing serious damage to the world's major oil exporters – most notably Russia.
While the market explanation is partially true, it is simplistic, and fails to address key geopolitical pressure points in the Middle East.

Oilprice.com looked beyond the headlines for the reason behind the oil price drop, and found that the explanation, while difficult to prove, may revolve around control of oil and gas in the Middle East and the weakening of Russia, Iran and Syria by flooding the market with cheap oil

The oil weapon
We don't have to look too far back in history to see Saudi Arabia, the world's largest oil exporter and producer, using the oil price to achieve its foreign policy objectives. In 1973, Egyptian President Anwar Sadat convinced Saudi King Faisal to cut production and raise prices, then to go as far as embargoing oil exports, all with the goal of punishing the United States for supporting Israel against the Arab states. It worked. The “oil price shock” quadrupled prices.

It happened again in 1986, when Saudi Arabia-led OPEC allowed prices to drop precipitously, and then in 1990, when the Saudis sent prices plummeting as a way of taking out Russia, which was seen as a threat to their oil supremacy. In 1998, they succeeded. When the oil price was halved from $25 to $12, Russia defaulted on its debt....

Turning to the current price drop, the Saudis and OPEC have a vested interest in taking out higher-cost competitors, such as US shale oil producers, who will certainly be hurt by the lower price. Even before the price drop, the Saudis were selling their oil to China at a discount. OPEC's refusal on Nov. 27 to cut production seemed like the baldest evidence yet that the oil price drop was really an oil price war between Saudi Arabia and the US.
However, analysis shows the reasoning is complex, and may go beyond simply taking down the price to gain back lost marketshare.
“What is the reason for the United States and some U.S. allies wanting to drive down the price of oil?” Venezuelan President Nicolas Maduro asked rhetorically in October. “To harm Russia.”
Many believe the oil price plunge is the result of deliberate and well-planned collusion on the part of the United States and Saudi Arabia to punish Russia and Iran for supporting the murderous Assad regime in Syria.

Punishing Assad and friends
Proponents of this theory point to a Sept. 11 meeting between US Secretary of State John Kerry and Saudi King Abdullah at his palace on the Red Sea. According to an article in the Wall Street Journal, it was during that meeting that a deal was hammered out between Kerry and Abdullah. In it, the Saudis would support Syrian airstrikes against Islamic State (ISIS), in exchange for Washington backing the Saudis in toppling Assad.

If in fact a deal was struck, it would make sense, considering the long-simmering rivalry between Saudi Arabia and its chief rival in the region: Iran. By opposing Syria, Abdullah grabs the opportunity to strike a blow against Iran, which he sees as a powerful regional rival due to its nuclear ambitions, its support for militant groups Hamas and Hezbollah, and its alliance with Syria, which it provides with weapons and funding. The two nations are also divided by religion, with the majority of Saudis following the Sunni version of Islam, and most Iranians considering themselves Shi’ites.
“The conflict is now a full-blown proxy war between Iran and Saudi Arabia, which is playing out across the region,” Reuters reported on Dec. 15. “Both sides increasingly see their rivalry as a winner-take-all conflict: if the Shi’ite Hezbollah gains an upper hand in Lebanon, then the Sunnis of Lebanon—and by extension, their Saudi patrons—lose a round to Iran. If a Shi’ite-led government solidifies its control of Iraq, then Iran will have won another round.”

17---Oil prices slump after surprise inventory jump. marketwatch

Crude-oil futures slumped Wednesday, wiping out earlier gains as U.S. data confirmed an unexpected jump in crude inventories.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February CLG5, -2.89%  fell $1.64, or 2.8%, to $55.48 a barrel. February Brent crude on London’s ICE Futures exchange LCOG5, -2.98%  lost $1.74, or 2.8%, to $59.95 a barrel.

On Wednesday, the U.S. Energy Information Administration said commercial crude inventories rose 7.3 million barrels from the previous week to 387.2 million barrels. On average, analysts were looking for a decrease of 1.8 million barrels.
Late Tuesday, the American Petroleum Institute said its data showed a 5.4-million-barrel gain in U.S. crude stockpiles for the week ended Dec. 19. Rising U.S. oil production due to the shale boom has been largely responsible for the glut in oil markets, and a large build-up in U.S. supply typically weighs on oil prices

18---Christmas for Wall Street: Dow hits record 18,000 points, wsws
A cheer rang up from traders on the floor of the New York Stock Exchange Tuesday morning as the Dow Jones Industrial Average hit 18,000 points for the first time ever. The index, which stood at 16,264 a year ago, closed at 18,024 Tuesday afternoon, having risen 1,000 points in the last week alone.
The media referred to the last several days of trading—which also saw the S&P 500 index reach record high—as a “Santa Claus rally.” This spike in share values was attributed to rising consumer spending, falling gas prices and a supposedly “roaring” US economy...

In reality, Wall Street is celebrating the sharp reduction of workers’ wages and living standards that have sparked record corporate profits and the Fed’s policy of unlimited free money, which has fueled a new speculative bubble. Behind this, however, are intractable contradictions in the US and world economy, which will inevitably lead to a new market “correction.”

