- Seeking A Savior
Submitted by Jeff Thomas via InternationalMan.com,
It’s an unfortunate truth that, when people are worried about the future, they often put their faith in politicians to somehow make everything better.
Politicians, of course, are famous for promising panaceas for whatever is troubling voters, and they even invent new troubles to worry about, presenting themselves as the only ones who can solve these woes.
Not surprising then, that, over time, any nation may slowly deteriorate into a population of nebbishes who turn to their government to do their thinking for them and take responsibility for their futures.
In the last year, the world has seen many elections in which the top spot (president, prime minister, premier, etc.) was contested. In Brazil, socialist President Dilma Rousseff was returned, but almost immediately ran into trouble over a failing economy, scandals, and corruption charges. In less than a year, her popularity sank to the lowest level for any Brazilian president on record.
In the UK, conservative Prime Minister David Cameron was returned, which immediately triggered riots in London by the anti-austerity crowd. He will soon be facing increasingly angry voters of all stripes who are boiling over with the dramatically worsening immigration question. In addition, he’ll soon be facing a referendum on the UK’s membership in the EU – an eventuality he’s been postponing for quite some time.
In Canada, voters have chosen to oust the conservatives and return to the golden promises of the Trudeaus. The Canadian dollar dropped immediately. Justin Trudeau plans a vast programme of public spending in the face of a declining economy, but hasn’t offered any explanation as to how this can be paid for.
Argentina has just had its election. The departing Peronist, Cristina Fernández de Kirchner, has passed the baton (and a failing economy, rapidly declining peso, and civil unrest) to the more conservative Mauricio Macri.
Do we see a pattern here? No, except in the sense that countries habitually put in a conservative for a while, tire of him, and replace him with a liberal, then tire of him, and replace him with a conservative.
None of these leaders will be the solution to the problems of their nations. In fact, they are the problem. Each of them (and many others around the world) offered dramatic, unrealistic campaign promises for ever-increasing largesse from the government. Each will increase national debt to maintain a government that’s already drowning in debt, in order to fulfil their promises, with an understood endgame that, at some point, the economy hits the wall. Citizens with opposing views of the reason for such problems are boiling over, as it’s become clear that there’s no money in the till to pay for such economically suicidal policies. Yet, each year, the spending worsens and so do the economic conditions for the average citizen.
And this is true whether we see Labour, Tory, Republican, Democrat, Democrata Progresista, or Federalista del Centro in power. At some point, it would be reasonable to expect the average voter to realise that it’s not only the opposition candidate that’s a danger, it’s also his own party’s candidate and, in fact, the entire political system.
What’s interesting is that, in many countries, grumblings can be heard to this effect – that “they’re all corrupt” – yet, immediately after making such statements, the average voter returns to the support of his party’s candidate, as he is “the lesser of two evils.”
And here we see a guiding principle of party politics. Do all you can to create the image of the opposing party as literally evil. Use the media to parrot that concept, on a daily basis. By so doing, it becomes unimportant who you run for office. Your party supporters do not vote for your candidate, they vote against the opposing party’s candidate. And that makes it possible to run a rutabaga for office and still win, if you can succeed in demonising the turnip the other party is running.
In the U.S., political candidacy is practically a national sport. The presidential competition begins as soon as the previous election has ended. (Candidate Hillary Clinton began the “I might be running” charade before the sitting president had been sworn in, in 2013, for his second term.)
In addition to the candidates pouring so much time into campaigning that those who already hold public office abandon their responsibilities in order to focus on the campaign, hundreds of millions of dollars are poured into each campaign. In the current U.S. election race, we observe Mrs. Clinton, a candidate with a dark past who has been described by the majority of American voters as a liar, and as dishonest and untrustworthy – an astonishing revelation until an even more astonishing truth sinks in – that many of those who see her in that light plan to vote for her anyway, in order to stop a Republican – any Republican – from attaining office.
And the Republican side is presently led by Donald Trump, a man famous for his quick temper, boastful comments, bullying presence, and egotistical will, in addition to having a long record of causing massive bankruptcies with his business projects.
Yet, his supporters are equally rabid in their belief that he is desperately needed to counter the dreaded Mrs. Clinton.
It’s hard to imagine that two candidates could be less qualified for public office. We might be forgiven if we conclude that there is no lesser of two evils in equations such as this one. There is only disaster in a red outfit versus disaster in a blue outfit.
In 1796, the young U.S.A. chose between John Adams and Thomas Jefferson for president. Most Americans admired them both and it was a very close election. Both had been founding fathers and both contributed heavily to the cause of freedom that was so valued in the early days of the U.S.
But, in those days, the average American recognised that his freedom depended upon a small government. As Mr. Jefferson rightly stated, “A government big enough to give you everything you want is a government big enough to take away everything that you have.”
Indeed, the U.S. had come into being as a result of revolution against the government of King George of England, who had the temerity to raise the total tax level to about 2.5%.
But countries do seem always to decline over time. No matter how well-intended the original concept, no matter how productive the people, countries decline, and for the same reasons. Governments (both liberal and conservative) constantly work to grow their own power and to extract as much wealth from their people as they can manage.
As stated at the beginning of this article, “It’s an unfortunate truth that, when people are worried about the future, they often put their faith in politicians to somehow make everything better.” By doing so, they make their own destruction possible.
But what’s one person to do? “You can’t fight City Hall,” as they say. However, in most countries, the U.S. included, it’s still legal to vote with your feet – to move to a different jurisdiction that has not gone so far into decline, where the taxation is low and the level of liberty is high. In any era, there are always jurisdictions that are freer than others. The present era is no exception. In seeking a saviour, we should not put our faith in any politician or group of politicians.
If we have a saviour, he is the man in the mirror. If we are to be saved, we alone must do the research, make the plans, vote with our feet, and establish our own liberty.
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Editor’s Note: The U.S. government is broke and bleeding money. Like most governments that get into financial trouble, we think American politicians will keep choosing the easy option…money printing on a massive scale.
This has tremendous implications for your financial security. These politicians are playing with fire and inviting a currency catastrophe.
Most people have no idea what really happens when a currency collapses, let alone how to prepare…
How will you protect your savings in the event of a currency crisis? This just-released video will show you exactly how. Click here to watch it now.
- Are These The Tankers Bilal Erdogan Uses To Transport ISIS Oil?
Regular readers are by now well acquainted with Bilal Erdogan, the son of Turkish autocrat Recep Tayyip Erdogan. Although Erdogan senior masquerades as President of a democratic society, he is in reality a despot who just weeks ago, capped off a four-month effort to nullify an undesirable ballot box outcome by scaring the electorate into throwing more support behind the ruling AKP in a do-over vote designed specifically to undermine the pro-Kurdish HDP, which put up a strong showing in the last round of elections, held in June.
As the world’s interest in Islamic State’s illicit oil trade has grown over the past 60 or so days, so too has the scrutiny on how the group gets its stolen crude to market. In the seven days since Turkey shot down a Russian Su-24 near the Syrian border, Moscow has done its best to focus the world’s collective attention on the connection between ISIS and Turkey. It’s common knowledge among those who pay attention to such things that Ankara is part of an alliance that includes Riyadh, Doha, and Washington whose collective goal is to fund and arm the Syrian opposition. What’s up for debate is the extent to which that alliance supports ISIS and, to a lesser extent, al-Nusra.
Earlier today, Vladimir Putin explicitly accused Ankara of attempting to protect ISIS oil routes by shooting down Russian warplanes which have destroyed hundreds of Islamic State oil trucks in November.
Erdogan of course denies the allegations, but as we’ve shown, it would be very easy for Turkish smugglers to commingle ISIS and KRG crude (which, by the way, is also technically illegal), effectively using Kurdish oil to mask Turkey’s participation in the Islamic State oil trade.
Some contend that Bilal Erdogan’s marine transport company BMZ Group (which owns a Maltese shipping company) is involved in trafficking ISIS oil (see our full account here).
Here’s what Syrian Information Minister Omran al-Zoub said on Friday:
“All of the oil was delivered to a company that belongs to the son of Recep [Tayyip] Erdogan. This is why Turkey became anxious when Russia began delivering airstrikes against the IS infrastructure and destroyed more than 500 trucks with oil already. This really got on Erdogan and his company’s nerves. They’re importing not only oil, but wheat and historic artefacts as well.”
