Wednesday, August 31, 2016

Today's links

Today's quote:  "...We were not strong enough to drive out a half-million American troops, but that wasn't our aim. Our intention was to break the will of the American Government to continue the war. Westmoreland was wrong to expect that his superior firepower would grind us down. If we had focused on the balance of forces, we would have been defeated in two hours. We were waging a people's war..."  General Vo Nguyen Giap, the Vietnamese Communist commander

1--Bill Gross: The Fed has "mastered the art of market manipulation "

---I and others however, have for several years now, suggested that the primary problem lies with zero/negative interest rates; that not only do they fail to provide an “easing cushion” should recession come knocking at the door, but they destroy capitalism’s business models – those dependent on a yield curve spread or an interest rate that permits a legitimate return on saving, as opposed to an incentive for spending. They also keep zombie corporations alive and inhibit Schumpeter’s “creative destruction” which many argue is the hallmark of capitalism. Capitalism, almost commonsensically, cannot function well at the zero bound or with a minus sign as a yield. $11 trillion of negative yielding bonds are not assets – they are liabilities. Factor that, Ms. Yellen into your asset price objective. You and your contemporaries have flipped $11 trillion from the left side to the right side of the global balance sheet. In the process, you have deferred long-term pain for the benefit of short-term gain and the hopes that your ancient model renormalizes the economy over the next few years. It likely will not. Japan is the petri dish example for the past 15 years. Other developed market economies since Lehman/2009 are experiencing a similar fungus.
Investors should know that they are treading on thin ice. The problem with Cassandras, such as Gross and Jim Grant and Stanley Druckenmiller, among a host of others, is that we/they can be compared to a broken watch that is right twice a day but wrong for the other 1,438 minutes. But believe me: This watch is ticking because of high global debt and out-of-date monetary/fiscal policies that hurt rather than heal real economies. Sooner rather than later, Yellen’s smooth shot from the fairway will find the deep rough.

2--Stan Druckenmiller's "Horrific Sense" Of Deja Vu: "I Know It's Tempting To Invest, But This Will End Very Badly" (archive) important

3--“If You Own a Home in Palo Alto, CA, Sell it Now”

4--Turkish FM talks ‘Euphrates Shield’ with Russian counterpart

5--Gülen movement ‘founded by CIA like the Mormons and Scientologists,’ says Turkish prosecutor

“Investigative journalists have been reporting that [Gülenists] worked as contractors for foreign intelligence services such as the CIA, MI6 and BND and infiltrated into the intelligence services of other countries acting in the name of the services they worked for,” read the indictment.

It noted that the mysterious killings of journalists Necip Hablemitoğlu, Haydar Meriç and Aytunç Altındal, who wrote books on the issue, should be “carefully investigated.” 

6--Will Washington sabotage China's OBOR Eurasia integration masterplan??

China has proposed OBOR; a pan-Eurasian connectivity spectacular designed to configure a hypermarket at least 10 times the size of the US market within the next two decades. The US hyperpower – not the Atlanticist West, because Europe is mired in fear and stagnation — “proposes” the current neocon/neoliberalcon status quo; the usual Divide and Rule tactics; and the primacy of fear, enshrined in the Pentagon array of “threats” that must be fought, from Russia and China to Iran. The geopolitical rumble in the background high-tech jungle is all about the “containment” of top G20 members Russia and China....

An array of Silk Road projects now crisscross Eurasia, progressively networking east-west and north-south corridors through many an economic zone; an expanding connectivity and infrastructure development frenzy involving Russia, China, India, Pakistan, Iran, Southeast and Central Asia. Connectivity, now more than geography, is destiny....

At the G20 China once again is announcing it is taking the lead. And not only taking the lead – but also planning to overstretch its abilities to make the hyper-ambitious OBOR Eurasia integration masterplan work. Call it a monster PR exercise or a soft power win-win; the fact that humanitarian imperialism as embodied by the Pentagon considers China a major “threat” is all the Global South – and the G20 for that matter — needs to know. 

7--Made in America: State Dept. Offers $3Mln For Daesh Leader Trained in US

The US State Department has offered a $3 million reward for any information leading to the arrest of Gulmurod Khalimov, a former Tajik police commander who is currently one of the main leaders of the Daesh terrorist group. While the press release labels him as a terrorist, it fails to mention that it was the US who actually trained him...

In 2003, I went to Baton Rouge in Louisiana, to undergo special training with the US Special Forces,” the man says. “In 2008, I also underwent special training, again at Baton Rouge,” he continues. “From 2003 to 2008, I had special training in America at a Blackwater military base,” he further reveals, adding that there they were trained to fight against Muslims and Islam. Back in 2015, RT news channel contacted the US institutions involved in his training for information. The US training organization The Academy, which is the current owner of the facilities where Khalimov was taught, answered that they did everything “with the explicit approval of the appropriate US Government department or agency.”

8--Obama success story: Third biggest stock market boom since 1900; Obama gave away the farm to enrich his Wall Street masters

The Obama years have been among the best of times to be a stock investor, going all the way back to the dawn of the 20th century.” He notes that someone who bought a low-cost stock index fund at the beginning of Obama’s presidency would have seen the value of the investment triple as of today.

Obama has overseen the third best run for stock market investors since 1900, Sommer writes. The market performed better only under the presidencies of Republican Calvin Coolidge in the 1920s, during the speculative boom that led to the Great Depression, and Democrat Bill Clinton, who presided over the era of “irrational exuberance” on financial markets and the tech bubble. Under Obama, the stock market performed better than under pro-business Republican presidents such as Ronald Reagan, Dwight Eisenhower and George H.W. Bush.

The current bull market is the outcome of deliberate policies undertaken by Obama in the wake of the 2008 financial crash to save the banks at the expense of the vast majority of the population, beginning with the bailout of major financial institutions....

The US Federal Reserve lowered its benchmark interest rate to near zero and adopted the policy of “quantitative easing” to pump trillions of dollars into the financial markets. Obama’s reappointment of Ben Bernanke in 2009 and his appointment of Janet Yellen as Bernanke’s successor in 2013 were decisions to support the continuation of this policy.

This gave rise to a massive boom in speculation that has greatly exacerbated the growth of social inequality. The wealth of the 400 richest individuals in the US skyrocketed from $1.27 trillion in 2009 to $2.34 trillion last year.

Share prices have soared to record heights, but have virtually no correlation with the stagnating real economy outside the world of finance. Economic growth for the remainder of 2016 and next year is estimated to be at 2 percent, far lower than after previous recessions. Meanwhile, median household income has fallen by 7 percent since 2000 and labor’s share of total income has dropped from 66 percent to 61 percent....

In March of 2009, the Obama administration carried out a number of measures to steady the nerves of America’s financial aristocracy and restore confidence on Wall Street. After the House of Representatives passed a bill to tax some bonuses at a handful of companies that had received government bailout money, following an explosion of public anger over the announcement of $165 million in executive bonuses by the bailed-out insurance giant American International Group (AIG), Obama moved to block passage of a similar bill by the Senate.

That same month, the administration announced a “private-public partnership” to offload the banks’ bad mortgage assets at public expense. Merely days later, Obama announced plans to “fundamentally restructure” the US auto industry while forcing brutal wage and benefit concessions on auto workers as a condition for any further loans to General Motors and Chrysler. The restructuring of the auto industry signaled a broader assault on the working class as a whole.

It was after the implementation of these policies that the stock market began its record-breaking ascent.

Tuesday, August 30, 2016

Extra Links

1--Food Price Deflation Cheers Consumers, Hurts Farmers, Grocers and Restaurants

The U.S. is on track this year to post the longest stretch of falling food prices in more than 50 years, a streak that is cheering shoppers at the checkout line but putting a financial strain on farmers and grocery stores.

The trend is being fueled by an excess supply of dairy products, meat, grains and other staples and less demand for many of those same products from China and elsewhere due to the strong dollar. Lower energy costs for transportation and refrigeration also are contributing to sagging food prices, say economists.
“Deflation is a godsend for consumers,” said Bob Goldin, vice chairman of food consultancy Technomic Inc.