This financial parasitism, which has accelerated since the 2008 crash, has coincided with a historic transfer of wealth from the working class into the hands of the richest one percent and one-tenth of one percent of the population.
With US corporations flush with an estimated $1.5 trillion in cash, last year saw a sharp increase in mergers and acquisitions. According to Forbes, global M&A activity was up 22 percent year-over-year to $3.58 trillion, the third highest figure on record and the highest reading since the global financial crisis. Analysts predict this frenzied pace will continue in 2015, with depressed oil prices likely to spark a wave of mergers and consolidations in the energy industry.
While this socially-destructive activity massacres jobs and leads to further demands for greater output and sacrifice from workers, it has and will continue to produce a windfall for the financial aristocracy.

19--Ukrainian government prepares extreme austerity measures, wsws

20--Washington transforms Ukraine into capitalist Valhalla, wsws

National patriotic education” classes will become a mandatory component of school educational programs.... These include constitutional amendments reducing free, compulsory school education from 11 to nine years, abolishing constitutional guarantees of the rights to free education and health care, and reducing the number of members of parliament from 450 to 150..

Social benefits to be abolished include free meals for school children and hospital patients, free health resort treatment for children, free participation in youth sports centers, most state-funded scholarships, and reduced fees on public transport for students and teachers. Inflation indexing for the salaries of public sector workers is to be suspended. Price controls on medicines are to be abolished....

Pensions for working pensioners are to be reduced by up to 90 percent. A moratorium on indexing pension benefits to inflation will be prolonged indefinitely....Military servicemen are no longer to receive benefits for the rental and purchase of living quarters and uniforms, and the state will no longer pay employers for holding jobs for workers who have been drafted....

In the recently unveiled program, “de-bureaucratization, decentralization, deregulation, and accountability” are declared as the guiding principles of state policy. Its goals include the doubling of export volumes by 2019, “large-scale privatization of state property under the appropriate economic conditions,” “de-monopolization of the economy,” “capitalization of state banks,” financial restructuring of the state-owned oil and gas company Naftogaz, restructuring of the judicial system, reform of law enforcement, and efforts to establish “energy independence.”...

At the same time, a number of taxes, as well as a number of agencies that regulate business activity, will be abolished. Income taxes and taxes on small and medium businesses are to be reduced...

21--Putin appeals to the Russian oligarchs, wsws

Even if Putin stressed the “very warm atmosphere” of his meeting with the oligarchs, his government can no longer be sure of their support. Despite his constant offers to imperialism, Western governments and media, as well as significant sections of the Russian finance and business elite criticise his policies as demonstrating too little willingness to compromise.

The Russian edition of Forbes magazine commented on Thursday’s press conference saying, “The attempts by the Kremlin to present the situation as a ‘usual crisis’, which also affects large and strong economies, is a sign of ineptitude. ... The situation is extraordinary. ... In these days, many Russian businessmen and even the state bureaucracy confront the question—should we remain within this system, which many think means suicide.”

The Russian oligarchy and state bureaucracy fear that without unconditional capitulation to imperialism, their entire fortune and power in Russia itself is at risk. At the same time, social tensions are rising enormously as a result of the economic war being conducted by the US and EU and the open protection of the oligarchs by the Kremlin.

22--Ukraine parliament approves move towards NATO, wsws

The integration of Ukraine into NATO would be another matter entirely, bringing NATO forces nearly as far east as Hitler’s armies reached in the days leading up to the battle of Stalingrad, 72 years ago, the turning point in the fighting on the Eastern front in World War II.
Hitler conquered virtually the entire territory of present-day Ukraine, a feat which German Chancellor Angela Merkel and the US President Barack Obama seek to duplicate, not through open invasion, but by the use of cash, political subversion and neo-Nazi gangs.
Actual NATO membership would mean that the United States and its European allies would be legally obligated under Article IV of the NATO treaty to go to war in defense of Ukraine, an obligation that would extend to Ukraine’s claim to Crimea, annexed by Russia earlier this year, and to the eastern territories now controlled by pro-Russian separatists.
Since this would threaten war between nuclear-armed powers, the major European countries, including Germany and France, have discouraged talk of NATO membership for Ukraine. But the Obama administration has had no such reservations.

At Wednesday’s State Department press briefing, spokeswoman Marie Harf merely paraphrased the official NATO statement, saying, “[T]he door is open … countries that are willing to contribute to security in the Euro-Atlantic space are welcome to apply for membership. Each application will be considered on the merits.”

She concluded, “[A]ny decision on potential NATO membership is one for Ukraine and NATO to make.” In other words, Russia has no say on whether NATO tanks and warplanes should be stationed on its doorstep.
Ukraine only formally adopted non-aligned status in 2010, when Russian-backed Viktor Yanukovych was president and his party controlled parliament. But the principle that Ukraine would not join NATO, founded as an anti-Soviet, anti-Russian military bloc, was accepted by both Stalinist and imperialist officials at the time of the breakup of the Soviet Union,,,

The Washington Post hailed the program of budget-cutting and privatization in an editorial Wednesday that called the Yatsenyuk cabinet “a technocrat’s dream,” and noted the presence of “Natalia Jaresko, a US citizen and highly respected investment banker who has taken over the finance ministry.”

