Monday, April 13, 2015

Today's Links

1--Putin lifts ban on delivery of S-300 missile systems to Iran, RT
This is HUGE


2--Greece to be effective partner with Russia’s Gazprom - Forbes, RT


3--Yemen Plunges 'Into Darkness' Amid Power Cuts, Saudi-Led Attacks sputnik


4--Obama’s criminal war against Yemen, wsws


5--Yemen slaughter escalates as regional powers exchange threats, wsws


What was already the poorest country in the Arab world faces deepening shortages of medical supplies, electricity, water and basic foodstuffs. Several day-old corpses now litter the streets of Yemen’s southern port city of Aden, along with garbage accumulating amidst the breakdown of basic social functions, according to local officials.


Mass evacuations of hundreds of civilians have continued, with nationals from Sudan, Ethiopia, the United States, South Korea, Nigeria, Syria, Indonesia and a number European countries boarding emergency flights out of the country over the weekend. At least 900 refugees have fled across the strait to Somalia during the past week, according to the UN's refugee agency.
The multi-sided civil war was unleashed by the overthrow of the US-backed government by tribal-based militant groups, beginning


6--Hasan Nasrallah: war against Yemen will lead to Saudi defeat and humiliation (ENG SUB - 4/4) , you tube


...the real aim of the war is to retake control and domination of Yemen...we condemn the unjust Saudi-American aggression against Yemen, its people, and its army present and future. we call for a halt to this aggression. Just for the sake of Saudi money and Saudi praise the whole region goes to war for something that can be resolved politically through negotiations. It is the right of the Yemeni people, the oppressed, the beloved, the honorable, the courageous, the wise Yemeni people to defend and resist and confront and they are doing this and I tell you they will achieve victory because these are the laws of God and this is part of history....Throughout history, the invaders are defeated, the invaders are humiliated...In Iraq, and later in Afghanistan, Gaza and Lebanon the whole world knows that air raids don't bring victory. And where is the Saudi army? The Saudi army doesn't want to fight. It wants to bring Pakistanis, Jordanians and Egyptians to fight on its behalf. anyone who knows the Yemeni people, knows they will not put up with this aggression, will not put up with this humiliation. The Yemeni people will be victorious because this is history. They will fight to defend their dignity, their existence, their families, and their territory. Let the Arab League take this historic opportunity for an Arab, or Islamic or international initiative to end the aggression and find a political solution. Otherwise the invaders will face defeat.


7---Yemen and the Congress of Reaction, counterpunch


The Houthis fought six wars with former military strongman Ali Abdullah Saleh, who was forced out of the presidency in 2012 by the GCC and the UN Security Council. Hadi, his vice president, took over and largely ignored the Houthis — always a bad idea in Yemen.
So, aided by their former enemy, Saleh — who maintains a strong influence in the Yemeni armed forces — the Houthis went to war with Hadi. The new president was placed under house arrest by the rebels, but escaped south to the port of Aden before fleeing to Saudi Arabia when the Houthis and Saleh’s forces marched on the city
...
While the U.S. has talked about a political solution, that’s not what’s coming out of the Arab League. The military campaign, says Arab League General Secretary Nabil el-Araby, “will continue until all the Houthi militia retreats and disarms and a strong unified Yemen returns.” The bombings have already killed hundreds of civilians and generated tens of thousands of refugees. Gulf Council sources say that the air war may continue for up to six months.


8---The $9 Trillion Short That May Send the Dollar Even Higher, Bloomberg


9--China’s Bank & Waning USA Hegemony, jack rasmus, cp


10--Yanis Varoufakis and Joseph Stiglitz , you tube


11--Treasury Flash Crash of October 15, 2014 Still Has Wall Street in a Sweat , WSOP


12--Wall Street’s Wealth Transfer System Is Imperiling the U.S. Economy , WSOP
Income Inequality Graph from Robert Reich's Film, "Inequality for All"
Income Inequality Graph from Robert Reich’s Film, “Inequality for All”