Nationwide, the price of a gallon of whole milk on average was down 11% to $3.06 in July over a year ago; the price of a dozen large eggs fell 40% to $1.55 in the same period.

2--More Fed Bond Purchases Are the Wrong Answer

Ms. Yellen doubled-down on Fed asset purchases, suggesting that, in response to a future recession, “policy makers may wish to explore the possibility of purchasing a broader range of assets.”
This idea isn’t unheard of at other central banks, which are buying corporate bonds, regional government bonds and, in the case of the Bank of Japan, 8301 1.69 % even equity and real estate instruments. But other central banks have different boundaries. Fed purchases of a broader range of assets would be an incredible overreach because the asset choices would be highly politicized. Only Congress has the power to appropriate funds and borrow on the credit of the U.S., but broader Fed purchases would come perilously close. The Fed’s $2.3 trillion in liabilities to banks are not covered by the debt limit or other checks and balances, but they should be if the Fed buys new types of assets....

Last week’s Jackson Hole conference of central bankers defended the status quo in monetary policy despite disappointing economic results. Friday’s GDP report revised second-quarter growth down to 1.1%, confirming that the U.S. is suffering its weakest recovery since 1949. This came after the Congressional Budget Office’s new forecasts showing that current policies are expected to generate only 2% GDP growth per year for a decade assuming no recession...

July data from the Bureau of Labor Statistics showing that only 62.8% of people are participating in the labor force. That is barely above the lowest points in the recovery and is three percentage points below the long-term average participation rate, meaning millions of people are being left out by the weak economy....

Ms. Yellen dismissed with a single paragraph the widespread criticism of the Fed’s policies, blaming the poor results on the 2008 crisis. The reality is that Fed policies are causing an immense misallocation of capital toward bond issuers at the expense of small businesses and their workers. Governments have an open tap, and corporate bond issuance is booming, helping bigger companies buy back shares and pay dividends. These borrowers don’t add as much to growth as smaller borrowers.
To fund its bondholdings, the Fed is borrowing trillions of dollars from banks

3--All the new jobs since the beginning of the recovery have been shitty, low-paying, parttime, service sector jobs (archive) The social crisis and the US elections

A new report released this week demonstrates that under first the Bush and then the Obama administrations, the whole structure of employment in America has been radically altered to reduce the status of workers to that of a super-exploited casual and contingent labor force, lacking any job security or health and retirement benefits.

The report, by Princeton University and the RAND Corporation, documents the fact that all net full-time job growth in the US between 2005 and 2015 was accounted for by “alternative work arrangements,” i.e., people working as independent contractors, temps, through contract firms or on-call. There were actually fewer conventional full-time positions—by 400,000—in 2015 than a decade earlier.

One particularly revealing indication of the brutal conditions facing growing sections of workers is the fact that the proportion of contingent workers holding multiple jobs has more than quadrupled over the past 10 years, from 7.3 percent in 2005 to 32 percent in 2015. Nearly one-third of people working with no benefits or job security are holding down an additional part-time or full-time job just to make ends meet.

Another report released this week, this one by the Pew Charitable Trusts, provides further insight into the conditions facing low-income workers that are fueling anti-establishment and anti-capitalist sentiment. Entitled “Household Expenditures and Income,” the study reports that housing costs for the lower third of income groups in the US rose 33 percent between 2013 and 2014, the biggest annual jump in housing spending for the 19 years that Pew has studied the question.

With spending on transportation and food also rising, 2014 became the first year studied by Pew in which median spending on these basic necessities surpassed median income. By 2014, median income had fallen by 13 percent from 2004 levels, while expenditures had increased by 14 percent

The combination of cluelessness and contempt that prevails in top circles was summed up in early March by President Barack Obama following the release of last month’s employment report, which showed a larger-than-expected gain in payrolls for February. Saying the report was a vindication of his economic policies, which had made the US economy “the envy of the world,” Obama derided what he called “an alternative reality out there from some of the political folks that America is down in the dumps.” On the contrary, he gushed, “America is pretty darn great right now.”...

4--US pressures Turkey to curb attacks on Syrian Kurds

5--Turkey must halt Syria incursion

Meanwhile, Iran has voiced its concerns over Turkey’s continued military operations on Syrian soil.
“Increasing the scope of activities in northern Syria will result in the deaths of even more innocent people and civilians. The Turkish army must swiftly put an end to its operations in Syria,” said Iranian Foreign Ministry Spokesman Bahram Qassemi (seen below).

He noted that despite being crucial to regional security, battling terrorism must not breach a nation’s sovereignty and must be carried out in coordination with the nation’s central government.

6--Empty-headed "dumbfuski" Joe Biden visits Turkey

The U.S. is obsessed with stopping the natural gas pipeline from Iran, across Iraq, to Syria’s coastline.  I have written about this subject ad nauseam.  The U.S. would also like to prevent Syria from exploiting  the vast natural gas reservoirs underneath the Mediterranean which will become a billion dollar asset for Gazprom which is already scratching its left palm while waiting for the mayhem to stop.  The only way to bring Syria under control is by breaking it into pieces, as Biden wanted to do with Iraq.  With a Kurdish state reaching from the Turk border down past Al-Hasaka, the projected dimensions of the state might go beyond the natural lines and extend across territory necessary for the pipeline.  With a Kurdish state, the U.S. can have its own military bases to enable the Kurds to protect themselves from the government in Damascus.  Look for the first country at the U.N. to recognize a new Kurdish republic.  ...

The sole purpose of the American presence in Al-Hasaka, a normally halcyonic city with split Syrian/Kurd jurisdiction devoid of any ISIS infestations, is to get the Syrian government out and to push for the federalization of the country as a prelude to the creation of a Kurdish Republic obedient to the United States. 

Biden continues to play stupid, a role for which he is eminently qualified.  That he actually gave the order to support Turk ground troops while playing buddy-buddy with the Kurds only brought into detailed relief the complete breakdown of American foreign policy and its relegation into the hands of trolls

Foreign Ministry: Violations and massacres committed by #Turkish regime are condemned aggressions
Foreign and Expatriates Ministry said on Monday that the violations and massacres committed by the Turkish regime in the Syrian territories form a crime of aggression and crimes against humanity, adding that combating terrorism on the Syrian territories by any side must be done in coordination with the government of the Syrian Arab Republic and the Syrian Arab Army.
“The Turkish army’s air and artillery forces, in coordination with the armed terrorist organizations, targeted the villages of Jub al-Kusa and al-Amarneh to the south of Jarabulus city in Aleppo through shelling randomly, leading to a massacre and killing 35 civilians, 20 of them were killed in Jub al-Kusa and 15 others in al-Amarneh village, in addition to dozens wounded persons,” The Foreign Ministry said in two identical letters sent to the UN Secretary-General and President of Security Council about the bloody ugly massacre committed by the Turkish army in the north of Syria.
“The government of the Syrian Arab Republic condemns, with the strongest terms, the repeated crimes, violations, aggression and massacres perpetrated by the regime in Ankara against the Syrian people, sovereignty and territorial integrity of the Syrian Arab Republic for more than five years,” the two letters affirmed.

Today's Links

Today's quote:  "Russia made it clear to Turkey that it will not tolerate any infringement of the agreement or any clash with the Syrian Army drawing clear redlines, and threatening that its Air Force will hit the Turkish forces and its proxies in case of any similar violation....Moscow told Damascus “Turkey is willing to cut the Kurds’ toenails, they who believed the US is carrying a magic wand and could offer them a state in Syria without any objection or reactions. The YPG have no previous experience with American forces that can abandon them when US interests with Turkey prevails, despite hundreds of Kurds being killed on the battlefield against ISIS”...." Elijah J. Magnier, Putin and Erdogan have agreed on a restricted road map in Syria: the Kurds and Nusra will be the main losers

1--Low-Volatility Stocks At Risk As Credit Cycle Ends, UBS Warns A Crash Is Coming

The age of excess liquidity and inexpensive debt is over, according to Winter, and that makes it harder for management to use credit to satiate investors' demands for corporate profits
UBS notes that "77% of stock crashes are driven by earnings announcements," and more companies are likely to disappoint the market in the future.