23---Ukraine ascension to NATO would end Russia-NATO ties – Moscow, RT

24--Witness account of Ukraine MH17 takedown confirmed by lie detector – investigators, RT

According to his account, he personally saw the plane piloted by [Ukrainian military pilot] Voloshin armed with R-60 air-to-air missiles,” Markin said. “He added there was no need for such weapons during regular air missions of the Ukrainian Air Forces because the rebel forces had no military aircraft.”

Markin said that the Investigative Committee will continue gathering and analyzing evidence perpetrating to the downing of MH17 and will share the information with the Netherlands-led international probe into the incident, “if they really interested in establishing the truth and send an inquiry.”
The witness is likely to be taken into protective custody in Russia because his life may be threatened, Markin said.
The Ukrainian Security Service confirmed on Wednesday that a Captain Voloshin does serve as a military pilot in the country’s armed services. But it said he didn’t fly any missions on the day the Malaysian Airlines flight was shot down.

The Russian Investigative Committee invited the Dutch or Malaysian experts to check Voloshin using a polygraph, and Ukraine’s Security Service to provide the military log to the official investigation, Markin said.
“The fact that Ukraine’s Security Service has acknowledged Voloshin’s existence is already an accomplishment,” he said.

24---Russia-US relations 'poisoned' for decades to come – Medvedev, RT

Russian PM Dmitry Medvedev thinks the recent unfriendly moves by Presidents Poroshenko and Obama effectively turn Ukraine into Russia’s potential enemy. It will also “poison” relations with the US for decades to come.
On Facebook, Medvedev commented on the Ukraine Freedom Act 2014 signed by Barack Obama last week, and on the Ukrainian parliament’s intention to cancel a national law forbidding them to join military blocs.
As in the case with the Jackson-Vanik amendment, our relations with America will be poisoned for decades to come,” he added.
Medvedev also underlined that if Ukraine changed its out-of-bloc status, it would in essence be an application to join NATO, rendering Ukraine Russia’s potential enemy

25--Aso says wage hikes key to 'Abenomics' success, JT

26--Secret gov bust in Turkey: There is growing propaganda being made by the parallel structure. What are you planning to do to avoid this?
There are several interesting points with regard to recent developments. The first is efforts to introduce the Dec. 14 operation as a dispute or even revenge, as outlined by [main opposition Republican People’s Party, CHP, leader Kemal] Kılıçdaroğlu between the government and the parallel structure. However, this is not something between the government and the parallel structure. This is a problem between the parallel structure and a group of people who have suffered because of a plot committed by this structure. … Now that this plot has been revealed, they are hiding behind freedom of the press. They are trying to mislead [public opinion]. They are doing another thing at the same time. They are starting a smear campaign against Turkey in every corner of the world. …

What does an operation on this organization have to do with freedom of the press? The journalists brought to the courthouse are not being questioned for their articles. They are told ‘You violated the rights of a group of people for depicting them as terrorists through the campaign you carried out.’ There is clear evidence here. Weapons with certain serial numbers were found. We’ll now wait for the court ruling. I can’t judge beforehand, but these are things that were discovered. Plus, this incident has been introduced as a media raid. No one has been taken from their house in the early morning; they were invited to testify.

They didn’t behave like a normal citizen and instead of going to the court to testify, they went to the newspaper and deceived public opinion by saying that they were resisting. What are they resisting for? They testified and were released pending trial. What would happen if they had gone to the court in advance instead of making such a show?

And that shows another thing: Some circles are pressing the button [to begin an operation against Turkey]. When I was the foreign minister, I would think at least 50 times before calling a colleague on a Sunday, even if the case was an immediate one. And if the colleague is Jewish, I never called on Saturday. But about an operation that took place on a Sunday, without having an idea about its background, a statement was issued from the European Union even though it’s difficult to make such a decision, as such statements require collectivity. But [we observed] a mobilization [against Turkey], just like with the press of a button.

We have, in fact, envisaged this. We had a meeting on this issue with our friends and we have reviewed the measures to be taken in the frame of public diplomacy. We have made the necessary assignments. Public opinion should be careful against efforts to reflect this operation against human rights because it is in fact seeking to respond to the human rights of a certain group....

You were planning to announce a new package on freedom of expression in Brussels?
There is nobody in Turkey being investigated because of their expression. We are not in a defensive mode on this issue. Anyone can make any kind of publication, even under Turkey’s current conditions. Whose freedom of expression is being restricted? Whose words were silenced? We can openly discuss it everywhere in the world. But it should also be known that we are under the siege of a massive smear campaign of propaganda. We know who is behind this propaganda.

27--We’re winning over ‘parallels’ (secret government) : President Erdoğan , Hurriyet

Agents of the parallel structure within TÜBİTAK began to wiretap the president, the prime minister, the chief of General Staff and other top officials with high-tech devices it created before leaking the content of their communications to other countries’ secret services, Erdoğan said.

“It’s not only treason but also immorality. Not only treason and immorality toward their country but also toward science and scientists,” Erdoğan said.