Monday, June 29, 2015

Today's links

1--Eastring vs. Balkan Stream: The Battle For Greece  (must read)
2--Five Myths About the Iran Deal
3--Oil Firms In Talks With Iran Ahead Of Nuclear Deal
4--Greek collapse, global turbulence loom as Syriza imposes capital controls

5--Yield-starved investors driving asset prices to dangerous levels: OECD

6--No capex recovery

7---Wall Street On Parade has uncovered a major new area of concern. For more than two years now, SEC Chair Mary Jo White has been aware that the most dangerous banks on Wall Street, which are publicly traded securities, have been engaging in “capital relief trades” with hedge funds and private equity firms to dress up the appearance of stronger capital while keeping the deteriorating assets on their books. But neither White nor her Director of Enforcement, Andrew Ceresney, have put a halt to the practice.

8---Worst capex recovery ever

9--3.5 Million Foreclosures Delayed Through Can-Kicking

Fannie Mae and Freddie Mac combined to complete 65,960 foreclosure prevention actions in Q1 this year, bringing the total of such actions up to almost 3. 5 million between the two GSEs since September 2008 when the conservatorships began, according to the Federal Housing Finance Agency (FHFA)’s Q1 2015 Foreclosure Prevention Report released on Tuesday.

Out of those 3.5 million foreclosure prevention actions in nearly seven years, 2.9 million borrowers completed home retention actions that helped them stay in their homes. About 1.8 million of those borrowers received permanent loan modifications, according to FHFA. Borrowers completed 41,321 permanent loan modifications in Q1, a slight increase from 40,922 in Q4. Approximately 31 percent of borrowers receiving permanent loan modifications in Q1 saw their monthly mortgage payments reduced by 30 percent or more. FHFA reported that as of the end of the first quarter, approximately 17 percent of loans modified in the first quarter of 2014 had missed two or more payments.

Of those nearly 66,000 foreclosure prevention actions completed during Q1, 56,451 of them were home retention actions (loan modifications, repayment plans, forbearance plans, or charge-offs-in-lieu). According to FHFA, 9,509 of those Q1 foreclosure prevention actions were home forfeiture actions (short sales or deeds-in-lieu of foreclosure).
Third-party sales and foreclosure sales totaled 34,873 during the quarter, foreclosure starts totaled 70,267, and REO inventory for both Fannie Mae and Freddie Mac was 100,279, according to FHFA

11--- NATO increases support for Ukrainian regime, warns of renewed fighting

12--Oil glut fakery?


14---New U.S. single-family home sales increased in May to a more than seven-year high, further brightening the outlook for the housing market and the broader economy. (Tweet this)
The Commerce Department said on Tuesday sales rose 2.2 percent to a seasonally adjusted annual rate of 546,000 units, the highest level since February 2008. April’s sales pace was revised to 534,000 units from the previously reported 517,000 units.
Economists polled by Reuters had forecast new home sales, which account for 9.3 percent of the market, rising to a 525,000-unit pace last month.

15---California housing market slows considerably
California’s massive housing market is slowing down in almost every way imaginable, according to the latest California Real Property Report from PropertyRadar.
California single-family home and condominium sales dropped 3.5% to 36,912 in May from 38,249 in April.
However, the report explained that what is unusual this month is that the decrease in sales was due to a decline in both distressed and non-distressed property sales that fell 8.6% and 2.5%, respectively. The monthly decline in non-distressed sales is the first May decline since 2005.

On a yearly basis, sales were up slightly, gaining 2.3% from 36,096 in May 2014.
“With the exception of a few counties, price increases have slowed considerably,” said Madeline Schnapp, director of economic research for PropertyRadar. “You cannot defy gravity.”
“The environment of rising prices on lower sales volumes was destined not to last. Higher borrowing costs since the beginning of the year and decreased affordability was bound to impact sales sooner or later. We may also be seeing the fourth year in a row where prices jumped early in the year, only to roll-over and head lower later the rest of the year,” Schnapp continued.

Thursday, June 25, 2015

Today's Links

1---The “American Dream” denied----US home ownership rate hits lowest level in two decades\
2---NATO announces expansion of military force targeting Russia

NATO defense ministers meeting in Brussels Wednesday and Thursday agreed to the enlargement of the organization’s Response Force to 40,000 troops from the current level of 13,000. On Tuesday, ahead of the meeting, US Defense Secretary Ashton Carter announced the positioning of hundreds of American tanks, military vehicles and heavy artillery pieces in the Baltic States as well as Poland, Romania and Bulgaria.

This buildup of troops and military equipment is part of a long-term reorientation of NATO directed against Russia. There is only one conclusion the Kremlin can draw from such threatening and aggressive measures: Washington and its European allies are preparing to go to war against Russia. Moscow is undoubtedly preparing accordingly.
Polish Defense Minister Tomasz Siemoniak spelled out the implications of the US-NATO policy at the conclusion of NATO war games in Poland last week, declaring: “The peaceful period after the Second World War is over. We cannot defend our European way of life if we don’t do more for our defense....

The report stated that overall defense spending by NATO will fall by 1.5 percent in 2015 to $893 billion. ...On Monday, US Defense Secretary Carter announced that Washington would contribute bombers, fighter jets, surveillance drones, Special Operations troops and other military resources to the VJTF....

In testimony earlier this month, Robert Scher, the US assistant secretary of defense for strategy, plans and capabilities, Defense Secretary Carter’s key nuclear policy aide, told Congress that the Pentagon was considering a variety of options for responding to alleged violations of the INF treaty, including preemptive missile strikes against Russia

3---anti-Uber mayhem, cars set ablaze in Paris
4--Class war: Transport workers plan militant alliance, general strike against anti-union laws
5--​‘We always knew missile defense shield was against Russia & China’ – top Moscow security official
6---Russia to Deploy S-400 Air Defense Systems Near Western Borders by End 2015

7---World Wide Web: Russia to Launch 672 Satellites for Global Internet Service

8--US ups the ante

Russia complains that the year 2002 saw a dramatic turn for the worse when the United States withdrew from the 1972 Anti-Ballistic Missile (ABM) Treaty, becoming the first nation since World War II to exit a major arms control agreement. This move was followed by the development of the US Missile Defense System, intending to deploy its elements in several countries in Eastern Europe right by the Russian borders.
Moscow also repeatedly airs its grievances regarding NATO. Despite the dissolution of the Soviet era military Warsaw Pact, NATO, far from following that example, has expanded its membership from 12 nations to 28 and does not want to stop there. Furthermore, the US still keeps significant nuclear arsenals in some European countries, apart from NATO having an overwhelming superiority over Russia in terms of conventional weapons in Europe...

The latest public opinion polls show that only 38 percent of Americans approve of Obama’s foreign policy while 50 percent disapprove of it. As for the members of Congress only 10 percent of Americans think that they do a good job while 60 percent believe that the job they do is poor.
9---What Would A Saudi-Russian Partnership Mean For World Energy?

Tuesday, June 23, 2015

Today's links

1--Gazprom-Shell Partnership Flies In The Face Of Sanctions

Gazprom and Royal Dutch Shell are teaming up on several energy projects that will benefit both. The two energy companies have agreed to build an expansion of the Nord Stream Pipeline, a major natural gas pipeline that travels beneath the Baltic Sea. The pipeline is a priority for Russia, which will allow it to expand its natural gas exports to Europe while also cutting out Ukraine from the mix.
Gazprom, Shell, along with E.ON and OMV – two gas importers in Western Europe – have agreed to build the $11 billion expansion of Nord Stream.

Moreover, the growing relationship between the two energy giants could also be seen as a victory for Kremlin in its ongoing duel with Brussels over energy dependence. The European Union has sought to reduce its reliance on Russia for energy, but the expansion of Nord Stream will only swell Russian gas imports to Europe.
Gazprom’s Alexei Miller also went out of his way to say that the Nord Stream expansion would not be a replacement for Russia’s proposed Turkish Stream pipeline, which would connect Russian gas to Southern Europe

2--Is This What Our Bond Bear Market Already Looks Like?

then, earlier this year, something happened. Bonds came down hard, hedge funds were all over them, and the mood changed.
“We’re entering a bear market in fixed income,” Michael Novogratz, principal at Fortress Investment Group, told Bloomberg at the SkyBridge Alternatives Conference in Las Vegas in early May. “It’s time to get off the train and stay off the train,” he said, loudly talking his book. “We’ve seen probably a low yield in 30-year Treasuries.”
But the transition from bull market to bear market won’t have a major impact on stocks and bonds until the Fed actually begins to raise rates, he said. By that time, the bond-market swoon was well under way, particularly in euro bonds, and most particularly in German government bonds which were plunging from their ludicrous heights reached in far, in the sixth month of the year 2015: negative market return.

