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.

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