Saturday, January 16, 2016

Washington invokes hunger to promote war in Syria

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The United States, France and Britain called a meeting of the United Nations Security Council on Thursday to press for “immediate action” to secure the delivery of humanitarian aid to besieged areas of Syria. The supposedly heartfelt humanitarian concerns of the three imperialist powers that are currently bombing Syria came amid a concerted propaganda campaign over alleged starvation in the southwestern Syrian town of Madaya.
Originating with Al Jazeera, the news agency controlled by the Qatari monarchy, a key source of financial and arms support for the Al Qaeda-linked militias that have ravaged much of Syria, the invocation of Madaya as proof of the supposed inhumanity of the Syrian government of President Bashar al-Assad has been taken up by much of the world media. The New York Times published a front-page report Friday on conditions in the town, based on accounts that the newspaper said “could not be independently confirmed.”
There is no reason to doubt that conditions are desperate in Madaya, as they are in much of Syria after more than four years of a sectarian civil war fomented and provisioned by US imperialism and its regional allies, including Saudi Arabia, Turkey and Qatar. As many as 4.5 million Syrians are in areas that have been cut off from the rest of the country by the battle lines.
If Madaya is the focus of international attention, however, it is because it is encircled by Syrian government forces along with their allies from the Lebanese Hezbollah militia. The town sits at a strategic juncture near the Lebanese border and less than 25 miles from the capital, Damascus.
In the international furor being whipped up over conditions in Madaya, including through the use of photographs of starving people taken elsewhere, little attention is given to the fact that the town is largely controlled by the al-Nusra Front, Al Qaeda’s Syrian affiliate, and Ahrar al-Sham, a similar Salafist jihadi militia.
While conditions of hunger in the town are routinely attributed to the government siege, residents have reported that food supplies have been monopolized by the Al Qaeda-linked groups, which sell them at extortionate prices to finance their operations. On October 18, the International Committee of the Red Cross delivered two months’ worth of food supplies to Madaya, with the government doing nothing to impede humanitarian access to the town. That many are facing hunger is largely attributable to the looting of the aid shipment by US-backed “rebels.”
While the imperialist powers and their media accomplices are directing all eyes to Madaya, they have wholly ignored equally if not more desperate conditions in the predominantly Shia towns of Kefraya and al-Foua in the northwestern province of Idlib, which have been under attack by the US-backed “rebels” since 2011 and under a total siege since March of last year. Starved of supplies and under constant attack, the town has seen 1,700 civilian residents killed.
The indifference of the imperialist powers to hunger and suffering among populations under siege by their proxy forces demonstrates that the invocation of starvation is just one more bid to promote a war for regime change as some kind of humanitarian intervention.
Today marks the 25th anniversary of the launching of the first Gulf War against Iraq in 1991. Then, as now, phony pretexts were floated by the US government and echoed and amplified by the corporate media to justify a predatory war for control of the Middle East and its strategic oil resources. In this regard, little has changed over the course of a quarter century of uninterrupted American militarism in the region.
In 1991, it should be recalled, the public was told of marauding Iraqi troops snatching Kuwaiti babies out of incubators and leaving them to die in order to ship the devices back to Iraq. A tearful volunteer nurse was brought to Capitol Hill to testify on this atrocity, which seemed to echo World War I propaganda about German soldiers using Belgian babies for bayonet practice.
Only well after the US invasion was it revealed that the “nurse” was, in fact, the daughter of the Kuwaiti ambassador to the US and a member of the oil sheikdom’s royal family, and that the incubator story was a propaganda hoax from start to finish.
In the years that followed, the US imposed draconian sanctions upon Iraq that led to real starvation and unchecked disease. According to some estimates, the sanctions led to the deaths of as many as 500,000 Iraqi children due to a lack of food, medicine and uncontaminated water resulting from the imperialist blockade. Confronted with this appalling death toll in a 1996 television interview, Madeleine Albright, who was then the US ambassador to the UN and soon to be secretary of state, responded, “We think the price is worth it.”
This is the same government now shedding crocodile tears over the alleged use of hunger as a weapon by the Syrian government.
Since then, the United States has annihilated over a million people in the invasion and occupation of Iraq, killed tens of thousands more in the US-NATO war to overthrow Libya’s Muammar Gaddafi, and orchestrated the war in Syria that has left an estimated 260,000 dead and displaced half of the country’s population. These interventions have thrown all three countries and their social infrastructures into a state of collapse.
The recklessness and brutality of the US ruling oligarchy’s militarist attempts to impose its hegemony over the Middle East and the entire planet go hand-in-hand with its destructive role within the US itself, smashing up the country’s industrial base, destroying the jobs and living standards of the working class, and funneling the bulk of the nation’s wealth to a handful of financial parasites.
Neither the escalation of the war for regime change in Syria, nor, for that matter, the toppling of Assad will extricate American capitalism from its insoluble crisis. The unending eruption of American militarism will produce only more death and destruction, intensifying the crisis both at home and abroad and bringing humanity ever closer to a global conflagration.