We are currently witnessing the end of the credit cycle. Credit spreads have been increasing, global earnings growth rates are in aggregate flat and market impact has been increasing...


In a world of heightened macro factor, systemic and economic policy risk, we should expect higher levels of equity market volatility.

2-- Why the Math Doesn’t Work for Today’s Market

Stock valuations rise and fall, but when an important factor driving market performance is mathematically unsustainable, it is worth a closer look.
That is especially true now when ultralow interest rates make it easy to rationalize stocks at almost any valuation. At minimum, depressed interest rates allow the market to stay higher for longer than under more normal circumstances.

One factor that could end this game is how much cash companies are giving back to investors. It is no secret that companies that pay healthy dividends or buy back stock, usually both, are the most popular kids in the class this year.

Aswath Damodaran, a professor at New York University’s Stern School of Business, sees this as the market’s biggest risk. Mr. Damodaran, who is considered an authority on valuation, says S&P 500 companies through the first two quarters of the year collectively returned 112% of their earnings through buybacks and dividends. That is the highest since 2008 and well above the 82% average over the past 15 years, he said in a blog post last week.

3--The Price of the Calm After the Storm   -- Policy makers have ensured that markets are calm, but distortions are rife

Central banks now own a staggering $25 trillion of financial assets, according to Bank of America Merrill Lynch. Bond yields and prices are at extraordinary levels. The Austrian government bond due 2062 is trading over 200% of face value; the 10-year U.S. Treasury hasn’t yielded 3% in more than 2½ years. Central-bank buying has squeezed corporate markets; European nonfinancial bonds yield just over 0.5%. Single-B-rated Rwanda’s U.S. dollar bonds yield just 6.3%, down from 8.2% early this year.....

Investors now have a near-Pavlovian reaction to bad news: they expect monetary policy to ride quickly to the rescue. But central bankers are increasingly talking of the limits to their powers; they cannot address structural problems. Even if central bankers succeed in restoring growth, the real test will be unwinding the policies that bought the time to get there. After more than seven years of increasingly unconventional measures, the exit is looking increasingly difficult.

4--The Federal Reserve’s Politicians---Interest groups now lobby the central bank as if it’s a legislature

(absolute economic power?) The Fed these days has more power than Congress. So thoroughly has the central bank taken over regulating finance since Dodd-Frank, so completely does it preoccupy financial markets, and so broadly has it intruded into fiscal policy and the allocation of capital that Fed officials Janet Yellen, Stanley Fischer and Bill Dudley are the most important economic decision makers in government. ...

(Why does policy only serve the few and the rich?) If the Fed is going to be a political body, why not hold a hearing for savers whose retirement plans have been upset by seven and a half years of near-zero interest rates? Or what about pension trustees who have seen their funding shortfalls soar due to low interest rates?...     

(The Fed picks the winners)  Fed policies to raise asset prices have favored affluent stock owners over middle-class savers who have bank accounts or lower-yielding investments. Handed more regulatory power by Dodd-Frank, the Fed is now a joint-venture partner with the biggest banks

(The Fed cannot reduce its giant liabilities for fear of a market crash)  A Fed that wanted to reduce its political footprint would wind down its $4.5 trillion balance sheet as its bond holdings mature. The Yellen Fed instead is reinvesting the principal from maturing bonds to maintain its sway over long-term bond rates.....

(anticipating a slump, the Fed pledges more of the same)  the Fed now considers QE bond buying to be a routine part of its “toolkit” to keep unemployment low. Come the next recession, her implication is that the Fed won’t stop merely at buying Treasurys or mortgage securities. It will follow the European Central Bank in buying a board swath of corporate bonds. This will plunge the Fed even deeper into favoring some parts of the economy over others. ...

(where are the results?)  Sooner or later the public and its representatives are going to demand that the Fed show economic benefits from its vast de facto political powers.

5--Erdogan Calls Putin as Russia Seethes at Turkey’s Syrian Incursion

6--Leaked Memos Show George Soros Plotted to Oust Putin, Destabilize Russia

7--Joe Biden's junket to Turkey: It's all about the gas

Thereafter, Joe Biden travelled to Sweden, where he appealed to EU states to cancel the construction of the second line of the Nord Stream. Sweden was the key country for Biden to convince because of its unique right to cancel the project – Sweden has access to the Baltic Sea, where the largest part of the gas pipe is located. The US Vice President claimed that Nord Stream 2 was a fundamentally bad deal. Biden also mentioned that Europe’s dependence on Russian gas destabilises Ukraine. “Europe needs to diversify the gas sources,” he said...

But why does Biden care so much about European energy contracts and gas pipes in the Old World?
The reason is that Biden has a personal interest in the Ukrainian gas transit industry. Soon after the Euro-Maidan events in 2014, his son, Hunter Biden, became a member of the board of directors of Burisma Holdings, the largest gas company in Ukraine. This corporation – whose real owners are unknown, while its formal ones are registered in Cyprus – began to trample all Ukrainian gas assets, even during Yanukovich’s reign. The new regime, however, made Burisma Holdings a monopoly in the industry.

Burisma plans to mine not only natural gas, but to also deal with shale gas. In addition to this, the company intends to build a network of sea terminals and pipelines to receive liquefied natural gas (LNG).

In Stockholm, Biden offered to deliver LNG directly from the US to Europe. Several European countries already have an opportunity to receive this type of gas; however, the terminals have quite a poor connection with the gas transportation system based on the Russian pipelines. The idea of connecting the terminals with the existing pipeline, therefore, is fairly logical, unless the idea is buried, of course.

At the present, due to the low level of oil prices, both shale and liquefied gas are not very popular in Europe. However, the prices will not be low forever. Besides this, shale gas technologies keep forging ahead, which will make the Ukrainian gas business profitable in the future, unless it is overrun by Nord Stream 2. This is why Biden called the second pipeline “a destabilising factor.”

In today’s Ukraine, not a single serious decision is made without two people – the Assistant Secretary of State for European and Eurasian Affairs, Victoria Nuland, and the US Vice President, Joe Biden. The coup in Ukraine was guided by the neo-conservative forces led by Nuland – this was discovered during a journalistic investigation in 2014. Since Joe Biden was a co-sponsor of the Euro-Maidan project, he claimed a share in the Ukrainian gas business.

The “democratisation” process in Ukraine was also forced by the National Democratic Institute (NDI), of which Biden Junior is a member of the board of directors. The NDI is an affiliate of the US Democratic Party. The main aim of this institute is to “help build democracy” in different countries around the world. The chairperson of the NDI board of directors is Madeleine Albright. Whether or not Albright took part in the “Ukraine: Gas and Democracy” project, remains unknown. However, the interesting fact is that the board of directors of Burisma Holdings includes Devon Archer, who is Hunter Biden’s partner in US-based investment trust company, Rosemont Seneca Partners. Archer is also John Kerry’s friend and he runs a property fund founded by Kerry’s wife, Teresa Heinz Kerry.

Therefore, so-called “friends of the Ukrainian democracy” have been inspired not only by their political views, but also by certain business interests. It was thus not Europe that Biden was protecting from Russian gas aggression during his visit in Sweden; he was protecting his investments.

8--Turkish-led Forces & Kurdish SDF Reached Ceasefire Agreement – Reports

Seaparately, reports have appeared that the Turkish army and the SDF’s Jarablus Military Council have set up a ceasefire deal in northern Syria with the US-led coalition mediation.
According to unconfirmed reports:

  • The SDF will have to withdraw to east of Euphrates river
  • The Turkish army will be allowed 15km advance from Jarablus towards Azaz (not more)
  • Turksih-backed militants are not noted in the agreement (In other words, Turkish-backed militants will be able to cross the Sajur river and andvance towards Manbij if they have a will)

The Turkey-backed Free Syrian Army (F)SA has declarred a new operation aganist the ISIS terrorist group in the west of Jarablus.
If reports are confirmed, it will appear that the Turkish Armed Forces will not advance further to the north from Sajur river and will focus on capturing from ISIS more areas along the Turkish-Syrian border

9--Syrian War Report – August 30, 2016: US-backed ‘Rebels’ and ISIS Unite Efforts in Hama

On August 29, an ISIS-linked militant group called “Jund al Aqsa” and US-backed moderates from the so-called “Free Syrian Army” launched a joint advance on the Syrian army and the National Defense (NDF) in the northern part of Syria’s province of Hama......

