Monday, June 20, 2016

Todays Links

Today's Quote: "...right now we live in the world with a military balance. The nuclear potential of the two powers does not allow the West to start a war for absolute world domination. The probability of mutual destruction for many years prevents the US and its satellites from starting a global war against Russia and its allies. Russian breakthrough in the development of hypersonic weapons (read here) makes the prospect of military success against it even less likely." Saker

Quote: "with unprecedented provocation on September 11, the grand operation of destabilizing whole parts of the planet was launched, and the policy of controlled chaos was initiated. After staged events with twin towers, the world was told that terrorism is the main enemy. Interestingly, in 2001 terrorism was not a great threat; furthermore, few countries were familiar with it, except Russia and Israel. Importantly, the influence and spread of terrorism increased as the US, under the pretext of war on terrorism, occupied one country after another. While Russia, after taking over new territories, leaves universities, culture, economy, and life in its wake, the US taking over countries leave anarchy, chaos, and always the armies of ORGANIZED terrorists."  Saker

1--How the FBI helps to perpetuate the War on Terror

Omar Mateen gunned down 49 patrons at the LGBTQ Pulse Nightclub in Orlando, the FBI attempted to induce his participation in a terror plot. Sheriff Ken Mascara of Florida’s St. Lucie County told the Vero Beach Press Journal that after Mateen threatened a courthouse deputy in 2013 by claiming he could order Al Qaeda operatives to kill his family, the FBI dispatched an informant to "lure Omar into some kind of act and Omar did not bite."

While self-styled terror experts and former counter-terror officials have criticized the FBI for failing to stop Mateen before he committed a massacre, the new revelation raises the question of whether the FBI played a role in pushing Mateen towards an act of lethal violence.

Since 9/11, the FBI has relied heavily on informants to entrap scores of young, often mentally troubled Muslim men and send them to prison for as long as 25 years. As Aviva Stahl reported for AlterNet’s Grayzone Project, the FBI recently encouraged an apparently mentally disturbed recent convert to Islam named James Medina to bomb a South Florida synagogue and pledge allegiance to ISIS, a militant group with which he had no prior affiliation. On trial for planning to commit an act of terror with a weapon of mass destruction, Medina has insisted through his lawyer that he is mentally ill.

Trevor Aaronson, a journalist and author of “Terror Factory: Inside the FBI’s Manufactured War on Terror,” revealed that nearly half of terror cases between 9/11/01 and 2010 involved informants, including some with criminal backgrounds raking in as much as $100,000 from the FBI. The FBI's assets have often preyed on mentally ill men with little capacity to resist their provocations. “Is it possible that the FBI is creating the very enemy we fear?” Aaronson wondered.

2--Another reason to hate Hillary Clinton: Surveillance

In the immediate aftermath of the heinous slaughter in Orlando, the neoconservative-neoliberal chimera known as Hillary Clinton predictably called for an expansion of surveillance and the police state. Less than 48 hours after the attack, in a speech in Cleveland, Clinton proclaimed:

We already know we need more resources for this fight. The professionals who keep us safe would be the first to say we need better intelligence to discover and disrupt terrorist plots before they can be carried out.  That’s why I’ve proposed an ‘intelligence surge’ to bolster our capabilities across the board, with appropriate safeguards here at home....

what Clinton is actually suggesting is a massive increase in contracts awarded to private intelligence firms and military contractors, though veiling it as a boost to the intelligence community.  This fact is made clear by the renowned investigative journalist Tim Shorrock in his 2008 book Spies for Hire: The Secret World of Intelligence Outsourcing where he notes that:
In 2006… the cost of America’s spying and surveillance activities outsourced to contractors reached $42 billion, or about 70 percent of the estimated $60 billion the government spends every year on foreign and domestic intelligence. Unfortunately, we cannot know the true extent of outsourcing, for two reasons. First, in 2007, the Office of the Director of National Intelligence (ODNI) refused to release an internal report on contracting out of fear that its disclosure would harm U.S. national security interests. Second, most intelligence contracts are classified, allowing companies like CACI to hide their activities behind a veil of secrecy.
Think about that figure for a second: 70 percent of the intelligence budget goes to outsourcing.  In other words, government expenditure on surveillance and intelligence is an indirect subsidy to private corporations....