Global stocks plunge amid fears of a new financial crisis

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Stock markets in the US and around the world ended the week with massive selloffs, rocked by fears that the slowdown in China and plunging oil and commodity prices will trigger a new financial crisis on the order of the 2007-2008 disaster.
Another sharp fall on Chinese markets, with the Shanghai Composite Index dropping 3.55 percent, followed by a 6 percent fall in oil prices to $29 a barrel, set off a wave of panic selling. The mood was summed up by the chief strategist at Federated Investors, who said, “Investors are scared to death, and the fact that it’s happening at the beginning of the year has some historical significance.”
A major factor in the Chinese selloff was concern that Beijing will report its weakest full-year growth figure in 25 years on Tuesday.
On Friday, Walmart announced that it will close 269 stores, 154 of them in the US, and eliminate 16,000 jobs. The Walmart statement, coming on the heels of multi-store closure announcements by Macy’s and Sears-Kmart, highlighted the worsening slowdown in the real economy globally and in the US that underlies the turbulence on stock and bond markets. It also reflected the reality of falling wages and mounting income insecurity affecting broad layers of the US population.
Also this week, BP announced 4,000 layoffs, pointing to the increasingly depressed state of the energy sector.
Friday’s selloff, with the EURO STOXX/50 index down 2.37 percent and all of the major US indexes lower by well over 2 percent, caps off the worst-ever yearly opening for Wall Street. The Dow Jones Industrial Average, which lost 391 points on Friday to crash through the 16,000-point level, has fallen by 8.24 percent so far this year. The Standard & Poor’s 500 index has fallen by more than 8 percent and the Nasdaq has lost more than 10 percent.
All three US indexes are officially in correction, having lost more than 10 percent from their recent highs. The Chinese stock indexes are officially in bear market territory, having shed more than 20 percent of their value. In just the first two weeks of the new year, global stock markets have lost $5.7 trillion in value.
The price of oil, a barometer of global economic activity, is down 20 percent so far this year. The first two weeks of 2016 have seen the steepest two-week decline for oil since the 2008 financial crisis.
Going into a three-day weekend, with the markets closed Monday for Martin Luther King, Jr. Day, there will be intensive behind-the-scenes discussions between Treasury and Federal Reserve officials and the major Wall Street banks and hedge funds over the spiraling crisis. The White House on Friday took the unusual step of commenting on market movements in an attempt to reassure investors. White House spokesman Josh Earnest said officials were closely watching market movements and their potential impact on the economy.
Since the financial crash of 2008, the world capitalist economy has been propped up by rapid growth in China and a number of emerging market countries and a huge run-up in stock prices, all of which has been engineered on the basis of an immense growth of debt. The Federal Reserve and the central banks of Europe and Asia have pumped trillions of dollars into the financial markets, fueling a further increase in financial parasitism and speculation. This, combined with ruthless austerity against the working class, has formed the basis for an unprecedented enrichment of the world’s rich and super-rich and a further transfer of wealth from the bottom to the top.
But in the US and the other older industrialized countries, there has been a sharp decline in business investment in the productive forces. Instead, the vast profits of banks and corporations have gone largely to parasitic activities such as stock buybacks, dividend increases and mergers and acquisitions.
Earlier this week, Albert Edwards, a strategist at Societe Generale, told an investment conference in London that global economic developments would “push the US back into recession.” Predicting that there will be a new financial crisis “every bit as bad as 2008-2009,” he noted, “We have seen massive credit expansion in the US. This is not for real economic activity; it is borrowing to finance share buybacks.”
Now, with China slowing rapidly, Brazil and Russia in deep recessions, and the other emerging market economies sinking under the impact of falling commodity prices and rising debt, the inherently unstable financial house of cards is beginning to collapse.
A measure of the growth of speculation is the fact that since 2009, the US junk bond market has increased by some 80 percent, to $1.3 trillion. The market for energy junk bonds has increased even faster, up 180 percent to more than $200 billion. In recent weeks, as oil and other commodities have continued to fall and China has continued to slow, the junk bond market has shown signs of imploding, with prices dropping sharply and a number of energy junk bond mutual funds collapsing.
Larry Fink, the CEO of Blackrock, the world’s biggest private investment fund, told the US cable channel CNBC Friday that the market crisis was likely to worsen. “I actually believe there’s not enough blood in the streets,” he said, adding that “you’re going to start seeing more layoffs in the middle part of the first quarter, definitely the second quarter…”
A battery of economic data released Friday indicated that the US economy is sharply decelerating. The Federal Reserve reported that industrial production fell 0.4 percent in December, primarily as a result of cutbacks in utilities and mining output, after declining 0.9 percent in November. Industrial production fell at an annual rate of 3.4 percent in the fourth quarter of 2015.
Last week, the Institute for Supply Management released its manufacturing index, showing a decline to 48.2 in December, the lowest reading since December 2009. Any number below 50 signals a contraction.
The New York Fed this week released its Empire State Manufacturing Survey index, showing a decline to minus 19.37 in January from minus 6.21 in December. “Business activity declined for New York manufacturing firms more sharply than at any time since the 2007-2009 recession, according to the January 2016 survey,” the New York Fed said.
These reports confirm the existence of an industrial recession in the US. And this week, Michael Ward, chief executive of the CSX railway, said in a television interview that the country was in the grips of a “freight recession,” with coal and other commodity shipments falling precipitously.
The Commerce Department reported on Friday that US retail sales fell 0.1 percent in December from the previous month. For all of 2015, retail sales rose just 2.1 percent, the weakest reading since 2009, after advancing 3.9 percent in 2014. The National Retail Federation separately estimated that holiday sales rose just 3 percent from the previous year, far below its projection of 3.7 percent growth.
The Commerce Department also reported that business inventories fell 0.2 percent in November, the biggest drop since September 2011.
The Labor Department released its Producer Price Index, showing a decline of 0.2 percent last month. Pointing to deflationary forces in the US economy, producer prices fell 1.0 percent in 2015, the weakest figure since the series began in 2010.
As a result of the weak data on the US economy, JPMorgan Chase cut its fourth quarter 2015 estimate for growth of the gross domestic product from a 1.0 percent annual rate to a mere 0.1 percent pace. Barclays trimmed its forecast by four-tenths of a percentage point to a 0.3 percent rate.
The sharp intensification of the economic crisis will further inflame geopolitical tensions and the drive of the US and other imperialist powers to war. At the same time, it will stoke internal social tensions that are already driving the working class into struggle in the US and internationally against austerity and social inequality.
The emergence of a major economic crisis takes place against the backdrop of a critical presidential election in the US, which has already revealed the growing alienation of the working population from the entire political system and the further lurch of the two big-business parties to the right.