(The Russians are coming)

Meanwhile, unconfirmed reports appeared in pro-government and pro-militant sources that a convoy consisting of some 120 Russian military advisers have arrived Aleppo city from Latakia. If this is confirmed, Moscow will likely use this contingent for humanitarian operation in the area.

10--Kremlin: Putin to meet Turkey's Erdoğan, UK's May, Saudi's bin Salman in China

11--Syrian Army makes huge strides in southern Aleppo

12--Turkish, Kurdish forces in Syria agree to ‘stop shooting at each other’

13--Putin and Erdogan have agreed on a restricted road map in Syria: the Kurds and Nusra will be the main losers

Ankara committed itself to hunting down “ISIS” along the Syrian border with Turkey, and to preventing the Kurds from establishing themselves along the borders. Russia has accepted a Turkish incursion into Syrian territory due to the Kurds’ declared hostility to the government in Damascus when YPG forces attacked and expelled the Syrian army from al-Hasakah city to the suburbs, with US backing, – a clear intention to initiate the partition of Syria. Russia stands against a Kurdish state ruled by the US in the new Kremlin Mediterranean base, Syria. The Kurds had been enjoying the support of Damascus for the five years of war, and believe that the rebellion was not in vain, rather part of a plan to divide Syria.

Russia understands that the US is reluctant to exert influence over its allies in the Middle East to instruct their proxies in Syria to stay away from the (ex) Nusra group (Al-Qaida in Sham, newly rebranded as Jabhat Fateh al-Sham). Turkey expressed its willingness to collaborate and instruct many rebel groups under its direct influence, to reject unification, avoid the merger proposed by Nusra, and keep its distance from the Jihadists, mainly in the northern city of Aleppo. Those groups receive their logistic, finance, military equipment, medical treatment, medicine, hospitalisation, free access to the country and intelligence information from their sponsors in the Middle East: all via Turkey...

Moreover, Turkey showed its ability to change its long declared policy toward  Damascus: Prime Minister, Binali Yildirim declared, “Syrian President Bashar al-Assad could be a partner in this transitional phase”. The tactical disagreement over Assad’s future as the head of his country remains a suspended unsolved issue that Russia considers it is the right of the Syrian people to decide.

Turkey agreed to avoid any contact or clash with the Syrian army, mainly around Aleppo, in support of the Syrian rebels and jihadists. This is leaving (ex) Nusra almost alone with minor groups around Aleppo, Ramouseh and the academies, offering a perfect target to the Russian Air Force, and the US, if willing to act in partnership, since jihadists are left alone on that front.

Turkey succeeded in benefitting from Washington’s blessing to engage its forces in Syria after five years of objection and rejection of a most wished no-fly-zone. Erdogan was carrying a sharp knife, blackmailing a US concerned that the Turkish president may fall into the arms of Russia, which would represent a threat to the NATO alliance. Erdogan was due to be pleased by the US to divert attention from the role he is unwittingly claiming that the US played and was not far from orchestrating the failed coup last July....

Russia made it clear to Turkey that it will not tolerate any infringement of the agreement or any clash with the Syrian Army drawing clear redlines, and threatening that its Air Force will hit the Turkish forces and its proxies in case of any similar violation.

Russia has advised Syria to avoid any official objection and condemnation deposited at the United Nations Security Council related to the presence of Turkish troops on its soil. Turkey is protecting its national interest, preventing the partition of Syria, a possible domestic Kurdish uprising and a Rojava state on its border, and eliminating a future permanent foothold of US forces in Syria.
Moscow told Damascus “Turkey is willing to cut the Kurds’ toenails, they who believed the US is carrying a magic wand and could offer them a state in Syria without any objection or reactions. The YPG have no previous experience with American forces that can abandon them when US interests with Turkey prevails, despite hundreds of Kurds being killed on the battlefield against ISIS”.

14--Joe Biden came, saw, but failed to conquer Turkey

15--  Guess who's coming to dinner:  Hillary's regime change meetings with George Soros?

Days in the life of Hillary Clinton   
On June 2, 2010, Hillary Clinton's calendar as secretary of state shows that she held a half-hour meeting with billionaire investor George Soros and officials from his Open Society Institute, which makes grants to various causes around the world. (The group is now known as the Open Society Foundations.)
In the room for the meeting was Obama White House special assistant Michael McFaul, who would go on to become the U.S. ambassador to Russia. Also included, according to the calendar entry, were two officials from the Open Society Institute: Michael Hall, who is now the group's regional director for the Caucasus and Central Asia, and Jeff Goldstein, who is now the group's senior policy advisor for Eurasia, according to the organization's website.

16-- Happy Sounds at Hillary State Department; CHA-CHING

Billionaires dropped by a lot

Particularly billionaire Mort Zuckerman, who owns the New York Daily News and shows up in Clinton's calendar several times, including the 35 minutes he spent with Clinton in her office on Thursday, Oct. 7, 2010. On Monday, Oct. 26, 2009, Bill and Melinda Gates came by for a 50-minute session. Billionaire and former Citigroup chairman Sanford Weill got a half hour appointment on June 2, 2010, along with his chief of staff, Mike Conway.
Warren and Susie Buffett dropped by on Tuesday Oct. 5, 2010, for lunch in the secretary's outer office for an hour beginning at 12:55 p.m. Unlike many of Clinton's other meetings, this one includes a listing for the topic of conversation: "Buffett Foundation...

Behind the scenes at the NYSE

The schedule gives a detailed account of Clinton's visit to the New York Stock Exchange on Sept. 21, 2009 — a time when Wall Street was still reeling from the 2008 financial crisis. Clinton's turn ringing the opening bell that day was visible to the media and the world, but her other meetings were not. The calendar shows Clinton met at 8:20 a.m. with Jeffrey Eubank, the NYSE's senior vice president of global affairs and government relations, a former Bush administration official whose Wall Street job included managing relationships with governments and heads of state around the world.
Clinton also met with then-NYSE CEO Duncan Niederauer in his office for a five minute "courtesy call" and held an off-the-record breakfast discussion with CEOs including Stephen Schwarzman of the Blackstone Group, James Tisch of Loews Corp., Indra Nooyi of PepsiCo and Howard Schultz of Starbucks.

17 --How big alcohol is about to get rich on weed

18 --It Takes a Ruling-Class Village to Staff the White House

"The people who own the country, ought to govern it." John Jay

According to William K. Black, who has held top federal regulatory positions, what we are seeing in this group “is complete domination by what used to be the Democratic Leadership Council. … Very, very right-wing foreign policy. What they call a muscular foreign policy … a euphemism for invading places. Very, very tough on crime … [and pro-] mass incarceration. And the economic side, all in favour of austerity. All in favour of privatization. Tried to do a deal with Newt Gingrich to privatize Social Security. And of course, were all in favour of things like NAFTA.”
It’s no small matter. “The transition team,” Black notes, “is the one that is both deciding what are we actually going to make our policy priorities in the magic—again a cliché—first 100 days? But more than that, who will the top people be?”....

