Thursday, December 18, 2014

Today's Links


 Going Nuclear:  "Were Russia to deploy this “nuclear” financial option, the Western financial system would not be able to absorb a shock of default. And that would demonstrate – once and for all - that Wall Street speculators have built a ‘House of Cards’ so fragile and corrupt that the first real storm turns it to dust." Pepe Escobar




I have no doubt that the entire situation with pumping up passions and anti-Russian feelings among the Western public is well-coordinated,” Russian Foreign Minister Sergey Lavrov told the LifeNews channel.
“Was there malice in the actions of some of our Western colleagues, who started interpreting the content of confidential conversations in a way that turned interpretation into misinterpretation? Or have some folks simply decided to ride before the hounds or demonstrate their full loyalty to the campaign unfolding in Europe with a lot of input from their transatlantic allies?” the minister wondered


1--The plunge of the Russian currency this week is the drastic outcome of policies implemented by the major imperialist powers to force Russia to submit to American and European imperialism’s neo-colonial restructuring of Eurasia. Punishing the Putin regime’s interference with their plans for regime change in countries such as Ukraine and Syria, the NATO powers are financially strangling Russia." ...


While there are a host of global economic factors underlying the fall in oil prices, it is unquestionable that a major role in the commodity’s staggering plunge is Washington’s collaboration with OPEC and the Saudi monarchs in Riyadh to boost production and increase the glut on world oil markets.


As Obama traveled to Saudi Arabia after the outbreak of the Ukraine crisis last March, the Guardian wrote, “Angered by the Soviet invasion of Afghanistan in 1979, the Saudis turned on the oil taps, driving down the global price of crude until it reached $20 a barrel (in today’s prices) in the mid-1980s… [Today] the Saudis might be up for such a move—which would also boost global growth—in order to punish Putin over his support for the Assad regime in Syria. Has Washington floated this idea with Riyadh? It would be a surprise if it hasn’t.”
Since then, with OPEC declining to cut production despite an accelerating fall in prices, oil has dropped to under $60 a barrel.
 Alex Lantier, Imperialism and the ruble crisis, wsws
http://www.wsws.org/en/articles/2014/12/18/pers-d18.html





“The struggle for world domination has assumed titanic proportions. The phases of this struggle are played out upon the bones of the weak and backward nations." Leon Trotsky, 1929


2--The markets are rigged, PCR, counterpunch


Apparently, Putin has been sold, along with his internal enemies the Atlanticist integrationists, on “free trade globalism.”  Globalism destroys the sovereignty of every country except the world reserve currency country that controls the system.


As Michael Hudson has shown, neoliberal economics is “junk economics.”  But it is also a tool of American financial imperialism, and this makes neoliberal Russian economists tools of American imperialism.....


The stock market is high because corporations are the biggest purchases of stock. Buying back their own stock supports or raises the share price, enabling executives and boards to sell their shares or cash in their options at a profitable price.  The cash that Quantitative Easing has given to the mega-banks leaves ample room for speculating in stocks, thus pushing up the price despite the absence of fundamentals that would support a rising stock market.
In other words, in America today there are no free financial markets. The markets are rigged by the Federal Reserve’s Quantitative Easing, by gold price manipulation, by the Treasury’s Plunge Protection Team and Exchange Stabilization Fund, and by the big private banks...


Washington intends to subvert Russia and to turn Russia into a vassal state like Germany, France, Japan, Canada, Australia, the UK and Ukraine.  If Russia is to survive, Putin must protect Russia from Western economic institutions and Western trained economists.
It is too risky for the US to take on Russia militarily.  Instead, Washington is using its unique symbiotic relationship with Western financial institutions to attack an incautious Russia that foolishly opened itself to Western financial predation."...


No country dependent on foreign capital is sovereign.  A country dependent on foreign capital, especially from enemies seeking to subvert the economy, is subject to destabilizing currency and economic swings.  Russia should self-finance.  If Russia needs foreign capital, Russia should turn to its ally China.  China has a stake in Russia’s strength as part of China’s protection from US aggression, whether economic or military.


The falling oil price has brought concern that oil derivatives are in jeopardy. Citigroup has a provision in the omnibus appropriations bill that shifts the liability for Citigroup’s credit default swaps to depositors and taxpayers. It was only six years ago that Citigroup was bailed out to the tune of a half trillion dollars.  Already Citigroup is back for more while nothing whatsoever is done to bail the American people out of their hardships caused by Citigroup and the other financial gangsters.
What we are experiencing is not a repeat of the past. The ability or, rather, the audacity of the US government itself to manipulate the major financial markets is new. Can this new trend continue?  The government is supposed to be the enforcer of laws against market manipulation but is itself manipulating the markets.