Declassified Emails Reveal NATO Killed Gaddafi to Stop Libyan Creation of Gold-Backed Currency

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In spite of French-led U.N. Security Council Resolution 1973 creating a no-fly zone over Libya with the express intent of protecting civilians, one of the over 3,000 new Hillary Clinton emails released by the State Department on New Year’s Eve, contain damning evidence of Western nations using NATO as a tool to topple Libyan leader Muammar al-Gaddafi. The NATO overthrow was not for the protection of the people, but instead it was to thwart Gaddafi’s attempt to create a gold-backed African currency to compete with the Western central banking monopoly.

The emails indicate the French-led NATO military initiative in Libya was also driven by a desire to gain access to a greater share of Libyan oil production, and to undermine a long term plan by Gaddafi to supplant France as the dominant power in the Francophone Africa region.

The April 2011 email, sent to the Secretary of State Hillary by unofficial adviser and longtime Clinton confidante Sidney Blumenthal with the subject line “France’s client and Qaddafi’s gold,” reveals predatory Western intentions.

The Foreign Policy Journal reports:
The email identifies French President Nicholas Sarkozy as leading the attack on Libya with five specific purposes in mind: to obtain Libyan oil, ensure French influence in the region, increase Sarkozy’s reputation domestically, assert French military power, and to prevent Gaddafi’s influence in what is considered “Francophone Africa.”

Most astounding is the lengthy section delineating the huge threat that Gaddafi’s gold and silver reserves, estimated at “143 tons of gold, and a similar amount in silver,” posed to the French franc (CFA) circulating as a prime African currency.

The email makes clear that intelligence sources indicate the impetus behind the French attack on Libya was a calculated move to consolidate greater power, using NATO as a tool for imperialist conquest, not a humanitarian intervention as the public was falsely led to believe.

According to the email:
This gold was accumulated prior to the current rebellion and was intended to be used to establish a pan-African currency based on the Libyan golden Dinar. This plan was designed to provide the Francophone African Countries with an alternative to the French franc (CFA).

(Source Comment: According to knowledgeable individuals this quantity of gold and silver is valued at more than $7 billion. French intelligence officers discovered this plan shortly after the current rebellion began, and this was one of the factors that influenced President Nicolas Sarkozy’s decision to commit France to the attack on Libya.)
The email provides a peek behind the curtain to reveal how foreign policy is often carried out in practice. While reported in the media that the Western backed Libyan military intervention is necessary to save human lives, the real driving factor behind the intervention was shown to be the fact that Gaddafi planned to create a high degree of economic independence with a new pan-African currency, which would lessen French influence and power in the region.

The evidence indicates that when French intelligence became aware of the Libyan initiative to create a currency to compete with the Western central banking system, the decision to subvert the plan through military means began, ultimately including the NATO alliance.

Thursday, January 14, 2016

Russia Is Preparing a Military Response to the Expansion of NATO

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In response to the creation of the mobile forces of NATO, Russia can dispatch heavy military equipment in a Western direction. 

The beginning of 2016 marked a new escalation in military tensions near the borders of Russia. Yesterday in Lithuania, as part of operation "Atlantic Resolve", alongside the standard armaments, the main part of the American battalion of NATO troops from the 2nd cavalry regiment of the US army, stationed in Germany, arrived. The Northern Atlantic Alliance does not hide the fact that the military presence in the Baltic states will grow. 

Yesterday the Minister of Defence of Poland Antoni Macierewicz, on the Polish radio station 'Maryja', once again expressed the hope that in the near future at the NATO summit in Warsaw will overcome the "German veto" on the formation throughout the country of permanent military bases of the Alliance. 

In response, Russia continues to improve its forces, using the elements of hybrid war. Moscow is worried about the bellicose attitude of Poland. This country has already approached NATO with a request to place nuclear weapons on its territory. According to the Deputy Minister of Defence of Poland, Tomasz Siemoniak,  the Alliance has a program in which NATO members can have nuclear weapons in the country-ally. This is highly likely, and not only in Poland or Lithuania, but also in other countries of Eastern Europe. This unequivocally was made clear recently by the Supreme commander of the allied NATO forces, General of the U.S. air force, Philip Breedlove. He said that, in regards to Russia, it is time for "tough measures". Rigidity must manifest itself in the sending of American troops to Europe and "high-quality" training of the armed forces of the United States for a possible fight with a "former enemy in the cold war". 