The Policy Planning Group Filter
The revolving door between top corporate/financial and government positions and the promise of heightened remuneration in the “private” sector (after one does Big Business’ bidding while “serving” in the “public” one) is a very big and often underestimated part of this overall system of class rule. Also unduly neglected is the role that elite neoliberal and corporate-financial-networked policy planning bodies play in staffing, socializing, solidifying and doctrinally schooling top U.S. executive branch personnel. The key institutions here are the CFR, The Trilateral Commission, the Bilderberg Group, the Rand Corp., The Aspen Institute, the Atlantic Council, the Brookings Institution, the Center for Strategic and International Studies, the Peterson Institute for International Economics, the Hoover Institution, the Carnegie Corporation of New York/Carnegie Endowment for International Peace, The Rockefeller Foundation, the Foreign Policy Association, the Committee for Economic Development and The Bretton Woods Committee.

These core policy organizations (with the CFR in the lead) share three basic properties: a strong commitment to the domestic and global “Open Door” expansion (non-territorial but not without considerable reliance on the U.S. and U.S.-sponsored military force) of American transnational “free market” capitalism (corporate, state and financial); principal funding by transnationally oriented Fortune 500 corporations and financial institutions; the ubiquitous presence of their top personnel both in the elite “private” (corporate, financial and legal) sector and in White House GSM positions.
Of Obama’s 30 GSMs, van Apeldoorn and de Graaff find, fully 25 (83 percent) held prior top affiliations with one or more of these planning groups, totaling 162 such affiliations. The elite policy groups’ presence was slightly higher in the Clinton White House (26/209) and similar in the Bush presidency (22/211). ....

“Lady Klynton Kissinger Sachs”

Will things be any different in the likely Clinton 45 White House? One would have to be very naive to think so. It’s not for nothing that Hillary Clinton is known on Wall Street as “Lady Klynton Kissinger Sachs.” The consistently war-hawkish Clinton is the quintessential power-elite and ruling-class insider.  She was minted and socialized at such ruling-class institutions as Oxford, Yale Law, Rose Law, the Wal-Mart board of directors, the Democratic Leadership Council (dedicated to pushing the Democratic Party further to the corporate-friendly right during the 1980s and 1990s), the White House (eight years as a highly policy-empowered first lady), the globalist Clinton Foundation, the CFR and the U.S. State Department. She and her husband “operate in … a world awash in money and connections … [a] very privileged place,” as The New York Times’ Carolyn Ryan recently said. She is the candidate of campaign finance and of (exorbitant) speaking-fee choice for Goldman Sachs, Citigroup, the CFR, the Chicago Mercantile Exchange, Robert Rubin and the rest of the nation’s transnationally oriented corporate and financial aristocracy—including a remarkable number of pinstripe Republicans who do not trust the “unhinged” Trump. As New York Times columnist Maureen Dowd cleverly reflects:
All these woebegone Republicans whining that they can’t rally behind their flawed candidate is crazy. The G.O.P. angst, the gnashing and wailing and searching for last-minute substitutes and exit strategies, is getting old. They already have a 1-percenter who will be totally fine in the Oval Office, someone they can trust to help Wall Street, boost the U.S. Chamber of Commerce, cuddle with hedge funds, secure the trade deals beloved by corporate America, seek guidance from Henry Kissinger and hawk it up. … The Republicans have their candidate: It’s Hillary.
Personnel Is Policy
But it’s not just about Hillary Clinton. It takes a ruling-class village to make policy for the few in the name of the many. Clinton’s vice presidential pick, Tim Kaine, is a financial-sector darling who backed fast-tracking the arch-global corporatist, Wall Street-backed Trans-Pacific Partnership (TPP). Her campaign manager, John Podesta, is a legendary ruling-class inside-outsider. A former chief of staff for President Bill Clinton, Podesta has headed a major Washington, D.C., lobbying firm whose clients have included BP, Citigroup, Wal-Mart and Lockheed Martin. He founded the Center for American Progress (CAP), which has become a virtual policy arm of the neoliberal Obama White House and—as The New York Times reported after Obama appointed him as a special adviser in December of 2013—“taken millions of dollars in corporate donations and has its own team of lobbyists who have pushed an agenda that sometimes echoes the interests of those corporate supporters.” The CAP poses as a “progressive,” even “left-leaning” alternative to right-wing think tanks like the Heritage Foundation, but it really embodies a kind of reconstructed “Third Way neoliberalism” that is deeply captive to global corporate and financial interests. Podesta is also president of the Clinton-Kaine Transition Project.

20--Syria: Their War, Not Ours

Monday, August 29, 2016

Today's Links

Today's quote:  "The Turkish move into Syria should bury once and for all any idea that Turkey is in the process of undertaking a geopolitical realignment away from the West and towards the Eurasian powers.  Not only is Turkey still a US and NATO ally,  but it is now conducting an illegal military operation against Russian opposition in Syria with US military support.  That is not the action of a country in the process of carrying out a realignment and preparing to switch alliances from the West to Beijing and Moscow....Turkey remains, as it has always been, an ally not of Russia and the Eurasian powers, but of the US and the West, and its actions in Syria are a clear demonstration of that." Alexander Mercouris

Yesterday, in our post-mortem on the Jackson Hole symposium, we found one particular highlight most notable: according to Princeton University economist Christopher Sims, "policymakers were told that it may take a massive program, large enough even to shock taxpayers into a different, inflationary view of the future." And, as has been customary over the past year, the place where this "shock therapy" will be tested first, will be the same place where 30 years of unconventional monetary policy has so far failed: Japan.

That is the scenario envisioned by Mark Haefele, global chief investment officer at UBS Wealth Management who oversees the investment policy and strategy for about $2 trillion in invested assets.
In a Bloomberg Television interview, on Monday, Haegele said that the BOJ could announce a “massive stimulus program” as the nation desperately seeks to reach a 2% inflation target.

It is how much they do, and whether they can create that kind of shock and awe at this point in the cycle,” said Haefele, adding “they could announce a massive stimulus program both on the monetary and fiscal side or they could end up reducing their inflation targets. Right now, it looks like they are going to use more stimulus.”...

for everyone else another sharp plunge in the Yen will mean a surge in imported inflation, a drop in purchasing power, even more negative savings rates, deteriorating economic fundamentals, and a general decline in the standards of living. However, since Japan is now all in, its only option remains to double down, and when that fails, to double down again until its entire financial system finally cracks

2--Talking tough to boost the sagging dollar and recycle foreign capital into US markets: Federal Reserve Chairwoman Janet Yellen, Friday, in a keynote speech at the conference: (many quotes)

When asked whether the Fed could raise rates at its meeting next month and again before the end of the year, he said Ms. Yellen's speech "was consistent with answering yes to both of your questions, but these are not things we know until we see the data."

3--Jackson Hole roundup; Fiscal stimulus needed

During the meeting Yellen and three regional Fed bank presidents -- Robert Kaplan of Dallas, Eric Rosengren of Boston and Loretta Mester of Cleveland -- all urged fiscal policy makers to step up.
“Central bankers, we are increasingly talking about this, about the need for fiscal policy and other economic tools beyond monetary policy,” Kaplan said during a luncheon Friday, although he cautioned it could be “many years” for there to be action

4--QE, End of the Private Sector? Japanese Government Now Largest Shareholder of 474 Big Companies ((Central Banks manage the capital accumulation process. "Wealth effect" is a fake Public relations device to confuse people about what is really happening...Why you never hear the term "political economy" to explain the looting of the oligarchs)

The Bank of Japan and the Government Pension Investment Fund (GPIF) have been buying stocks to inflate the market, create some kind of “wealth effect,” and bamboozle regular Japanese into pouring once again into stocks, after many of them lost a big chunk of their savings when the prior bubble imploded without ever recovering....

But even after Japanese stocks took a licking over the past year, the fund’s allocation to domestic equities is still 21%, so near its range and no longer a powerful buyer. But to make up for any holes left behind by the pension fund, the BOJ announced on July 28 that it would nearly double its annual purchases of equity ETFs to ¥6 trillion ($59 billion)....

The holdings of Japanese stocks by these two entities have nearly tripled over the past five fiscal years to about ¥39 trillion ($381 billion), according to The Nikkei. During that time, the Nikkei stock index soared 70%, “demonstrating their powerful support.”
But, but, but… the index remains 57% below its bubble peak of 1989

5---As Fed nears rate hikes, policymakers plan for 'brave new world'; Fed explores new policies to assist the accumulation process

uture policymakers might choose to consider some additional tools that have been employed by other central banks," including buying a wider range of assets or raising the inflation target. She also cited the possibility of targeting the average level of prices in the economy rather than their rate of change.