when she calls for an intelligence surge what she’s actually doing is making clear to her military-industrial-surveillance complex cronies that she will make sure to feed the goose that continues to lay the golden eggs.  Just like her speeches to Goldman Sachs served to reassure Wall Street that she was their lady, so too does Clinton use the tragic events in Orlando to give a wink and a nod to Booz Allen Hamilton, CACI International, and the rest

3--Stocks up 1%; Dow briefly up 250 points as Brexit concerns wane

The dollar fell against a basket of currencies Monday, with the euro trading near $1.133 and the yen around 104.4 against the dollar. The pound surged broadly, trading about 2 percent higher against the greenback, putting it on track for its best one-day performance in seven years. Oil markets also rallied, with U.S. crude futures trading above $49 a barrel, up about 2.5 percent. Brent futures, meanwhile, rose to trade above $50

4--'Deep State' behind US State Dept. dissent on Syria

In it, Glennon argues that the reason US foreign policy and national security policy doesn't change regardless of comings and goings of US administrations due to what he terms the "deep state." The author goes back to the political theory of 19th century English scholar Walter Bagehot who argued in his 1867 book, "The English Constitution" that England of the day had a double government: The official one presented to the public, and an inner one, made up of the elites that make real decisions away from constitutional processes, public scrutiny and media.

Glennon picks up on the idea and makes a thesis that national security bureaucrats, along with intelligence and military elite influenced by money and politics, make decisions regardless of constitutional process or even laws.

Until now the idea of a political class presenting different visions for the country in electoral process has been a cornerstone of US political system that calls itself a representative democracy.
The State Dept memo, together with National Security apparatus' track record of defacto immunity from any effective oversight, has made this vision nothing more than a mirage

5--A Surprising Thing Happened After Central Banks Went "All In"

DB's conclusion:
if the central banks behind extreme policy measures have little to show for the risk they have taken on their balance sheet to this point, and the pressures they have subjected their savers and financial institutions to, why should we expect such actions to be extended much further into the future? Any benefit of additional central bank accommodation appears to have been largely exhausted at this point in the cycle.

If that is indeed the case, it is much more likely that a year from now we would see those programs on their way to curtailment rather than further expansion. Fundamentals would once again prevail over technicals, just as they always do over time. Recent market moves suggest investors are beginning to position themselves accordingly in anticipation of such an outcome.
The problem with that is that should global markets, even those lagging the US such as Europe and Japan, trade on "fundamentals", then there is a lot of pain in store. Which may explain the ever increasing willingness of central banks to discuss and even contemplate helicopter money as the last recourse fusion of fiscal and monetary policy, one meant to provide a final inflationary stimulus, which will either push yields higher around the globe - a necessary and sufficient condition to inflate away the massive debt load - or will fail, leaving only mass defaults as the last resort to eliminate trillions in global excess debt. And since that would mean wiping out the bulk of the status quo's equity "net worth", one can be certain that absolutely everything will be tried before this last-case option is attempted

6--The Biggest Bubble Of All Time?

The median Price to Sales ratio on S&P 500 companies is over two. That doesn’t sound like a lot until you consider that during the Tech Bubble it didn’t clear 1.6 and during the Housing Bubble it never cleared 1.75.

Put another way, the market has NEVER been more expensive relative to the money corporations receive in sales.