While we’ve yet to come across conclusive evidence of Bilal’s connection to ISIS, we would note that the Turkish port of Ceyhan is state-run and given Turkey’s extensive experience in smuggling KRG crude, it seems entirely fair to suggest that sneaking in 40,000 or so barrels of ISIS oil each day wouldn’t be that difficult a task. Indeed, given that Kurdish oil is, like ISIS crude, technically undocumented, Turkey will always have plausible deniability on its side (unless of course the oil is being moved into the country straight from Syria which is what Putin seems to be suggesting).
In any event, if Bilal Erdogan is in fact engaged in the trafficking of stolen crude (and take it from us, Baghdad will tell you that Kurdish crude sold independently of SOMO is every bit as illegal as Islamic State oil) it’s probably worth tracking BMZ Group’s fleet. Here’s a list of ships that Turkish or other regional media have at one time or another confirmed belong to Bilal:
You can track them all, free of charge at MarineTraffic.com:
Just don’t let Erdogan senior catch you monitoring his son’s fleet or you, like Can Dündar, editor in chief of Cumhuriyet, and Erdem Gül, the newspaper’s capital correspondent in Ankara, could end up sitting in a Turkish jail for 100 + 42 years.
- Fourth Turning – Our Rendezvous With Destiny
Submitted by Jim Quinn via The Burning Platform blog,
In Part 1 of this article I discussed the catalyst spark which ignited this Fourth Turning and the seemingly delayed regeneracy. In Part 2 I pondered possible Grey Champion prophet generation leaders who could arise during the regeneracy. In Part 3 I focused on the economic channel of distress which is likely to be the primary driving force in the next phase of this Crisis. In Part 4 I assessed the social and cultural channels of distress dividing the nation. In Part 5 I examined the technological, ecological, political, military channels of distress likely to burst forth with the molten ingredients of this Fourth Turning, and finally in this final part, our rendezvous with destiny, with potential climaxes to this Winter of our discontent.
We are now in the seventh year of this Fourth Turning. A famous quote from the seventh year of the last Fourth Turning portended the desperate, bloody and ultimately heroic trials and tribulations which awaited generations of our ancestors. What will be our rendezvous with destiny?
“There is a mysterious cycle in human events. To some generations much is given. Of other generations much is expected. This generation of Americans has a rendezvous with destiny.” – Franklin Delano Roosevelt – June 27, 1936 – Philadelphia, PA
Our Rendezvous With Destiny
“The seasons of time offer no guarantees. For modern societies, no less than for all forms of life, transformative change is discontinuous. For what seems an eternity, history goes nowhere – and then it suddenly flings us forward across some vast chaos that defies any mortal effort to plan our way there. The Fourth Turning will try our souls – and the saecular rhythm tells us that much will depend on how we face up to that trial. The saeculum does not reveal whether the story will have a happy ending, but it does tell us how and when our choices will make a difference.” – Strauss & Howe – The Fourth Turning
The people have been permitting a small cadre of elitists, billionaire financiers, corporate chiefs, propagandist media moguls, and crooked politicians to make the choices dictating the path of our country since the 2008 dawn of this Fourth Turning. The choices they have made and continue to make have imperiled the world and guaranteed a far more calamitous outcome as we attempt to navigate through the trials and tribulations ahead. Their strategy to “save the country” by saving bankers, while selling the plan to the public as beneficial to all and essential to saving our economic system, has proven to be nothing more than the greatest wealth transfer scheme in human history. The ruling class is deliberately blind to their own venality and capacity for evil.
They commit evil acts, not for evil’s sake but to improve the world for their kind. All men have the capacity for evil, but only those with power and wealth have the ability to destroy the world in the name of their “progressive” ideology. The lust for power, immense hubris, arrogance towards the masses, and belief in utopian visions, by men portraying themselves as enlightened, have led to the deaths of millions in just the last century. The true reign of terror has yet to reveal itself, as this Fourth Turning will unleash the worst in humanity once the insipid and trivial are swept away by the cruel reality of life and death choices.
We are managed by a totalitarian regime and willingly oblige their aspirations for power, control, limitless wealth, and control over the political, social, economic, and financial levers of our society, as long as we can still facebook, twitter, text, post selfies, and generally amuse ourselves to death. Orwell’s vision of a totalitarian regime where boot on the face control, repression, surveillance, torture, and endless war had failed to materialize in the U.S. over the 50 years after the publication of 1984. The vision of Aldous Huxley’s Brave New World proved more accurate and is still the dominant totalitarian game plan today. The invisible government manipulating the unseen mechanisms of society, forming the habits and opinions of the masses through propaganda and silence about truth, has efficiently convinced the masses to love their servitude.
“A really efficient totalitarian state would be one in which the all-powerful executive of political bosses and their army of managers control a population of slaves who do not have to be coerced, because they love their servitude. To make them love it is the task assigned, in present-day totalitarian states, to ministries of propaganda, newspaper editors, and school teachers. Such propagandists accomplish their greatest triumphs, not by doing something, but by refraining from doing. Great is truth, but still greater, from a practical point of view, is silence about truth. By simply not mentioning certain subjects… totalitarian propagandists have influenced opinion much more effectively than they could have done by the most eloquent denunciations, the most compelling of logical rebuttals.” – Aldous Huxley – 1946 revised foreword to Brave New World
As the decade’s long debt fueled economic expansion petered out at the turn of this century, with average Americans experiencing an ongoing fifteen year recession, punctuated with multiple booms and busts created by the Wall Street owned Federal Reserve, a more Orwellian totalitarianism has begun to raise its ugly boot. As the exponential increase in debt reached its zenith and economic progress for the masses stalled, the ruling class embraced Orwell’s belief that once a society built upon hedonistic principles and “good times” loses its vitality, the ruling class would need to invoke government morality, patriotic fervor towards state mandated enemies, a quasi-religious belief in governmental omnipotence, and restrictions upon the freedoms and liberties documented in the U.S. Constitution.
The 9/11 attacks marked the turning point for totalitarianism in America. Their lust for power can no longer be sustained by using suggestion to convince the masses to love their servitude, but will require the truncheon, military hardware, surveillance technology, more prisons, and physical intimidation of the masses to maintain the status quo. We are in the midst of experiencing the worst of Huxley and Orwell’s dystopian nightmares.
Fourth Turnings are not finished portraits, but a canvas upon which the colors of history are painted. The specific events, timing, duration, and outcomes are not knowable or predictable in advance, but the reaction and mood of generational cohorts to the events are predictable and consistent throughout history. Anyone who denies the dramatic mood change in the country since 2008 and the deepening crisis mindset engulfing the world is either a member of the existing establishment or on their payroll. Denial and propaganda will not reverse the tide as a tsunami of consequences will sweep away the existing social order and replace it with something different. It may be better or worse, and our choices during the next decade will matter.
Strauss & Howe pondered four possible outcomes to this Crisis:
- It could mark the end of man. It could be an omnicidal Armageddon, destroying everything, leaving nothing.
- It could mark the end of modernity. The Western saecular rhythm – which began in the mid-fifteenth century with the Renaissance – could come to an abrupt terminus.
- It could spare modernity but mark the end of our nation. It could close the book on the political constitution, popular culture, and moral standing that the word America has come to signify.
- It could simply mark the end of the Millennial Saeculum. Mankind, modernity, and America would all persevere. Afterward, there would be a new mood, a new High, and a new saeculum. America would be reborn. But, reborn, it would not be the same.
None of the outcomes are pre-ordained. The outcome will be determined by the actions of human beings like you and me. Our choices, decisions, judgment, deeds, hesitations or inactions could impact the future course of history. Human beings are inherently flawed, susceptible to their emotions, greed, pride, arrogance, and hubris. They are prone to delusions, bouts of cognitive dissonance, herd like behavior, and a penchant for normalcy bias.
They are also inherently kind, generous, courageous and capable of great feats. The future of our country has hung by a thread during the three previous Fourth Turnings, on the snow covered fields at Valley Forge, at the stone wall in Gettysburg, and on the blood soaked beaches in Normandy. The time will come when the future of our country will be determined by the actions of a few.
One of the crucial problems we face is the inevitable fact positions of power in our society tend to be filled with psychopathic narcissists whose desire for control, ability to manipulate others into trusting them using charisma, lack of remorse or guilt for their lawless acts, and belief in their own infallibility, create a society with no moral boundaries, no truth, no hope, and no sense of right and wrong.