Notably, her laundry list of possible tools did not include negative rates, an idea that has been nearly universally panned by Fed officials. She said the Fed is not actively considering additional policy tools but participants at the conference suggested the process is already well underway.
"You are seeing an exploration of how are we going to operate in a quite different world than before the crisis," Lockhart said.

6--Years of Fed Missteps Fueled Disillusion With the Economy and Washington; Fed offers mea culpa on the economy promising to do more of the same in the future, WSJ, Hilsenrath, the Fed Mouthpiece

7---Global central bankers, stuck at zero, unite in plea for help from governments

8--Global central bankers, stuck at zero, unite in plea for help from governments: CBs consider fiscal jolt to boost flagging corporate earnings

Fed Chair Janet Yellen devoted the final page of her keynote talk on possible monetary policy reforms to a list of fiscal and structural policies she feels would help the economy.

Fiscal policy was not on the formal agenda for the conference, but it was a steady part of the dialogue as policymakers thought through policies for a post-crisis world. One of the central worries is that households and businesses have become so cautious and set in their outlooks - expecting little growth and little inflation - that they do not respond in expected ways to the efforts central banks have made.
That has included flooding the financial system with cash, and voicing a steady commitment to their inflation targets in an effort to make people believe they will be met....

In a lunch address by Princeton University economist Christopher Sims, policymakers were told that it may take a massive program, large enough even to shock taxpayers into a different, inflationary view of the future.
"Fiscal expansion can replace ineffective monetary policy at the zero lower bound," Sims said. "It requires deficits aimed at, and conditioned on, generating inflation. The deficits must be seen as financed by future inflation, not future taxes or spending cuts."
It was not clear whether such ideas will catch on. But there was a broad sense here that the other side of government may need to up its game.

9--United States Corporate Profits, Mosler  The reason CBs are concerned

Corporate profits in the United States decreased by 2.4 percent or $36.3 billion to $1469.7 billion in the second quarter of 2016, after rising an upwardly revised 8.1 percent in the previous period, preliminary estimates showed. Dividends decreased 0.9 percent or $8.2 billion in the second quarter (compared to a gain of 0.8 percent or $7.3 billion in Q1) and undistributed profits dropped 5.2 percent or $28.1 billion (compared to a rise of 24.3 percent or $106.1 billion in Q1). Also, net cash flow with inventory valuation adjustment, the internal funds available to corporations for investment, fell 1.1 percent or $22 billion, after going up by 5.7 percent or $112.7 billion in the previous period

10--Has the recession already started?; Bank loans continue to decelerate

This is not about one month’s numbers. It’s been a full retreat ever since the collapse of oil capex at the end of 2014, with no sign yet of anything but more of same until deficit spending- private or public- picks up sufficiently to offset the ‘normal’ amount of unspent incomes.
And as previously discussed, it wouldn’t surprise me if future revisions show that the recession started a year ago or maybe even before that

11---Check out this map where the housing bubble is biggest

June marked 50 consecutive months of annual national home price appreciation, with prices up 33 percent from the post-recession bottom in 2012, according to a new report from Black Knight Financial Services. It measured the average national home price in June at $265,000, which is within just 1.1 percent of a record high.

Some markets, however, have surpassed their previous price height. These include cities where tech jobs are driving population growth. Seattle and Portland, Oregon, top the list, as workers migrate north from pricey San Francisco. Denver, Austin, Texas, and Pittsburgh are also seeing a heavy influx of tech-sector jobs, pushing demand for housing higher and pulling prices along.

12--A new housing bubble?

13--Euphrates Shield': Turkish Operation to Reshape Balance of Power in Syria

Faysal Itani, resident senior fellow at the Rafik Hariri Center for the Middle East at the Atlantic Council, suggests in his article for the Foreign Policy Magazine, that Turkey may become Washington's long-anticipated "professional military ally" against Daesh in Syria. Itani believes that Turkey's involvement in the conflict "will shape the war on the extremist group to Washington's advantage." On the other hand, "the campaign itself may launch a new era of US-Turkish cooperation in Syria," he insists.

14--The Turkish Invasion Of Syria As Path To "Regime Change"; Compelling but wrong

15--Anatomy of the Turkish Invasion: Official Narrative vs. True Objectives

What I had not considered in February, was the probability of Turkey openly utilizing its military units to support, and co-mingle with, Turkmen militants and Islamic terrorist groups. It appears that the Turkish political establishment learned some lessons from the Russian and U.S. experience with military intervention in Syria. Russian special operations and air force assets support the Syrian Arab Army on the ground, while the U.S. has chosen to infuse special operations forces with YPG and SDF units. Instead of a direct military invasion in force, it was decided that proxies should bear the brunt of the fighting and provide a thin venire of legitimacy by portraying it as a majority Syrian rebel operation. Additionally, the reason given for the operation is to fight ISIS, remove them as a national security threat and to establish a buffer zone between the varied forces fighting within Syria and Turkey, and to provide a protected, humanitarian zone. It can easily be deduced that all of these explanations are a cover for the real Turkish objectives behind this operation


It becomes readily apparent, after a mere tertiary review of the events, that the limited Turkish operation to combat ISIS is a false narrative to cover the reality that Turkey is invading Syria with its Islamic proxies to secure its own national goals. These goals are those of the corrupt Erdogan regime only, and not those of the Turkish people. Turkish security will not be served by continuing the spiral of violence and injustice in Syria, nor by filling the pockets of the Erdogan family and their mafia allies through money made from war profiteering and illicit smuggling. Turkey and the United States are hoodwinking the Turkish and Kurdish people, and feeding them a lie that has convinced them to subordinate their own interests. Turkey defeated the non-existent ISIS threat in Jarablus, which evaporated within hours, and will capitalize on the door that has been opened to them as much as possible. Russia will rue the day it trusted Erdogan again, and the Kurds must learn the truths of the past. The United States will continue to use them to its own ends until the Kurds finally stop acting like the battered spouse in the relationship.

16--Note by the Saker: I have to admit that I still am rather puzzled by the Turkish “invasion” of Syria.  There are several hypotheses about what the Turks are really up to and what their real goal is.  Since my friends Alexander Mercouris and Mark Sleboda seem to have a much better understanding of what is happening than I, I submit to your attention their analysis rather than to exposes you to my confused guesses

17--Erdogan double-crosses Putin

The article makes it clear that Turkey did not coordinate the Jarablus operation with Moscow or Damascus, and that it was much bigger than Moscow was led to expect.  The Russians are also clearly annoyed by the extent to which the operation has been coordinated by Turkey with the US, which is providing air support.
“For Moscow, Ankara’s operation was an unpleasant surprise, demonstrating that the expectations for a convergence of the countries’ positions on Syria that emerged after the meeting between Putin and Erdogan were premature.  In deciding about the operation in Jarabulus, the Turkish leader has sent a signal that relations with the U.S. remain a priority for him, and he prefers to act in the framework of the antiterrorist coalition led not by Moscow, but Washington.”

I have repeatedly warned against over-high expectations that the recent rapprochement between Turkey and Russia amounted to any sort of realignment.  I have also said that despite Turkish annoyance with the US over the recent coup attempt, Turkey remains a US ally, continues to be committed to regime change in Syria, and is not going to throw the US out of Incirlik or allow Russia to use the base.  My only surprise is that judging from this comment it appears there were some people in Moscow who thought otherwise. ...