13--Top Russia Public Intellectual: Western Financial System Is Driving It to War, RI


14--An Insider’s Take: How the Fed Ruined the Economy, stockman


15--Consumers Still In The Bunker, stockman


16--Why the math on homeownership is not motivating renters, cnbc


17--Meet The Secretive Group That Runs The World, ZH


18--Druckenmiller: This could end 'very badly', cnbc


19--World stocks reach milestones, dollar gains, cnbc


World equity markets tested record highs on Friday on hopes of more stimulus from top central banks, while the dollar strengthened on favorable government debt yields compared to those of most other developed countries.
Wall Street scored solid gains after U.S. conglomerate General Electric Co. said it plans to sell assets and buy back up to $50 billion of its stock. This propelled GE shares to their highest since September 2008, ending up 10.8 percent at $28.51 in heavy volume.
Earlier, Japan's Nikkei index rose above 20,000 points for the first time in 15 years while top European shares advanced to their highest since 2000.


20--Stan Druckenmiller's "Horrific Sense" Of Deja Vu: "I Know It's Tempting To Invest, But This Will End Very Badly"
http://www.zerohedge.com/news/2015-04-11/stan-druckenmillers-horrific-sense-deja-vu-i-know-its-tempting-invest-will-end-very-
     

Sure enough, about a year and a half later an analyst from Bear Stearns came in and showed me some subprime situation, the whole housing thing, and we were able to figure out by mid-'05 that this thing was going to end in a spectacular housing bust, which had been engineered - or not engineered but engendered by the Federal Reserve's too-loose monetary policy and end in a deflationary event. And we were lucky enough that it turned out to be correct. My returns weren't very good in '06 because I was a little early, but '07 and '08 were - they were a lot of fun.
So, that's why if you look at today I'm experiencing a very strong sense of deja vu.
...
Let me just say this, the Federal Reserve was founded in 1913. This is the first time in 102 years, A, the central bank bought bonds and, B, that we've had zero interest rates and we've had them for five or six years. So, do you think this is the worst economic period looking at these numbers we've been in in the last 102 years? To me it's incredible.
Now, the fed will say well, you know, if we didn't have rates down here and we didn't increase our balance sheet, the economy probably wouldn't have done as well as it's done in the last year or two. You know what, I think that's fair, it probably wouldn't have. It also wouldn't have done as well as it did in 2004 and 2005. But you can't measure what's happening just in the present in the near term. You got to look at the long term.
And to me it's quite clear that it was the Federal Reserve policy. I don't know whether you remember, they kept coming up with this term back at the time, they wanted an insurance policy. This we got to ensure this economic recovery keeps going. The only thing they ensured in my mind was the financial crisis. So, to me you're getting the same language again out of policymakers. On a risk-reward basis why not let this thing a little hot? You know, we got to ensure that it gets out. But the problem with this is when you have zero money for so long, the marginal benefits you get through consumption greatly diminish, but there's one thing that doesn't diminish, which is unintended consequences.