The psychopaths occupy key positions in Washington D.C., on Wall Street, on Madison Ave., within the military, operating the Department of Homeland Security, running think tanks, in corporate board rooms. They count amongst them media moguls, politicians, central bankers, regulators, CEOs, generals, policemen, religious leaders, and shadowy billionaires, who are meticulous in planning their crimes, with contingency plans when their malevolent deeds come unraveled.
The systematic pillaging of the world’s wealth by the chosen few is a highly organized strategy designed to offer few clues to the masses regarding its coordination, scope and malicious intent. The psychopathic ruling class is following a blueprint to enslave the masses in debt, while they fulfill their narcissistic fantasies of domination, control, power and wealth. The people are just pawns in their game of chess, disposable and interchangeable. These people give no pause in sacrificing the lives of millions to achieve their ambition of ruling the world.
We now enter the most dangerous phase of this Fourth Turning. Whether the next financial implosion leads to war or the next war leads to a financial implosion, the consequences will be far reaching and destructive. I see the chances of a unified country choosing shared sacrifice to fight a common foe as almost nil. The eight year reign of Barack Obama drastically increased the divisiveness and mistrust within our borders and around the world.
His failed presidency has left the nation significantly worse off economically, with trillions in new debt added, with more unfunded liability promises totaling tens of trillions added to the $200 trillion bill for future generations. Political, race, religious, generational and wealth divides have grown to cavernous levels, with virtually no chance of compromise or healing. The two leading candidates for the presidency, Hillary Clinton and Donald Trump, promise to divide the country even further if elected.
I believe the Party realizes their game plan since 2008 has failed to revive the U.S. economy, exacerbated the failed socialist experiment in Europe, laid bare the complete and utter failure of quantitative easing in Japan, and as the globalization tide has receded revealed the epic levels of mal-investment in China. The thirty five year delusionary conviction that debt could sustain consumer societies perpetually is coming to its inevitable conclusion.
As more and more debt has been required just to maintain a declining standard of living for the average household, the unsustainability of this paradigm has come into full view. It now appears the contingency plan of the Party is a global war to cull the herd, further enriching the arms dealers and the financiers of war. Politicians around the world have been tasked with stirring patriotic fervor amongst the masses against terrorists – domestic and foreign – and the new axis of evil – Russia and China.
The world is already on the precipice of war, as the situation in Syria and the Ukraine deteriorates. The requirements of alliances and treaties would require a global war if a treaty member is “attacked” or a false flag event is staged to initiate hostilities. With the Chinese economy poised for a debt conflagration destined to be the world’s next Lehman moment, the spark which unleashes an inferno of debt going bad across the globe will lead to war.
Once the Rubicon is crossed, there will be no turning back. With Europe already teetering under an unpayable debt burden, enormous unemployment, and now hordes of Muslims invading their lands from the Middle East; oil producing countries undergoing a profound negative economic shock from $40 oil; and countries dependent upon U.S. and European consumption to sustain their mal-investment racked economies; politicians and bankers see war as their last resort for maintaining the status quo.
When the dominoes of debt begin to topple, a global depression will ensue, leading to an enormous surge in unemployment, skyrocketing budget deficits, intensifying currency wars, plunging global trade, and a final discrediting of central bankers and puppet politicians around the world. Civil unrest will unfold in urban enclaves across the U.S. and around the world. The police state will attempt to crush civil disturbances, but if they go too far, a backlash from heavily armed Americans will be in the offing.
The militarization of local police will inflame the situation. If race riots in the urban areas spread to the more rural domain of white America, the animosity created during the Obama years would result in much bloodshed. The elites living in NYC, Washington D.C., and California will insist upon an overwhelming Federal response to the chaos. States occupied by more liberty minded citizens and governors may well resist Federal interference, setting in motion secession scenarios and adding fuel to the fire of civil disarray.
In the midst of economic collapse, plunging stock markets, swelling unemployment rolls, surging home foreclosures, skyrocketing bad debt losses, avalanche of bankruptcies, and chaos in the streets, how will psychopaths controlling our political and financial systems react? Their immense egos, belief in their own brilliance, arrogance, disregard for the consequences of their actions, lack of empathy for mankind, and hubris will lead them to gamble it all on war.
Any attempt to conscript young people to fight wars on behalf of corporations and bankers will potentially be met with armed resistance from people who have seen the truth, as the Deep State veil is pierced. That will leave the psychopaths with only the current volunteer soldiers, their high tech weaponry, cyber-warfare, and most alarmingly their nuclear arsenal. The toxic mixture of human malevolence, miscalculation, bad luck and technological sophistication could lead to Oppenheimer’s nightmare.
“Now I am become Death, the destroyer of worlds.”
Strauss & Howe pondered four possible big picture outcomes to this Fourth Turning. The first two are almost too horrendous to ponder, with the world destroyed in an Armageddon scenario or an end to modernity, with a complete collapse of science, culture, politics, and society. They are not the most likely scenarios, but their probability is certainly not zero. That leaves the remaining two likelihoods – the end of our nation in its current form or a successful resolution of the Crisis with a rebirth of the nation and a new High.
The reason I cannot fathom a positive resolution of this Crisis is the deeply entrenched corruption and diseased institutions controlling the levers of society. The system cannot be reformed from within and must crash, with the existing social order replaced. There is no gallant leader poised to bring the country back to its former glory. The Roman Empire lasted twelve generations, the Soviet Union one generation, and I fear the American Empire will not survive until its fourth generation in its current form.
So the question remains, what form will our nation take at the end of this Fourth Turning? Rome is still a city in Italy. The people who lived under the Soviet empire still live their lives today. The U.S. could become a drastically reduced nation state, no longer policing the world, with a lowered standard of living, less debt, less government, a currency based on the productive assets of the nation, an economy driven by savings and investment, small local banks that take deposits and lend money to businesses and people, and absolutely no Federal Reserve controlling the currency and interest rates of the country. A desperate public could also turn to a dictator who promises them even more safety and security, with the loss of all freedom and liberty. Or the country could break-up into a multitude of regional countries with like-minded values, economic interests, and beliefs.
I don’t know what the future holds for my country, my family, or the world. I do know our individual choices over the coming decade will matter. I do know we are in a fight for the survival of humanity where good people must prevail or evil will triumph. Victory will require individual and communal courage. The fight will require perseverance, determination, foresight, intelligence, and a willingness to die for the ideas of liberty and freedom.
Whether you lead or follow, the only way to bring the country back to its founding principles and restoration of the U.S. Constitution is to act with honesty, integrity, and honor. Leading by example rather than words, while setting high moral standards for your actions, will inspire others to do the same. It may not seem so at this moment, but the very survival of our country is at stake. There are no guarantees and believing God will always be on our side is wishful thinking. The glory or ruin of our country will be decided in the next decade and we will have a say in that outcome.
“Eventually, all of America’s lesser problems will combine into one giant problem. The very survival of the society will feel at stake, as leaders lead and people follow. The emergent society may be something better, a nation that sustains its Framers’ visions with a robust new pride. Or it may be something unspeakably worse. The Fourth Turning will be a time of glory or ruin.
History offers no guarantees. Obviously, things could go horribly wrong – the possibilities ranging from a nuclear exchange to incurable plagues, from terrorist anarchy to high-tech dictatorship. We should not assume that Providence will always exempt our nation from the irreversible tragedies that have overtaken so many others: not just temporary hardship, but debasement and total ruin. Losing in the next Fourth Turning could mean something incomparably worse. It could mean a lasting defeat from which our national innocence – perhaps even our nation – might never recover.” – Strauss & Howe – The Fourth Turning
There is a time for everything, and a season for every activity under heaven:
a time to be born and a time to die,
a time to plant and a time to uproot,
a time to kill and a time to heal,
a time to tear down and a time to build,
a time to weep and a time to laugh,
a time to mourn and a time to dance,
a time to scatter stones and a time to gather them,
a time to embrace and a time to refrain,
a time to search and a time to give up,
a time to keep and a time to throw away,
a time to tear and a time to mend,
a time to be silent and a time to speak,
a time to love and a time to hate,
a time for war and a time for peace.