Mark Sleboda has explained to me that the principal corridor to supply the rebels in Syria has always been through the area of north east Syria around Jarablus.  In his words
“Idlib is not an acceptable supply route from Turkey to forces in Aleppo province because the Turkish-Syrian border in Idlib is mountainous terrain – small and bad roads and then long routes all the way through Idlib past SAA held territory into Aleppo province. The Jarablus Corridor north of Aleppo is and has always been absolutely vital for the insurgency,. That’s why Turkey, Brookings, etc have always placed so much priority on a no fly zone there. Now its come to realisation.”
In other words the Turkish capture of Jarablus before it could be captured by the YPG was not primarily intended to prevent the linking together of two areas within Syria under Kurdish control – though that may have been a secondary factor – but was primarily intended to secure the main supply route (or “ratline”) Turkey uses to supply the Jihadi fighters attacking Aleppo....

Going back to the war in Syria, my own view remains that this will not in the end decide the outcome of the battle of Aleppo, where reports suggest that the Syrian army is continuing to gain ground despite the uninterrupted – and in fact increasing – flow of supplies to the Jihadi fighters across the Turkish border. My longer term view also remains that if the Syrian government succeeds in recapturing the whole of Aleppo and eventually Idlib, then it will have won the war.  However what this episode shows is that the war is far from won, and that the Turks and their US backers are still prepared to go on escalating it in order to prevent the Syrian army winning it....

Setting up a rebel “safe zone” inside Syria in the teeth of the opposition of the YPG is however what Erdogan and the Turks – backed by the US – have now decided to do....

Regardless of this, the Turkish move into Syria should bury once and for all any idea that Turkey is in the process of undertaking a geopolitical realignment away from the West and towards the Eurasian powers.  Not only is Turkey still a US and NATO ally,  but it is now conducting an illegal military operation against Russian opposition in Syria with US military support.  That is not the action of a country in the process of carrying out a realignment and preparing to switch alliances from the West to Beijing and Moscow.

The Russians and the Turks are now talking to each other, which for several months they had stopped doing.  The Kremlin’s summary of Friday’s conversation between Putin and Erdogan shows that they are still talking about improving their trade links and economic ties.  However, as the Kommersant article shows, even that limited progress now appears to be in jeopardy as the two countries’ conflicting stances in the Syrian war once again threaten to pull them apart. 
In other words Turkey remains, as it has always been, an ally not of Russia and the Eurasian powers, but of the US and the West, and its actions in Syria are a clear demonstration of that.

18--Bernie Sanders fake revolution: A farce propped up on a sticking pile of lies

Our Revolution “will focus on three distinct areas of work,” according to email and Facebook announcements: “(1) bringing millions of working people and young people into the political system; (2) inspiring, recruiting and supporting progressive candidates across the entire spectrum of government—from school board to the US Senate; (3) educating the public about the most pressing issues confronting our nation and the bold solutions needed to address them.”
What this means in reality is (1) registering people as Democrats and encouraging them to vote for the Democratic Party; (2) supporting candidates in Democratic Party primaries and Democratic candidates in general elections; (3) conducting propaganda to portray the reactionary capitalist and imperialist politics of the Democratic Party as the solution to the social problems confronting working people....

Every one of the candidates endorsed on the Our Revolution web site is a Democrat, including such longtime party standard-bearers as former Senator Russ Feingold of Wisconsin, who is seeking his old job after being defeated in 2010 by a right-wing Republican; incumbent Democratic representatives Raul Grijalva of Arizona, Tulsi Gabbard of Hawaii, Keith Ellison of Minnesota and Marcy Kaptur of Ohio; and a slew of Democratic candidates for Congress and state and local office..

As was the case throughout the primary campaign, Sanders made no mention of the growing threat of war and no criticism of the Obama administration’s foreign policy, including the escalation of US warfare in Syria and Iraq, the widespread use of drone-fired missiles to assassinate those targeted by the CIA and Pentagon, and the continuing military buildup against Russia and China. The “Our Issues” section of the Our Revolution web site lists 17 subjects, every one of them related to domestic concerns. There is not a single reference to foreign policy or war....

The entire operation underscores the real political function of the Sanders campaign from its outset. .... to channel mass anger against social inequality and the domination of the political system by Wall Street back behind the Democratic Party, where it could be strangled and dissipated.
( and support for wall streets favorite candidate, crooked Hillary)

19---Turkish President Recep Tayyip Erdogan made clear that Turkey’s intervention would be a long and bloody one

In response to a question on the creation of so-called safe zones within Syria, Earnest denied that this was being considered as a policy option by the Obama administration because it would require additional military forces. This was thoroughly disingenuous, given that Washington is backing a Turkish operation whose explicit goal is the creation of a zone in northern Syria controlled by Turkish troops.

Violence continued to spread within Turkey following a bomb attack Friday by PKK-aligned militants, which killed 11 Turkish police officers and wounded 78 people. PKK rebels launched a grenade attack on the airport in Diyarbakir Sunday, and a Turkish soldier and 10 PKK militants were killed in clashes in Hakkari province.

Speaking at a rally Sunday in Gaziantep, 30 kilometres from the Syrian border, Turkish President Recep Tayyip Erdogan made clear that Turkey’s intervention would be a long and bloody one. He indicated that Ankara would not distinguish between the PKK, with which it has been in a virtual state of war since last year, and the YPG in Syria. After vowing to wipe out Islamic State in Syria and Iraq, Erdogan declared, “We are as determined about the PYD [Democratic Union Party], the separatist terror organisation’s Syrian wing… We will continue until we uproot this terror organisation.”

There has been a virtual blackout of the dramatic escalation of the Syrian conflict in the US media and it has not been raised as a major issue by either candidate of the two big business parties in the presidential election campaign. News coverage of Syria on Sunday focused on reports accusing the Assad regime of dropping barrel bombs on a civilian neighborhood in “rebel”-occupied Aleppo, while the killing of civilians by Turkish forces was passed over in virtual silence.

Democratic candidate Hillary Clinton, who enjoys the overwhelming backing of the military and intelligence establishment, has left no doubt about her readiness to vastly intensify US military operations in Syria after November, even if this means direct confrontation with Russia. The Center for a New American Security think tank, which was co-founded by Michele Flournoy, a former Defense Department official who is reportedly on the short list for the secretary of defense position in a Clinton administration, called in June for a future US administration to authorize military strikes against Assad’s forces.

Saturday, August 27, 2016

Today's links

Today's quote:  "The foreign policy of the American ruling class has had the most horrifying consequences for the peoples of the countries targeted. The war fomented by the United States in Syria has reduced the population of that country from 23 million to about 17 million, killed up to half a million people, and displaced over 13 million....Nobody should believe that the criminal cabal that runs US foreign policy will proceed with any more deliberation or caution in launching a war whose body count will be in the hundreds of millions, if not billions, than it does in plotting wars in which “mere” millions of lives are squandered."  Andre Damon, WSWS

1--Memo to Janet Yellen: Play with the currency markets at your own risk

"Any equivocation by Ms. Yellen will be met with a dollar rout in the FX market," Schlossberg predicted. "Stakes are higher than normal."
"The currency market is already, at best, skeptical that the Fed will raise rates this year," and if Yellen doesn't reassure traders that she will do so, the U.S. dollar/Japanese yen cross "will crash below 100 and most likely break the post-Brexit lows of 98," Schlossberg said.

Given the greenback is currently trading at 100.53 yen, that would represent a huge move for a major currency pair.
In recent days, Dallas Fed President Robert Kaplan, Kansas City Fed President Esther George and, most importantly, Fed Vice Chairman Stanley Fischer have all indicated that a rate hike could still be appropriate this year. Last week, New York Fed President William Dudley said September remains on the table.

"It seems unreasonable to expect Yellen [to] substantially deviate" from these views, Brown Brothers Harriman currency strategist Win Thin wrote Thursday

2--More trickle down: Why Bill Gross is fed up with the Fed

"For example, future policymakers may wish to explore the possibility of purchasing a broader range of assets, Yellen said

3---Say goodbye to retirement:  Japanese Government Squanders Pension Funds On Failed Stocks As Losses Reach $130 Billion In Past Year

Japanese stocks are down about 22% in the past 12 months which represents about $60BN of losses or 4.5% of GPIF assets.... deputy director-general of investment strategy, Shinichiro Mori, points out, the GPIF will maintain the status quo as "stock markets are on a recovery trend." (Stocks will bounce back!....Not bloody likely)

4--The impending slump: Recession Odds Spike To 37%, JPM Calculates, Highest Yet For This Cycle

While not as dire as the recent analysis by Deutsche Bank which calculated that a recession over the next 12 months is more than likely, with odds rising to 60%, overnight JPM released its latest recession probability analysis, and - somewhat unexpectedly following the last two stellar job reports and a full court political press that the recovery has rarely been stronger going into the election - now sees a 37% chance of a recession in the next 12 months. This is the highest recession probability calculated by Jamie Dimon's bank during the current economic cycle, and matches the odds first laid out in early July.