3--Get out now while you still can

Recently, it’s become readily apparent that some of the world’s top money managers are getting concerned about what might happen when a mass exodus from bond funds collides head on with a completely illiquid secondary market for corporate credit.
Indeed, bond market illiquidity is the topic du jour and has almost become something of a cliche among pundits and mainstream financial media outlets years after we first raised the issue in these pages. But just because something has become fashionable to discuss doesn’t mean it’s not worth discussing and indeed, we’re at least pleased to see that the world is suddenly awake to the fact that a primary market supply bonanza catalyzed by rock-bottom borrowing costs and yield-starved investors could spell disaster when paired with shrinking dealer inventories. ...

TCW isn’t alone: Bond funds are holding about 8 percent of their assets as cash-like securities, the highest proportion since at least 1999, according to FTN Financial, citing Investment Company Institute data.

Cudzil’s reasoning is that the Federal Reserve is moving toward its first interest-rate increase since 2006, and the end of record monetary stimulus will rattle the herds of investors who poured cash into risky debt to try and get some yield,,,

TCW Group Inc. is taking the possibility of a bond-market selloff seriously.

So seriously that the Los Angeles-based money manager, which oversees almost $140 billion of U.S. debt, has been accumulating more and more cash in its credit funds, with the proportion rising to the highest since the 2008 crisis. ....

“If you distort markets for long periods of time and then you remove those distortions, you’re subject to unanticipated volatility,” said Cudzil, who traded high-yield bonds at Morgan Stanley and Deutsche Bank AG before joining TCW in 2012. He declined to specify the exact amount of cash he’s holding in the funds he runs.

Price swings will also likely be magnified by investors’ inability to quickly trade bonds, he said. New regulations have made it less profitable for banks to grease the wheels of markets that are traded over the counter and, as a result, they’re devoting fewer traders and money to the operations.

To boot, record-low yields have prompted investors to pile into the same types of risky investors -- so it may be even more painful to get out with few potential buyers able to absorb mass selling.

“We think the market’s telling you to upgrade your portfolio,” Cudzil said. “Whether it happens tomorrow or in six months, do you want look silly before the market sells off or after?”

4--Housing is on the 'verge of a breakout'
5--As Fraud Metastasizes on Wall Street, Regulators Ponder the Culture

Thomas Hayes was on trial in another section of London over charges that he rigged the benchmark interest rate, Libor, on which interest rates on loans and financial instruments are set around the world. Yesterday, Hayes produced for the jury a “Guide to Publishing Libor Rates,” which his superiors at UBS had crafted for traders, teaching them how to manipulate Libor to benefit trading positions of UBS. Hayes’ bosses are not on trial....

Then there was the SEC’s case against a shady and illegal deal called ABACUS at Goldman Sachs. On April 16, 2010, the SEC explained the deal as follows:
“The SEC alleges that one of the world’s largest hedge funds, Paulson & Co., paid Goldman Sachs to structure a transaction in which Paulson & Co. could take short positions against mortgage securities chosen by Paulson & Co. based on a belief that the securities would experience credit events.”
In other words, Paulson helped Goldman select dogs that would default or receive credit downgrades and then made easy bets that they would. That sure sounds a lot like fraud to a lot of folks.
The SEC complaint goes on: “…after participating in the portfolio selection, Paulson & Co. effectively shorted the RMBS [Residential Mortgage Backed Securities] portfolio it helped select by entering into credit default swaps (CDS) with Goldman Sachs to buy protection on specific layers of the ABACUS capital structure. Given that financial short interest, Paulson & Co. had an economic incentive to select RMBS that it expected to experience credit events in the near future. Goldman Sachs did not disclose Paulson & Co.’s short position or its role in the collateral selection process in the term sheet, flip book, offering memorandum, or other marketing materials provided to investors

6--- Nothing wrong with that, is there?

The most dangerous banks on Wall Street, which are publicly traded securities, have been engaging in “capital relief trades” with hedge funds and private equity firms to dress up the appearance of stronger capital while keeping the deteriorating assets on their books. But neither White nor her Director of Enforcement, Andrew Ceresney, have put a halt to the practice.

7---Hold Cash

Two notable concerns stood out in Berner’s talk. First was a concern about liquidity in bond markets evaporating rapidly for reasons they don’t yet “sufficiently understand.” Berner explained:

“…liquidity appears to have become increasingly brittle, even in the world’s largest bond markets. Although liquidity in these markets looks adequate during normal conditions, it seems to disappear abruptly during episodes of market stress, contributing to disorderly price changes. In some markets, these episodes are occurring with greater frequency. Examples include the mid-2013 sell-off in U.S. fixed-income markets, the October 2014 dislocation in U.S. Treasuries and futures markets, and the sharp moves in euro-area government bonds in early May of this year and in the past few days. None of these episodes disrupted U.S. financial stability, nor do we yet sufficiently understand their causes. But together they highlight a potential weakness in markets that could amplify the impact of financial shocks.”

Another major concern are the bond mutual funds and ETFs that have mushroomed since the 2008 crisis and are stuffed full of illiquid assets or assets which might become illiquid in a financial panic. Berner quoted SEC Commissioner Michael Piwowar on this issue, who has said:
“The growth of bond mutual funds and exchange-traded funds (ETFs) in recent years means that these funds now hold a much higher fraction of the available stock of relatively less liquid assets than they did before the financial crisis…their growth heightens the potential for a forced sale in the underlying markets if some event were to trigger large volumes of redemptions.”

The Financial Times article noted the same concerns as those of the OFR, writing:

“Adding to the concerns of bond bears, the market’s liquidity — the ability of traders to buy and sell securities smoothly and without moving prices excessively — has diminished dramatically. That exacerbates sell-offs and could in the worst case turn a natural correction into a crash — especially if retail investors are frightened by the fact that their supposedly safe bond funds can lose money and dump the asset class.”

According to Bloomberg data, corporations have issued an astounding $9.3 trillion of bonds since the start of 2009 as borrowing costs have plummeted as the Fed cut and maintained its Fed Funds rate in the zero bound range. Much of the proceeds of those corporate bond offerings found their way into the stock market through corporate share buybacks, pushing stock prices artificially higher.
When you put all of these factors together, it’s clear this is an unprecedented era of risk with little visibility on how markets will behave during periods of extreme stress

8--Russia's Su-35 Fighter: A Trump Card Up Beijing's Sleeve in South China Sea

9--Paul predicts dollar demise

The end result of this needless bullying by the United States will hasten the one thing Washington fears the most: a world monetary system in which the US has no say and the dollar is relegated to playing second fiddle," the former congressman warned.

10--Socialist collapse in greece

The summit’s outcome is not only a new humiliating surrender by Tsipras’s Syriza party, but a bitter lesson on the bankruptcy of its pro-capitalist perspective of opposing austerity through deals negotiated with the EU.
Workers overwhelmingly reject EU austerity in Greece and throughout Europe. This was the driving force behind the election of Syriza in Greece. It is reflected in mass protests against austerity held last weekend in Britain, bitter opposition to the Hartz IV social cuts in Germany, and the discrediting of the Socialist Party (PS) in France. Nonetheless, the EU has succeeded in forcing Syriza to impose ever more draconian austerity measures and cross all its own “red lines,” accepting all of the cuts demanded by the banks, and more.

This is not an expression of great strength on the part of the EU, a widely reviled organization that speaks for a financial aristocracy comprised of a tiny minority of the European population. Rather, it is an expression of the class character of Syriza and its hostility to socialist revolution and the working class.
As a party speaking for sections of the Greek capitalist class and affluent layers of the middle class, it accepts the entire free-market economic and social framework of the EU. From the outset it pledged not to repudiate the Greek debt or impose capital controls to halt the outflow of cash from Greek banks.

Facing a cutoff of credit from the EU, it raided billions of euros of cash reserves from Greek public institutions to pay off its creditors. Among these creditors is Greece’s own not insubstantial banking sector, where Syriza officials and their financial bankers store much of their wealth.
Tsipras and other Syriza officials have spent untold hours cajoling and pleading with the representatives of finance capital in one country after another. They have never made an appeal to the working class, either in Greece or the rest of Europe, to mobilize in opposition to the attacks by the various governments or the EU.

The leaders of the EU, for their part, had already taken the measure of Syriza before it came to power. They saw it as the representative not of the insurgent Greek masses, but of bankrupt Greek capitalism. That is why, even as Europe teetered on the brink of a financial crisis provoked by the EU’s reckless cuts and its threats to expel Greece from the euro zone, EU officials ruthlessly pressed their advantage.

11--Spy Agency’s Secret Plans to Foster Online “Conformity” and “Obedience” Exposed

Though its existence was secret until last year, JTRIG quickly developed a distinctive profile in the public understanding, after documents from NSA whistleblower Edward Snowden revealed that the unit had engaged in “dirty tricks” like deploying sexual “honey traps” designed to discredit targets, launching denial-of-service attacks to shut down internet chat rooms, pushing veiled propaganda onto social networks, and generally warping discourse online.