Operation "Atlantic Resolve" began in the spring of 2014, i.e. from the time that Crimea became a part of Russia. In Lithuania and other Baltic States leaders then claimed that a similar thing could happen to them, and appealed for help to NATO. Since then, the soldiers of the Pentagon are on a rotating basis, ever present in the region. According to open sources, rotational troops deployed in Rukla (Kaunas district) consist of a mixed mechanized infantry battalion "Iron wolf". Here, on the 14th of January, there will be a delivery of military equipment, including armored Stryker, armored SUVs and trucks. Basically it is a wheeled machine, equipped with automatic grenade launchers, heavy machine guns, and means of concealment. 

In fact, the Americans have a unit in Lithuania for action in a local armed conflict. But there is already a concentration of offensive weapons. According to open data, NATO, in the village Munici of ┼áiauliai district, there is already heavy American military equipment – Abrams tanks and Bradley IFV. According to the latest plans of the Alliance, they should use units of rapid reaction forces, which are composed of national contingents of NATO. The same equipment was placed in Latvia and Estonia. In addition, the fleet in the Lithuanian ┼áiauliai was replenished with 16 NATO fighter jets. In all Baltic States units are placed from the American military, the function of which is to carry out military and pre-war actions. At the borders of the Russian Federation elements of electronic intelligence of the Alliance were deployed. That is, the U.S. and its allies continue to build up military strength at the borders of the Russian Federation. 

The defense Ministry of Lithuania reported that, according to the decisions of NATO for collective defence, allies of the US will remain in Lithuania until such a time where the situation demands security. 

Judging by the situation in Eastern Europe, their presence will be there for a long time. The American media is now actively raising the issue of the "Russian Bear", which is supposedly "very dangerous". They say it's time "to stop him from hugging". This theme fits well with, according to the Pentagon, the new national security Strategy of the Russian Federation (NSC RF), which was signed on December 31st by President Vladimir Putin. In the document the military activities of the USA and other NATO countries are viewed as "a threat to the national security" of Russia. 

The previous NSS of the Russian Federation was adopted in May 2009, and it was supposed to guide the next 10 years. But political and military conditions have changed so a new document for the first post-Soviet times gives a hard-hitting assessment of the U.S. and the North Atlantic Alliance. Judging by what was said to German journalists the other day by Putin, such a valuation has existed for a long time, but it was not transparent, and here it was voiced. The head of Russia believes that the main mistake of Western politicians after the collapse of the USSR was "the development of military structures to the East" and NATO''s desire to "reign" on the continent. That's why "now we are discussing the crisis", said the President of the Russian Federation. 

Such conclusions are, it seems, based on facts. It is difficult to refute what has been said at the annual meeting of the Defense Ministry last December. The Defense Minister Sergei Shoigu said that in NATO countries bordering Russia, "During this year the aircraft contingent has increased eight times, and the number of military personnel by 13 times". To the borders of the Russian Federation "300 tanks and Infantry Vehicles were additionally deployed and missile defense systems by Aegis Ashore. In varying degrees of completeness are 310 aircraft-carriers capable of carrying about 200 U.S. nuclear bombs". 

"Tanks and 300 BMP's are a technique for a full-fledged division. And she hosted and saw deployment in Eastern Europe in less than a year. While aircraft capable of carrying nuclear weapons have the flight time to our industrial areas and cities of just 5 minutes" – said military expert Lieutenant General Yury Netkachev. "Creating tasks to further militarize is the problem", the General says, "NATO will only exacerbate the situation, prompting Russia to respond". What the steps will be, you do not have to guess. Despite the severe economic crisis, Moscow made a decision not to reduce spending on defence and security. 

Sergei Shoigu, reporting on the 11th of December 2015, to the President, stressed that next year will see the continued "building up of combat capabilities of the Armed forces." According to him, measures will be taken "to strengthen military forces in the West, southwest and Arctic strategic directions". From open sources it is known that in 2016, in addition to Arctic areas and the strengthening of groups in the Crimea and the Northern Caucasus, the formation and management of basic compounds of the 1st tank army of the Western military district will be completed. The 6th (Leningrad region) and 20th (Voronezh) combined arms army will be strengthened by new connections. Apparently, Moscow will respond to NATO plans to establish mobile units of the Alliance on the borders of the Russian Federation . 

On January 3rd, 2016 the commander of the Airborne Troops Colonel-General Vladimir Shamanov said that the air assault brigades and divisions "assumed the formation of six tank divisions," as well as "units of unmanned aerial vehicles, including shock army" and two divisions of electronic warfare. A similar set of weapons is necessary for a hybrid war. Their possible presence in the Airborne shows the mobile component is being referred to. Shamanov said that the strengthening of the combat capability of the Airborne Troops will be discussed at the board meeting of the Ministry of Defense on January 29th. 

But it is already clear that the basis of the formation of the Russian armed forces from the mobile forced will likely involve the airborne troops. In the modern history of Russian, tank units were not part of the Airborne Forces. The formation suggests that the striking power of the airborne forces, that is mobile forces, will be strengthened. Apparently, the possibility will be considered that tanks and other heavy military equipment will be pre-placed in the military bases near areas of potential conflict (as Americans did in the Baltic States). That is, the Western and North-Western borders of the Russian Federation or military sites in Belarus, as it is already been underway for a long time. In the area of these bases, in the daylight, the airborne division will parachute down to perform military missions on the  maintenance and development of tanks and infantry fighting vehicles for combat.