Earnings are a complete fiction. Corporations are using accounting gimmicks to juice them. Earnings that using Generally Accepted Accounting Principles (GAAP) are at levels not seen since 2012......Meanwhile, stocks are 70% higher…

7--The Wealth Inequality Problem in One Chart

we plotted the “Median Net Worth” of different wealth groups between 1998 and 2013. This is based on a study that the Federal Reserve does about every three years on consumer finances.
When this data is compared in 2013 dollars:
  • The Lower Class: Wealth has decreased by 26.5% for the bottom 20% of incomes
  • The Working Class: Wealth has decreased by 52.7% for the second lowest 20% of incomes
  • The Middle Class: Wealth has decreased by 19.1% for the middle 20% of incomes
However, one segment has shot up “off” the charts:
  • The Top 10%: Wealth has increased 74.9%, soaring to a median net worth of over $1.1 million.
...what has changed between 1998 and today, using latest data from last month (May 2016)???

  • The Federal Funds Rate, which is the rate that generally acts as a backbone for interest rates across the country, has dropped like a rock. Right now it was effectively 0.37% in May 2016, way down from 5% to 6% that existed for most of the 90s.
  • ...
  • Money Supply (M2) has increased from $4.2 trillion (1998) to $12.7 trillion today. About $5 trillion of this increase came after the 2008 crisis. ..
who benefits from 0% interest rates the most?

Who owns assets like real estate or stocks that have their prices propped up by these policies?
Who can borrow capital at low rates to invest or speculate on rises in these prices – is it the people that already have money, or the people without any?
Where does all the extra money that is added to the system go?
What is each $1 trillion of new U.S. debt spent on, and do the benefits of this added debt outweigh the costs?

8--Share-Buyback Announcements Plunge, Stocks Risk Getting Clocked

In 2015, S&P 500 companies bought back $569 billion of their own shares, down just a smidgen from $572 billion in 2014, according to FactSet. That’s a combined $1.14 trillion in stock repurchases. With the S&P 500 market capitalization at $18.8 trillion currently, corporate buybacks over the past two years have mopped up about 6% of the total float in dollar terms. And this has been happening year after year with increasing vehemence since 2010.

While some sectors already cut back in 2015, buybacks soared 44% in the Industrial sector and 26% in the Consumer Discretionary sector. Companies buying back their own shares act purposefully as the relentless bid, with the sole goal of driving up share prices. They want to buy high! And it works....

IBM, which most recently reported its 16th year-over-year revenue decline in a row, ending up with its worst quarterly revenues in 14 years, is a master at this. That’s why its stock price magically keeps creeping back up after the post-earnings announcement beat-down...

Buyback announcements – not actual share buybacks – totaled $2 trillion since 2013. Many of those announced buyback programs stretch over several years, and some of those announced buybacks haven’t been executed yet. But buyback announcements are suddenly plunging. Christine Hughes, Chief Investment Strategist at OtterWood Capital:
According to JP Morgan Quant Marko Kolanovic, announced buybacks have dropped 40% ($250 billion) on a 12-month trailing basis. Share buybacks take approximately 6 quarters to execute so the recent drop will translate into roughly $40 billion less equity demand per quarter.

9--Grandmaster Putin (Grandiose multi-step operation lasting 16 years)

Only at the end of two thousand twelfth after the defeat of the most dangerous attempt at revolution, Russia succeeded in transferring the battle for its sovereignty to the international front. The country did not only succeed in defending itself but also developed immunity to further attempts by the West to arrest the Russia’s development using the traditional Western tools – regime change and incitement of internecine conflicts. The country has come to understand the most important thing – the mortal danger of a stab in the back administered within its own borders.

Even the enormous pressure the West consolidated against us, its sanctions, engineered drop in the oil prices, economic sabotage and juridical outrage in 2015 – the pressure that would have brought down any other country – in Russia only resulted in 3% reduction in GDP. Furthermore, by the end of this year, according to the European estimates, Russia is to expect positive growth.
Wars, crises, pressure, maligning – all of this does not really scare us. We have always weathered storms and have always emerged from them stronger than before
Thanks to that, we have gained time and are continuing to develop successfully...