Among the most troubling revelations is a 42-page internal JTRIG memo that describes in detail how the elite unit developed, maintained, and apparently sought to expand its “scientific and psychological research into how human thinking and behavior can be influenced” in order to increase its ability to “manipulate public opinion” via online tools like email, social media, video, discussion forums, and other platforms.
Greenwald and Fishman argue JTRIG’s self-documented exploits are most notable because of their “extensive use of propaganda methods and other online tactics of deceit and manipulation” that are not only reserved for “suspected foreign enemies” or criminals, as the agency continues to claim, but have also been used against other groups and individuals that the agency deems threatening or “politically radical.”

12---The Rise of the “Non Leftist Left”. The Radical Reconfiguration of Southern European Politics

Today the radicalized middle class looks for practical, specifically defined and government-sponsored policies that can restore their past prosperity.  They do not aim to ‘level the playing field’ for everyone but to prevent their proletariazation.  They reject the politics of the traditional left parties because class struggle and worker-centered ideologies do not promote their own social aspirations

For most radicalized middle class activists the culprits are ‘austerity’, the mega-bank swindlers and the political kleptocrats.  They seek parties that can reform or moralize capitalism and restore ‘individual dignity’.  They want to kick out corrupt officials.  They demand ‘participatory democracy’ rather than the traditional left’s goal of public ownership under worker control...

Syriza’s personalist leader, Alexis Tsipra,s appointed right wingers from former regimes to key posts.  He negotiated with the Troika and caved on all strategic issues dealing with debt payments, austerity and privatizations.  Syriza never considered ‘going to the people’Syriza’smoral crusade’ against capital is mended by their embracing capitalism and the colonial Eurozone system.
Syriza’s lack of class analysis, class struggle and class mobilization and its total commitment to working within amoralized capitalism and the Eurozone to restore middle class status and security has resulted in the most abject conformity and surrender – punctuated by shameless buffoonery on the part of some leaders...

On a much broader front, the leaders of theNLL have not organized any mass protests – let alone formed a mass movement which would seriously challenge the imperialist powers, NATO, the Middle East wars and US-EU sanctions against Russia......

M5S’, like Podemos and Syriza, expresses the disorganized radicalism of the young, frustrated lower middle class raging against their downward mobility, while refusing to break with the EU. They rail against the concentration of power in the hands of the banks, but refuse to pursue their nationalization. M5Smobilized 800,000 people in Rome recently but led them nowhere. ‘Five Stars’ convokes crowds to meet and cheer its leaders and to ridicule the power brokers.  Afterwards they all go home....

13--Nomi Prins, Keynote Speaker Who Addressed The Fed, IMF And World Bank, Warns There Is No Saving This Global Financial System
14--'It's time to hold physical cash,' says one of Britain's most senior fund managers
It may be time to put money under the mattress. High profile fund managers explain how to prepare for a 'systemic event'

15--(Gazprom deal with Germany gets the nod after) EU extends economic sanctions against Russia for 6 months - official

16---The Euro Was Doomed From The Start—–And Still Is

17--The Flash-Crash Trader's Kafkaesque Nightmare

Saturday, June 20, 2015

Today's Links

Robert McNamara on firebombing Japan

1--Carl Icahn: Donald Trump Is Completely Correct That "We Are In A Bubble Like You've Never Seen Before"

2---European Central Bank extends credit on fears of Greek bank collapse, wsws

In his latest blog, Finance Minister Yanis Varoufakis summed up some of the indices of the social catastrophe this has already produced in Greece. Since 2010, “Wages fell by 37 percent, pensions were reduced by up to 48 percent, state employment diminished by 30 percent,” and “Consumer spending was curtailed by 33 percent,” he wrote.
“Around 1 million families survive today on the meagre pension of a grandfather or a grandmother as the rest of the family members are unemployed in a country where only 9% of the unemployed receive any unemployment benefit. Cutting that one, solitary pension is tantamount to turning a family into the streets.”...

Tsipras’s speech, speaking alongside Putin only days after the EU extended sanctions against Russia for six months, contained an implicit threat. “The economic centre of the planet has shifted. There are new economic forces that are playing a role,” he said. “Russia is one of the most important partners for us.”  Repeal the bill of rights???
4---Iran Woos Oil Companies Ahead of Nuclear Deadline

Speaking of Russia, this week saw movement on two key natural gas projects for the Kremlin. Gazprom announced that it has agreed to build an expansion of the Nord Stream pipeline, which delivers gas to Germany via a pipeline beneath the Baltic Sea. Phase 3 and 4 of the Nord Stream would see 55 billion cubic meters of natural gas per year heading to Europe. The pipeline has been an important plank in Russia’s effort to bypass Ukraine.

Separately, Russia signed a preliminary deal with the Greek government, pushing forward Russia’s “Turkish Stream” pipeline. The agreement is not binding. And one can’t help but notice the timing. It comes just as Greece is in emergency talks with Europe over its debt, and Russia has even said that it would consider providing financial assistance to the Greek government. The announcement will give Greece added leverage in negotiations, and it also helps Russia push its project forward.

5---War dangers in South China Sea continue to rise

The Obama administration has attempted to portray China’s reclamation and construction as a sinister and threatening challenge to “freedom of navigation.” In reality, they are a belated reaction to the activities of other claimants over the disputed territories and a response to the US military build-up in the region as part of the “pivot” to Asia.
Since the 1980s, Vietnam has constructed numerous facilities and reclaimed land on the 28 islets and reefs that it occupies in the Spratlys, including lighthouses, airstrips, ports and troop barracks. The Philippines has done the same on the 10 islands and reefs it holds. Malaysia, which occupies seven islands and reefs, has an airfield on the largest and stations troops on all them.

While the US refuses to sign the United Nations Convention on the Law of the Sea (UNCLOS), it has backed the legal action initiated in 2013 by the Philippines to challenge China’s claims in the Permanent Court of Arbitration in The Hague. In December 2014, Washington, while posturing as “neutral” in the territorial disputes, issued a State Department report asserting that China’s claims were contrary to international law—laws which the US does not recognise.
China has stated that it will not accept any UN court ruling against its claims and its activities in the South China Sea are at least in part motivated by concerns that the Philippines, backed by the US, could seek to exploit a decision in Manila’s favour to occupy the disputed territories.

The construction of airfields and docking facilities on islands and reefs is also a response to the tactics that the US would employ in a war against China. In the event of conflict, American strategists, as part of their openly discussed “AirSea Battle” plans, advocate the imposition of a naval blockade that prevents Chinese shipping passing through the key sea lanes between the Indian and Pacific Oceans into the South China Sea. If China’s access to oil and other resources from the Middle East and Africa was cut off, its economy would collapse...

Next week, the Philippines military will carry out separate training exercises with both US and Japanese forces near Palawan Island in the South China Sea. Both the operations will involve surveillance aircraft—which Washington specifically threatened to use to fly into the exclusive zone around Chinese-held territory.....

The operations that China will be following most closely, however, is the massive Talisman Sabre exercise that will take place in July in northern Australia involving the US and Australian militaries, along with contingents from New Zealand and Japan. The George Washington aircraft carrier battlegroup arrived in Brisbane this week ahead of the exercise. In total, some 33,000 troops, 21 ships and submarines and over 200 aircraft will carry out what amounts to a rehearsal for a military confrontation with China in the South China Sea by a joint US-Australian task force

6---if the United States does decide to impose tariffs on China, Chen said, American companies operating in China, which account for more than 60 percent of China's exports to the United States, would surely be hurt the most. (China's commerce minister: U.S. has the most to lose in a trade war Washington Post, 2010

7---US-China Diplomatic Negotiations: Military Encirclement and Encroachment, James Petras

Obama’s so-called ‘pivot to Asia’ is best understood as a rapid escalation of military threats and exclusionary trade pacts designed to provoke, isolate, weaken and degrade China and push back its rise to economic supremacy in Asia.
So far the US strategy has failed. Washington’s diplomatic gestures have lacked the necessary economic substance and incentives to its ‘allies’; its much-ballyhooed trade agreements have floundered in the face of far superior and inclusive Chinese initiatives, including its new $100 billion-dollar Infrastructure Investment Bank and its more than $40 billion dollar economic agreements with the government of India.