Financial Meltdown? The Central Role of Credit, the “Global Margin Call”, Impasse in Monetary Policy

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Those who have been reading my work for any length of time know I have been adamant we would someday face a “global margin call”. I believe this call was issued last week! No matter how you look at the world, whether financially, geopolitically, macro, micro or whatever …what underlies everything in our world today is “credit”.
Credit is used to build, wage war, to produce and deliver, to consume or to trade, EVERYTHING runs on credit. As a side note, in order for credit to be extended, the borrower must have some sort of “collateral”. This collateral can be physical, financial, or simply “faith”, meaning a good credit rating or at least trust by the lender.
We’ve now arrived at a point very similar to where we were in the fall of 2008 with several very grave exceptions. The world is facing a global margin call again, only this time there are no sovereign entities left with a clean balance sheet that can be levered up further.
There are also no tools left available to the various central banks to administer monetary policy. They have already printed, monetized debt and lowered rates to zero. Richard Fisher has even admitted they have no ammunition left! As a side note, rates were cut to zero to make the higher debt balances serviceable but now even zero percent rates are not enough. From a macro standpoint, real economic activity is not generating enough cash flow (profits and tax revenues) to support this current debt. Lastly, there is no more “collateral” left to borrow against. Whether it be stocks, bonds, real estate, commodities or even “faith”, we are at the end of the road in the collateral department.
We have recently found out (not that we did not already know) through admission that many statistics have been wrong, and wrong for many years. What was reported and paraded as fantastic employment news on Friday turned out to really be a stinker as the truth turned out to be a whopping 11,000 job gain
What would have been considered heresy just 10 years ago is now “normal”, the Swiss National Bank has become a huge global hedge fund along with the PBOC and Bank of Japan. Does anyone doubt the Fed is not deeply in U.S. equity markets also (by the way, US monetary aggregates have gone into SHARP decline since the Dec. 6th report)? What kind of monetary policy is this? Sovereign “money” (currency) is foundationed on stock markets? Please keep in mind that global trade is crashing with the Baltic Dry Index making all time lows this past week and reports of tankers (non oil) all over the world being docked and empty. As for oil, there is such a global glut there are now fears of lack of storage space. All of this points toward a collapsing real global (depression) economy …which must service the most financial debt in the history of history!
This past week, markets all around the globe convulsed greatly with almost nothing left unscathed. There was a different excuse each day for the drops. We first heard about the Saudi/Iran disconnect of diplomatic ties, then, everything was down because of the yuan devaluation and their market hitting the 7% circuit breakers. I even heard someone say that everyone has such great profits they wanted out …but not until the 2016 tax year which is why they waited until the first week.
I do not believe any of it and would instead say we are simply receiving a global margin call. This had to come sooner or later as the world sits upon the greatest credit build in all of history. We are simply at the end of a “credit cycle” …unfortunately the largest credit cycle EVER! Everyone “knew” this day would come yet no one paid attention to it in their daily lives as “life just went on” as if nothing was wrong! I am sure we will hear reason after reason in the future …the real reason being too much debt with not enough collateral left nor enough economic activity to support it. Simple!
Now, the margin call comes. Now comes the great unwind! “Collateral” of all sorts will be questioned. The questions will be of the “strength, liquidity, ownership and even whether the collateral even exists”. Everything will be questioned and nothing taken for granted or even at face value. The issue of “trust” and even “who” can you trust will come forward. Institutions who have traded with each other for decades will suddenly be looking at each other with different eyes. Questions like “will I get paid” or “will I receive what I paid for” will be an everyday exercise.
There will surely be “blame” but what will it be? Several years into the future it will be understood for what it really is, too much debt, leverage and financially modified products such as derivatives. In the immediate, the blame might go on anything or anyone. We could see a banking collapse in China, Europe or start somewhere insignificant like “Pottersville”.
It could be some sort of military action.
Maybe in the Middle East, eastern Europe, China South Sea. It could involve any number of characters from the US, China, Russia or Saudis, Israelis, Iran, Syria, Iraq? Who knows? It could begin with oil. It could begin with gold. It could begin with “truth” coming out in the form of a “truth bomb” and finger pointing. We might see a global trade war or outright currency war.
Do the Chinese, Russians and Saudis have enough Treasury securities to dump and cause an interest rate spike? Are the Saudis still U.S. allies or do they view us now as pro Iran and they switch alliances? Will, and which treaties will be honored when push comes to shove? If I had to guess, whatever happens will certainly not be “petro dollar” friendly!
All of these questions and many more will be asked. The most important of course being whether or not “you” can meet the margin call or whether you do business with a cross partner who cannot meet the call. When I write “you” I mean to say everyone, every entity, and every sovereign government. This is how we will get the long awaited reset, the markets will close and accounts will be settled and liquidated if necessary, only upon the reopenings will you understand what you really have. The great global unwind is here and now with the most dreaded of all phrases about to be announced
“MARGIN CALL GENTLEMEN”!

Financial collapse leads to war

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Scanning the headlines in the western mainstream press, and then peering behind the one-way mirror to compare that to the actual goings-on, one can't but get the impression that America's propagandists, and all those who follow in their wake, are struggling with all their might to concoct rationales for military action of one sort or another, be it supplying weapons to the largely defunct Ukrainian military, or staging parades of US military hardware and troops in the almost completely Russian town of Narva, in Estonia, a few hundred meters away from the Russian border, or putting US “advisers” in harm's way in parts of Iraq mostly controlled by Islamic militants.