3---Upper House plans probe into Central Bank role in ruble crash, RT


4--Ukrainian Soldier Confirms: Ukraine’s Military Shot Down Malaysian MH17 Plane, eric Zuesse


5--Hitler vs. Bernanke, CP


Enter Hitler, who had been sworn in as chancellor under President Paul von Hindenburg in January, 1933. Hitler appointed German economist and banker, Hjalmar Schacht, as President of the Reichsbank and Minister of Economics. Schacht, in turn, launched a groundbreaking fiscal stimulus program that rebuilt the nation’s worn infrastructure and put millions of people back to work. At the same time, Schacht took steps to strengthen the currency, jettison the gold standard, and impose capital controls, all of which served to reinforce Germany’s economic independence. Here’s a little background from C.K.Liu’s Asia Times article “Nazism and the German Economic Miracle”:
“The Nazis came to power in Germany in 1933, at a time when its economy was in total collapse, with ruinous war-reparation obligations and zero prospects for foreign investment or credit. Yet through an independent monetary policy of sovereign credit and a full-employment public-works program, the Third Reich was able to turn a bankrupt Germany, stripped of overseas colonies it could exploit, into the strongest economy in Europe within four years, even before armament spending began.” (“Nazism and the German Economic Miracle,” Henry C. K. Liu, Asia Times)
6--Japan auto lobby sounds alarm over weak domestic sales, Reuters


Ike, who also serves as Honda chairman, said Prime Minister Shinzo Abe's stimulus policies - known as Abenomics and designed to end years of deflation - had failed to encourage spending on big-ticket items like cars.


"Abenomics is not having clear traction across the country and even though as an industry we benefit from the weaker yen, we feel a sense of crisis about the fact that cars are actually not selling," he said.
Ike also said plunging emerging-market currencies were having an "undeniable" impact on Japan's auto sector. 


7--Is Russia ready to impose capital controls?, Bloomberg


When the Asian financial crisis hit, Malaysia's position looked a lot like Russia's today: It had big foreign reserves and a low short-term debt level, but relatively high general indebtedness if households and corporations were factored in. At first, to bolster the ringgit, Deputy Prime Minister Anwar Ibrahim pushed through a market-based policy with a flexible exchange rate, rising interest rates and cuts in government spending. It didn't work: Consumption and investment went down, and pessimism prevailed, exerting downward pressure on the exchange rate.


So, in June 1998, Prime Minister Mahathir Mohamad, a Putin- like authoritarian figure, appointed a different economic point man, Daim Zainuddin. In September, on Daim's urging, Malaysia introduced capital controls. It banned offshore operations in ringgit and forbade foreign investors to repatriate profits for a year. Analysts at the time were sharply critical of the measures, and Malaysia's reputation in the global financial markets inevitably suffered.
According to Kaplan and Rodrik, however, the capital controls were ultimately effective. The government was able to lower interest rates, the economy recovered, the controls were relaxed ahead of time, and by May 1999 Malaysia was back on the international capital markets with a $1 billion bond issue.


8--Obama signs Russia sanctions bill, no plans to use it for now, RT


US entities would be forbidden from investing in gas giant Gazprom, and the company would face additional sanctions if it broke off supplies to key eastern European countries, with whom it has squabbled repeatedly over price. Other sanctions would involve Russia’s arms exporter Rosoboronexport.


Perhaps most crucially, organizations in the country’s embattled financial sector would be barred from dealing with any US banks, a measure similar to that faced by Iran at the low point of the fallout over its nuclear program.


In a related move, the bill authorizes Obama to supply anti-tank weapons, surveillance drones and other sophisticated equipment for Petro Poroshenko's government in Kiev, though White House officials said the President had no immediate plans to allow US weapons to be used to put down the uprising in the east of the country....


But two factors appear to have put a brake on the plan. Obama is loathe to impose new measures without backing from Brussels, where there is no unity on the need for future sanctions, with Francois Hollande even suggesting on Thursday that existing ones should be lifted, if Russia displays positive "gestures."


9--Even slaves had it better:  Inequality In U.S. Today Is Worse than in Apartheid South Africa or 1774 Slaveholding Colonial America … and TWICE As Bad As In Ancient Slaveholding Rome, WA Blog


10--What Putin is not telling us, pepe escobar


And then there’s a “nuclear” option – which Putin didn’t even have to mention. If Russia decides to impose capital controls and/or imposes a “holiday” on repayment of larger debt tranches coming due in early 2015, the European financial system will be bombed – Shock and Awe-style; after all, much of the Russian bank and corporate funding was underwritten in Europe.


Exposure to Russia per se is not the issue; what matters is the linkage to European banks. As an American investment banker told me, Lehman Brothers, for instance, brought down Europe just as much as New York City - based on inter-linkages. And yet Lehman was based in New York. It’s the domino effect that counts.


Were Russia to deploy this “nuclear” financial option, the Western financial system would not be able to absorb a shock of default. And that would demonstrate – once and for all - that Wall Street speculators have built a ‘House of Cards’ so fragile and corrupt that the first real storm turns it to dust. ...


Putin was so cool, calm, collected – and eager to delve into details - at his press conference because he knows Moscow is able to move in total autonomy. This is – of course – an asymmetrical war – against a crumbling, dangerous empire. What those intellectual midgets swarming the lame duck Obama administration are thinking? That they can sell American – and world – public opinion the notion Washington (European poodles, actually) will brave nuclear war, in the European theater, in the name of failed state Ukraine?


11--Fueled by Recession, U.S. Wealth Gap Is Widest in Decades, Study Finds, NYT
I love the way the media makes it sound like it was all a big mistake.


12--Lender’s fear of strategic default will prevent future housing bubbles , oc housing

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