In the face of its economic failures the Pentagon has opted for flagrant military encroachments on Chinese airspace. Specifically, US warplanes are directed to overfly China’s ongoing construction of military installations on atolls in the South China Sea. The Chinese Foreign Office and Defense Ministry have vigorously protested these violations of its sovereignty. The Obama regime has brashly rejected China’s diplomatic protests and affirmed Washington’s ‘right’ to encroach on Chinese territorial waters.
After a quarter of a century of failing to dominate China via economic penetration by US multi-nationals and through the liberalization of its financial system, Washington has discarded its ‘softer’ diplomatic approach and adopted a ‘proto-war’ stand. This policy uses economic boycotts, military encirclement and encroachment on Chinese maritime, aerial and land sovereignty in the hope of provoking a military response and then evoking a second ‘Pearl Harbor’ as a pretext for a full scale war engulfing its Asian allies (and Australia) in a major war in the Asia-Pacific region.

China’s market successes have replaced the US as the dominant economic power in Asia, Latin America and Africa. In the face of this ‘usurpation’ the US has dropped the velvet glove of diplomacy in favor of the iron fist of military provocation and escalation. The US military budget is five times greater than China’s, whereas China’s investments and financing of economic projects throughout Asia, Latin America and the BRIC countries are ten times greater than those of the US.
China’s ‘economic pivot’ will clearly enhance Beijing’s global position over the medium and long-run, if the US’s reckless and short-term military superiority and territorial aggression does not lead to a devastating world war!

In the meantime, China is developing its military capacity to confront the ‘US pivot to war’. China’s leaders have devised a new defensive strategy, boosting its naval capacity and shifting from strictly territorial defense to both defense and offense on land, air and sea. Off shore defense is combined with open sea protection to enhance China’s capability for a strategic deterrent and counter-attack. China’s annual military spending had increased on average ten percent per annum in anticipation of the Pentagon shifting 60% of its fleet to the Pacific over the next five years.

8--Damning survey shows Ukrainians want peace

9--Judaism vs Jewish Identity Politics – Rabbi Yaakov Shapiro and Gilad Atzmon
Watch minute 29 thru 43 Is it all true or not?  I don't know

10--"Thucydides's trap"? China vs US not inevitable

The United States has intervened the South China Sea issue time and again lately. China firmly opposes it and reiterated that the united states is not a party in the South China Sea disputes, which are between China and other claimants and should be handled by those directly involved.
The situation has many people pondering how the two countries can avoid "Thucydides's trap" -- the notion an established power becomes so anxious about the rise of a new power that a struggle leading to war becomes inevitable. And how can they build their new-model relationship featuring peaceful coexistence and common development?

China and the United States should realize that the targeting of this new relationship is a strategic choice by both sides and requires unremitting efforts despite challenges. The sides have more incentives to enhance communication and cooperation than they do differences.
It should be kept in mind that a solid foundation has been established for the formation of the new relationship. In 2014, bilateral trade exceeded 550 billion U.S. dollars. China and the United States are each other's second-largest trading partners.

The number of Chinese traveling to the United States and Americans traveling to China each day adds up to more than 10,000.
The more than 90 dialogue mechanisms existing between China and the United States, with the S&ED and CPE included, have ensured smooth channels for communication, and for dispute settlement to some extent.
Heads of the two states have had several fruitful meetings. Besides their first summit in 2013, Obama paid a visit to China in November 2014. The two leaders have also met on the sidelines of multilateral meetings, such as the eighth summit of the G20 in September 2013 and the third Nuclear Security Summit in March 2014. Their talks touched upon a wide range of issues and face-to-face meetings helped enhance understanding and trust

11--Carter : "there will not be a single state of Iraq."
Carter addressed what would happen if a "multi-sectarian Iraq" -- a country where Sunnis, Shiites and Kurds live together -- is not possible.
"If that government can't do what it's supposed to do, then we will still try to enable local ground forces, if they're willing to partner with us, to keep stability in Iraq," he said. "But there will not be a single state of Iraq."

13--Carter speaks out against partition (then why are they arming ISIS?)

“This type of legislation risks fracturing the government of Iraq,” Carter told Senate Armed Services Chairman John McCain (R-Ariz.). “Directly arming the Kurds or other groups within Iraq is inconsistent with the longstanding U.S. foreign policy of working to maintain a stable, unified Iraq and could be viewed by the government of Iraq as directly interfering in Iraq’s internal affairs.”
Carter also said the amendment “fuels false narratives in Iraq and elsewhere in the region that the United States intends to partition the country.”....

At the State Department, spokeswoman Pooja Jhunjhunwala said it was U.S. policy that all arms transfers to Iraq “must be coordinated via the sovereign central government.”
The provision pits the new Iraqi government led by Prime Minister Haider al-Abadi against the Kurdistan Regional Government in Northern Iraq, with both sides employing high-powered Washington lobbyists to press their interests.
The Iraqi government is represented by the Podesta Group, according to disclosure forms, while the Kurds have retained Squire Patton Boggs, Greenberg Traurig and other firms.

14--Who Is the Biggest Aggressor in the South China Sea?

In 1996, Vietnam occupied 24 features in the Spratly Islands (source).  At that time, according to the same source, China occupied nine. By 2015, according to the United States government, Vietnam occupied 48 features, and China occupied eight.
On May 13, U.S. Assistant Secretary of Defense, David Shear, said this to the Senate Foreign relations Committee: “Vietnam has 48 outposts; the Philippines, 8; China, 8; Malaysia, 5, and Taiwan, 1.”
In the past 20 years, according to the United States, China has not physically occupied additional features. By contrast, Vietnam has doubled its holdings, and much of that activity has occurred recently. The Vietnamese occupations appear to have increased from 30 to 48 in the last six years.
Shear also pointed out that as of his speech, China did not have an airfield as other claimants did. He said:
All of these same claimants have also engaged in construction activity of differing scope and degree. The types of outpost upgrades vary across claimants but broadly are comprised of land reclamation, building construction and extension, and defense emplacements. Between 2009 and 2014, Vietnam was the most active claimant in terms of both outpost upgrades and land reclamation, reclaiming approximately 60 acres. All territorial claimants, with the exception of China and Brunei, have also already built airstrips of varying sizes and functionality on disputed features in the Spratlys.

It appears China has now built an airfield and that this was already visible in April 2015, when the Daily Mail reported that “images showed a paved section of runway 505m by 53m on the northeastern side” of Fiery Cross Reef. Now media pundits are engaged in a debate about how many acres China has


 China’s two-pronged strategy of what I term “incremental assertiveness” in the South China Sea is designed to change facts on the water to strengthen China’s position while simultaneously cementing economic ties with neighboring states to draw them closer into China’s orbit, thereby making them think twice about challenging Beijing (See: “Will China Change its South China Sea Approach in 2015?”). ....

China is also approaching a series of important meetings where it would prefer to have the South China Sea issue not dominate discussions and hamper progress in other areas, beginning with the annual Strategic and Economic Dialogue (S&ED) in Washington, D.C. later this week ahead of President Xi Jinping’s visit to the United States in September

Thursday, June 18, 2015

Today's Links

Today's quote:  "The 2008 crash and subsequent developments have revealed certain fundamental realities about American society. All of the official institutions, including the presidency, the courts, Congress and the financial regulators, have worked single-mindedly to shield the banks and the financial elite and enable them to grow even richer.
So-called “democracy” in America is a façade. The reality is a plutocracy―the rule of the rich." Rolling in Dough

Quote 2 from Ron Unz comments: Battle for Blair Mountain
The Troika should be viewed as mafiosa loan sharking operation like the kind that John Gotti used to run in his youth. The intent from day one was to steal the assets of Greece for German Eurotrash Bankster Gangsters.
Abolish the Greek debt. If the German Bankster-Gangsters try to pass this illegitimate debt off to the German People…the German People should rise up and pack the German Banksters-Gangsters Wives-Daughters-Sisters and Nieces into sexual slavery in the Sudan.

1--The call to reinstate the draft Ron Fournier
2--Russia to construct new gas pipeline to Germany via Baltic Sea – Gazprom Putin outfoxes Obama again

Gazprom is planning to construct two threads of a new gas pipeline with a capacity of 55 billion cubic meters per year. Shell, E.On and OMV have been invited to participate, said the company. This could double direct supplies of Russian gas to Europe.
The four companies have signed a memorandum of intent to create the gas transportation infrastructure to ensure direct supplies of Russia gas to European consumers.

"The memorandum demonstrates the intention of the sides to construct the two threads of the pipeline from the coast of Russia through the Baltic Sea to the coast of Germany. The capacity of the new pipeline will be 55 billion cubic meters annually," Gazprom said in a statement.
The new pipeline will have a similar route to Nord Stream, said Gazprom spokesman Sergey Kupriyanov.
The company’s stake will be no less than 51 percent, he added.
Given declining production in Europe, as well as a global increase in demand for gas, Gazprom, E.ON, Shell and OMV will shortly create a joint venture to implement the project intended to fill the demand gap, TASS reports.