The strenuous efforts to whip up Cold War-like hysteria in the face of an otherwise preoccupied and essentially passive Russia seems out of all proportion to the actual military threat Russia poses. (Yes, volunteers and ammo do filter into Ukraine across the Russian border, but that's about it.) Further south, the efforts to topple the government of Syria by aiding and arming Islamist radicals seem to be backfiring nicely. But that's the pattern, isn't it? What US military involvement in recent memory hasn't resulted in a fiasco? Maybe failure is not just an option, but more of a requirement?

Let's review. Afghanistan, after the longest military campaign in US history, is being handed back to the Taliban. Iraq no longer exists as a sovereign nation, but has fractured into three pieces, one of them controlled by radical Islamists. Egypt has been democratically reformed into a military dictatorship. Libya is a defunct state in the middle of a civil war. The Ukraine will soon be in a similar state; it has been reduced to pauper status in record time—less than a year. A recent government overthrow has caused Yemen to stop being US-friendly. Closer to home, things are going so well in the US-dominated Central American countries of Guatemala, Honduras and El Salvador that they have produced a flood of refugees, all trying to get into the US in the hopes of finding any sort of sanctuary.

Looking at this broad landscape of failure, there are two ways to interpret it. One is that the US officialdom is the most incompetent one imaginable, and can't ever get anything right. But another is that they do not succeed for a distinctly different reason: they don't succeed because results don't matter. You see, if failure were a problem, then there would be some sort of pressure coming from somewhere or other within the establishment, and that pressure to succeed might sporadically give rise to improved performance, leading to at least a few instances of success. But if in fact failure is no problem at all, and if instead there was some sort of pressure to fail, then we would see exactly what we do see.

In fact, a point can be made that it is the limited scope of failure that is the problem. This would explain the recent saber-rattling in the direction of Russia, accusing it of imperial ambitions (Russia is not interested in territorial gains), demonizing Vladimir Putin (who is effective and popular) and behaving provocatively along Russia's various borders (leaving Russia vaguely insulted but generally unconcerned). It can be argued that all the previous victims of US foreign policy—Afghanistan, Iraq, Libya, Syria, even the Ukraine—are too small to produce failure writ large enough to satisfy America's appetite for failure. Russia, on the other hand, especially when incentivized by thinking that it is standing up to some sort of new, American-style fascism, has the ability to deliver to the US a foreign policy failure that will dwarf all the previous ones.

Analysts have proposed a variety of explanations for America's hyperactive, oversized militarism. Here are the top three:

1. The US government has been captured by the military-industrial complex, which demands to be financed lavishly. Rationales are created artificially to achieve that result. But there does seem to be some sort of pressure to actually make weapons and field armies, because wouldn't it be far more cost-effective to achieve full-spectrum failure simply by stealing all the money and skip building the weapons systems altogether? So something else must be going on.

2. The US military posture is designed to assure Americans of their imagined “full-spectrum dominance” over the entire planet. But “full-spectrum dominance” sounds a little bit like “success,” whereas what we see is full-spectrum failure. Again, this story doesn't fit the facts.

3. The US acts militarily to defend the status of the US dollar as the global reserve currency. But the US dollar is slowly but surely losing its attractiveness as a reserve currency, as witnessed by China and Russia acting as swiftly as they can to unload their US dollar reserves, and to stockpile gold instead. Numerous other nations have entered into arrangements with each other to stop using the US dollar in international trade. The fact of the matter is, it doesn't take a huge military to flush one's national currency down the toilet, so, once again, something else must be going on.

There are many other explanations on offer as well, but none of them explain the fact that the goal of all this militarism seems to be to achieve failure.

Perhaps a simpler explanation would suffice? How about this one:

The US has surrendered its sovereignty to a clique of financial oligarchs. Having nobody at all to answer to, this American (and to some extent international) oligarchy has been ruining the financial condition of the country, running up staggering levels of debt, destroying savings and retirements, debasing the currency and so on. The inevitable end-game is that the Federal Reserve (along with the central banks of other “developed economies”) will end up buying up all the sovereign debt issuance with money they print for that purpose, and in the end this inevitably leads to hyperinflation and national bankruptcy. A very special set of conditions has prevented these two events from taking place thus far, but that doesn't mean that they won't, because that's what always happens, sooner or later.

Now, let's suppose a financial oligarchy has seized control of the country, and, since it can't control its own appetites, is running it into the ground. Then it would make sense for it to have some sort of back-up plan for when the whole financial house of cards falls apart. Ideally, this plan would effectively put down any chance of revolt of the downtrodden masses, and allow the oligarchy to maintain security and hold onto its wealth. Peacetime is fine for as long as it can placate the populace with bread and circuses, but when a financial calamity causes the economy to crater and bread and circuses turn scarce, a handy fallback is war.

Any rationale for war will do, be it terrorists foreign and domestic, Big Bad Russia, or hallucinated space aliens. Military success is unimportant, because failure is even better than success for maintaining order because it makes it possible to force through various emergency security measures. Various training runs, such as the military occupation of Boston following the staged bombings at the Boston Marathon, have already taken place. The surveillance infrastructure and the partially privatized prison-industrial complex are already in place for locking up the undesirables. A really huge failure would provide the best rationale for putting the economy on a war footing, imposing martial law, suppressing dissent, outlawing “extremist” political activity and so on.

