Wednesday, August 17, 2016

Today's Links

1--Mortgage applications fell 4% even as rates sit near record lows

Mortgage applications to purchase a home also lost ground, falling 4 percent for the week to the lowest level since February. ...

Several major U.S. metropolitan markets are hitting new record high median home prices.... Single family housing starts in July rose less than 1 percent for the month, and building permits, an indicator of future construction, fell 3.7 percent, according to the U.S. Census.

"Single family starts of 770,000 is about exactly where the year to date average is, 25 percent below the 25 year average and 58 percent below the 2006 peak," said Peter Boockvar, chief market analyst of the Lindsey Group.

The six months under review have seen central bankers continuing what is surely the greatest experiment in monetary policy in the history of the world. We are therefore in uncharted waters and it is impossible to predict the unintended consequences of very low interest rates, with some 30% of global government debt at negative yields, combined with quantitative easing on a massive scale.

To date, at least in stock market terms, the policy has been successful with markets near their highs, while volatility on the whole has remained low. Nearly all classes of investment have been boosted by the rising monetary tide. Meanwhile, growth remains anaemic, with weak demand and deflation in many parts of the developed world. 

Many of the risks which I underlined in my 2015 statement remain; indeed the geo-political situation has deteriorated with the UK having voted to leave the European Union, the presidential election in the US  in November is likely to be unusually fraught, while the situation in China remains opaque and the slowing down of economic growth will surely lead to problems. Conflict in the Middle East continues and is unlikely to be resolved for many years. We have already felt the consequences of this in France, Germany and the USA in terrorist attacks.
As a result, Rothschild has put his money where his mouth is: "we have reduced our exposure from 55% to 44%. Our Sterling exposure was significantly reduced over the period to 34%, and currently stands at approximately 25%. We increased gold and precious metals to 8% by the end of June."

Central bankers are pressing onward with their failed negative interest rate experiment, oblivious to the damage that it is doing to banks and long-term investors like life insurers and pension funds.

Even more bizarre is the central bank assumption that by charging banks for reserves, they can force banks to lend. First, the very need to resort to negative interest rates results from crappy fundamentals. Entrepreneurs are not going to borrow to invest in new projects just because money is on sale. They invest because they see market opportunities; the cost of money being too high can constrain investing, but cheap money won’t produce loan demand in the absence of attractive projects. The only exception is activities where the cost of money is the biggest cost of doing business. That is the case for levered speculation.
Economists are way late in the game acknowledging the need for more demand by calling for more fiscal spending.

4--Global central banks dump U.S. debt at record pace

In the first six months of this year, foreign central banks sold a net $192 billion of U.S. Treasury bonds, more than double the pace in the same period last year, when they sold $83 billion.
China, Japan, France, Brazil and Colombia led the pack of countries dumping U.S. debt...

t's the largest selloff of U.S. debt since at least 1978, according to Treasury Department data.
"Net selling of U.S. notes and bonds year to date thru June is historic," says Peter Boockvar, chief market analyst at the Lindsey Group, an investing firm in Virginia.
U.S. Treasurys are considered one of the safest assets in the world. A lot of countries keep their cash holdings in U.S. government bonds.
Many countries have been selling their holdings of U.S. Treasuries so they can get cash to help prop up their currencies if they're losing value.
The selloff is a sign of pockets of weakness in the global economy. Low oil prices, China's economic slowdown and currencies losing value are all weighing down global growth, which the IMF described as "fragile" earlier in the  year.

5--Putin Tells Everyone Exactly Who Created ISIS

" must rise above the endless desire to dominate"

6--Strong signs of policy change in Turkey

Indeed, signs continue to emerge that Russia, Iran and Turkey are very serious about establishing an alliance in Syria. It was reported Iran's Foreign Minister Mohammad Javad Zarif proposed to hold a trilateral meeting with Turkey and Russia to discuss the settlement of the Syrian crisis.

Meanwhile, the Russo-Iranian military cooperation has strengthened with Tehran signaling its readiness to share its facilities and capacities with Moscow to fight Daesh.
Interestingly enough, Turkish journalist Murat Yetkin of Hurriyet Daily News also believes that "circumstances are forcing Ankara to find a new policy in Syria."...

Ankara is likely to adopt a new foreign policy course toward Damascus.

"Prime Minister Binali Yildirim's statements to daily Karar on Aug. 15 suggest that Ankara is in the process of adopting a new, three-point Syria policy. This new policy will prioritize the maintenance of Syria's territorial integrity, (meaning no separate Kurdish entity), the avoidance of ethnic or sectarian domination, (meaning an end to al-Assad's Alawite-based government), and the return of Syrians to their country once a solution in Syria is reached," Yetkin stresses.

