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.

The US in 2016: No money for social programs, cash to burn for the military

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The US Navy’s “goals and objectives” outline for 2016, released last week, does not mince words: the first goal listed in the second subhead reads: “Buy more ships.”
And that is exactly what the world’s most powerful navy is doing. On Wednesday, the Defense Department announced it was moving forward with plans to replace its Ohio-class ballistic missile submarines, the most lethal killing machines in the history of mankind, with a completely new design beginning in 2021.
Each Ohio-class ballistic submarine is, by itself, the fifth most powerful military in the world. The Navy operates 14 of them. Each submarine carries 24 Trident II missiles, with each missile carrying eight warheads with a yield six times greater than the “little boy” bomb that killed over a hundred thousand people in the US bombing of Nagasaki, Japan, in 1945.
With an effective range of more than 7,456 miles, a single Ohio-class submarine in the waters outside of San Diego could obliterate 192 cities in western China, with a combined population of 400 million people, if the commander-in-chief were so inclined.
But the Ohio class is apparently in need of an upgrade, and the White House gave the Pentagon the go-ahead last Monday to send a “Request for Proposal” to the ship’s contractor, General Dynamics Electric Boat, approving funds for the building of a prototype. Each submarine, of which there will be 12, will cost an estimated $6-8 billion—not including research and development costs, the price of each submarine’s nearly 200 nuclear warheads, and associated operating costs—up from $2 billion for the Ohio class.
The day after the White House gave the go-ahead for replacing the Ohio-class submarines, the Center on Budget and Policy Priorities (CBPP) reported Monday that up to a million people will lose food stamp benefits in 2016.
Twenty-three states are expected this year to lift a moratorium on one of the harshest austerity measures imposed by the Clinton administration’s “welfare reform” program, which caps the amount of time many people are eligible for food stamps at three months. The time limits were halted during the recession, but under the pretense that there is “no money,” to pay for food stamps, states all over the country are re-imposing the time limits.
“The loss of this food assistance, which averages approximately $150 to $170 per person per month for this group, will cause serious hardship among many,” reported the organization. The CBPP notes, “USDA data show that the individuals likely to be cut off by the three-month limit have average monthly income of approximately 17 percent of the poverty line, and they typically qualify for no other income support.”
In announcing the food stamp cuts, Clinton pledged to “spend the taxpayers’ money wisely and with discipline, that we can spend more money on the future.” If he had been telling the truth, he would have declared that he was proposing the cuts so that the Navy could “Buy more ships.”
After all, the money has to come from somewhere. And it’s easiest to take from those who are the least capable of defending themselves. In addition to the poor people who depend on food stamps to survive, working class children have been targeted.
The same day that the White House gave the go-ahead for the design of the new submarines, the CBPP released a report showing that funding for schools has been slashed in most states since 2008, and in 15 states by more than 10 percent. Arizona has cut education spending by 23.3 percent, Alabama by 21.4 percent, Idaho by 16.9 percent, and Georgia by 16.5 percent.
While there is, of course, no money for children and the poor, defense contractors are licking their chops over the expected uptick in global military spending resulting from the wars flaring out of control in the Middle East and the growing standoff in Eastern Europe and the Pacific.
Defense industry analyst Deloitte gleefully declared earlier this month that military spending is “poised for a rebound” as a result of “heightened tensions” around the world.
It notes, “2015 was a pivotal year that saw heightened tensions between China, its neighbors and the US over ‘island building’ in the South and East China Seas, and the related claims of sovereign ocean territory rights by China. In addition, Russia and the Ukraine are at odds related to Russia’s takeover of Crimea and their military actions in Eastern Ukraine,” while “The recent tragic bombings in Paris, Beirut, Mali, the Sinai Peninsula, and other places have emboldened nations to join in the fight against terrorism.”
The report notes that “improved profitability” will result from “renewed interest from buyers” in acquiring “armored ground vehicles, ground attack munitions, light air support aircraft” and “maritime patrol ships and aircraft,” as “the military operations tempo is likely to increase and more missions are executed.”
The global uptick in military spending coincides with a major new shopping spree by the United States, which spends as much money on its military as the next seven countries—China, Russia, Saudi Arabia, France, the UK, India and Germany—combined. The US expends $609.9 billion out of the $1.7 trillion spent worldwide by all countries each year on war.
But this figure is slated to surge as “Many large, mainly US [Department of Defense] programs representing billions of US dollars, are likely to start soon, enter the engineering manufacturing design phase, and reach low-rate or full-scale production over the next few years. These programs include Ohio Class Submarine replacement, F-35 fighter jet, KC-46A aerial refueling tanker, and Long Range Strike Bomber.”
Just one of these programs, the F-35 “Lightning II,” plagued with delays and cost-overruns, will cost $1.45 trillion over its lifecycle, more than twice the amount that state, federal, and local governments spend educating 50 million children each year.


RBS tells investors: 'sell everything' as crisis nears

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The Royal Bank of Scotland has recommended its clients prepare for a “cataclysmic year,” as major stock markets could drop by a fifth and Brent oil could hit $16 a barrel.
"Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small," said the bank’s credit team in a note sent to clients, quoted by the Telegraph.
According to RBS analysts, the markets are showing the same stress alerts as seem before the 2008 crisis.
Andrew Roberts, the bank’s credit chief, says that “China has set off a major correction and it is going to snowball.”China “has very high debt levels (as a percentage of GDP) given they are still emerging” and crucially they have accumulated this debt incredibly fast, he said.
He predicts European and Wall Street markets to drop from 10 to 20 percent this year. London’s FTSE100 was predicted to plummet even lower.
“London is vulnerable to a negative shock. All these people who are ‘long’ oil and mining companies thinking that the dividends are safe are going to discover that they’re not at all safe,” said Roberts.
“We are moving in a short-term $26 target and once reached down to $16. Our forecasts are for this to occur through 2016, but the risk is it occurs in Q1 as global oil demand drops off according to IEA forecasts and the world runs out of ships to store it in,” he said.
This follows a bearish outlook for this year from Roberts’ team, issued late last year.
At the time Roberts said there are “a number of bad headwinds affecting the world right now, which will worsen in 2016.”