Monday, January 5, 2015

Today's Links

"Unhappy events … have re-taught us two simple truths about the liberty of a democratic people.  his first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it comes stronger than their democratic state itself. That in its essence is fascism—ownership of government by an individual, by a group." President Franklin D. Roosevelt

1---Jeff Gundlach: "If Oil Drops To $40 The Geopolitical Consequences Could Be Terrifying", zero hedge

Question: The crash in the oil market is already causing jitters in the financial markets around the globe. What is your take on that?

Gundlach: Oil is incredibly important right now. If oil falls to around $40 a barrel then I think the yield on ten year treasury note is going to 1%. I hope it does not go to $40 because then something is very, very wrong with the world, not just the economy. The geopolitical consequences could be – to put it bluntly – terrifying.

2--Energy stocks nosedive, zero hedge

3--When we take the costs and realized oil and gas prices that the companies involved provide to the Securities and Exchange Commission in their 10-Qs, we get a break-even WTI price of $80-85/barrel, wolf street

Arthur Berman: We’ve read a lot of silly articles since oil prices started falling about how U.S. shale plays can break-even at whatever the latest, lowest price of oil happens to be. Doesn’t anyone realize that the investment banks that do the research behind these articles have a vested interest in making people believe that the companies they’ve put billions of dollars into won’t go broke because prices have fallen? This is total propaganda.

We’ve done real work to determine the EUR (estimated ultimate recovery) of all the wells in the core of the Bakken Shale play, for example. It’s about 450,000 barrels of oil equivalent per well counting gas. When we take the costs and realized oil and gas prices that the companies involved provide to the Securities and Exchange Commission in their 10-Qs, we get a break-even WTI price of $80-85/barrel. Bakken economics are at least as good or better than the Eagle Ford and Permian so this is a fairly representative price range for break-even oil prices.

But smart people don’t invest in things that break-even. I mean, why should I take a risk to make no money on an energy company when I can invest in a variable annuity or a REIT that has almost no risk that will pay me a reasonable margin?

Oil prices need to be around $90 to attract investment capital. So, are companies OK at current oil prices? Hell no! They are dying at these prices. That’s the truth based on real data. The crap that we read that companies are fine at $60/barrel is just that. They get to those prices by excluding important costs like everything except drilling and completion. Why does anyone believe this stuff...

Many people think that the resurgence of U.S. oil production shows that Peak Oil was wrong. Peak oil doesn’t mean that we are running out of oil. It simply means that once conventional oil production begins to decline, future supply will have to come from more difficult sources that will be more expensive or of lower quality or both. This means production from deep water, shale and heavy oil. It seems to me that Peak Oil predictions are right on track.
Technology will not reduce the break-even price of oil. The cost of technology requires high oil prices..

The price of oil will recover. Opinions that it will remain low for a long time do not take into account that all producers need about $100/barrel. The big exporting nations need this price to balance their fiscal budgets. The deep-water, shale and heavy oil producers need $100 oil to make a small profit on their expensive projects. If oil price stays at $80 or lower, only conventional producers will be able to stay in business by ignoring the cost of social overhead to support their regimes

4--How Americans Feel About Religious Groups  PEW
Jews, Catholics & Evangelicals Rated Warmly, Atheists and Muslims More Coldly

Oil and gas production makeup a hefty chunk of the "mining and manufacturing" component of the employment rolls. Since 2000, when the oil price boom gained traction, Texas has comprised more than 40% of all jobs in the country according to first quarter data from the Dallas Federal Reserve.

If current energy and currency market trends continue, 2015 could prove to be a huge year for the United States as a combination of weaker commodity prices, a strong dollar, and steady economic growth, especially in a global context, create huge foreign flows coming into the U.S. market which could all potentially lead to the fastest pace growth in a decade. ....

 But with the growth of oil and energy investors as a major asset class within North America, there exists the risk that investors could collectively decide to dump their energy stocks should prices continue to fall, or drop rapidly in a short space of time. According to Tom Kloza, global head of energy analysis at the Oil Price Information Service: "If panic hits those financial companies that have a lot of exposure to oil on the upside, the numbers you may think are burlesque or hyperbole like $35 or even $25 suddenly become real possibilities, if only for a brief period of time," said Kloza. "Anything can happen in 2015."

No one should believe the gains-from-trade story. It is based on fanciful nonsense. The reactionary nature of the story results from two blatant misrepresentation of international exchange. First, the Heckscher-Ohlin theory treats international trade as if it were among countries. In a capitalist system trade is always among companies, with households far down the distribution line. Second, it views competition in general and specifically among companies as a benign and harmonious process.

