Friday, July 22, 2016

Today's links

Today's quote:  “We are determined to resolve regional issues by joining hands with Iran and Russia, and with our efforts to return peace and stability to the region.” Recep Tayyip Erdogan, Turkish president

1--The earnings hoax goes on---The Real Numbers Behind GE's "Beat": Organic Orders -16%; Power -27%; Equipment Orders -30%; Aviation -37%

2--Look Who’s Frantically Demanding that Taxpayers Stop Italy’s Bank Meltdown

The total exposure of French banks and private investors alone to Italian government debt exceeds €250 billion. Germany holds €83.2 billion worth of Italian bonds. Deutsche bank alone has nearly €12 billion worth of Italian bonds on its books. The other banking sectors most at risk of contagion are Spain (€44.6 billion), the U.S. (€42.3 billion) the UK (€29.8 billion) and Japan (€27.6 billion).

Leading the charge is America’s biggest bank by assets, JP Morgan Chase.

“It’s necessary to do it [bail out the banks], and the sooner the better, in order to nip in the bud one of the root causes of uncertainty gripping the markets,” said Lucía Gutiérrez-Mellado, deputy director of strategy for JP Morgan Asset Management

surely it’s just a matter of days or weeks before the purse strings of Europe’s taxpayers are loosened once again for the benefit of banks, their executives, and their bondholders.

3--Draghi Supports Bailout of Italy’s Banks

4--Lehman didn't have to die

...with respect to the specific questions he asks” — did the Fed have the legal authority to lend and was it forced to shut Lehman down — “I find his answers pretty compelling.”...

Rather, the decision to let Lehman fail reflected a mixture of politics —  — economic policy driven by managing “moral hazard,” and a misguided sense that investors had anticipated a Lehman failure and the consequences would be manageable....

Larry Ball’s carefully researched work is incredibly important for drawing the proper lessons from the 2008 crisis,” said Athanasios Orphanides, an economics professor and expert on central banking at M.I.T.’s Sloan School of Management....

One of the more intriguing questions Professor Ball tackles is why Mr. Paulson, rather than Mr. Bernanke, appears to have been the primary decision maker, when sole authority to lend to an institution in distress rests with the Fed. The answer, he suggests, is to be found more in psychology than data.
“By many accounts, Paulson was a highly assertive person who often told others what to do, and Bernanke was not,” Professor Ball writes. “Based on these traits, we would expect Paulson to take charge in a crisis.”

5--Major developments in Syria and Turkey

for the Syrian government the failed coup is quite literally God-sent. Not that Assad and Erdogan will ever have a love-fest again, but Assad must now realize that his most formidable adversary has now been neutered and that this completely changes the strategic dynamic of the war for the liberation of Syria from the Takfiris. Add to this the agreement between Russia and the USA which, however insincere and temporary, at least precludes a direct US attack on Syria (as demanded by the 51 Neocon crazies at Foggy Bottom). Add to this the very real possibility that Trump will be in the White House next year and I would suggest that, all in all, things sure look way better today for Syria than they did just a couple of weeks ago....

Whether Putin “saved Erdogan” as some claim, or whether Russia just gave him advanced warning of the coup, it is pretty darn clear that Erdogan now vitally needs Putin’s support and that Putin knows that. Soon the world will find out what exactly Putin had in mind when, following the downing of the SU-24, he announced sanctions against Turkey and then added “Одними помидорами вы не отделаетесь” (you will not get away just with tomatoes). There will be a price to pay for Erdogan and Erdogan knows it. But Putin also knows that now is the time to negotiate with Erdogan, so the price will be substantial, but reasonable. At the end of the day, Russia and Turkey need each other, at least to prevent another, it would be the 13th, Russian-Turkish war.