And so perhaps that is what we should expect. Financial collapse is already baked in, and it's only a matter of time before it happens, and precipitates commercial collapse when global supply chains stop functioning. Political collapse will be resisted, and the way it will be resisted is by starting as many wars as possible, to produce a vast backdrop of failure to serve as a rationale for all sorts of “emergency measures,” all of which will have just one aim: to suppress rebellion and to keep the oligarchy in power. Outside the US, it will look like Americans blowing things up: countries, things, innocent bystanders, even themselves (because, you know, apparently that works too). From the outside looking into America's hall of one-way mirrors, it will look like a country gone mad; but then it already looks that way. And inside the hall of one-way mirrors it will look like valiant defenders of liberty battling implacable foes around the world. Most people will remain docile and just wave their little flags.

But I would venture to guess that at some point failure will translate into meta-failure: America will fail even at failing. I hope that there is something we can do to help this meta-failure of failure happen sooner rather than later.
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Five years ago, the Environmental Protection Agency (EPA) was commissioned by Congress to undertake a study on the impacts of hydraulic fracturing (fracking) on drinking water. This newer method of oil and gas extraction involves the pumping of highly pressurized water, sand and chemicals into underground rock formations.

Fracking has driven the boom in U.S. oil production and contributed to the steep drop in gasoline prices, but the environmental impacts of this relatively new technique are not well understood.
The EPA’s draft study—released in June to solicit input from advisers and the public—found  that fracking has already contaminated drinking water, stating in the report [3]:
“We found specific instances where one or more mechanisms led to impacts on drinking water resources, including contamination of drinking water wells…
Approximately 6,800 sources of drinking water for public water systems were located within one mile of at least one hydraulically fractured well … These drinking water sources served more than 8.6 million people year-round in 2013…
Hydraulic fracturing can also affect drinking water resources outside the immediate vicinity of a hydraulically fractured well.”
Despite these findings, and EPA’s own admissions of “data limitations and uncertainties” as well as “the paucity of long-term systemic studies,” the agency stated in its conclusion that “there is no evidence fracking has led to widespread, systemic impacts on drinking water resources.”
Industry hacks and their MSM cheerleaders took this line and ran with it, proclaiming that “the science is settled” on fracking and any further concerns are just crazed environmental activists pursuing an agenda.

However, it turns out that the EPA’s own science advisers have repudiated the study’s major conclusion [4], saying that it is “inconsistent with the observations, data and levels of uncertainty.”
“Major findings are ambiguous or are inconsistent with the observations/data presented in the body of the report,” the 31-member scientific review board said on Thursday. The panel will have a public teleconference on Feb. 1 before sending its final recommendations to EPA.

The conclusion of the draft report had already drawn suspicion of political tampering. Adding to this is the fact that EPA left out high-profile cases in Pennsylvania, Texas and Wyoming “where hydraulic fracturing activities are perceived by many members of the public to have caused significant local impacts to drinking water sources.”

The EPA draft report also found that failed wells and aboveground spills may have affected drinking water resources. It found evidence of more than 36,000 spills from 2006 to 2012. According to Bloomberg [4]:
“Spill data alone “gives sufficient pause to reconsider the statement” that there’s no evidence of systemic, widespread damage, said panelist Bruce Honeyman, professor emeritus at the Colorado School of Mines.
“It’s important to characterize and discuss the frequency and severity of outliers that have occurred,” said panelist Katherine Bennett Ensor, chairwoman of the Rice University Department of Statistics.
And panel member James Bruckner, a professor of pharmacology and toxicology at the University of Georgia, said the report glosses over the limited data and studies available to the agency.
“I do not think that the document’s authors have gone far enough to emphasize how preliminary these key conclusions are and how limited the factual bases are for their judgments,” Bruckner said.
Young, the University of California professor who suggested rewriting the top-line conclusion, faulted the document for trying “to draw a global and permanent conclusion about the safety or impacts of hydraulic fracturing at the national level” given the “uncertainties and data limitations described in the report.””
In light of these criticisms, there will be heavy pressure to revise the EPA’s conclusion in the final report, and the oil and gas industry will have major egg on its face.

The fact is, fracking was fast-tracked into use before the environmental impacts could be properly assessed. Public health and environmental quality took a back seat to the profits of an industry that long ago cemented its grip on federal and state governments.

The oil and gas industry tried their hardest, with the help of government agencies, to keep the identity of fracking fluids from becoming public knowledge. But as that information has come out, we are finding that these chemicals pose catastrophic risks to human health, as a study by the Yale School of Public Health[5] points out.
“In an analysis of more than 1,000 chemicals in fluids used in and created by hydraulic fracturing (fracking), Yale School of Public Health researchers found that many of the substances have been linked to reproductive and developmental health problems, and the majority had undetermined toxicity due to insufficient information.
Further exposure and epidemiological studies are urgently needed to evaluate potential threats to human health from chemicals found in fracking fluids and wastewater created by fracking.”
Contamination of drinking water is not the only threat that fracking poses. Oklahoma, which has gone full speed ahead with fracking operations, has seen a 730 percent increase in earthquake activity since 2013. Since the start of the new year, 69 earthquakes have struck, with two registering a magnitude of 4.7 and 4.8 [6].

The state’s own Geological Survey admitted, “we know that the recent rise in earthquakes cannot be entirely attributed to natural causes.” They say the earthquakes are caused by wastewater injection wells, not fracking, but this is dubious considering the tremendous influence of the oil and gas industry in that state.

A report released last year by a group of seismologists, researchers, and oil and gas industry representatives “overwhelming connected hydro fracturing to the surge in earthquakes. [7]
It is past time for government to stop endangering public and environmental health by protecting the fossil fuel industry with bogus conclusions in its risk assessments.