(Ecclesiastes 3:1-8, NIV)
- Pedro Da Costa Has The Courage To Review Ben Bernanke's Memoir, Finds A Few Gaping Holes
Pedro da Costa may no longer be asking Janet Yellen uncomfortable questions on behalf of the WSJ, but that doesn’t mean the Peterson Institute’s latest editorial fellow can’t opine on his favorite topic: central bankers.
In the following review of Ben Bernanke’s memoir “The Courage To Act”, Pedro has done just that, and while his review of what is contained in the book is enlightening for those who are still waiting for the deflated, “fair value” priced copy, it is Pedro’s “courage to write” what Bernanke conveniently forgot to add in his memoir, that makes this review so much more memorable than the generic sycophantic tripe written by his “access journalism” peers.
Yet the ongoing manipulation of key benchmark interest rates—which falls within the direct purview of the Fed—does not get a mention in the book. Neither do illegal foreclosures, the lack of transparency on Wall Street, banks’ concentrated political power, the revolving-door nexus of Wall Street and the regulatory world, or even the global banking system’s increasing vulnerability to financial crises (think Greece, China, Japan, Russia, Brazil, Turkey—and that’s just in the past year).
Bernanke does accept some blame for having missed the signs of looming financial disaster on his watch. But he stops well shy of a mea culpa. He says he was merely echoing the conventional wisdom of the time: that the housing bubble wouldn’t burst spectacularly and that, even if it did, the economic damage would be limited.
But at least Bernanke had the “courage” to cover everything else…
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Originally posted on Book Forum, written by Pedro Nicolaci Da Costa
Anatomy of a Meltdown
Ben Bernanke’s Washington tell-all says too little, too late
Former Federal Reserve chairman Ben Bernanke’s new book feels more like the first of many acts than an authoritative memoir. And the main body of the narrative remains, so far as financial history is concerned, very much a work in progress.Still, notwithstanding its provisional character, there’s no denying that The Courage to Act is a useful document. Bernanke was arguably the most powerful economic official in the world during the worst global financial crisis since the Great Depression. His direct account of that event, staid though it can be, is invaluable—both for the official record and for understanding how his thinking shifted during an eventful eight-year tenure atop the Fed.
The memoir begins with an amusing glimpse into the notoriously shy and guarded Bernanke’s personal life, cataloguing his journey from a small-town boyhood in South Carolina through the Ivy League academic ranks and on to what he describes as his unlikely elevation to the head of the nation’s central bank. “I had studied monetary policy for years,” writes Bernanke, who as a longtime Princeton economics professor specialized in the study of the monetary causes of the Great Depression. “I had never expected to be part of the institution and contributing to policy decisions.” As he traces the odyssey leading to the inner sanctums of Washington power, Bernanke conquers his constitutional reserve long enough for the reader to get a feel for the folksy demeanor and obsessive baseball fandom that have endeared him within wonkish economic-policy circles.
Yet this personal touch is less in evidence as the book progresses. Bernanke slips all too easily into inside-baseball macroeconomic jargon in his blow-by-blow policy chronology, and while this might be interesting to investors, scholars, and journalists who lived through the crisis, it fails to offer enough insight to make this a broadly compelling historical account.
“I proposed that we leave the federal funds rate unchanged, while hedging our bets a little by continuing to acknowledge in our statement that ‘some inflation risks remained,’” he writes of one key policy call in 2006, early on in his tenure as Fed chairman. Not exactly fly-on-the-wall material—especially considering that full transcripts of meetings for that year were released in 2011. The book contains too many such passages.
In Bernanke’s version of events, his reticence seems more than simply personal; the omissions from his narrative prove, at times, to be more telling than the stories he shares. This is particularly true when it comes to the prospect of increased financial regulation—a chronic blind spot of Bernanke’s as chairman and, not coincidentally, a shortcoming typical of the conventional economic models favored by the nation’s other senior economic policy makers.
As he recounts how he sized up the challenges presented by the Fed post, Bernanke explains that, like many scholarly economists, he relished the chance to see his key intellectual concerns at play in real-world-policy settings. “I was interested in all of the work of the Board, including the regulation and supervision of banks. The big attraction, however, was the chance to be involved in U.S. monetary policy,” he admits.
An intensive focus on monetary matters dominates The Courage to Act, as it did Bernanke’s chairmanship. To take one striking example, Bernanke never talks about criminality or fraud when it comes to the financial crisis, despite ample legal evidence—and countless Justice Department settlements—indicating that banks consistently pushed the boundaries of legality and often went well beyond them. (He did get a lot of attention recently for saying, in an interview with USA Today published the day of the book’s release, that there should have been more prosecutions.)
Yet the ongoing manipulation of key benchmark interest rates—which falls within the direct purview of the Fed—does not get a mention in the book. Neither do illegal foreclosures, the lack of transparency on Wall Street, banks’ concentrated political power, the revolving-door nexus of Wall Street and the regulatory world, or even the global banking system’s increasing vulnerability to financial crises (think Greece, China, Japan, Russia, Brazil, Turkey—and that’s just in the past year).
Bernanke does accept some blame for having missed the signs of looming financial disaster on his watch. But he stops well shy of a mea culpa. He says he was merely echoing the conventional wisdom of the time: that the housing bubble wouldn’t burst spectacularly and that, even if it did, the economic damage would be limited.
In the great Washington tradition of blandly asserted deniability, Bernanke also rather fatalistically insists that the overlapping jurisdictions of multiple agencies—the Fed, the Office of the Comptroller of the Currency, the Securities and Exchange Commission, and others—all but ensured that no single body had ultimate responsibility for monitoring the entire financial system.
Bernanke says he quietly but unsuccessfully favored a model that would have essentially handed all banking-regulation authority to the Fed, despite its widely reported precrisis failures. He was pushing back against ideas like Senate Banking Committee chairman Chris Dodd’s plan to strip the Fed of its regulatory authority entirely. “The Fed already possessed the bulk of the government’s expertise and experience needed to serve as the financial stability regulator,” Bernanke contends.
That expertise had not helped the Fed foresee the crisis, much less prevent it. But once the scope of the meltdown finally dawned on Bernanke, he was in some ways the perfect man for the job. His research on the Great Depression, as well as on Japan’s troubles with economic stagnation and deflation—a vicious cycle of falling prices, wages, and business activity—gave him an ample tool kit, albeit a still largely untested one, with which to approach the problems.
Indeed, Bernanke had given an inadvertently prescient speech in 2002 titled “Deflation: Making Sure ‘It’ Doesn’t Happen Here.” In it, he argued that central banks were not powerless to stimulate economic growth and employment, as had been widely presumed, in the event that official interest rates fell to zero. Instead, the Fed could purchase a range of government bonds to put downward pressure on longer-term interest rates, boosting other financial and credit markets in the process. The increased lending would help revive economic activity.
And buy bonds he did. Starting in late 2008, the Fed began purchasing Treasury and mortgage bonds in earnest, in a series of “quantitative easing” programs designed to bring the financial system back to life and bolster a sputtering economic recovery. The final tally of buying, which took place in three rounds, wound up totaling in excess of $4.5 trillion, more than five times the Fed’s precrisis bond portfolio. During an emergency teleconference of the policy-setting Federal Open Market Committee on January 21, 2008, Bernanke didn’t mince words. “At this point we are facing, potentially, a broad-based crisis,” he told his colleagues. “We can no longer temporize. We have to address this crisis. We have to try to get it under control. If we can’t do that, then we are just going to lose control of the whole situation.” Yet despite forceful moves to secure the banking system, including the decision to keep official rates at zero for nearly seven years, the performance of the US economy continues to frustrate the Fed’s optimism about the future in almost systematic fashion.
Bernanke, who now works as an adviser for the hedge fund Citadel and for Pimco, a giant bond fund based in California, might have hoped for a better set of economic indicators to greet the release of The Courage to Act. To his credit, the unemployment rate has fallen sharply to 5.1 percent, a far cry from its recession peak of 10 percent. However, there is evidence of underlying weakness in employment, including low workforce participation, a stubborn lack of wage growth, and high long-term joblessness. The economy’s growth rate remains lackluster, suggesting the expansion is still sluggish some six years after it began. True, the US economy looks stronger than many of its overseas counterparts, but that’s not saying much, given a global outlook that continues to deteriorate and threatens to once again shake US growth.