6---Assad: Syria will continue its struggle for independence against US imperial aggression--Aleppo, Terror's Last Stand?  Aleppo battle is the last card for the Turks, Qataris and Saudis

      President Assad: Of course, there was a lot of support to the terrorists from around the world. We have more than one hundred nationalities participating in the aggression against Syria with the support of certain countries like Saudi Arabia and Qatar with their money and Turkey with the logistical support, and of course with the endorsement and supervision of the Western countries, mainly the United States, France, and the UK, and some other allies. But since the Russians decided to intervene in supporting legally the Syrian Army in fighting the terrorists in Syria, mainly al-Nusra and ISIL and some other affiliated groups, the scales have been tipped against those terrorists, and the Syrian Army has made many advances in different areas in Syria. And we are still moving forward, and the Syrian Army is determined to destroy and to defeat those terrorists. You mentioned Homs and Aleppo. Of course, the situation in Homs, since the terrorists left Homs more than a year ago, the situation has been much, much better, more stable. You have some suburbs of the city which were infiltrated by terrorists. Now there is a process of reconciliation in those areas in which either the terrorists give up their armaments and go back to their normal life with amnesty from the government, or they can leave Homs to any other place within Syria, like what happened more than a year ago in the center of the city.

For Aleppo it is a different situation, because the Turks and their allies like the Saudis and Qataris lost most of their cards on the battlefields in Syria, so the last card for them, especially for Erdogan, is Aleppo. That is why he worked hard with the Saudis to send as much as they can of the terrorists – the estimation is more than 5,000 terrorists – to Aleppo...

War on infrastructure...War on ordinary people

Actually, the war on Syria is a full-blown war; it is not only supporting terrorists. They support the terrorists, and at the same time they launched a political war against Syria on the international level, and the third front was the economic front, in which they dictate to their terrorists, to their surrogate mercenaries, to start destroying the infrastructure in Syria that helped the economy and the daily needs of the Syrian citizens....

UN is a US puppet

President Assad: Talking about the role of the United Nations or Security Council could be illusive, because actually the United Nations is now an American arm, where they can use it the way they want, they can impose their double standards on it instead of the Charter. They can use it like any other institution within the American administration. Without some Russian and Chinese stances in certain issues, it would be a full American institution..

US driven by its own agenda exclusively...

President Assad: You know, traditionally, the American administrations, when they had relations with any group or community in any country, it is not for the sake of the country, it is not for the interest of the people; it is for the agenda of the United States

"Opposition" are traitors...

President Assad: We have good relations with the opposition within Syria based on the national principles. Of course, they have their own political agenda and they have their own beliefs, and we have our own agenda and our beliefs, and the way we can make the dialogue either directly or through the ballot boxes; it could be a different way of dialogue, which is the situation in every country. But we cannot compare them with the other oppositions outside Syria, because the word “opposition” means to resort to peaceful means, not to support terrorists, and not to be formed outside your country, and to have grassroots, to have real grassroots made of Syrian people. You cannot have your grassroots be the foreign ministry in the UK, France or the intelligence in Qatar and Saudi Arabia and the United States. This is not opposition, this is called, in that case, you are called a traitor. So, they call them oppositions, we call them traitors.

"Lying" is the American way...

It is part of the American politics to demonize presidents

About how they defame, or try to demonize certain presidents, this is the American way, at least since the second World War, since they substituted British colonization in this region, and maybe in the world, the American administrations and the American politicians haven’t said a single honest word regarding anything. They always lie. And as time goes by, they are becoming more inveterate liars, so this is part of their politics. So, to demonize me is like how they tried to demonize President Putin during the last two years and they did the same with the leader Castro during the last five and six decades. This is their way. So, we have to know that this is the American way.

Syrian war is about "independence"...

Latin America People understand that the war in Syria is about independence…there is strong harmony between Syria and Latin America, especially Cuba

President Assad: So, they know what is the meaning of being independent or not to be independent. They understand that the war in Syria is about independence. But the most important thing is the role of Cuba. Cuba was the spearhead of the independence movement within Latin America and Fidel Castro was the iconic figure in that regard. So, on the political level and the knowledge level, there is a strong harmony between Syria and Latin America, especially Cuba

US president is a puppet or figurehead that carries out elitist agenda...