3--NATO Chief Jens Stoltenberg Unveils Biggest Build-Up Since Cold War---Numbskull US protects the maginot line while putin slips thru the Ardennes and onto Paris

And therefore NATO has to respond. We are responding, and we are doing so by implementing the biggest reinforcement of our collective defenses since the end of the Cold War and the Spearhead force is a key element of this reinforcement, and it's great to see that it's functional, and that it's exercising here in Poland
More than 15,000 troops from 22 nations are also taking part in operation Allied Shield, a series of exercises designed to test the strength and readiness of NATO and allied armed forces.

This Alliance is Ready, Willing and Able"

Writing in the Wall Street Journal, Stoltenberg and Gen. Breedlove, the head of US European Command and NATO's supreme allied commander in Europe said: "We are in Poland this week to meet and see allied forces take part in Exercise Noble Jump, the first deployment of NATO's new Very High Readiness 'Spearhead Force'.

Allied Shield will demonstrate that NATO is able to deploy combat forces anywhere within NATO's territory within days should a crisis break out or if allies are threatened," the NATO pair said.
"It will show the world that this alliance is ready, willing and able to deal with whatever challenges it faces."
"Moreover, the Spearhead Force is exactly that: the tip of the spear. Behind it lies the NATO Response Force, which allies have agreed to more than double in size over the coming months. It will consist of more than 30,000 soldiers, sailors, marines and aircrew, ready to reinforce allies or defend our security interests wherever needed," they said

4---The pipeline will be constructed jointly with Gazprom’s European partners: E.ON, Shell and OMV.

5--Russia economic isolation "impossible"

The official noted that, for his part, he will use his speech to "point out that in the age of economic globalization, in the age of all sorts of challenges and risks, it is impossible to imagine a return to the strategy of the economic blockade, just as it impossible to imagine Russia's isolation. I believe that we cannot afford to lose Russia as a strategic partner. After all, the world economy requires cooperation, openness and accessibility between partner nations, and the development of trade relations. The global economy and political cooperation are closely linked to one another."...

The St. Petersburg International Economic Forum opened on Thursday and is set to run until Saturday. The annual event has taken place since 1997, and is positioned as a unique growth and stability network for emerging markets and growth economies, with discussions, forums and round tables on issues of economic and business importance. Last year, over 4,700 participants from 73 countries attended the Forum

6--Greece's Tsipras heads to Russia for some love

There is speculation that talks between the leaders will focus on the proposed construction of a gas pipeline through Greece and the country's potential participation in a new BRICS development bank, set up by Brazil, Russia, India, China and South Africa with a reserve fund for emergency situations.

7---Global Disorder Reigns!" George Soros Warns Washington "Mend Relations With China" Or Face World War 3

In the financial sphere the Bretton Woods institutions—the IMF and the World Bank—have lost their monopoly position. Under Chinese leadership, a parallel set of institutions is emerging. Will they be in conflict or will they find a way to cooperate? Since the financial and the political spheres are also interconnected, the future course of history will greatly depend on how China tackles its economic transition from investment and export-led growth to greater dependence on domestic demand, and how the US reacts to it. A strategic partnership between the US and China could prevent the evolution of two power blocks that may be drawn into military conflict.
How did we reach this point of global disorder?...

Then in 1997, a group of neoconservatives argued that the US should use its military supremacy to impose its national interests, and established a think tank called the Project for the New American Century, “to promote American global leadership.” But that was a false approach: military force cannot be used to rule the world. After the terrorist attack of September 11, the neocons persuaded President George W. Bush to attack Iraq on dubious grounds that turned out to be false, and the US lost its supremacy. The Project for the New American Century had approximately the same lifespan as Hitler’s Thousand-Year Reich: around ten years.

On the financial side, by contrast, there was a clear consensus—the so-called Washington Consensus—on America’s role in the world. It became dominant in the 1980s under the leadership of Ronald Reagan and Margaret Thatcher. It had strong ideological support from market fundamentalists; it had a supposedly scientific foundation in the Efficient Market Hypothesis and Rational Choice Theory; and it was efficiently administered by the International Monetary Fund (IMF). The consensus was a much more subtle compromise between international governance and national self-interest than the neocons’ view that military power is supreme.

Indeed, the Washington Consensus had its roots in the original compromise on which the Bretton Woods institutions were founded. John Maynard Keynes proposed a truly international currency, the bancor, but the US insisted on the dollar as the world’s reserve currency and it prevailed. In the memorable words of George Orwell’s Animal Farm, “all animals are equal, but some animals are more equal than others.” ...

Unfortunately, the scientific foundations of this approach proved to be ill conceived. Unregulated financial markets are inherently unstable: instead of a general equilibrium that assures the optimum allocation of resources, they produce financial crises. This was dramatically demonstrated by the crash of 2008. By coincidence, 2008 marked both the end of America’s political supremacy and the demise of the Washington Consensus. It was also the beginning of a process of financial and political disintegration that first manifested itself in the microcosm of the European Union, but then spread to the world at large.
The crash of 2008 had a lasting negative effect on all the economies of the world, with the notable exception of China’s...

International governance on a global scale is equally fragile. The world may break up into rival camps both financially and politically. China has begun to build a parallel set of financial institutions, including the Asian Infrastructure Investment Bank (AIIB); the Asian Bond Fund Initiative; the New Development Bank (formerly the BRICS Bank); and the Chiang Mai Initiative, which is an Asian regional multilateral arrangement to swap currencies. Whether the two camps will be able to keep their rivalry within bounds will depend on how China manages its economic transition and on how the US reacts to it

The US would be making a major concession if it opened the door to allowing the renminbi to become a potential rival to the dollar. It could demand similar concessions from China in return, but that would be the wrong approach. The relationship between two great powers is not a zero-sum game: one party’s gain is not necessarily a loss for the other.
China is seeking SDR status for the renminbi not to please or hurt the US but for reasons of its own that are only indirectly connected with China’s ultimate ambition of replacing the US dollar as the dominant currency in the world. China seeks to use financial liberalization as an engine of growth for the Chinese economy

On his last state visit to the US in 2013, President Xi spoke of a “new type of great power relationship.” The subject has been widely discussed in China since then. President Obama should outline his own vision by drawing a distinction between Putin’s Russia, which has replaced the rule of law with the rule of force, and today’s China, which does not always abide by the rule of law but respects its treaty obligations. Russian aggression needs to be firmly resisted; by contrast China needs to be encouraged—by offering a more constructive alternative—to avoid the route of military aggression. This kind of offer may elicit a favorable response. Rivalry between the US and China is inevitable but it needs to be kept within bounds that would preclude the use of military force....

China has more in common with Russia than with the US. Both Russia and China consider themselves victims of America’s aspiration to world domination. ...the US government should nevertheless make a bona fide attempt at forging a strategic partnership with China

8---India to sign free trade deal with Russia-led Eurasian Economic Union

9--Wage gains? Uh, uh....Real Hourly Earnings Drop To Lowest In 2015

10--You've Been Warned: Calls For Mandatory "National Service" For Americans Aged 18-28 Have Begun
Ron Fournier is the Senior Political Columnist and Editorial Director of National Journal. Prior to joining NJ, he worked at the Associated Press for 20 years, most recently as Washington Bureau Chief. A Detroit native, Fournier began his career in Arkansas, first with the Hot Springs Sentinel-Record and then with the Arkansas Democrat and the AP, where he covered the state legislature and Gov. Bill Clinton. In January 1993, Fournier moved to Washington, where he covered the White House and presidential campaigns for the AP. ...

From the National Journal:
I know a better way to fight ISIS. It starts with an idea that should appeal the better angels of both hawks and doves: National service for all 18- to 28-year-olds.

Require virtually every young American—the civic-minded millennial generation—to complete a year of service through programs such as Teach for America, AmeriCorps, the Peace Corps, or the U.S. military, and two things will happen:
11--World Hasn’t Had So Many Refugees Since 1945, Report Says
12--U2′s Bono Partners with Monsanto to Flood African Agriculture with GMOs

13--NATO Launches “Trident Juncture 2015″, Largest Military Exercise since the End of the Cold War

14--Housing starts on a per capita basis. It’s not yet up to prior recession lows:

15--QE asset inflation Millionaires projected to own 46 percent of global private wealth by 2019

In total, the world added $17.5 trillion of new private wealth between 2013 and 2014. The report notes that nearly three quarters of all these gains came from previously existing wealth. In other words, the vast majority of money gained has been due to pre-existing assets increasing in value—not the creation of new material things.
This trend is the result of the massive infusions of cheap credit into the financial markets by central banks. The policy of “quantitative easing” has led to a dramatic expansion of the stock market even while global economic growth has slumped.
While the wealth of the rich is growing at a breakneck pace, there is a stratification of growth within the super wealthy, skewed towards the very top.