But that does not mean that Ankara will push ahead with its "Assad must go" concept.
"Ankara seems to be ready to accept a reconstruction of the Syria government, a coalition perhaps led by the Baath party," he underscores, adding that it remains an "open question" whether Ankara will agree to accept Bashar al-Assad as a key player in the new government.

7--The permanent partitioning of the Middle East: The New York Times whitewashes US imperialism in Middle East and contemplates ethnic cleansing

The publication of “Fractured Lands” has an objective significance. The presentation, the content and the tone of the series express the American ruling class’ sense that it faces a catastrophe of historically unprecedented proportions in the Middle East. When Anderson asks in his preface: “Why did it turn out that way?” he is asking on behalf of a ruling class that is dazed by the catastrophic outcome of its own reckless and shortsighted policies.

For the last 25 years, US imperialism has laid waste to a span of territory stretching several thousand miles from North Africa to Central Asia, leaving over 1 million dead. A new vocabulary of words like “shock and awe,” “extraordinary rendition,” “black site prison,” “disposition matrix” and “Terror Tuesday” has emerged as the language of the US wars. A significant portion of the region’s 200 million people has been left homeless or have fled for safe haven abroad. Next January, Barack Obama will leave office as the first president in US history to serve his entire two terms while the country was at war.

“Fractured Lands” is an apologia for the record of American imperialism...

That such lines could be published in the leading paper of American liberalism underscores the reactionary political climate cultivated by 25 years of permanent war. The “last, best option” consists of pitting populations against each other along ethnic and religious lines in an exercise of region-wide partition that would mean the deaths and dislocation of millions.
In fact, the policy promoted by the New York Times is already in place. Al-Qaeda, ISIS, the al-Nusra Front and other ultra-right wing Islamic groups have been utilized by American imperialism to destroy the old state-structure of the Middle East in an effort to subordinate the entire region to the interests of American banks and corporations.

8---  Aetna pullout highlights pro-corporate, anti-working class character of Obamacare:   The fraud of Obamacare shows the need to put an end to privately owned insurers, hospital and health care chains and pharmaceutical companies and establish socialized medicine under a workers government.

The situation, which potentially spells the collapse of the entire edifice of private, for-profit health insurance policies underwritten by Obamacare, underscores the fact that the program was conceived and implemented not for the purpose of ending the social obscenity of tens of millions going without health coverage in the United States—millions remain without any coverage under Obama’s program—but as a means of slashing costs and boosting profits for health insurers and providers by reducing benefits and rationing care for working people.

The entire program was drawn up by and for the insurers and corporate America as a whole. It places no serious obligations or controls on the profit-bloated insurance giants. There are no federal controls on the profits they make, the premiums they charge or the out-of-pocket costs they impose on policyholders. Whether or not they participate at all is entirely up to them, determined, like all other business decisions, on profit considerations.

On the other hand, ordinary people who are not in government programs such as Medicare or covered by employer-sponsored insurance plans are required to buy plans offered by private companies on Obamacare exchanges. If they fail to do so, they must pay a hefty fine...

The inability of large numbers of people to pay the exorbitant premiums demanded by the insurers is a barometer of the social crisis in America and the growing chasm between the rich and poor. It is an exposure of the Obama administration’s assault on all of the basic social rights of the working class—to decent-paying jobs, housing, education, health care. While the Democrats and Republicans squander trillions on the US military and its criminal exploits abroad, they wage social war against the working class at home.

The Affordable Care Act has nothing in common with near-universal, quality health care, as Barack Obama promised at the law’s inception. The fraud of Obamacare shows the need to put an end to privately owned insurers, hospital and health care chains and pharmaceutical companies and establish socialized medicine under a workers government.

9--The Louisiana flooding—a failure of American capitalism

The Obama administration has done little more than the Bush administration after Katrina. There were no plans for Obama to interrupt his vacation on Martha’s Vineyard, although he will leave the island briefly to campaign for Hillary Clinton. He made the obligatory declaration of a federal disaster area, covering four parishes on Monday, expanded to 12 parishes on Tuesday. Louisiana Governor John Bel Edwards, a Democrat, said that the declaration would eventually apply to about 30 parishes, half the state.

Only a relative handful of the residents of the affected area have federal flood insurance—far fewer proportionally than in New Orleans, 10 percent compared to 40 percent. Most of the flood victims will be wiped out, with their homes and property deluged, forced to rebuild from scratch at their own expense. Once again, as during Katrina, working people are being left to their own devices, with no real social safety net to support them.

The Obama administration mobilized trillions in resources when the financial aristocracy faced disaster on Wall Street in 2009. It spends lavishly on the military-intelligence apparatus, nearly a trillion dollars every year. But aid for the flood victims in Louisiana will be doled out stingily, just as it has been for those hit by flooding in West Virginia, Maryland and Texas, or by other weather events such as tornadoes, drought and mudslides.