People like me, others, when they get zero money - and I know a lot of people in this room are probably experiencing this, you are forced into other assets and risk assets and behavior that you really don't want to do, and it's not those concentrated bet kind of stuff I mentioned earlier. It's like gees, these zero rates are killing me. I got to do this. And the problem is the longer rates stay at zero and the longer assets respond to that, the more egregious behavior comes up.
Now, people will say well the PE is not that high. Where's the beef? Again, I feel more like it was in '04 where every bone in my body said this is a bad risk reward, but I can't figure out how it's going to end. I just know it's going to end badly, and a year and a half later we figure out it was housing and subprime. I feel the same way now. There are early signs. If you look at IPOs, 80 percent of them are unprofitable when they come. The only other time we've been at 80 percent or higher was 1999.
The other thing I would look at is credit. There are some really weird things going on in the credit market that maybe Kenny and I can talk about later.
But there are already early signs starting to emerge. And to me if I had a message out here, I know you're frustrated about zero rates, I know that it's so tempting to go ahead and make investments and it looks good for today, but when this thing ends, because we've had speculation, we've had money building up for four to six years in terms of a risk pattern, I think it could end very badly.
...
KL: You mentioned in your talk that there are already early signs of excesses due to over-easy monetary policy. What are some of the signs you see?
SD: Okay. I mentioned credit. I mentioned credit. Let's talk about that for a minute. In 2006 and 2007, which I think most of us would agree was not a down period in terms of speculation, corporations issued $700 billion in debt over that two-year period. In 2013 and 2014 they've already issued $1.1 trillion in debt, 50 percent more than they did in the '06, '07 period over the same time period. But more disturbing to me if you look at the debt that is being issued, Kenny, back in '06, '07, 28 percent of that debt was B rated. Today 71 percent of the debt that's been issued in the last two years is B rated. So, not only have we issued a lot more debt, we're doing so at much less standards.
Another way to look at that is if those in the audience who know what covenant-light loans are, which is loans without a lot of stuff tied around you, back in '06, '07 less than 20 percent of the debt was issued cov-light. Now that number is over 60 percent. So, that's one sign.

The other sign I would say is in corporate behavior, just behavior itself. So, let's look at the current earnings of corporate America. Last year they earned $1.1 trillion; 1.4 trillion in depreciation. Now, that's about $2.5 trillion in operating cash flow. They spent 1.7 trillion on business and capital equipment and another 700 billion on dividends. So, virtually all of their operating cash flow has gone to business spending and dividends, which is okay. I'm onboard with that.
But then they increase their debt 600 billion. How did that happen if they didn't have negative cash flow? Because they went out and bought $567 billion worth of stock back with debt, by issuing debt. So, what's happening is their book value is staying virtually the same, but their debt is going like this. From 1987 when Greenspan took over for Volcker, our economy went from 150 percent debt to GDP to 390 percent as we had these easy money policies moving people more and more out the risk curve. Interestingly, in the financial crisis that went down from about 390 to 365. But now because of corporate behavior, government behavior, and everything else, those ratios are starting to go back up again.

Look, if you think we can have zero interest rates forever, maybe it won't matter, but in my view one of two things is going to happen with all that debt. A, if interest rates go up, they're screwed and, B, if the economy is as bad as all the bears say it is, which I don't believe, some industries will get into trouble where they can't even cover the debt at this level.
And just one example might be 18 percent of the high-yield debt issued in the last year is energy. And I don't mean to offend any Texans in the room, but if you ever met anybody from Texas, those guys know how to gamble, and if you let them stick a hole in the ground with your money, they're going to do it. So, I don't exactly know what's going to happen.  I don't know when it's going to happen. I just have the same horrific sense I had back in '04. And by the way, it lasted another two years. So, you don't need to run out and sell whatever tonight.