These two misrepresentations allow the pernicious fiction that international trade benefits all of humanity by bringing to each country more efficient allocation of resources and through greater allocative efficiency cheaper commodities for everyone everywhere. In reality, international trade is contest and collusion among great corporations to generate profits. A major part of this profit seeking comes through achieving economic and political power at the national level, by buying elections or buying politicians directly.

A very large portion of cross-border trade occurs not between companies, but within them (“intra-firm trade”). The motivations for this internal corporate trade include avoiding 1) unionization, 2) taxation, and 3) national regulations that prevent destructive environmental practices. Any benefits to the “consumer” are more than wiped out by job losses, elimination of small producers, the race to the bottom in wages and working conditions, and global pollution.
Trade and the Decline of Democracy...

Countries integrated into a system of trade may go to war with each other because trade itself contains the source of conflict, aggressive competition among institutions of private power stronger than governments. This may not be rational for “the people” of any of the countries in a conflict. Countries do not have homogenous populations; they are divided into classes and groups. For some groups and classes, armed conflict may bring gains, making the choice for war quite rational even on a cost-benefit calculation.

International trade aggravates the three great crises—of finance, development and the environment — and to those three it adds another, of democracy. Far from a benign process fostering harmony and welfare among nations, commodity and service trade, most of it carried out by powerful private institutions, creates tensions, corruption and conflict. As a general rule, wars kill people and enrich corporations. That, Mr Krugman, explains why not all but most of them continue to occur

9--Just desserts--The opposition in the Ukraine and its paymasters in the U.S. and EU called up the spirits of the right, the fascist, to wage a coup against the elected president and to push their selfish objectives onto the Ukrainian public. ...Now those spirits won't go away, MOA

10---Greek euro exit would be ‘Lehman Brothers squared’: economist, marketwatch

11---Do you think Germany is serious about ‘Grexit’, or is it just political manipulation?

Ernst Wolff: Well, to me it’s just political manipulation. I think they are just threatening the Greek people, actually they are telling the Greek people to vote for a party that will not leave the euro.
See, Greece is not a country like Germany, France or Italy at the moment – Greece has been put under forced administration of the troika that is the ECB, the EU and the IMF. And all Germany wants is to keep Greece under the domination of this organization. The Greek government can vary – the politics of the Greek government are really determined by the troika. And the German government wants this to keep going. ...

EW: You see, the Greek government debt is at 175 percent right now, runs up to €330 billion. And a lot of debt nowadays is ensured in the derivative markets. So if Greece actually leaves the euro that would mean that a lot of credit default swaps would come due. And that could actually bring down the euro, and could also bring down the whole financial system, worldwide. So I don’t think that is really an option.

I think this maneuver by the German government is just a threat to the Greek working people, because they have been paying for the mistakes made by the finance industry. Look at the situation in Greece nowadays. The social systems have been devastated, the old system has been taken down, unemployment is at 26 percent, youth unemployment is at almost 60 percent. The social situation in Greece is terrible – and what Germany wants is to implement even further austerity measures. And they know that the Greek people are fed up with this, they don’t want any more of this. So the German government is telling Greek voters: “Do not vote for a party that is against our domination.”

12--The UN Anti-Nazi Resolution, the Prague Declaration and the History of “US Accommodation with Nazism”....The Prague declaration: This is the beginning of the effort at “normalization” and ultimately the legitimization of nazism.

In one of his first official acts, Ukraine’s new U.S. puppet President Poroshenko made October 14 the Ukranian National Day of Celebration commemorating the day in 1943 that Stepan Bandera’s nazi army was established. During World War II, Bandera’s OUN prepared two assassination attempts against United States President Franklin Delano Roosevelt, a fact ignored by both Poroshenko and his U.S. supporters. Poroshenko’s shameful action is a desecration of the memory of the more than 300,000 heroic Ukranians murdered by the Nazis during the second battle of Kharkov, in May 1942, a battle which, though ending in defeat for the anti-nazi Ukranians, succeeded in slowing and weakening the invading nazi army, thereby contributing, ultimately, to the great Soviet victory at Stalingrad, the turning point in World War II.