The status quo is particularly worrying in the already lagging realm of financial regulation. The sense that Wall Street has gone back to business as usual is pervasive among investors and the public. Bernanke admits there was little appetite for regulation within the agencies charged with writing and enforcing the rules: “[Alan] Greenspan and senior Fed attorneys were reluctant as a matter of principle to aggressively use” the new authority they had acquired to stop “unfair or deceptive” lending practices during the housing boom, he writes.
Washington’s persistent aversion to adopting tougher rules for finance could leave the country distinctly unprepared for another market shock. A recent Boston Fed conference found, discouragingly, that the current tools available to regulators to prevent and fight financial crises would likely fail. That’s hardly a ringing endorsement of years of hard-fought reform—or of Bernanke’s legacy. Nor is this glum appraisal out of line with Bernanke’s own confessed agnosticism about more robust regulatory enforcement. “Philosophically, I did not view myself as either strongly pro- or anti-regulation,” he writes. “As an economist, I instinctively trusted the markets.”
The nation’s chief regulator is more emphatic about his general allegiances in the rarefied circles of financial power. One especially fond memory, of the Bank for International Settlements (BIS), is instructive: “We retired to the BIS dining room for long, frank conversations over gourmet four-course dinners (each course with its own wine). For generations, the world’s central bankers have formed a sort of club, of which I was now a member.”
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And for those curious to learn more about the “central bankers’s sort of club”, the Bank of International Settlements, please read “Meet The Secretive Group That Runs The World“
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Pedro Nicolaci da Costa is an editorial fellow at the Peterson Institute for International Economics. He has been writing about economics since 2001, and covered the Fed extensively before, during, and after the 2008 financial crisis.
- Here's How To Trigger A Bank Run
Submitted by Tim Price via SovereignMan.com,
On August 6, 1979, Paul Volcker as the new Chairman of the Federal Reserve was determined to eliminate the terribly high inflation that had taken hold of the system. And he succeeded.
The Fed’s primary interest rate stood at 11% when Volcker entered office. By June 1981 he had hiked them all the way to 20%.
Corporate America was not impressed. Indebted farmers blockaded his building.
But the pain was relatively short-lived. And as Volcker’s victory over inflation became more apparent, markets applauded. As bond prices started to rise, stock prices joined them.
Both credit and equity markets began a multi-decade bull run.
The trend in interest rates for years has been in the other direction; rates in the US are now effectively zero, though Janet Yellen is widely expected to announce a modest tightening next month.
Over here in Europe, zero has not marked the lower bound for rates. The European Central Bank’s deposit rate stands at negative 0.2%. And they’re widely expected to cut the deposit rate even further.
These policies have consequences. One of those consequences is that government bond yields throughout Europe have gone negative.
Government bond yields with durations up to two years are now negative in Switzerland. As well as Germany. Finland. The Netherlands. Austria. Belgium. Denmark. France. Ireland. Sweden. Italy. Spain.
Regardless of how heavily and unsustainably indebted those governments are, bond investors in all of those countries are still buying bonds even though they are now guaranteed to lose money.
But if this weren’t odd enough, the weirdness has spread from bonds to cash.
From January, depositors in Alternative Bank Schweiz in Switzerland will earn negative 0.125% on bank deposits. Depositors with over 100,000 Swiss francs will earn negative 0.75%.
If you wanted to trigger a bank run, this is certainly how you might go about it.
First, drive interest rates down to zero. Then cut rates even more. At the same time, start talking about banning cash altogether.
And if you’re in the euro zone, make sure you squander seven years doing precisely nothing to restructure your banking system after its near-death experience of 2008.
What should the rational investor do in an environment of ongoing financial repression?
To know the answer, we need to know whether central banks will be successful in their increasingly quixotic efforts.
We think the ultimate outcome will be an inflationary mess on a scale perhaps unprecedented in financial history, but not, perhaps, before a deflationary crisis happens first.
Either way, western market government bonds no longer offer any margin of safety, only the prospect of guaranteed loss. They have once again become certificates of confiscation.
For us, the logical solution is to focus only on the highest quality businesses trading at the lowest possible multiples – which invalidates most western markets, notably those of the US, from consideration.
And notwithstanding the price action of the last four years, we continue to see merit in precious metals.
Think of gold, for example, not as a commodity (given that gold is rarely, if ever, consumed), but as a special type of bond.
In the words of Charlie Morris, formerly of HSBC Global Asset Management, think of gold as an irredeemable bond that pays no interest, but has no credit risk, where the issuer is God or the universe itself.
- Number Of Millennials Living In Parents' Basement Climbs (Again); Weddings Blamed (Again)
Three weeks ago, we noted with some alarm that the number of women age 18 to 34 living with their parents is now the highest since record keeping began more than seven decades ago.
According to a study by the Pew Research Center in Washington, 36.4% of young women have now moved back to the basement, so to speak. The culprit: weddings. No, really. From Bloomberg:
Eternal happiness can wait. Millennials are much less likely to be married than their parents were at their age, and marriage often serves as an impetus to move out.
Of course the real reason why 18-34 year-olds are moving home is because the US economic “recovery” is characterized by a labor market that, far from being a “robust” creator of breadwinner jobs, actually churns out bartenders and waiters. The sad thing is, between lackluster wage growth, crippling student debt, and bad decision making when it comes to picking a college major, some millennials are finding out that serving drinks is a far better way to make ends meet than taking a full-time job for a meager salary that all but guarantees you a spot among America’s growing peasantry.
On Monday, we get still more evidence of the above, this time from the Commerce Department, who reports that 31.5% of 18-34 year-olds now live with their parents. As you can see from the following, this is one graph that is the definition of “up and to the right”:
If that were a chart of some “key metric” a startup founder dreamed up with the help of a VC backer, you’d have yourself a billion dollar unicorn. Unfortnately it’s not. It’s an illustration of just how abysmal the US economic “recovery” truly is and it’s also a reflection of what happens when you pair an inexorable rise in the cost of education with a jobs market that’s a shadow of its pre-crisis self.
Next, have a look at the chart of 25-34 year-olds living with their parents:
As you can see, that looks like the highest level on record. If we assume a student starts college at 18 or 19, and finishes in 4-5 years (which may be optimistic but should be a decent baseline), the 25-34 bracket should include quite a few graduates. If these young adults are moving home at a record pace, one has to believe that the labor market is anything but “robust.”
But not so fast says Jed Kolko, an independent economist and senior fellow at the Terner Center for Housing Innovation at the University of California, Berkeley. As WSJ notes, Kolko – like te Pew Research Center – believes this can all be explained by a lack of weddings. Here’s WSJ:
Mr. Kolko says that the rise in children living with their parents is largely related to the fact that people are marrying and having children later, not to the weak economy and housing market. Single people without children are more likely to continue living at home much later.
Note that Kolko is asking you to make the following ridiculous assumption: if you aren’t married, you automatically want to live with your parents. Obviously, that’s absurd.
But one thing Kolko does get right is this: “What I think it means is that the boost to housing from young adults will come more slowly than people expect.”
Indeed Jed. But not because unmarried people want to live in their parents’ basement until they find their soulmate. Rather, because soaring rents, student debt, and a lack of decent job opportunities have conspired to make independence and self-sufficiency a pipe dream for a third of the nation’s millennials.
Also, someone should tell the Commerce Department that there’s no reason to put out this type of abysmal data. A “double seasonal adjustment” could fix this right up.
- Paper Gold Dilution Hits 294x As Comex Registered Gold Drops To New All-Time Low
One week ago, gold market observers were surprised when in the span of four days, gold held in the JPM Comex vault declined by nearly 50%, starting on November 16 when the 668,498 ounces held in the vault below 1 Chase Manhattan Plaza declined precipitously to just 347,899 ounces, a new all time low.
Furthermore, as of the latest Comex activity update, on Friday the Registered gold held by JPM dropped another 2,802 ounces to a record low and virtually negligible 7,975 ounces, essentially equivalent to zero as shown in the chart below, even as JPM’s eligible gold has also been seeing a substantial decline in recent months.