President Assad: We resumed our relation with the United States in 1974. Now, it has been 42 years since then and we witnessed many American presidents in different situations and the lesson that we have learned is that no one should bet on any American president, that is the most important thing. So, it is not about the name. They have institutions, they have their own agenda and every president should come to implement that agenda in his own way, but at the end he has to implement that agenda.

      All of them have militaristic agendas, and the only difference is the way. One of them sends his army like Bush and the other one sends mercenaries and proxies like Obama, but all of them have to implement this agenda. So, I do not believe that the president is allowed completely to fulfill his own political convictions in the United States, he has to obey the institutions and the lobbies, and the lobbies have not changed and the institutions’ agenda has not changed. So, no president in the near future will come to make a serious and dramatic change regarding the politics of the United States....

Syria will continue its struggle for independence...

Message to Latin America: We have to keep our independence as the US will not stop trying to topple every independent government

President Assad: Latin America is a very good and important example to the world about how the people and their governments regain their independence. They are the backyard of the United States as the United States sees, but this backyard was used by the United States to play its own games, to implement its own agenda and the people in Latin America sacrificed a lot in order to regain their independence and everybody knows that.

After regaining their independence, those countries moved from being developing countries, or sometimes under-developed countries, to be developed countries. So, independence is a very important thing and it is very dear for every Latin American citizen. We think they have to keep this independence because the United States will not stop trying to topple every independent government, every government that reflects the vast majority of the people in every country in Latin America.

7---Professor Stephen F. Cohen  "there are also people who think that the US either knew about the coup or "actually somehow abetted it."

there are also people who think that the US either knew about the coup or "actually somehow abetted it." The professor referred to the fact that relations between Turkey and its NATO allies — UK Prime Minister David Cameron and US President Obama — were very frosty during the Warsaw NATO Summit in early July. There were views voiced that Erdogan was "clearly ostracized there."

Interestingly enough, in his interview with RT, Afshin Rattansi, a London-based author and journalist, highlighted that it was also astonishing that the NATO nations had not raised a finger to help Erdogan's government during the attempted coup.

"Astonishing that just a couple of years ago, we would have expected the NATO nations to have come to the aid of the Erdogan government, which was elected in November. This time? Nothing… Also astonishing is John Kerry in Moscow looking to evaluate the situation, not [offering] immediate support for this linchpin of NATO supremacy, as they see it in terms of world security — this critical country in terms of their domination of the Middle East," Rattansi remarked.

12--The Turkish coup, US militarism and the collapse of democracy

One week after the abortive military coup to overthrow Turkey’s President Recep Tayyip Erdoğan, there remains no doubt that Washington had a major hand in the bloody events that shook Istanbul and Ankara.

Turkish military commanders with the closest ties to the Pentagon have been directly implicated in the attempted overthrow, including the commander of the Incirlik air base, where the US stores its largest stockpile of nuclear weapons in Europe and from which it carries out its bombing campaign against Iraq and Syria. Multiple aircraft supporting the coup flew out of Incirlik under the eyes of the US military. After it became apparent that the coup would fail, the Turkish base commander asked the US for asylum.

It emerged Wednesday that a warning of the impending coup had come from Russia, which relayed intercepted radio communications between the coup plotters to Turkey’s National Intelligence Organization, known as the MIT. The warning was shared with the Turkish president in time for him to flee barely a half an hour in advance of a special operations squad sent to the seaside resort where Erdoğan was vacationing with the mission of either killing or capturing him.

Is it plausible that the CIA and the US military, with their massive deployment in the region and the world’s most extensive electronic surveillance network at their disposal, would not have been aware of the same communications?...

Relations have further deteriorated over the war for regime change in Syria, where Turkey is the principal backer of Islamist militias tied to Al Qaeda, while Washington has increasingly solidified ties with Syria’s Kurdish militia, which is in turn aligned with the PKK, the Turkish Kurdish movement with which Ankara is at war.
Most recently, there is Erdoğan’s apology to Moscow over the deliberate shoot-down of a Russian warplane in November 2015 and a move toward rapprochement with the government of Vladimir Putin.
In the wake of the coup, Erdoğan spoke with Putin well before a phone call with Obama. And, in a conversation Tuesday with Iranian President Hassan Rouhani, Erdoğan declared, “We are determined to resolve regional issues by joining hands with Iran and Russia, and with our efforts to return peace and stability to the region.”...

