Thursday, September 17, 2015

Today's Links

1--Cameron: No-fly zone back on the table. Clash with Moscow possible
2--What Putin said

In essence what Putin is saying is very simple: the Islamic State is an existential threat to everyone and all those involved in the Syrian civil war should put aside their differences and their geopolitical strategies to combine against it.

To that end Putin proposes a revival of what is in essence the peace plan to bring an end to the Syrian conflict proposed by Kofi Annan at the Geneva Conference in 2012 – that there should be negotiations between the Syrian factions to set up a power sharing government until a final settlement of the conflict can be agreed.

As Putin points out, Assad has accepted this proposal (“President Assad is ready to involve the moderate segment of the opposition forces in these processes, in managing the state”)....

Above all Putin remains adamantly opposed to regime change.  He points out that it is the West’s relentless pursuit of regime change that has destabilized the entire region, and which has caused the refugee exodus...
The following are extracts from a speech made by Putin in Dushanbe taken from Russia’s Presidential website 
I mentioned the situation in Syria and Iraq; they are the same as the situation in Afghanistan, in that they worry all of us. Please allow me to say a few words on the situation in this region, the situation around Syria. 
The state of affairs there is very serious. The so-called Islamic State controls significant stretches of territory in Iraq and Syria. Terrorists are already publicly stating that they have targets set on Mecca, Medina and Jerusalem. Their plans include expanding activities to Europe, Russia, Central and Southeast Asia.
We are concerned by this, especially since militants undergoing ideological indoctrinations and military training by ISIS come from many nations around the world – including, unfortunately, European nations, the Russian Federation, and many former Soviet republics. And, of course, we are concerned by their possible return to our territories. 
Basic common sense and a sense of responsibility for global and regional security require the international community to join forces against this threat. We need to set aside geopolitical ambitions, leave behind so-called double standards and the policy of direct or indirect use of individual terrorist groups to achieve one’s own opportunistic goals, including changes in undesirable governments and regimes.
As you know, Russia has proposed rapidly forming a broad coalition to counteract the extremists.....

3-- Engineered Refugee Crisis to Justify "Safe Havens" in Syria
4--Assad: The Interview

 As you know, we are at war with terrorism, and this terrorism is supported by foreign powers. It means that we are in a state of complete war. I believe that any society and any patriotic individuals, and any parties which truly belong to the people should unite when there is a war against an enemy; whether that enemy is in the form of domestic terrorism or foreign terrorism. If we ask any Syrian today about what they want, the first thing they would say is: we want security and safety for every person and every family

5--How Wall Street took over the auto industry

6--US-Russian tensions rise over Syria

7--US-Russian tensions rise over Syria

This US-led air war is threatening to heat up, with Australia announcing that its warplanes launched their first air strikes inside Syria on Monday, claiming they were directed against Islamic State of Iraq and Syria (ISIS) targets.
French Defense Minister Jean-Yves Le Drian, meanwhile, told France Inter Radio Wednesday that French warplanes would launch their own air strike in coming weeks in an attempt to stop ISIS advances, particularly near the city of Aleppo, Syria’s largely destroyed former industrial and commercial capital

Putin also stated that Syria’s President Assad was prepared for a political compromise with “the healthy part of the opposition.”
Washington and its regional allies have insisted that no compromise is possible outside of Assad’s ouster. Some European officials, however, have called this policy into question, fearing that a precipitous collapse of the Assad regime would only result in either ISIS or the Al Qaeda-affiliated Al-Nusra Front overrunning Damascus.
British Foreign Minister Philip Hammond, suggested last week that Assad could remain in office during a six-month “transitional period,” a scheme that was rejected by the Syrian government, which questioned the right of London to impose the length and outcome of such a process.
What is clear is that Washington’s principal objective in Syria is not the defeat of ISIS, but rather regime change. Its aim is to deprive Russia of its one ally in the Middle Eastand its sole foreign naval baseas part of a broader strategy of militarily imposing US hegemony over the energy-rich region, and more broadly over the Eurasian landmass.
To that end, US imperialism is escalating its military threats against Russia. Pentagon Comptroller Michael McCord, in an interview with Bloomberg news, indicated that the US 2017 military budget is being reshaped largely in preparation for a confrontation with Moscow.
“The thing that we have the most thinking to do about in this budget compared to any other previous budgets is Russia,” McCord said, adding that this is “in terms of are we doing the right things in investments and posture