Net result of that operation was outing of the whole network of Western influence in the country, full takeover of the media fed by Western funds, full control over politicians and others who then acted on the side of the West, and the ability to control liberal faction in the government, which still lives under the Damoclean sword of compromising information obtained back then.
These events, a complete defeat of Anglo-Saxons in a game they were considered great masters of, caused total prostration of the collective West. The West put in a considerable effort to determine the real situation in the country, as it clearly saw the discrepancy between the reports of the “5th column” and reality. However, as the network of Western influence and its sources were “cleaned up” by the Russian special services, and every step of known agents of Western influence in power was controlled, this work was slow…

The project, which is at least 600 years old, of making part of the Russian people a weapon against Russia, is revived. Ukraine, which was quetly being destroyed by the West during all this period, using an example that worked in the middle of the XXth century, is rapidly converted into a military battering ram against Russia....

Virtually immediately, in April, the West showed its true colors by initiating a hot conflict. Using its puppets and supported by a part of Ukrainian population, Kiev starts an aggression against Eastern Ukraine bordering Russia. The operation verges on genocide of Russian population in the area. Ukraine uses prohibited by international conventions phosphorus bombs, cassette bombs, burns people alive, deliberately targets civilians, and so on. All this demonstrated cruelty has one purpose: to force Russia to invade the territory of a foreign country. Everything was done to achieve this, but even more was done to close the trap thus prepared for the “Russian bear” once it is in it …
The world media were on the ready; engaged politicians froze with microphones near their mouths, the world public opinion was prepared, and in Russia the game “Putin, move in the troops!” was played out…
The world stopped in anticipation… And… nothing happened…

At the same time, the collective West conducted in another part of the world a greatest military operation since WWII – the creation of controllable tools –the terrorist armies.
Thing is, right now we live in the world with a military balance. The nuclear potential of the two powers does not allow the West to start a war for absolute world domination. The probability of mutual destruction for many years prevents the US and its satellites from starting a global war against Russia and its allies. Russian breakthrough in the development of hypersonic weapons (read here) makes the prospect of military success against it even less likely. ...

hus, on the one hand, the US got a pretext to invade resource-rich countries and the ability to print more money to finance these wars, while, on the other hand, forming terrorist armies controlled by them.
There were several reasons for this plan.
First – the American debt. And ever increasing problems of servicing it, as it grows.
Second – the creation of chaos. By creating it everywhere except at home the US forms an impression that it is a “safe haven” for capital, attracting enormous financial flows to the US from destabilized regions.
Third, which is the most important, terrorist groups are not state armies. They cannot be attacked with nukes, as they act on the territories of countries. The terror does not maintain a traditional frontline, but it has commanders. This makes them a controllable tool. The only party that could stop terror, according to the Western plan, was the US, and any disobedience towards the US would immediately precipitate a terrorist attack

The seemingly successful Western operation of creating an arc of instability and forming from the remnants of Libya, Syria and Iraq of a new state controlled by the US, which was supposed to supply terrorism, that was almost competed, was ruined. More than 10 years of work, several states, many hundreds of billions of dollars, with the endgame in Syria, were crushed by the Polite Army...

Taken together, all of this can in the foreseeable future make our country a recognized leader of the world resistance to corporatocracy, globalization, false tolerance and political correctness, turn it into the main defender of traditional spiritual, religious, moral, and historic values of all peoples on Earth against the West that lost all bearings.

10--Wall Street cash or Elizabeth Warren: Hillary's choice

11--The US Economy: Weaken than it looks

12--IMF calls for overhaul of Abenomics stimulus policies

The global lender called for a more flexible monetary policy framework with the Bank of Japan abandoning a specific calendar date for achieving its 2 percent inflation target. It added that Japan would need to raise the sales tax to at least 15 percent to strike the right balance between growth and fiscal sustainability (Okay, so the IMF doesn't think the BOJ's loosy-goosy monetary policy is loose enough..AND...they want to raise taxes in the middle of a recession. Great advice, eh?)