KL: Will this unprecedented global money printing ever stop? And what is your intermediate and long-term view on inflation?
SD: Well, the global money printing is interesting because the United States is the world's central bank. And Japan had this guy named Shirakawa running the central bank, and he didn't believe in this stuff. So, what happened when he didn't print the money but the U.S. was printing the money and we're [inaud.], the Japanese yen started to appreciate and it stayed appreciating, and it basically hollowed out the country. And they were eventually forced, as you know, two years ago into flooding their system with money.
You have a very, very similar situation going on in Europe now. I know Mario Draghi and Angela Merkel don't like QE. They don't like anything about it, but again, the chump - I have this partner. I don't know if he's in the room, Kevin Warsh who's on the Federal Reserve Board. He said Japan used to be the new chump because they had the overvalued currency. Now it's Europe. So, their currency went from 82 say back in 2000 all the way up to 160, and it was 140 last summer, and they're absolutely getting murdered. And now they're apparently caving in and they're going to print money.
I don't know when it's going to stop. And on inflation this could end up being inflationary. It could also end up being deflationary because if you print money and save banks, the yield curve goes negative and they can't earn any money or let's say the price of oil goes to $30, you could get a deflationary event. If you had asked me this question in late '03, I'd have said well, this probably ends with inflation, but by the time we needed to, we figured out no, this is going to end in deflation. So, the fed keeps talking about deflation, but there is nothing more deflationary than creating a phony asset bubble, having a bunch of investors plow into it and then having it pop. That is deflationary.
...
But the point I was making earlier is there was a great enabler, and that was the Federal Reserve... pushing people out the risk curve. And what I just can't understand for the life of me, we've done Dodd-Frank, we got 5,000 people watching Jamie Dimon when he goes to the bathroom. I mean all this stuff going on to supposedly prevent the next financial crisis. And if you look to me at the real root cause behind the financial crisis, we're doubling down.
Our monetary policy is so much more reckless and so much more aggressively pushing the people in this room and everybody else out the risk curve that we're doubling down on the same policy that really put us there and enabled those bad actors [ph.] to do what they do. Now, no matter what you want to say about them, if we had had five or six percent interest rates, it would have never happened because they couldn't have gotten the money to do it.
...
KL: What's the future of the euro currency?
SD: I think the euro needs to continue to go down because eight of those countries have such a cost disadvantage versus Germany right now. It's about 40 percent because they haven't been behaving themselves since the euro was put together that you have severe outright deflation not like pretend deflation like we talk about on the board. It's real deflation. And   they've got sclerosis. I can't see Europe surviving without the euro going down to somewhere in the mid-80s. And if you think that's a ridiculous forecast, when I restarted Duquesne in 2000, the euro was 82. Now, that was extreme. But let me ask you this, think of the Europe and United States back in 2000 and think of them today. Do you think Europe has made incremental gains versus the United States or declines? So, to me it's not unreasonable to see the euro continue to go down.
The other thing I'll say, I do analyze currencies, and it would be almost unprecedented to have a 10-month currency trend. Because all the dislocations happen when your currency is overvalued and it's up long enough, it takes years to unwind those dislocations. And it's hard to argue the euro is not in a trend. It's down from 140 to 117. And using the rule of time, I don't think it's unreasonable to expect it to break 100 sometime in the next year or two.
In terms of the euro region itself, there's still a lot of questions. That was put together for political reasons really to create political unity. And as most people in this room know, it's doing just the opposite. It's creating political disunity. So, I don't think it's even a given that that thing stays together.
...
But you talk about entitlement. The federal debt right now is $17 trillion. The reason it's $17 trillion and not higher is because all those payments that are promised to Kenny, a lot of the people in this room, myself not too far in the future, they're not on the government balance sheet. Any company in America if you owe payments of that certainty, it would be a debt. In the U.S. government accounting it's revenue.

If you present valued what we have promised to seniors in Medicare and Social Security and Medicaid payments, the federal debt right now under gap accounting would be $205 trillion, not 17 because we have a demographic boom, which is the other side of the baby boom. As everybody knows in this room, it's the grey boom. We are creating 11,000 seniors in this country every day. Every day we're creating 11,000 new seniors, and we're only creating about 18 percent of youth employed to support those payments to them. So, we've got a big problem, and it really doesn't start until 2024, 2025, but if you wait 'til 2024, it's too late. It's not unlike climate change.
It's probably not a problem for 30 years, but if you wait 30 years, you can't fix it. So, you got to start now.

KL: This is my question, is there any way possible you think that we could have a soft landing from all the excesses we've had in the last 10 or 15 years?
SD: Anything's possible. I sure hope so. And I haven't committed. I'm not net short equities. I mean the stock market right now as a percentage of GDP is higher than - with the exception of nine months from '99 to - it's the highest it's been in the last hundred years of any other period except for those nine months. But you know what, when you look at the monetary policy we're running, it should be - it should be about where it is. This is crazy stuff we're doing. So, I would say you have to be on alert to that ending badly. Is it for sure going to end badly? Not necessarily. I don't quite know how we get out of this, but it's possible.
*  *  *