While the rising odds of a US recession are not surprising on their own, what is notable is that even JPM highlights the disconnect between the economy and the financial markets, observing that "as risk markets have rallied somewhat since our last update, the probability from the model based on macroeconomic data is now considerably above our models based on financial markets", confirming once again how distorted the relationship between the markets, supported by central banks, and the underlying economy has become...

After dropping to 30% on July 8, our preferred macroeconomic indicator of the probability that a recession begins within 12 months has risen back to 37%, equaling its high for the expansion....

As risk markets have rallied somewhat since our last update, the probability from the model based on macroeconomic data is now considerably above our models based on financial markets (in other words, stock prices are grossly inflated and doomed to plunge)...

But the most notable development in the near-term data has been the deterioration in the business sector sentiment surveys, particularly for nonmanufacturing...

This morning’s GDP report also included the first read on corporate profits in the second quarter. The report incorporates preliminary data from the Census Bureau’s Quarterly Financial Report, which includes private businesses, in addition to earnings reports from public companies. Profits fell significantly short of our forecast, and the margin measure that enters our recession model moved down, raising the model’s “background risk” of recession to 35%

5--Will wonders never cease?  From Bench to Benchmark: Jose Canseco Is Twitter’s Favorite Financial Analyst-- Jose Canseco tosses out quips on Brexit, Japanese monetary policy

Jose Canseco, who slugged his way through the major leagues, has now developed a cult following after some of his contrarian predictions about financial markets came true....

He’s been pretty much spot on with the macro picture,” said James Mark II. The San Antonio-based stock and commodities trader first noticed Mr. Canseco’s tweets in February, after the ballplayer correctly predicted a rally in gold when many analysts were bearish.“I read it and I was like ‘Hmm, we agree’ ” Mr. Mark added. Now he checks Mr. Canseco’s Twitter TWTR -0.11 % page regularly to view the latest prognostications.

When political pundits and London bookies confidently predicted that Britain would vote to remain in the European Union, the 1988 Most Valuable Player for the Oakland A’s was already warning of the damage Brexit was going to bring.

Make no mistake Brexit will crater the UK into recession and the pound will do a 25% faceplant. Capital will flee like its pants are on fire,” he tweeted two days before the referendum. The pound fell by about 15% against the dollar after the vote, falling short of his prediction, but he got the gist of it.
Mr. Canseco also warned in February of a housing-market bubble in Vancouver. This month, the Canadian city began to impose a new tax on foreign buyers in an effort to curb prices....

More recently, Mr. Canseco has been stressed out over the Bank of Japan 8301 0.28 % ’s ultraloose monetary policy. “Kuroda-San buddy u are drying up your short term money market - will be lehmanish crises and banks won’t be able to raise capital will fail,” he tweeted recently.
He also penned a haiku that compared Haruhiko Kuroda, head of Japan’s central bank, to the famed Austrian School economist Ludwig von Mises.

Negative Interest
Next helicopter money
Kuroda Von Mise

6--Origins of the Imperial Doctrine?  Doctrine of 'Big Enchilada', Max Boot

Almost no one is criticizing President Bush's pledge to maintain American military hegemony. This silence is curious, considering the flap that occurred the last time such an assertion was made. In 1992, staffers working for Paul Wolfowitz (then the No. 3 Pentagon official, now No. 2) drafted a planning document that suggested the United States should "maintain the mechanisms for deterring potential competitors from even aspiring to a larger regional or global role."

This mild language - which referred to "mechanisms," not brute strength - provoked fits in official Washington. As Andrew Bacevich reminds us in his forthcoming book "American Empire," Sen. Alan Cranston of California attacked the Bush administration for proposing to make the United States "the only main honcho on the world block, the global Big Enchilada." ...

Now the Big Enchilada doctrine is back. The new Bush strategy proclaims: "Our forces will be strong enough to dissuade potential adversaries from pursuing a military buildup in hopes of surpassing, or equaling, the power of the United States." This is even stronger language than that used a decade ago....

If America is serious about remaining the Big Enchilada, it will have to spend more for defense. This is not a welcome implication for the White House, which, after throwing a pork fest in the farm bill, wants to hold the line on the defense budget.
Democrats, for their part, can't be too happy with a second implication of the predominance doctrine: Any nation with so much power always will be tempted to go it alone. Power breeds unilateralism. It's as simple as that.

Oh, sure, American presidents may pay lip service to allies, but when push comes to shove, we just don't need anyone else's help very much. It's not just George W. Bush who feels this way. Judging by his unwillingness to defer to the United Nations in Bosnia (1995), Iraq (1998) and Kosovo (1999), so did Bill Clinton.
Get used to it. If the non-reaction to the National Security Strategy is any indication, we're all hegemonists now.

7--Pretty funny:  Take note, Tony Blair: why jewellery looks so bad on men--They think it makes them more youthful. In fact, it shows us they’re desperate

The only thing a medallion arouses is our suspicions....

It is extremely hard for men to look good in bling. Almost without exception, it doesn’t look like a jaunty bit of self-decoration, but like a cry for help; the external manifestation of a bleak chunk of self-doubt. Tony Blair is just another tragedy in trinketdom, a wannabe medallion man who looks as if he might be auditioning for Godspell. Men, you have been warned. You are no spring chickens. Step away from the nuggets.

8--The Golden Gate to Asia: Turkey opens 3rd bridge linking Europe to Asia

9--Russia-India oil deal at risk due to US sanctions - media

US sanctions are threatening to derail Russian energy major Rosneft’s acquisition of a 49 percent stake in India's Essar Oil, reports The Times of India.

The deal was curtailed by the US Treasury's Office of Foreign Assets Control, according to the daily.
In July 2014, the Department of the Treasury included Rosneft on the list of sanctioned Russian companies after Washington accused Moscow of involvement in the military conflict in Eastern Ukraine and of annexing Crimea.

Indian banks, which invested over $5 billion into Essar Oil and currently hold 17 percent, expressed concerns over the deal due to fears of the potential consequences.
“We may have to review our exposure to Essar Oil if Rosneft comes on board,” said a top banker with a state-run lender, as quoted by The Times of India.
However, Essar Oil will reportedly try to push the deal with Rosneft through, allowing the Russian company to enter the Indian energy market.
Searching to expand cooperation with Russia beyond the traditional defense buyer-supplier relationship, New Delhi has invested over $5 billion in the Russian energy sector.

The Essar-Rosneft deal aims to open up India's retail energy business to the world's largest oil producer.
The deal was planned to be sealed by June. The Indian company had to reduce the share intended for sale by 25 percent, but the measure failed to change the situation.

10--Biden Reveals U.S. Opposition to Nord Stream 2 Pipeline

11-- Biden's failed junket--

--Soon after Biden told a news conference with the Turkish Prime Minister that the PYD “ would never get US support again” if it crossed the Euphrates,the PYD announced they were pulling back their units, although the SFA would remain. Within hours of the tank offensive, Erdogan had achieved one of his objectives, but it is not the US who is driving change in this battlefield but Turkey.
The tectonic plates of this conflict have shifted again, with or without NATO’s or the Pentagon’s assent. The US faces nowhere near as many challenges from its enemies in the Middle East as it does from its allies. And as Russia demonstrates, there is no more dangerous an ally than an ally scorned.

12--Joe Biden came, saw, but failed to conquer Turkey; Obama's Number two guy blind sided  in Ankara