"Without bolder structural reforms and credible fiscal consolidation, domestic demand could remain sluggish, and any further monetary easing could lead to overreliance on depreciation of the yen," the IMF said. (structural reforms" means slashing wages)

13--German Foreign Minister Suggests European Split Over Moscow  

Frank-Walter Steinmeier decries Western ‘saber-rattling and war cries’ toward Russia

14--Economic Gauges Raise Specter of Recession   --Closely watched indicators sour, as economists scramble to assess risk

Gut-wrenching gyrations in financial markets early in the year helped summon the specter of a new recession. Now, warning signs are coming mostly from the U.S. economy itself.
Hiring is slowing, auto sales are slipping and business investment is dropping. America’s factories remain weak and corporate profits are under pressure. All are classic signs of an economic downturn, and forecasters have certainly noticed. In a Wall Street Journal survey this month, economists pegged the probability of a recession starting within the next year at 21%, up from just 10% a year earlier. Some economists think the risk is even higher....

Financial-market convulsions at the start of the year stoked worries about a possible recession. But continued strength in the labor market reassured most economists about the resilience of the expansion, and markets largely calmed.
While the economy is still adding jobs, the recent hiring slowdown has spooked some forecasters. May’s growth in payrolls—just 38,000 jobs—was the weakest month of hiring since U.S. employers stopped shedding jobs in 2010. Barclays economist Michael Gapen noted that since 1960, persistently slower hiring compared with the recovery average, as seen in recent months, “more often than not” was followed by a recession in the next nine to 18 months....

Quarterly U.S. corporate profits have been declining on a year-to-year basis since late last year, according to the Commerce Department. The continuing balance-sheet squeeze is one reason Joshua Shapiro, chief U.S. economist at consultancy MFR Inc., pegs the odds of a recession in the next year at 50%.
“The ongoing decline in profitability and margins is likely to lead to aggressive cost-cutting, which should affect the labor market and consumer spending, which is the only thing keeping the economy afloat,” he said. His forecast assumes a recession in the second half of 2017, but “it could certainly happen sooner,” he said.

15--Junk Bonds Regain Fans

Some investors are turning again to junk bonds, saying their higher yields make them a good bet at a time when many stocks and government bonds appear richly valued.
The idea of buying into lower-rated companies with large debt loads at a time of general economic unease and acute concern about a possible U.K. departure from the European Union is anathema to many risk-averse investors.
Yet riskier corporate debt, which investors fled in the first month of the year, now pays above-market yields while appearing less stretched than many other asset classes, many portfolio managers and analysts say. The average yield for junk bonds in the U.S. is 7.4%, according to Barclays BCS 7.69 % PLC, compared with a five-year average of 6.7%....

Despite their rough start in January, U.S. high-yield bonds are up 8.3% this year, including price gains and interest payments, according to Barclays data, having been aided by ultraloose monetary policies by central banks that have driven down government-bond yields and pushed investors to seek out better returns from riskier securities. That compares with a 2.8% total return for the S&P 500, according to FactSet...

There are special risks inherent in a market filled with heavily indebted and, in many cases, struggling companies. Before rebounding in mid-February, high-yield bonds had lost nearly 9% over a three-month span amid fears that the U.S. economy was on the verge of recession. Junk bonds have also closely tracked oil prices in recent years because of the large number of energy companies with sub-investment-grade ratings, making the market vulnerable if commodity prices turn south again.
If the U.K. does vote to leave the EU, sparking uncertainty about the future of Europe, high-yield-bond prices would almost certainly be among the risky assets to get hit first....

Even if Britain leaves the EU, “the first week or two would probably be pretty ugly” but eventually it “could end up being net positive for domestic credit markets not really for good reasons,” but because it would make U.S. assets more attractive on a relative basis and encourage central banks to continue their easy-money policies, he said. (ECB policy has driven investors into mega risky trades)

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