21--The Fall of the House of Saud, Robert Baer, Atlantic


Just to make sure that no one upsets the workings of this system, perhaps by meddling in internal Saudi affairs, Saudi Arabia now keeps possibly as much as a trillion dollars on deposit in U.S. banks—an agreement worked out in the early eighties by the Reagan Administration, in an effort to get the Saudis to offset U.S. government budget deficits. The Saudis hold another trillion dollars or so in the U.S. stock market. This gives them a remarkable degree of leverage in Washington. If they were suddenly to withdraw all their holdings in this country, the effect, though perhaps not as catastrophic as having a major source of oil shut down, would still be devastating. ..
  Later, as ambassador, Bandar conveyed the kingdom's thanks by secretly placing $10 million in a Vatican City bank, as reported last year in The Washington Post; the money, deposited at the request of William Casey, then the director of the CIA, was to be used by Italy's Christian Democratic Party in a campaign against Italian Communists. Later still, in June of 1984, Bandar started paying out $30 million from the royal family so that Lieutenant Colonel Oliver North could buy arms for the Nicaraguan contras....
 In mid-2002 word leaked to the press that the semi-official Defense Policy Board, chaired by the notorious cold warrior Richard Perle, had sponsored a report declaring Saudi Arabia to be part of the problem of international terrorism rather than part of the solution. Saudi Arabia, the report stated, was "central to the self-destruction of the Arab world and the chief vector of the Arab crisis and its outwardly-directed aggression." It went on to say, "The Saudis are active at every level of the terror chain, from planners to financiers, from cadre to foot-soldier, from ideologist to cheerleader." .....
 And yet the image problems have continued. In October of 2001, nato forces raided the offices of the Saudi High Commission for Aid to Bosnia, founded by Prince Salman, and discovered, among other items, photos of the U.S. embassies in Kenya and Tanzania, before and after they were bombed; photos of the World Trade Center and the USS Cole; information on the use of crop-duster planes; and materials for forging U.S. State Department badges. His job wasn't made any easier when, in the fall of last year, Bandar found himself having to explain away the fact that about $130,000 in charitable contributions from his wife, Princess Haifa, might have ended up with two of the 9/11 hijackers....
  If an election were held in Saudi Arabia today, if anyone who wanted to could run for the office of president, and if people could vote their hearts without fear of having their heads cut off afterward in Chop-Chop Square, Osama bin Laden would be elected in a landslide—not because the Saudi people want to wash their hands in the blood of the dead of September 11, but simply because bin Laden has dared to do what even the mighty United States of America won't do: stand up to the thieves who rule the country.
Saudi Arabia today is a mess, and it is our mess. We made it the private storage tank for our oil reserves. We reaped the benefits of a steady petroleum supply at a discounted price, and we grabbed at every available Saudi petrodollar. We taught the Saudis exactly what was expected of them. We cannot walk away morally from the consequences of this behavior—and we really can't walk away economically. So we crow about democracy and talk about someday weaning ourselves from our dependence on foreign oil, despite the fact that as long as America has been dependent on foreign oil there has never been an honest, sustained effort at the senior governmental level to reduce long-term U.S. petroleum consumption.
  Saudi Arabia controls the largest share of the world's oil and serves as the market regulator for the global petroleum industry.
* No country consumes more oil, and is more dependent on Saudi oil, than the United States.
* The United States and the rest of the industrialized world are therefore absolutely dependent on Saudi Arabia's oil reserves, and will be for decades to come.
* If the Saudi oil spigot is shut off, by terrorism or by political revolution, the effect on the global economy, and particularly on the economy of the United States, will be devastating.
* Saudi oil is controlled by an increasingly bankrupt, criminal, dysfunctional, and out-of-touch royal family that is hated by the people it rules and by the nations that surround its kingdom.
Signs of impending disaster are everywhere, but the House of Saud has chosen to pray that the moment of reckoning will not come soon—and the United States has chosen to look away. So nothing changes: the royal family continues to exhaust the Saudi treasury, buying more and more arms and funneling more and more "charity" money to the jihadists, all in a desperate and self-destructive effort to protect itself.