But while the decline of JPM gold has long been noted, it was the latest drop in total Comex registered gold which has again raised eyebrows, and which contrary to expectations it would be replenished either from external inflows or by conversion from Eligible both of which have not happened, has instead continued to decline. According to the latest data, total Registered gold dropped by another 11% overnight to just 134,877 ounces, just over 4 tonnes and another all time low…
… and since the gold open interest remains largely unchanged, the physical gold coverage ratio, or the ratio of gold claims to Registered gold, has just hit an all time high of 294 ounces of paper for every ounces of physical.
- Sweden: "No Apartments, No Jobs, No Shopping Without A Gun"
Submitted by Ingrid Carlqvist via The Gatestone Institute,
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The Swedes see the welfare systems failing them. Swedes have had to get used to the government prioritizing refugees and migrants above native Swedes.
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"There are no apartments, no jobs, we don't dare go shopping anymore [without a gun], but we're supposed to think everything's great. … Women and girls are raped by these non-European men, who come here claiming they are unaccompanied children, even though they are grown men. … You Cabinet Ministers live in your fancy residential neighborhoods, with only Swedish neighbors. It should be obligatory for all politicians to live for at least three months in an area consisting mostly of immigrants… [and] have to use public transport." — Laila, to the Prime Minister.
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"Instead of torchlight processions against racism, we need a Prime Minister who speaks out against the violence… Unite everyone. … Do not make it a racism thing." — Anders, to the Prime Minister.
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"In all honesty, I don't even feel they [government ministers] see the problems… There is no one in those meetings who can tell them what real life looks like." – Laila, on the response she received from the government.
The week after the double murder at IKEA in Västerås, where a man from Eritrea who had been denied asylum grabbed some knives and stabbed Carola and Emil Herlin to death, letters and emails poured into the offices of Swedish Prime Minister (PM) Stefan Löfven. Angry, despondent and desperate Swedes have pled with the Social Democratic PM to stop filling the country with criminal migrants from the Third World or, they write, there is a serious risk of hatred running rampant in Sweden. One woman suggested that because the Swedish media will not address these issues, Löfven should start reading foreign newspapers, and wake up to the fact that Sweden is sinking fast.
Carola Herlin, Director of the Moro Backe Health Center, was murdered on August 10, along with her son, in the IKEA store in Västerås, Sweden.
During the last few decades, Swedes have had to get used to the government (left and right wing parties alike) prioritizing refugees and migrants above native Swedes. The high tax level (the average worker pays 42% income tax) was been accepted in the past, because people knew that if they got sick, or when they retired or otherwise needed government aid, they would get it.
Now, Swedes see the welfare system failing them. More and more senior citizens fall into the "indigent" category; close to 800,000 of Sweden's 2.1 million retirees, despite having worked their whole lives, are forced to live on between 4,500 and 5,500 kronor ($545 – $665) a month. Meanwhile, seniors who immigrate to Sweden receive the so-called "elderly support subsidy" — usually a higher amount — even though they have never paid any taxes in Sweden.
Worse, in 2013 the government decided that people staying in the country illegally have a right to virtually free health and dental care. So while the destitute Swedish senior citizen must choose between paying 100,000 kronor ($12,000) to get new teeth or living toothless, a person who does not even have the right to stay in Sweden can get his teeth fixed for 50 kronor ($6).
The injustice, the housing shortage, the chaos surrounding refugee housing units and the sharp slide of Swedish students in PISA tests — all these changes have caused the Swedes to become disillusioned. The last straw was that Prime Minister Löfven had nothing to say about the murders at IKEA.
Gatestone Institute contacted to the Swedish government, to obtain emails sent to the Prime Minister concerning the IKEA murders. According to the "principle of public access to official documents," all Swedes have the right to study public documents kept by authorities — with no questions asked about one's identity or purpose. The government, however, was clearly less than enthusiastic about sharing the emails: It took a full month of reminders and phone calls before they complied with the request.
What follows are excerpts from emails sent from private citizens to Prime Minister Stefan Löfven:
From Mattias, a social worker and father of four, "a dad who wants my kids to grow up in Sweden the way I had the good fortune of doing, without explosions, hand grenades, car fires, violence, rape and murder at IKEA":
"Hi Stefan. I am a 43-year-old father of four, who is trying to explain to my children, ages 6-16, what is going on in Sweden. I am sad to say that you and your party close your eyes to what is happening in Sweden. All the things that are happening [are] due to the unchecked influx from abroad. You are creating a hidden hatred in Sweden. We are dissatisfied with the way immigration is handled in Sweden, from asylum housing to school issues. And it takes so long to get a job, many people give up before they even get close. Mattias"
Marcus, 21, wrote:
"Hi Stefan, I am one of the people who voted for you. I live in Helsingborg, still with my parents because there are no apartments available. I can see where I live that as soon as an old person moves out, eight foreigners immediately move in: they just bypass us young, Swedish people in line. With all that is going on in Sweden – rapes, robberies, the IKEA murders and so on — why aren't non-Swedes sent back to their countries when they commit crimes? Of course we should help refugees, but they should be the right kind of refugees. … I'm sorry to say this, Stefan, but the Sweden Democrats should be allowed to rule for four years and remove the people who do not abide by the laws, and who murder or destroy young women's lives. It is horrible, I have a job that pays poorly because there are no jobs. Sweden has more people than jobs."
Peter wrote:
"Esteemed Prime Minister. I am writing to you because I am very worried about the development in Swedish society. I am met daily by news of shootings, exploding hand grenades/bombs, beatings, rapes and murders. This is our Sweden, the country that, when you and I grew up, was considered one of the safest in the world.
"You, in your role as Prime Minister, have a responsibility to protect everyone in the land, regardless of whether they were born here or not. Unfortunately, I can see that you are not taking your responsibility seriously. I follow the news daily, and despite our now having suffered another act of madness, this time against a mother and son at IKEA, I do not see any commitment from you? …
"You should emphatically condemn the violent developments we see in this country, allocate resources to the police, customs and district attorneys to slow and fight back (not just build levees and overlook) criminal activity."
Sebastian wrote:
"Hi Stefan! After reading about the horrible deed at IKEA in Västerås, I am now wondering what you are going to do to make me feel safe going to stores and on the streets of Sweden. What changes will there be to make sure this never happens again? Will immigration really continue the same way?"
Benny wrote:
"Hi, I'm wondering, why is the government quiet about such an awful incident? The whole summer has been characterized by extreme violence, shootings, knifings and explosions. The government needs to take vigorous action so we can feel safe."
Laila's subject line reads: "Is it supposed to be like this?"
"Are we supposed to go outside without arming ourselves? Rape after rape occurs and no one is doing anything about it. I was born and raised in Vårby Gård, but seven years ago, we had to move because we couldn't take the dogs out in the evenings due to the non-Europeans driving on the sidewalks. If you didn't move out of the way, they would jump out of the car and hit you. If you called the police, they do nothing — in a suburb of Stockholm. When my brother told some of these men off, a rocket (the kind you use at New Year's) appeared in his mailbox. You can imagine how loud the blast was. Women and girls are raped by these non-European men, who come here claiming they are unaccompanied children, even though they are grown men….
"It is easy to get weapons today, I wonder if that is what we Swedes need to do, arm ourselves to dare to go shopping. Well, now I am getting to what happened at a major department store: Two people were killed and not just killed, there is talk online of beheading.
"The Prime Minister will not say a word, but resources are allocated to asylum housings, a slap in the face for the relatives who just had two of their kin slain. Swedish newspapers will not say a word, but fortunately, there are foreign newspapers that tell the truth. We Swedes can't change apartments, we live five people in three bedrooms. Two of us are unemployed, looking, looking and looking for work. The only option is employment agencies. I'm 50 years old, on part-time sick leave because of two chronic illnesses, I cannot run around from one place to another. But more and more asylum seekers keep coming in. There are no apartments, no jobs, we don't dare go shopping anymore, but we're supposed to think everything's great.
"Unfortunately, I believe the Prime Minister needs to start reading foreign newspaper to find out that Sweden is going under. I found out that the mass immigration costs billions every year, and the only thing the immigrants do is smoke waterpipes in places like Vårby Gård. This is happening in other places too, of course. Now it's starting to spread; you will see that in the opinion polls, next time they are published. Soon, all Swedes will vote for the Sweden Democrats. They are getting more and more supporters every day.
"You Cabinet Ministers do not live in the exposed areas, you live in your fancy residential neighborhoods, with only Swedish neighbors. It should be obligatory for all politicians to live for at least three months in an area consisting mostly of immigrants, the car should be taken from you so you'd have to use public transport. … After three months, you would see my point.