The Financial Crisis Of 2016 Rolls On – China, Oil, Copper And Junk Bonds All Continue To Crash

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Never before have we seen a year start like this.  On Monday, Chinese stocks crashed once again.  The Shanghai Composite Index plummeted another 5.29 percent, and this comes on the heels of two historic single day crashes last week.  All of this chaos over in China is one of the factors that continues to push commodity prices even lower.  Today the price of copper fell another 2.40 percent to $1.97, and the price of oil continued to implode.  At one point the price of U.S. oil plunged all the way down to $30.99 a barrel before rebounding just a little bit.  As I write this article, oil is down a total of 6.12 percent for the day and is currently sitting at $31.13.  U.S. stocks were mixed on Monday, but it is important to note that the Russell 2000 did officially enter bear market territory.  This is yet another confirmation of what I was talking about yesterday.  And junk bonds continue to plummet.  As I write this, JNK is down to 33.42.  All of these numbers are huge red flags that are screaming that big trouble is ahead.  Unfortunately, the mainstream media continues to insist that there is absolutely nothing to be concerned about.
A little over a year ago, I wrote an article that explained that anyone that believed that low oil prices were good for the economy was “crazy“.  At the time, many people really didn’t understand what I was trying to communicate, but now it is becoming exceedingly clear.  On Monday, one veteran oil and gas analyst told CNBC that “half of U.S. shale oil producers could go bankrupt” over the next couple of years…
Half of U.S. shale oil producers could go bankrupt before the crude market reaches equilibrium, Fadel Gheit, said Monday.
The senior oil and gas analyst at Oppenheimer & Co. said the “new normal oil price” could be 50 to 100 percent above current levels. He ultimately sees crude prices stabilizing near $60, but it could be more than two years before that happens.
By then it will be too late for many marginal U.S. drillers, who must drill into and break up shale rock to release oil and gas through a process called hydraulic fracturing. Fracking is significantly more expensive than extracting oil from conventional wells.
Since the last recession, the energy industry has been the number one producer of good paying jobs in this country.
Now that those firms are starting to drop like flies, what is that going to mean for employment in America?
Just today, a huge coal company filed for bankruptcy, and so did a U.S. unit of commodity trading giant Glencore.  The following comes from Zero Hedge
While the biggest bankruptcy story of the day is this morning’schapter 11 filing by Arch Coal, one which would trim $4.5 billion in debt from its balance sheet while handing over the bulk of the post-reorg company to its first-lien holders as part of the proposed debt-for-equity exchange, the reality is that the Arch default was widely anticipated by the market.
However, another far less noted and perhaps far more significantbankruptcy filing was that of Sherwin Alumina Co., a U.S. unit of commodity trading giant Glencore PLC, whose troubles have been extensively detailed on these pages. The stated reason for this far more troubling chapter 11 was “challenging market conditions” which is one way to describe an industry in which just one remaining U.S. smelter will be left in operation after Alcoa shut down its Warrick Country smelting opslast week.
A spokesman for Glencore, which owns the entire business, said the commodities producer and trader is “supportive of the restructuring process undertaken by Sherwin and is hopeful of an outcome that will allow for the continued operation of the Sherwin facility.”
We desperately need prices for oil and other commodities to rebound significantly.  Unfortunately, that does appear to be likely to happen any time soon.  In fact, according to CNN we could soon see the price of oil fall quite a bit more…
The strengthening U.S. dollar could send oil plunging to $20 per barrel.
That’s the view of analysts at Morgan Stanley. In a report published Monday, they say a 5% increase in the value of the dollar against a basket of currencies could push oil down by between 10% and 25% — which would mean prices falling by as much as $8 per barrel.
If prices for oil and other commodities keep falling, what is going to happen?
Well, Gina Martin Adams of Wells Fargo Securities says that what is happening right now reminds her of the correction of 1998
Recent market volatility has dredged up memories of previous times of turmoil, most notably the 2008 crisis. But Gina Martin Adams of Wells Fargo Securities has been reminded of another, less dramatic correction year — 1998.
Adams posits that the current economic environment is suffering from themes that also played out in 1998, including falling oil prices, a rising U.S. dollar and troubles in emerging markets. Consequently, stocks may see a similar move to the 1998 correction, which saw a 20 percent drop for stocks over six weeks.
To me, it is much more serious than that.  Just before U.S. stocks crashed horribly in 2008, we saw Chinese stocks crash, the price of oil crashed, commodity prices crashed, and junk bonds crashed really hard.
All of those things are happening again, and yet most of the “experts” continue to refuse to see the warning signs.
In fact, the mainstream media is full of articles that are telling people not to panicwhile the financial markets crumble all around them…
There’s no need to make big moves in response to the recent volatility. “Regular folks should take on a long-term view and avoid trying to anticipate short-term market movements,” says Stephen Horan, the managing director of credentialing at CFA Institute. “There is almost no evidence to suggest that professionals can do it effectively and a plethora of evidence suggesting individuals do it poorly.”
They want “regular folks” to keep holding on to their investments as the “smart money” dumps their stocks at a staggering pace.
A little more than six months ago, I predicted that “our problems will only be just beginning as we enter 2016″, and that is turning out to be dead on correct.
The financial crisis that began during the second half of last year is greatly accelerating, and yet most of the population continues to be in denial even though the average stock price has already fallen by more than 20 percent.
Hopefully it will not take another 20 percent decline before people begin to wake up.