The most vulnerable point and the most spectacular target in the Saudi oil system is the Abqaiq complex—the world's largest oil-processing facility, which sits about twenty-four miles inland from the northern end of the Gulf of Bahrain. All petroleum originating in the south is pumped to Abqaiq for processing. For the first two months after a moderate to severe attack on Abqaiq, production there would slow from an average of 6.8 million barrels a day to one million barrels, a loss equivalent to one third of America's daily consumption of crude oil. For seven months following the attack, daily production would remain as much as four million barrels below normal—a reduction roughly equal to what all of the opec partners were able to effect during their 1973 embargo. ...
 Former CIA directors serve on boards whose members have to hold their noses to cut deals with Saudi companies—because that's business, that's the price of entry, that's the way it's done. Ex-Presidents, former prime ministers, onetime senators and congressmen, and Cabinet members walk around with their hands out, acting as if they're doing something else but rarely slowing down, because most of them know it's an endgame too. But sometime soon, one way or another, the House of Saud is coming down.
http://www.theatlantic.com/magazine/archive/2003/05/the-fall-of-the-house-of-saud/304215/3/
 This, at any rate, is the way we looked at the matter before fifteen Saudis and four other terrorists launched their suicide attacks on September 11; before Osama bin Laden suddenly became for the Arab world the most popular Saudi in history; before USA Today reported last summer that nearly four out of five hits on a clandestine al Qaeda Web site came from inside Saudi Arabia; and before a recent report commissioned by the UN Security Council indicated that Saudi Arabia has transferred $500 million to al Qaeda over the past decade.
Five extended families in the Middle East own about 60 percent of the world's oil. The Saud family, which rules Saudi Arabia, controls more than a third of that amount. This is the fulcrum on which the global economy teeters, and the House of Saud knows what the West is only beginning to learn: that it presides over a kingdom dangerously at war with itself. In the air in Riyadh and Jidda is the conviction that oil money has corrupted the ruling family beyond redemption, even as the general population has grown and gotten poorer; that the country's leaders have failed to protect fellow Muslims in Palestine and elsewhere; and that the House of Saud has let Islam be humiliated—that, in short, the country needs a radical "purification."...
 We can try to wish this away all we want. But the reality is getting harder and harder to ignore. Per capita income in Saudi Arabia fell from $28,600 in 1981 to $6,800 in 2001. The country's birth rate has soared, becoming one of the highest in the world. Its police force is corrupt, and the rule of law is a sham. Saudi Arabia almost certainly leads the world in public beheadings, the venue for which is often a Riyadh plaza popularly known as Chop-Chop Square. Illegal arms routinely flow into and out of the country. Taking into account its murky "off-budget" defense spending, Saudi Arabia may spend more per capita on defense than any other country in the world (some estimates put the figure at 50 percent of its total revenues), and the House of Saud believes this is necessary for its personal protection...
 In Los Angeles two of the 9/11 hijackers met with a Saudi working for a company contracted to the Ministry of Defense. A raid on the Hamburg apartment of a suspected accomplice of the hijackers turned up the business card of a Saudi diplomat attached to the religious-affairs section of the embassy in Berlin. Most of the more than 650 al Qaeda prisoners being held at the Guantánamo Bay Naval Base in Cuba—"the worst of the worst," according to Secretary of Defense Donald Rumsfeld—are rumored to be Saudis.

I served for twenty-one years with the CIA's Directorate of Operations in the Middle East, and during all my years there I accepted on faith my government's easy assumption that the money the House of Saud was dumping into weaponry and national security meant that the family's armed forces and bodyguards could keep its members—and their oil—safe. "The royal family is like the fingers of a hand," my colleagues at the State Department liked to say. "Threaten it, and they become a fist." I no longer believe this. Saudi Arabia is more and more a breathtakingly irrational state. For a surprising number of Saudis, including some members of the royal family, taking the kingdom's oil off the world market—even for years, and at the risk of destroying their own economy—is an acceptable alternative to the status quo.






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