"I am scared stiff of what is happening in this country. What will the government do about this?"
Anders wrote:
"Hi Stefan, why don't you, as our Prime Minister, react more against all the violence that is escalating in our country? [Such as] the double murder at IKEA in Västerås. Add to that the bombings and other things happening in Malmö. Instead of torchlight processions against racism, we need a Prime Minister who speaks out against the violence, who says that it's wrong no matter which ethnic group is behind it or at the receiving end of it.
"Because all the people living in Sweden are Swedish, right? A torchlight procession against racism only highlights the fact that it's immigrants committing these crimes. What we need now is a clear signal from our popularly elected [officials] that violence needs to stop now. Sweden is supposed to be a haven away from violence.
"I'm asking you as our Prime Minister, take a stand against the violence. Unite everyone in Sweden into one group and do not make it a racism thing."
Some of the people received a reply from Carl-Johan Friman, of the Government Offices Communications Unit; others have not received any reply at all. A typical response goes:
"Thank you for your email to Prime Minister Stefan Löfven. I've been asked to reply and confirm that your email has reached the Prime Minister's Office and is now available for the Prime Minister and his staff. It is of course not acceptable that people should be exposed to violence and criminal activities in their everyday life. Many efforts are made to counteract violence, and quite correctly, this needs to be done without pitting groups against each other. Thank you for taking the time to write and share your views, they are important in shaping government policies."
Gatestone Institute contacted Laila, one of the people who emailed, and asked her if she was satisfied with the answer she got. Laila replied:
"No, I'm not satisfied with the answer, because they didn't even respond to what I was talking about. In all honesty, I don't even feel they see the problems. They're talking about what it looks like when they have their meetings, but there's no one in those meetings who can tell them what real life looks like. It feels like the answer I got was just a bunch of nonsense.
They understand that people are scared. They talk about demonstrating against racism; they seem to be completely lost. The politicians do not understand how things work in Swedish society, because they live in their safe, snug neighborhoods where things are quiet. But a lot of Swedes are forced to live in immigrant-heavy neighborhoods, because they cannot afford an apartment somewhere else."
The anger at the government's non-reaction to the IKEA-murders also led to a demonstration at Sergels Torg, Stockholm's main public square, on September 15. Hundreds of protesters demanded the government's resignation, and held a minute of silence for the slain mother and son, Carola and Emil Herlin. The organizers plan to hold similar protests every month throughout Sweden.
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- Turkey Arrests Generals Who Stopped Syria-Bound, Weapons-Laden, Spook Trucks
If there’s a silver lining to last Tuesday’s downing of a Russian Su-24 warplane by two Turkish F-16s it’s that the world is now starting to scrutinize President Recep Tayyip Erdogan. Even to the uninitiated it seemed strange that a NATO member would shoot down a Russian fighter jet over an alleged 17 second violation of Turkish airspace. Why, one wonders, would the democratically elected leader of one of the world’s foremost up and coming emerging markets decide, out of the blue, to become the first member of the alliance to engage a Russian or Soviet aircraft in more than six decades?
The answer to that question lies in Ankara’s covert dealings with the various rebel groups fighting the Assad regime in Syria.
Turkey’s support for some militias (the Turkmen fighters aligned with the FSA for instance) is not secret. However, there’s no shortage of speculation that Erdogan is also allied with less “moderate” forces including ISIS. The PKK for instance, has long accused the government of maintaining a cozy relationship with Islamic State and there are all manner of reasons to believe that Turkey has at various times facilitated the flow of fighters and weapons to ISIS (see here) and served as a critical link between the group’s lucrative oil operation and global crude markets (see here and here). Now, thanks to last week’s plane “incident”, this has been laid bare for the world to see and Erdogan is not happy about it.
Now that AKP has regained its political supremacy (thanks to a farce of an election Erdogan engineered after AKP lost its absolute majority in June), Ankara has renewed its crackdown on undesirable journalism. As we reported on Friday, Can Dündar, editor in chief of Cumhuriyet, and Erdem Gül, the newspaper’s capital correspondent in Ankara, were arrested last week on charges of spying and aiding and abetting terrorists.
In reality, Dündar and Gül exposed Turkish intelligence’s role in providing weapons to extremists operating across the border. Here’s WSJ with the summary: “The charges center on a Cumhuriyet report in May, including photos and video, suggesting Turkish intelligence was secretly ferrying weapons to extremist Syrian rebels. The article sparked a major furor in Turkey, which has long been accused by its critics of secretly aiding in the growth of Islamic State militants based in neighboring Syria.” Here’s the video:
“The footage shows gendarmerie and police officers opening crates on the back of the trucks which contain what newspaper Cumhuriyet described as weapons and ammunition,” Reuters reported at the time, adding that “witnesses and prosecutors have alleged that MIT helped deliver arms to parts of Syria under Islamist rebel control during late 2013 and early 2014, [according to] a prosecutor and court testimony from gendarmerie officers.”
For his part, Erdogan claimed the trucks were carrying humanitarian aid for Turkmen groups (presumably the same FSA-aligned Turkmen groups who executed a Russian pilot last week). The President then hilariously accused a bevy of officers and prosecutors of being part of a “parallel state” (with ties to Fethullah Gülen). determined to bring down the government.
As Reuters went on to detail, the trucks were eventually allowed to pass after MIT officials threatened the police.“Don’t treat me like you have captured a terrorist,” one of the men told a gendarmerie officer who had handcuffed him.
The contents of the crates: 1,000 mortar shells, hundreds of grenade launchers and more than 80,000 rounds of ammunition for light and heavy weapons.
Here’s where the trucks were intercepted:
Given that the battle for Aleppo (which is still going on today with Iranian ground forces advancing on the city), was raging at the time the trucks were stopped, and given what we know about FSA’s ongoing presence in the city, it seems fairly obvious that the weapons were bound for the Free Syrian Army. Indeed, Erdogan hedged his “humanitarian aid for Turkmens” story, telling supporters over the weekend that “those who revealed the transfer made the world hear about these trucks by stopping them and checking what they were carrying. Then they said the government was sending weapons to terrorist groups [in Syria]. In so doing, they revealed all the humanitarian aid that was going to Bay?r-Bucak Turkmens. They also exposed those going to the FSA in that way.”
Of course funneling money to the FSA is dangerous enough as we saw last week when the 1st coastal brigade destroyed a Russian search and rescue helicopter with a US-made TOW, but it’s not as though the FSA (they’re “moderates” don’t forget, despite the fact that they fight alongside al-Nusra) were alone in Aleppo when these MIT trucks were stopped. Here’s are two maps which show the ISIS presence in the city on 01/05/2014:
As you can see, there’s no telling who these weapons were intended for which, presumably, is why the gendarmerie sought to stop the shipment.
Not satisfied with having imprisoned the reporters who broke the story, Erdogan moved on Monday to arrest the officers involved in the stop. Here’s the official story from state-run Anadolu Agency:
A court in Istanbul has ordered the arrest of three senior army officers, including two generals on charges of espionage and leading a terrorist group in a case involving the search of Turkish intelligence trucks in 2014.
The court made the ruling on Sunday.
General Hamza Celepoglu was accused of forming and leading an armed terrorist organization and of trying to overthrow the Turkish government. General Ibrahim Aydin and a retired colonel, Burhanettin Cihangiroglu, were accused of forming and leading an armed terrorist organization as well as spying and trying to oust the Turkish government, according to Istanbul prosecutor Irfan Fidan.
The three suspects were called to an Istanbul courthouse on Saturday as part of an investigation involving the search of trucks belonging to the Turkish intelligence (MIT) in 2014.
In January of that year, several trucks were stopped by the local gendarmerie in southern Adana and Hatay provinces on the grounds that they were loaded with ammunition, despite a national security law forbidding such a search.
So let’s just be clear about what’s going on here, because it would be a shame if the absurdity was lost on anyone. In January 2014, MIT loaded up some trucks with weapons bound for militant groups operating in northwestern Syria. Those trucks were stopped at the border by police who were subsequently threatened by intelligence agents who accompanied the drivers. Erdogan has now charged the officers with “forming and leading an armed terrorist organization,” when in fact they were doing the exact opposite. That is, they were trying to keep several truck loads of weapons from reaching armed terrorist organizations.