8-EPI---from 2000–2014, the median income for non-elderly households fell from $68,941 to $60,462, a decline of $8,479, or 12.3 percent

Since 1973, the median man working full-time, full-year has seen no sustained growth, dropping from $53,291 in 1973 to $51,902 in 2002 and falling further over the 2002-07 recovery and the recession to $50,383 in 2014

9--El Erian  Rate hikes?
Financial markets have become excessively reliant on central banks. This dependence has significantly untethered markets from underlying economic and corporate fundamentals. Years of rock-bottom interest rates and liquidity injections, both wrapped in a "volatility suppression" monetary regime, have encouraged investors to believe they can safely venture far and wide in search of returns that provide little cushion for the risks incurred.
There is fear that a signal of a change in the Fed's interest rate regime, no matter how small, would trigger very large capital flows and portfolio reallocations, leading to frightening financial asset air pockets that would be aggravated by patchy liquidity.

10--Jeremy Corbyn's QE for the people is exactly what the world may soon need
The rich have made a killing off QE. Next time it should be injected directly into the veins of the real economy ...

Jeremy Lawson, from Standard Life, gave his blessing to radical action this week, arguing central banks should be willing to fund fiscal stimulus directly, and even inject money "directly into household bank accounts" if need be.
Mr Corbyn's ideas are a variant of "helicopter money", the term coined by Milton Friedman, the doyen of monetary orthodoxy, lest we forget.
Friedman did not, of course, mean that banknotes should be dropped from the sky, though they could be in extremis, but rather that central banks have the means to create money to fund tax cuts, or to cover state spending, until the economy comes back to
Variants of People's QE were tried in the inter-war years. Japan's Christian prime minister Takahashi Korekiyo instructed the Bank of Japan in 1932 to fund a blitz of fiscal spending until deflation was defeated, pulling his country out of the Great Depression remarkably quickly.
The European Central Bank is dipping its toe in these waters right now. It is quietly buying the bonds of the European Investment Bank, an EU public body that chiefly finances infrastructure. While the ECB may not care to admit it - for fear of fresh lawsuits at the German constitutional court - it is in effect "printing" money to pay for fiscal stimulus.

11--West 'ignored Russian offer in 2012 to have Syria's Assad step aside'

12--Emerging Markets Are Not Facing a 1997-Style Crisis—They're Facing Something Worse

13--Loose money's first casualty: Abe

Standard & Poor’s cut Japan’s long-term credit rating one level to A+, saying ....
“We believe that the government’s economic revival strategy -- dubbed "Abenomics" -- will not be able to reverse this deterioration in the next two to three years,” S&P said in a statement. “Economic support for Japan’s sovereign creditworthiness has continued to weaken.”

14--Setting rates becomes aspirational rather than real   Todays "must read"

In the past, the central bank kept the fed funds rate at or near the target chosen by policy makers by injecting or draining bank reserves from the system via the New York Fed’s trading desk. The amounts of cash involved were small and the Fed was pretty good at hitting its desired rate. Not anymore.

Three rounds of so-called quantitative easing from 2008 to 2014, in which the Fed bought bonds to support the economy, has swamped banks with cash -- deposited with them by investors who sold bonds to the Fed. That added $2.6 trillion of reserves in excess of requirements to banks’ accounts held at the Fed. It also boosted the size of the Fed’s own balance sheet to $4.5 trillion, a five-fold increase from pre-crisis levels...

“We don’t know what’s going to happen when we lift off,” Simon Potter, the New York Fed official in charge of the trading desk, said in April, answering questions after a speech. “We’re pretty sure that we have the ability to lift rates at the initial point.”

Money Markets Swamped

With so much cash and little need for banks to borrow in the fed funds market, the Fed has lost the ability to lift the funds rate in the way that it did before the crisis. It has also decided for now against selling the bonds back to investors, which would shrink its own balance sheet and extinguish the excess reserves.

Instead, Fed officials designed new tools to help the central bank raise rates without reducing its balance sheet, which it hopes to slowly shrink over years by letting the bonds it now holds mature, without reinvestment. Officials say they expect to phase out reinvestments sometime after liftoff

Tighter Credit

The upshot: Credit will become more expensive faster than in previous tightening cycles as banks pass higher deposit costs on to borrowers in an effort to maintain profitability. The effects will probably become larger after the Fed’s second or third rate increase, according to Justin Fuller, a senior director at Fitch Ratings in Chicago.
“When you start to get up to 50 to 100 basis points of tightening and higher, that is when you start seeing much more competition by banks for operational retail-oriented deposits,” Fuller said. “Banks all over the country will be doing this.”