An Oxfam report from January, for example, shows that the bottom 99 percent of the world’s population went from having about 56 percent of the world’s wealth in 2010 to having 52 percent of it in 2014. Meanwhile the top 1 percent saw its wealth rise from 44 to 48 percent of the world’s wealth.
In 2014 the Russell Sage Foundation found that between 2003 and 2013, the median household net worth of those in the United States fell from $87,992 to $56,335—a drop of 36 percent. While the rich also saw their wealth drop during the recession, they are more than making that money back. Between 2009 and 2012, 95 percent of all the income gains in the US went to the top 1 percent. This is the most distorted post-recession income gain on record

16---Greek central bank warns of “uncontrollable crisis

17--Rolling in dough; Rich rule America

These rulings are part of an accelerating legal offensive by the American financial aristocracy not only to exonerate itself for criminal actions that triggered the worst economic crisis since the Great Depression, but to assert the untrammeled domination of private capital over the public interest.
It is approaching seven years since the bankruptcy of Lehman Brothers on September 15, 2008 and the government bailout of AIG the following day. The net result of the policies carried out in the ensuing years by Democratic and Republican administrations alike, backed by Congress and the courts, is a massive increase in the wealth of the richest one percent of the population, a further concentration of power among a handful of Wall Street banks, and legal impunity for financial malefactors who are responsible for untold human suffering.
Not one leading banker has been prosecuted, let alone jailed. Rather, financial gangsters are being shielded by the government and vindicated by the courts...

The 2008 crash and subsequent developments have revealed certain fundamental realities about American society. All of the official institutions, including the presidency, the courts, Congress and the financial regulators, have worked single-mindedly to shield the banks and the financial elite and enable them to grow even richer.
So-called “democracy” in America is a façade. The reality is a plutocracy―the rule of the rich

18--End of sanctions? Europe courting Iran for business bonanza

Last month, Germany hosted Iran’s Minister of Petroleum Bijan Zangeneh for rare high-level discussions about investments in oil, gas and petrochemical industries.

19--Policy elites choose to repeat the mistakes made in iraq

In that regard, apparent disagreement on specifics masked a deeper consensus consisting of three elements:
* That ISIS represents something akin to an existential threat to the United States, the latest in a long line going back to the totalitarian ideologies of the last century; fascism and communism may be gone, but danger is ever present.
* That if the United States doesn’t claim ownership of the problem of Iraq, the prospects of “solving” it are nil; action or inaction by Washington alone, that is, determines the fate of the planet.
* That the exercise of leadership implies, and indeed requires, employing armed might; without a willingness to loose military power, global leadership is inconceivable


what the former secretary of defense, think tank CEO, and retired general chose not to say in fretting about ISIS is as revealing as what they did say. Here are some of the things they chose to overlook:
* ISIS would not exist were it not for the folly of the United States in invading -- and breaking -- Iraq in the first place; we created the vacuum that ISIS is now attempting to fill.
* U.S. military efforts to pacify occupied Iraq from 2003 to 2011 succeeded only in creating a decent interval for the United States to withdraw without having to admit to outright defeat; in no sense did “our” Iraq War end in anything remotely approximating victory, despite the already forgotten loss of thousands of American lives and the expenditure of trillions of dollars.
* For more than a decade and at very considerable expense, the United States has been attempting to create an Iraqi government that governs and an Iraqi army that fights; the results of those efforts speak for themselves: they have failed abysmally.
Now, these are facts

My own contribution to the televised debate was modest and ineffectual. Toward the end, the moderator offered me a chance to redeem myself. What, she asked, did I think about Panetta’s tribute to the indispensability of American leadership?
A fat pitch that I should have hit it out of the park. Instead, I fouled it off. What I should have said was this: leadership ought to mean something other than simply repeating and compounding past mistakes. It should require more than clinging to policies that have manifestly failed. To remain willfully blind to those failures is not leadership, it’s madness.

20--Asia: On the Rocks

. China security expert Yu Bin writes:
Despite its long historical record of sovereignty claims, China physically possess the fewest islets in the Spratlys (eight compared with 29 by Vietnam and nine by the Philippines) and is the last one to construct runways and other large-scale facilities (Vietnam has constructed 10,000 square meters of facilities in its occupied reefs since 2011). Nor has China resorted to the use of force to retake the reefs in the Spratlys from other claimants but chooses instead to construct those islets it has physically possessed......
the real drivers of bilateral tension are elsewhere. U.S. modernization of its nuclear arsenal, our sale of advanced fighters to Japan, the push for South Korea to adopt our missile defense shield: These are the more structural provocations.
Viewed from this more strategic vantage point, the South China Sea is not just about fishing rights and potential energy deposits. The real issue is the degree to which China can use the area for its new class of nuclear submarines and whether, conversely, the United States can box China in.
The South China Sea, in other words, is a make-or-break region: where the United States either holds on to its geostrategic advantage or China manages to “break out” and challenge U.S. hegemony....

Beijing has effectively accomplished this challenge in the geo-economic sphere, with its initiatives to set up a parallel set of global financial institutions. But up until recently, China simply didn’t have sufficient nuclear weapons or conventional forces to assert itself regionally, much less globally. Creating another leg in its strategic forces — alongside a very modest number of nuclear-tipped ICBMs — represents a potential game-changer, but only if China has a home for these subs and a way for them to roam the Pacific and Indian Oceans...

When the United States wades into the South China Sea dispute, it’s not just supporting allies like the Philippines or trying to drive a further wedge between China and Vietnam. Nor is it just about protecting the sea lanes through which so much of the world’s resources flow.
The “who lost the South China Sea” accusation that neoconservatives, liberal hawks, and Republican presidential candidates are preparing to level against the Obama administration — so reminiscent of of the 1950s debate over “who lost China?” — is really about the preservation of U.S. global power..

21--Get Ready for BRICS plus Germany, pepe escobar

Just as much of Europe is stagnant German economic ties with Asia are growing rapidly. Eventually politcs has to catch up with economics

That happened in the framework of a major ‘Pipelineistan’ game-changer. After Moscow cleverly negotiated the realignment of South Stream towards Turk Stream, right up to the Greek border, Putin and Greek Prime Minister Tsipras also agreed to a pipeline extension from the Turkish border across Greece to southern Europe. So Gazprom will be firmly implanted not only in Turkey but also Greece, which in itself will become mightily strategic in European ‘Pipelineistan’.

So Germany, sooner or later, must answer a categorical imperative - how to keep running massive trade surpluses while dumping their euro trade partners. The only possible answer is more trade with Russia, China and East Asia. It will take quite a while, and there will be many bumps on the road, but a Berlin-Moscow-Beijing trade/commercial axis – or the “RC” in BRICS meet Germany - is all but inevitable

22--Italy moves towards Russia

The “Moscow Agreement”
Indeed that Moscow trip by Renzi — the first official visit by a Western leader to Russia since the annexation of Crimea — signaled that Italy’s foreign policy was going to stray from its European allies (French President Francois Hollande held a brief talk with Putin at the Moscow airport in December 2013).

But the French fatally overestimated the time it would take the Germans to transit the Ardennes and reach the Meuse. The French Army would have had ample time to concentrate on any possible crossing of the Meuse, it was believed. But in 1938, a French parliamentary deputy, warned of the threat of a German breakthrough in the Ardennes-Sedan region.

This is, of course, precisely what happened. In one of military history’s most audacious feats, German mechanized forces crossed the Meuse, shattered weak French defenses there, and raced for the Channel, cutting off the British Expeditionary Force and France’s armies in the north that were poised to invade Germany’s Ruhr industrial region. The Dunkirk disaster ensued. Hitler’s foolish hopes of a German-British alliance saved the British forces at Dunkirk from total destruction.

Germany’s racing Panzer divisions and their close air support then drove south, sweeping aside French divisions, and taking Paris on 14 June, 1940. The German advanced across northern France and then down the Rhone Valley. More than 300,000 French mobile and “interval” troops with large numbers of heavy artillery were deployed to defend the Maginot Line.

Wednesday, June 17, 2015

Today's Links

Today's quote:  The only ones getting a free ride from the Fed’s zero interest rate policy (are) the Wall Street banks...who live off the carcasses of the dying middle class...

An economy built upon the consumption of iGadgets, Cheetos, meat lovers stuffed crust pizza, and slave labor.... is doomed to fail

1--Aren't rates supposed to rise in a normal recovery?
Dwindling GDP:
Well, one can debate whether the US economy is strengthening, especially when one considers that in reality quite the opposite is taking place...

... confirmed recently by none other than Goldman which last month cut its long-term potential growth rate for the US by half a percent from 2.25% to 1.75%.

2--Some Troubling Numbers From The CBO

The Fed and Feds can talk about recovery all they want. But it’s just talk. If the US was truly in recovery, interest rates would be rising.