The pathetic federal response also exposes the fraudulent character of the “war on terror,” now approaching the 15th anniversary of the 9/11 attacks. Vast resources have been squandered on “counterterrorism,” the build-up of the forces of the state and emergency planning. But when a genuine emergency hits—one, moreover, that was fully predictable—the enormous state apparatus yawns and turns its back....

July was the warmest month ever recorded, following a June that was the warmest June on record. The higher the air temperature, the greater the capacity of the air to store water vapor, and the greater potential downpour in the event that water vapor turns into rain.

How would a society based on rational planning and social need, rather than private profit, respond to such a crisis?

The resources of the society, including manpower, skilled emergency responders and basic necessities like shelter, clothing and food, would be fully mobilized and available in vast quantities as soon as required. Advance planning would ensure that regions particularly susceptible to such disasters, like the low-lying, swampy terrain of southern Louisiana, would receive special attention. And every effort would be made to adapt the technological processes of society to the scientific understanding of the driving forces of climate change, by reducing fossil fuel use and other emissions contributing to global warming.

Such a response would be the mirror opposite of the chaotic, unplanned and thoroughly indifferent response of American capitalist society to the latest natural disaster. It would only be possible under a socialist, planned economy controlled democratically by the working class

10--Escalating the war in Syria: A vote for Clinton is almost certainly a vote for an expanded war in Syria, and the public needs to understand that this is what we will get by entrusting her with the presidency.

Kelley Vlahos reminds us why Clinton is likely to be very hawkish as president:
But every message coming from her surrogates in the media and in the Washington defense establishment has been that she will “lean in” harder in Syria, and whether you want to call it “added ground troops” or something else, everyone in her orbit is calling for expanded U.S. intervention—including personnel and firepower—in the region, even at the risk of confrontation with Russia.

11-- Trump is right. Hillary and Obama did start ISIS, and this proves it

As of this writing, not one American media source of which this writer is aware has brought up in relation to Trump’s claims the August 2012 report (declassified and released in 2015 under a FOIA request from Judicial Watch) from the Defense Intelligence Agency (DIA) stating that “there is the possibility of establishing a declared or undeclared Salafist principality in Eastern Syria, and this is exactly what the supporting powers to the opposition want, in order to isolate the Syrian regime.” The “supporting powers” are identified as “western countries” (no doubt including and led by the United States), “the Gulf States” (presumably including and led by Saudi Arabia), and “Turkey” (just Turkey).
In August 2012 the Secretary of State at the time was one Hillary Rodham Clinton. The President was and still is one Barack Hussein Obama.

The DIA report said, in essence, that if we (the U.S. and our local cronies) keep aiding al-Qaeda, the Muslim Brotherhood, and other such sterling democrats, something really nasty would arise in eastern Syria. Several months later, it did, when ISIS declared itself a state straddling the Syria-Iraq border.

At some point, even a three-year-old picks up on the concept of causation. “Johnny, if you keep doing that, you’ll [break it, hurt yourself, whatever].” The MSM would have us think that Obama and Hillary are less intelligent than a three-year-old. By dumping funds and arms into the hands of terrorists—only the supposedly “moderate” head-choppers, of course—they had no idea, poor dears, what might happen....

As (General Michael ) Flynn confirmed last year, this was not a matter of the administration’s turning a “blind eye” but of their “willful decision” that led to ISIS:
Hasan: You are basically saying that even in government at the time you knew these groups were around, you saw this analysis, and you were arguing against it, but who wasn’t listening?
Flynn: I think the administration.

Hasan: So the administration turned a blind eye to your analysis?

Flynn: I don’t know that they turned a blind eye, I think it was a decision. I think it was a willful decision.

Hasan: A willful decision to support an insurgency that had Salafists, Al Qaeda and the Muslim Brotherhood?

Flynn: It was a willful decision to do what they’re doing.

12--Russia’s “Permanent Military Base” in Syria: Moscow just tipped the Balance of Power in the Mediterranean
By Alexander Mercouris

[.] "That the Syrian government has wanted to grant the base to Russia on a permanent basis has been known for some time. From the Syrian point of view the Russian base not only guarantees Russia’s support for the present Syrian government but also provides Syria with a measure of protection it has never had before from Israeli air incursions. These have been a continuous reality for decades with Syria lacking the capability to prevent them. The Russians do have that capability and the Syrians will be hoping that because of the presence of the base they will now use it to protect Syria from Israeli air incursions. As it happens reports suggest that the number of Israeli incursions of Syrian airspace have fallen off significantly since the Russian Aerospace Forces deployed to Syria last autumn, with the Israelis now careful to keep the Russians informed of their flights.[.]
Establishing a permanent foreign base in Syria is for the Russians a major departure from their former policy given the Russian military’s overwhelming focus on defending Russian territory rather than projecting Russian military power far beyond Russia’s borders.[.]

13--China to strengthen military role in Syria

14--Iran taps into Turkish-Russian reset


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