The potential side effects of rate increases with so much cash in the system and unfamiliar new regulations will make the Fed’s attempts to fine-tune the economy a lot more challenging, according to Michael Cloherty, head of U.S. interest-rate strategy at RBC Capital Markets LLC in New York.

“Under the old framework, you had 100 years of history to say: ‘If I raise the funds rate, I have a pretty good feel of how it hits the economy,’” Cloherty said. “It will take the Fed a really long time to figure out how the new world works.”
Cloherty estimates banks could see almost $1.5 trillion of deposits leave by the end of 2017, with $625 billion of it going to money funds, which would put it in the Fed’s overnight reverse repo facility. Those numbers jump to nearly $2.3 trillion and $900 billion in a worst-case scenario.

15--How to Help Refugees get home...Syrian Girl
want to help the refugees? Stop the wars

Stop Turkey, Qatar, Saudi from funding Isis-al Qaida terrorists
Stop US political support for al Qaida linked rebels
stop your governments from airstriking Syria

End sanctions
Rebuild Syria
Donate to Syrian Red Cresent or WafaRelief Fund

16--Turkey creates refugee pretext for war in Syria?

Analyst asks the same question, that is, why this "sudden and convenient deluge of refugees has flooded Europe, almost as if on cue. ...
 In reality, they did not appear out of a puff of smoke. They appeared in Turkey, a NATO member since the 1950’s and one of America’s closest regional allies. ...
 Turkey has suspiciously maintained a very enthusiastic “open door” policy for refugees, spending inexplicable sums of money and political capital in accommodating them. ....There is little way that these refugees could suddenly “disappear” and end up in Europe without the Turkish government and more importantly, European governments either knowing about it or being directly involved.

 Clearly Turkey lacks any altruistic motivation behind its refugee policy. Turkey is one of the chief facilitators of terrorists operating in Syria, and a primary collaborator in NATO’s proxy war against its neighbor. ....Likely, the refugees were to serve as the initial population of whatever proxy state NATO planned to create with territory it seized and established no-fly-zones over in northern Syria.
 Now it appears many of these refugees are instead being rerouted to Europe.
 ... It appears that Turkey is serving as a central transit point, not just for terrorists it is feeding into the Syrian conflict, but also for collecting refugees from across MENA and Central Asia, before allowing them to proceed in vast numbers to Europe.

17--The Fed’s Chatter About a Rate Hike Is to Appease Foreign Investors – Which Includes Money Launderers

There’s a legitimate basis for concern. When the United Nations Conference on Trade and Development (UNCTAD) released its “World Investment Report” on June 25, 2015, it reported that the United States had slipped to number 3, behind China and Hong Kong, for inflows of Foreign Direct Investment....

Adding to concerns, UNCTAD reported that owing to lackluster growth in the global economy, overall global inflows of Foreign Direct Investment had declined 16 percent in 2014. That meant that the U.S. was not just slipping in investment stature but was competing for a piece of a shrinking investment pie.
According to UNCTAD, foreign investment inflows to the United States fell to $92 billion in 2014, a drop of 40 percent from the 2013 level, while China became the largest recipient with $129 billion in inflows. Hong Kong ranked second with $103 billion....

On August 31, Wall Street On Parade published a review of economist Michael Hudson’s new book, “Killing the Host.” One thing we did not write about has lingered in our thoughts — an episode Hudson shares from his days working in Chase Manhattan’s economic research department. It also concerns an apparent desire by the U.S. to tap illicit foreign money as investment inflows. (Chase is now the commercial banking unit of Wall Street investment firm, JPMorganChase.)
Hudson writes:

“My last task at Chase dovetailed into the dollar problem. I was asked to estimate the volume of criminal savings going to Switzerland and other hideouts. The State Department had asked Chase and other banks to establish Caribbean branches to attract money from drug dealers, smugglers and their kin into dollar assets to support the dollar as foreign military outflows escalated. Congress helped by not imposing the 15 percent withholding tax on Treasury bond interest. My calculations showed that the most important factors in determining exchange rates were neither trade nor direct investment, but ‘errors and omissions,’ a euphemism for ‘hot money.’ Nobody is more ‘liquid’ or ‘hot’ than drug dealers and public officials embezzling their country’s export earnings. The U.S. Treasury and State Department sought to provide a safe haven for their takings, as a desperate means of offsetting the balance-of-payments cost of U.S. military spending.”

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