Remember the 6.5% unemployment rate bogey set by Bernanke in January 2013? Unemployment dropped below 6.5% in early 2014 on its way to 5.5% today. Did they raise rates? In 2013 we had two consecutive quarters of 4% GDP growth, with no Fed rate increase. In 2014 we had two consecutive quarters of 4.8% GDP growth, with no Fed rate increase. We have added ten million jobs and the stock market has tripled since 2009, with no Fed rate increase.
We are supposedly in the sixth year of an economic recovery and the Fed is still keeping the discount rate at a Lehman “world is ending” emergency level of .25%. Six years after the last recession the discount rate was 5.25%. The last time the unemployment rate was this low the discount rate was 4%. The only ones getting a free ride from the Fed’s zero interest rate policy and QE to infinity have been Wall Street banks, the .1% who live off the carcasses of the dying middle class...

In 1980 consumer credit outstanding as a percentage of personal income totaled 15%. Today it totals 22%, an all-time high. It is higher than the bubble peak in 2007-2008. Real per capita disposable income has only risen by 88% over the last 35 years. Meanwhile, real per capita consumer debt has risen by 288%. Wages and earnings from saving have been replaced by debt...

Boomers are entering their retirement years with $12,000 in retirement savings, while still in debt up to their eyeballs. There have been 10,000 Boomers turning 65 every day since 2010. This will continue unabated through 2029. This demographic certainty was already depressing consumer spending, as this age demographic spends far less than 25 to 54 year olds. Factor in the pitiful amount of savings and you have an ongoing spending implosion...

, the savings rate actually reached 1.9% in 2005, as the masses all believed they would live luxurious retirements off their home equity windfall. How’d that delusion work out? The current level of 5.6% is seen as troublesome by the powers that be. They cannot accept the crazy concept of saving and investment when their entire warped paradigm is built upon borrowing and consumption. Banks don’t make money when you save and they despise when you use cash. They can’t sustain their opulent lifestyles without their 3% VIG on every electronic transaction, 15% compounded interest on the $5,000 average credit card balance, billions in late fees for being one day late with your payment, $4 on every ATM transaction, and the myriad of other fees and surcharges designed to bilk you and keep you from saving. The saving rate will continue to climb as people have no choice to make up for years of living beyond their means....

We have an over-indebted, under-employed youth who don’t have anything to spend. And lastly we have the 25 to 54 year old age bracket who should be in their prime earning and spending years who are still 4 million jobs short of where they were in 2007 before the Fed induced financial collapse. The only age bracket to gain jobs since the crisis has been 55 to 69, as they have been forced to work to make up for their lost interest income. The only people making job gains are those least likely to spend....

The spending crescendo in 2004 through 2007 was fueled by the Greenspan housing bubble and the $3 trillion of mortgage equity withdrawal used to buy BMWs, in-ground Olympic size pools, Jacuzzis, vacations to Tahiti, home theaters, granite countertops, stainless steel appliances, and boob jobs, by delusional, apparently brain dead Americans who fell for the Bernaysian propaganda spewed by the Wall Street criminal class, hook line and sinker...

Pompous, arrogant, egocentric assholes who write for the Wall Street Journal, run JP Morgan, or control monetary policy for the world, know exactly what they have done, what they are doing, and who is benefiting. We all know the benefits of ZIRP and QE have gone only to the .1% who run the show. We know income inequality is at all-time highs. We know TPP will be passed, because the corporate fascists control the purse strings of our political class. We know the status quo will be maintained at all costs by the Deep State.....

They might not have us figured out, but a growing number of critical thinking, increasingly pissed off people, have them figured out. The debt expansion days are numbered. A deflationary depression is in the offing. The coming civil strife, financial panic, war, and overthrow of the existing social order will rival the three previous tumultuous upheavals in U.S. history – American Revolution, Civil War, Great Depression/World War II. Fourth Turnings are a bitch.

Hopefully I’ve explained the situation to the satisfaction of Jon and Janet. The mood in this country is darkening by the day. There is no going back to the good old days of yesteryear. They are long gone. No amount of debt issuance and propaganda is going to work. The system is overloaded. The people are angry. The politicians are captured. The banking elite are ransacking the nation for every last dime they can get their grubby little hands on. The military industrial complex is itching for war with Russia and China. The world hates us. If you can’t see it coming, you are either blind, dumb, or an Ivy League educated economist. So go out and spend to make your slave owners happy.

4--Life in Ukraine Since the U.S. Coup There in Feb. 2014 eric zuesse

This is all true, the US-backed fascist regime turned life for ordinary people here in Ukraine to real hell. With the collapse of local currency 3-fold over one year and all prices skyrocketing into universe the overwhelming majority of population is on the verge of starvation. Corruption is hitting all time highs and still we are forced to serve combat military service to defend this fascist regime. Only three options available: either paying a bribe of up to usd 3000 so they fake you incapable for military services, going on a military service with a high chance of being injured or killed in combat or facing a prison term of up to 8 years. This is what the american-style democracy has brougth to Ukraine. As an american writer once wrote, anglo-american expansion brings debt and death.

5--US backed coup tips Ukraine into depression ....we've become more like Europe's Somalia."

When Ukrainians toppled a pro-Russian president last year, nowhere was the euphoria greater than in Lviv, a short drive from the EU border, where people have dreamt for generations of escaping Moscow's orbit to join the West.
More than a year of war and economic collapse later, nowhere else has the disillusionment been felt more harshly.
"Everyone thought Ukraine would suddenly turn into Poland," said mechanic Taras Yakubovsky, sitting by a cast-iron woodburner in his small garage, where work has dried up because customers can no longer afford car repairs. "But we've become more like Europe's Somalia."

6---attitudes toward NATO obligations have evolved within member countries. In a new Pew poll, when asked “If Russia got into a serious military conflict with one of its neighboring countries that is our NATO ally, do you think our country should or should not use military force to defend that country?” majorities in three of the most important European allies — Germany, France, and Italy — responded “should not.”
This amounts to a repudiation of the Article Five obligation to consider an armed attack against any one member state as an attack against all. In the poll, Americans expressed the most intent to live up to that obligation, with 56 percent saying “should.” But 37 percent of American respondents said “should not.” In light of such alliance-wide attitudes, it is fair to ask what NATO stands for today.

7--Shanghai Containerized Freight Index Totally Collapses, Top Carriers Wage Price War to Form Global Shipping Oligopoly

8---Time to Fire Mary Jo White: SEC Covers Up for Bank Capital Accounting Scam Promoted by Her Former Firm, Debevoise

Pam Martens and Russ Martens published a mind-boggling expose yesterday on how the SEC is refusing to stop an abuse by major banks that increases systemic risk. Large banks are continuing to fake their capital levels, via a ruse called a “capital relief trade” with hedge and pension funds. And Mary Jo White, the chairman of the SEC, is aware of this practice, which undermines the safety and soundness of financial institutions, and has done squat about it.
White is not just head of the SEC but also a member of the Financial Stability Oversight Council. She is undermining it and financial reform generally by her failure to take on this practice. Pam Martens and Russ Martens also charge the SEC chairman and her director of enforcement, Andrew Ceresney, with cronyism, since they both hail from the law firm Debevoise, which is an active player in this practice.

As much as there has been considerable consternation over Mary Jo White’s numerous lapses, like hiding behind the need for more data as an excuse for doing nothing about high frequency trading, her failure to secure more admissions of wrongdoing in SEC settlements, and her refusal to comply with Dodd Frank by virtue of too freely issuing waivers for mandatory sanctions, even to recidivist bad actors, this dereliction of duty is considerably more serious, because it increases systemic risk in a direct, tangible way.* Remember that technically permissible balance sheet fakery at Lehman, also known as Repo 105, allowed it to mask how sick it was

9---Anonymous backs new encrypted social network to rival Facebook

10--UN doing nothing to stop Saudi aggression on Yemen: Hamza al-Houthi

11---US signals first ever U-turn on Iran sanctions

Secretary of State John Kerry has acknowledged for the first time that a final nuclear deal would not require Iran to detail its past activities in order to lift sanctions on the country. 
“We’re not fixated on Iran specifically accounting for what they did at one point in time or another,” he said by video from Boston where he is recuperating from a broken leg.
"We know what they did," Kerry added. "We have no doubt. We have absolute knowledge with respect to the certain military activities they are engaged in. What we are concerned about is going forward."
Economic sanctions lie at the heart of nuclear negotiations between Iran and the P5+1 group of countries.

U.S. and European officials had previously signaled to maintain sanctions as long as the International Atomic Energy Agency had not issued a clean bill of health for Iran’s nuclear program.
Tehran has made it clear that it would not settle for anything short of complete removal of sanctions if a final deal were to be signed.
Iran is also cooperating with the IAEA and has pledged to clarify everything about what the West calls military dimensions of the country’s nuclear activities in the past.
Kerry said, “The possible military dimensions, frankly, gets distorted a little bit in some of the discussion.”
Iran says it is nuclear activities are purely civilian, aimed at generating electricity. Years of scouring of the country by IAEA inspectors, meanwhile, has not produced any trace of diversion.
IAEA chief Yukio Amana again verified non-diversion of Iran’s nuclear program in the latest report this month, though sticking to the agency's usual political line that it could not provide assurances about possible undeclared material.