 There were 51 abstentions voted on Resolution 69/160, largely, and alarmingly, by European countries which had been ravaged by the nazi slaughter during World War II. These abstentions (however they were parsed in “explanation of vote”) suggest that Nazism is no longer abhorrent in parts of these countries, whether as a result of failure of historic memory, particularly in the younger generation, or more likely as a result of the current economic crisis, exacerbated by the noxious austerity measures being imposed upon most countries of the European Union, policies decimating the standard of living throughout Europe and leaving these destitute citizens prey to resurgent nazi propaganda today, as were the 25 million starving Germans in 1923.

 Although throughout the past decade, the United States had consistently opposed the anti-nazi resolution, this year, Ukraine, though previously abstaining, for the first time actually opposed the anti-nazi resolution, an ominous development, as on December 14, 2014 the U.S. Congress approved sending lethal weapons to Kiev, including anti-tank weapons, ammunition and troop-operated surveillance drones, anti-mortar radar systems, etc. as part of $350 million worth of weapons, raising the terrifying spectre that the U.S. is actually militarily supporting a pro-nazi resurgence in Ukraine.

13--2014–2015: Results and prospects, wsws

The ripping away of the veneer of democracy is an expression, fundamentally, of the unending and explosive growth of social inequality. Since 2008, the single-minded policy of the ruling class has been to maintain and increase its wealth by funneling trillions of dollars into the stock markets, combined with a relentless assault on the jobs and living conditions of the working class.

As a direct consequence of these policies, the 400 wealthiest individuals in 2014 saw their combined net worth grow by $92 billion, to $4.1 trillion. The total number of billionaires rose to a record 2,325 last year, up more than 7 percent from the year before. The net worth of this tiny portion of the world’s population rose by 12 percent, to $7.3 trillion.
The net worth of the 400 richest Americans increased to $2.29 trillion in 2014, nearly double what it was in 2009. Since 2010, the median household income in the US has fallen by five percent.

 war flows from the objective political logic and consequences of the unstoppable struggle of imperialist powers for an advantageous and even—as in the case of the United States—hegemonic position in the world capitalist system...

Geopolitical tensions—rooted in the insoluble contradiction between, on the one hand, the global character of capitalist finance, production and markets, and, on the other hand, the nation-state system in which capitalism is historically and politically rooted—are intensified by the persistence of economic crisis. As in 1914 and 1939, the imperialist powers seek to find a way out of the economic crisis by striving, at the expense of their competitors, to strengthen the position of “their” nation in the world arena. Within this brutal and dangerous process, the United States is playing the leading role. The unending “war on terror” has revealed itself, over the past decade and a half, to be the means by which the United States is attempting to beat back potential rivals and maintain its position as the global hegemon.

The global operations of the United States have assumed a brutal character that brooks comparison to the operations of Nazi Germany. But there is a crucial distinction: Nazi Germany aspired “only” to rule Europe. The American ruling class aspires to rule the world. In the course of 2014, the Obama administration was engaged, without stopping, in war or preparations for war in virtually every part of the globe. Driving the operations of the Pentagon and the CIA headquarters in Langley, Virginia—where all critical government decisions are made—is the conviction that China represents an unacceptable obstacle to American domination of Asia and the Asian-Pacific region, and, therefore, to its role as global hegemon.

The conflict with Russia over Ukraine, which erupted in 2014, is just one theater of this global struggle. The American ruling class believes that it cannot settle accounts with China in Asia unless it has secured control over the Eurasian landmass. The installation of a pro-US puppet regime in Kiev was aimed at inflicting a decisive geo-political setback to Russia, and compelling the Putin regime—or its replacement—to accept American domination.

14--Stocks knocked with crude; Dow tanks 300 points, cnbc

15--Globally there are at least $9 TRILLION US Dollar shorts in the form of carry trades. When a carry trade unwinds, the damage is often catastrophic.

Consider that stocks, even at current lofty levels, have a global market capitalization of slightly over $60 trillion.

In contrast, the global bond market is well over $100 trillion.

And the global currency market trades OVER $5.3 trillion per day.

As a result, stocks ALWAYS “get it” last.

16---Is Citi The Next AIG: 70 Trillion Reasons Why Citigroup And Congress Scrambled To Pass The Swaps "Push-Out" Rule, zero hedge

We also revealed that, not surprisingly, the main backer of the bill is notorious Wall Street puppet Jim Himes (D-Conn.) the man BusinessWeek branded "Wall Street's Favorite Democrat" who also happens to be a former Goldman Sachs employee.

17--North Korea/Sony Story Shows How Eagerly U.S. Media Still Regurgitate Government Claims, Glenn Greenwald

18--Saudi beheads 83 people in 2014, the most in years AP

19--Defeat in Afghanistan, MJ

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