Whether the abortive coup of July 15 marks the end of the attempts by the Turkish military to seize power is itself an open question. With fully one-third of its general staff under arrest, the country’s armed forces are in a state of turmoil. Moreover, Washington is not about to passively permit Turkey to drift out of its strategic orbit.

13--Trump delivers fascistic rant to conclude Republican National Convention

Trump described an America wracked by crisis, the source of which lies not in inequality and endless war, let alone the capitalist system, but in terrorism, illegal immigration and criminals roaming the streets. He said that his “first task” would be “to liberate our citizens from the crime and terrorism and lawlessness that threatens their communities.”

“In this race for the White House, I am the law and order candidate,” Trump said, pledging to expand the powers of the police.

All the problems plaguing the country, Trump proclaimed, would be resolved by the gift of his own person—through his coming to power. Using the language of any would-be dictator, Trump declared, “Beginning on January 20th, 2017, safety will be restored” to the United States. If elected, “Americans will finally wake up in a country where the laws of the United States are enforced.”...

His statement that “big business, elite media and major donors are lining up behind the campaign of my opponent” was perhaps the only accurate statement of his speech. However, the effort of the billionaire real estate mogul to present himself as the “voice” of ordinary people is grotesque.
His pledge to be the voice of the voiceless boiled down to proposals to reduce taxes, particularly for corporations, and eliminate government regulations. In the end, his vow to “Make America Great” is a prescription for the removal of all restraints on the accumulation of wealth...

The protracted decay of the political culture of American capitalism has now reached the point where an individual like Trump can be nominated as the candidate of one of its major political parties. Indeed, perhaps the most characteristic aspect of Trump’s speech was that it set out to provide prescriptions for a disease of which he is a prime symptom.

14-- The Crisis in Turkey Could Swallow Us All

15--Too Much Corporate Debt—–And Going Sour Fast

Now, as we all know, this debt as been incurred in order to engage in wise capital investment, so it will be very easy to pay it back with future profits…. well, not really, actually. A lot of it appears to have been wasted in decidedly unprofitable investments. This should be no surprise with administered interest rates at zilch for many years.
The rest has been judiciously deployed for financial engineering purposes, such as stock buybacks, m&a activity and even dividend payments. This, we hear, has been quite good for the stock options of many a corporate executive. Who would want to begrudge them that?

16--US fails to honor its deal with Iran-- P5+1 to forever regret any JCPOA violation: Iran cleric

....months into the JCPOA’s implementation, Iran complains that the promised economic benefits have yet to materialize, and that it still does not have access to global financial markets.
Many international banks still shy away from financing trade deals and processing transactions for fear of US retribution.
Tehran has warned that it can restore all those aspects of its nuclear program that it has agreed to limit under the deal if it is violated by the six countries.

17--Bank lending tightens

we would like to focus on the on-going deteriorating trend in credit fundamentals and discuss why we think we are in the final inning and therefore one could indeed expect a final and important melt-up in risky asset prices which could last well into September....

Japanese net buying of sovereign bonds recovered in May (¥1.8tn vs. ¥0.2tn in April), though still below the record level seen in March (¥5.5tn). US Treasuries made up for nearly 50% of all net purchases. .....

From a medium term perspective and assessing the "credit cycle" we believe the latest US Senior Loan Officer Survey points to yet another "warning" sign in the deterioration of the on-going credit cycle which has been so far pushed into "overtime" by central banks with ZIRP and their various iterations of QEs....

the net percentage of banks tightening lending standards for commercial real estate loans showed an even sharper increase in Q2 (+24.2% vs. +13.6% previously). This was the highest level since Q1 2010 (+27.3%). The only positives in the Q2 SLOS were consumer and residential mortgage lending standards, where, on balance, banks continued to ease in Q2. This should prove to be a mild tailwind for consumer spending and the housing market in the near term." - source Deutsche Bank....

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