12---US Air Force may deploy F-22 warplanes near Russia's border

13--Can China Contain America?  The US wants to provide security for the asia pacfic.
They'd be better off hiring Jack the Ripper

Last week Obama went to Beijing for the Asian Pacific Economic Cooperation (APEC) summit as the representative of the West and its centuries old grand project in East Asia. And what has that project been? History tells us that the West with its missionaries and soldiers, Obama’s predecessors, bathed the region in suffering and bloodshed. A short and incomplete list includes: the Opium Wars on China, the war on the Philippines, the nuclear bombing of Japan, the Korean and Vietnam wars, the bombings that laid waste Laos and Cambodia, the bloody CIA coup in Indonesia, and the military assault on the Korean movement to overthrow the Park dictatorship

14---Greek Debt Committee Just Declared All Debt To The Troika "Illegal, Illegitimate, And Odious"
People’s dignity is worth more than illegal, illegitimate, odious and unsustainable debt
Hooray for that

15---All retirees’ security is thus at risk when the massive overvaluation in fixed income and equity markets eventually rights itself."

16--Chinese non intervention: A thing of the past?

As President Xi Jinping’s “Silk Road” program of trade routes gets under way, with infrastructure projects planned across Central Asia, the Indian Ocean and the Middle East to Europe, China’s footprint abroad will expand from the $108 billion that firms invested abroad in 2013, up from less than $3 billion a decade earlier.
That is forcing China to take a more proactive approach to securing its interests and the safety of its people. With more engagement abroad there’s a risk that China, an emerging power with a military to match, is sucked into conflicts and runs up against the U.S. when tensions are already flaring over China’s disputed claims in the South China Sea.
“It is going to be a long, hard haul,” said Kerry Brown, director of the University of Sydney’s China Studies Centre. “You either have disruption as a new power rips up the rule book and causes bedlam or you’ve got a gradual transition where China is ceded more space but also expected to have more responsibility.”

17--The IMF “Defense” of it Actions against the Greeks is an Unintended Confession
As we (UMKC economists and NEP bloggers) and Paul Krugman have explained repeatedly, the fiscal response to a Great Recession does not require “difficult decisions” and “sacrifices.” It requires funding worthwhile projects that provide an enormous “win-win” for the nations suffering from the Great Recession – and it helps their neighbors’ economies. Germany’s economy would be much stronger today if it had not insisted on forcing Greece, Spain, and Italy into Great Depressions. Because of the inherently flawed structure of the euro, this requires the ECB to be used far more aggressively than was contemplated by its inept architects, but it can be done. It would be an awkward, inelegant, bastardized system, but the problem in getting it done isn’t the economics, it’s the toxic interconnection of politics, economic dogmas spread by the troika and the credulous media, and disdain of the EU core for the peoples of the EU periphery that pose the insuperable problems.

18--Russia cuts US debt holding by more than 40% over year "we don't need no stinking T-Bills"

19--Putin responds to US buildup in E Europe

While US officials claim that the positioning of weapons is meant only to facilitate military training exercises, a logical interpretation of the deployment of arms to these countries is that the US and its NATO allies are preparing to launch a war against Russia. For its part, the Putin regime is responding accordingly, shoring up its military forces and making its own preparations for war by whipping up reactionary Russian nationalism...

Since the collapse of the Soviet Union in 1991 NATO has been working to build a solid military bloc on Russia’s western border. The Czech Republic, Hungary and Poland joined in 1999; the Baltic states, Bulgaria, Slovakia, Slovenia and Romania in 2004; and Albania and Croatia in 2009. The fascist-led coup in Ukraine last year, backed by the US and Germany, was aimed at pulling that country out of Russia’s sphere of influence and towards the West. The far-right puppet government has dropped Ukraine’s non-aligned status, adopted in 2010, and is moving towards NATO member status.
With the US in the lead, NATO is already engaging in provocative military exercises all along Russia’s western border from the Arctic Ocean to the Black Sea. Numerous “near-miss” encounters between NATO naval vessels and aircraft and Russian aircraft have been reported in recent months. In February US armored personnel carriers were paraded in the Estonian city of Narva, just a few hundred yards from the Russian border.
With the growing buildup of US and NATO forces in Eastern Europe, one misstep by either side could spark a conflict between the two largest nuclear-armed powers on the planet, which would devastate the planet.

20--Why Anti-Keynesian Views Survive'
Simon Wren-Lewis:
Speak for yourself, or why anti-Keynesian views survive:
The evidence for the Keynesian worldview is very mixed. Most economists come down in favor or against it because of their prior ideological beliefs. Krugman is a Keynesian because he wants bigger government. I’m an anti-Keynesian because I want smaller government.
Statements like this tell us rather a lot about those who make them. As statements about why people hold macroeconomic views they are wide of the mark. Of course there is confirmation bias, and ideological bias, but as the term ‘bias’ suggests, it does not mean that evidence has no impact on the views of the majority of academics.
The big/small government idea makes no theoretical sense. Why would wanting a larger state make someone a Keynesian? Many Keynesians, and most New Keynesians, nowadays acknowledge that monetary policy should be used to manage demand when it can. They also know that any fiscal stimulus only works, or at least works best, if it involves temporary increases in government spending. So being a Keynesian is not a very effective way of getting a larger state.
It is also obviously false empirically. ...

21-- Pro west Kiev wants to de-industrialise the land

did much more than it was permitted by the Empire. He crossed red lines in his internal policies by banning Western companies from buying Russian resources; he crossed the red line in his foreign policy while protecting Syria and securing Crimea. He began to re-industrialise Russia, produce wheat and buy Chinese goods bypassing dollar. He limited power of oligarchs.

...The Kiev regime could use this reluctance of Putin and broker a good stable peace. But their sponsors want war. The breakaway Donbass was the power engine of all the Ukraine. The new regime is keen to de-industrialise the land: industrial workers and engineers speak Russian and relate to the Soviet Union and to Russia its heir, while Ukrainian-speakers and supporters of the regime are mainly small farmers or shopkeepers. This is a standard fare of ex-USSR: de-industrialisation is the weapon of choice for pro-Western regimes from Tajikistan to Latvia. Of Russia, too: the first thing carried out by pro-Western reformers in Gorbachev and Yeltsin’s days was de-industrialisation. It is said that Obama’s Transatlantic Free Trade Area (TAFTA) will de-industrialise Germany and France. Thus industrial Donbass has good reasons resisting its inclusion in the Ukraine, unless this will be a federated state leaving much of its authority to the provinces. Kiev prefers war depopulating the region

22---Pentagon's Carter sides with Israel on Iran nukes issue?

Ashton Carter, who shares Israel and the Gulf States’ concerns about Iran becoming a nuclear threshold state with breakout capabilities measured in months, knows the nitty-gritty of the Iranian program and argued against letting Iran having nuclear capabilities. In fact, in the past, Carter called for the use or threat of force to prevent Iran from obtaining nuclear weapons.

As the White House is more or less blocking the access of top Israeli government officials to the administration when it comes to the Iran nuclear file, Israel can leverage its excellent relations with the Pentagon to try to highlight, address and close key loopholes in the proposed agreement, while working with an expert on the topic who has not been involved in the negotiation but whose voice the president is very likely to take into consideration. Ash Carter’s realistic and pragmatic view on how the Middle East and the world will look after a deal with Iran will not be ignored by President Barack Obama. It is not too late to do so.

23---More bad news on the economy
24--The US Has no Diplomatic Capability nor Intent
In a piece titled "Too Quick on the Draw: Militarism and the Malpractice of Diplomacy in America," former ambassador Charles Freeman lays out the history of the abandonment not only of diplomatic intentions by the US, but also of diplomatic capability. He details what the loss of educated, capable, professional diplomats has done to US foreign policy, which now has to rely entirely on threats and force because our so-called diplomats do not know what diplomacy is for, nor how it is accomplished.
In one pity statement --
"Diplomacy, as such, is not part of civic education in the United States. A large percentage of our political elite has no idea what diplomats do, can do, or ought to do. Not for nothing is it said that if you speak three or more languages, you are multilingual. If you speak two languages, you are bilingual. If you speak only one language, you are American. And if you speak only one language, have never studied geography, and do not have a passport, you are probably a member of Congress."

25---Back to the US:
I see no sign of whatsoever of accelerating credit growth:...Mosler

26--Ashton Carter: Absent Iran nuclear deal, military option will ‘remain on the table’

26--Saudis prepare to go nuclear--What could go wrong?