As you can see, there are no limits on what Erdogan will do to suppress dissent and cover up Ankara’s role in implicitly supporting terrorism by arming militants in Syria.
It’s worth noting that the FSA has become nothing more than a kind of catch-all excuse for flooding Syria with weapons. As al-Jazeera reported earlier this month, the group is beset with defections and “nowhere is [the dissatisfaction] more apparent than in Aleppo, where many FSA soldiers are leaving the group, citing inadequate pay, family obligations and poor conditions.” Still, the media manages to portray them as a well-organized group of battle-hardened, “moderate” warriors who have a very real chance at battling the Russians and Iranians to a stalemate (they’ve rejected Russia’s overtures regarding teaming up to fight ISIS) on the way to negotiating for a transition away from the Assad government. This characterization allows Washington and its regional allies to justify the hundreds of millions in guns, ammo, and funding that to this day flows into the country unimpeded. Whether or not all of that goes to the FSA or the Kurds or whether, like Erdogan’s MIT trucks, it all could be going to the very same groups who organize and execute attacks on Western civilians is an open question that will likely never be answered.
- 2015: The Last Christmas In America
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
The game of enabling more debt by lowering interest rates and loosening lending standards is coming to an end.
If we define Christmas as consumer spending going up while earnings are going down, 2015 will be the last Christmas in America for a long time to come. In broad brush, Christmas (along with all other consumer spending) has been funded by financialization, i.e. debt and leverage, not by increased earnings.
The primary financial trick that's propped up the "recovery" for seven years is piling more debt on stagnating incomes. How does this magic work? Lower interest rates.
In a healthy economy, households earn more money (after adjusting for inflation, a.k.a. loss of purchasing power), and the increased earnings enable households to save, spend and borrow more.
In an unhealthy, doomed-to-implode economy, earnings are declining, and central banks enable more borrowing by lowering interest rates to zero and loosening lending standards so anyone who can fog a mirror can buy a new pickup truck with a subprime auto loan.
The problem with financialization is that it eventually runs out of oxygen. As earnings decline, eventually there's no more income to support more debt. And once debt stops expanding, the economy doesn't just stagnate, it implodes, because the entire ramshackle con game of financialization requires a steady increase in debt and leverage to keep from crashing.
The trickery of substituting financialization for earned income–the trickery that fueled the last seven years of "recovery"–is exhausted.
The incomes of even the most educated workers are going nowhere, while the earnings of the bottom 90% are sliding:
Wages as a percentage of gross domestic product (GDP) have been declining for decades. Note the diminishing returns on financialization and asset bubbles that always bust: wages blip up in the bubble and then crash to new lows when the bubble bursts:
Look at how debt has soared while GDP has essentially flatlined. This is diminishing returns writ large: we have to pile on ever-increasing mountains of debt just to keep GDP from going negative.
This dependence on debt for "growth" leaves the economy exquisitely sensitive to any decline in debt growth. The slightest drop in debt growth in the Global Financial Meltdown almost collapsed the entire global economy:
The essential fuel of "growth"–credit expansion–is rolling over:
Even the vaunted prop under a soaring stock market, corporate profits, are rolling over as the stronger dollar and stagnating sales pressure profits:
The game of enabling more debt by lowering interest rates and loosening lending standards is coming to an end. Debt is not a sustainable substitute for income, and households are increasingly finding themselves in two camps: those who can no longer afford to borrow and spend, and those who recognize that going in to debt to support spending is a fool's path to poverty and insolvency.
Say good-bye to Christmas, America, and debt-based spending in general–except, of course, for the federal government, which can always borrow another couple trillion dollars on the backs of our grandchildren.
- ISIS: Oil as a Strategic Weapon
By EconMatters
I have to admit that I am a news junkie. So my TV was glued to CNN on the day of the Paris terrorist attack. During its coverage, one of the CNN commentators mentioned that ISIS makes about $2 million a day in oil revenue. That piqued my curiosity and decided to find out more about ISIS oil operation.
Oil as a Strategic Weapon
According to FT, ISIS oil strategy has been long in the making since the group emerged in Syria in 2013. The group saw oil as a funding source for their vision of an Islamic state, and identified it as fundamental to finance their ambition to create a caliphate. ISIS controls most of Syria’s oil fields where it created a foothold in 2013. Crude is the militant group’s biggest single source of revenue.
ISIS has derived its financial strength from being the monopoly oil producer in a huge captive market in Syria and Iraq. Despite a US-led international coalition to fight ISIS, FT describes a “minutely managed” sprawling ISIS operation akin to a national oil company in just two years with an estimated crude production of 34,000-40,000 barrels per day (bpd).
$1.5 million a Day to Fund The Terrorist Group
The group sells most of its crude directly to independent traders at the wellhead for $20-$45 a barrel earning the group an average of $1.5 million a day. Without being able to export, ISIS brought hundreds of trucks and started to extract the oil and transport it. According to an FT interview of a local sheikh, an average of 150 trucks is filled daily with about $10,000 worth of oil per truck. Most traders can expect to make a profit of at least $10 per barrel.
Son of Turkey’s President Is In on ISIS Oil?
The arbitrage had the potential to go a lot more than $10 a barrel when oil prices were high. Russia has accused Turkey of buying ISIS oil (allegedly the son of Turkey’s President is involved, and also allegedly the U.S. is aware of it), reselling it to Japan and Israel for huge profits. Smugglers have been using boats, pumps, carrying on foot, by donkey or horse. Some see the oil production from ISIS as a contributing factor to the global oil glut pushing down oil prices.
Read: Using the Wave Principle to Trade
ISIS Adapts to Low Oil Prices
However, the biggest threat to ISIS oil production has been the depletion of Syria’s aging oilfields despite the group’s efforts to recruit skilled oil workers. ISIS does not have the technology of major foreign oil companies to counter the production decline.
ISIS has tried adapting to the new lower oil price environment by turning to oil midstream and downstream. FT and Aljazeera both reported that ISIS has recently expanded into refining and petrol stations. In ISIS-controlled territory, there’s no shortage of demand.
Russia & China Eyeing Middle East While Obama ‘Pivots’ to Asia
It is widely acknowledged that one of the reasons the international coalition against ISIS has not been effective is the reluctance of the coalition to target ISIS oil infrastructure (trucks, oilfields, pipelines) where there’s a large civilian presence, and for the potential environmental impact. Russia jumped in to aggressively target specifically ISIS oil operation and infrastructure aiming to cut off its funding source after ISIS took out a Russian plane. In essence, Russia is trying to push the U.S. aside and take a leadership role in dealing with the ISIS and Middle East chaos.
Russia’s timing is impeccable just as the U.S. is ‘pivoting’ to Asia, while China is only too eager to help Russia with an eye on the Middle East energy assets for its future energy security. The alliance of China and Russia may have been weakened on a now fragile economic ground due to the slowing economy in China and low oil prices negatively impacting Russia. However, the U.S. could be in serious trouble if the world starts trading oil in Reminibi instead of the U.S. dollar now that IMF has approved Chinese yuan as a main world currency.
Coalition In-fighting
Judging from the allegation that Turkey is buying ISIS oil, and that Turkey shot down a Russian Jet within a narrow 17-second window (some say the actual window is only 5 seconds), there is some serious in-fighting within the coalition against ISIS (perhaps that’s why Obama is desperate enough to drag Taiwan into the ‘Coalition’). One thing seems to always ring true in international politics: When it is about money or self-interests, countries seem more than willing to go that extra mile despite potential dire implications.
This could mean ISIS will keep its funding source with its oil making its way to all the intended and ‘unintended’ recipients like Japan, a significant U.S. ally. ISIS has so far demonstrated its ample capabilities in adapting and organizing its operation, this suggest there’s a long way to go in the fight against ISIS terrorists.
- Stocks End November With Nothing Despite Biggest Short-Squeeze In 6 Months
Black Friday sales were crap (yes including online), and economic data this morning was dismal… and still stocks did not rally!!
Trannies have given up their gains for the month and The S&P is practically unchanged – as the Small Cap squeeze is very evident…
(November saw "Most Shorted" end up 0.25% – the best gain in 6 months)
As Stocks fail once again to hold the October payrolls cliff-edge…
But for November, Crude oil and Gold were the biggest losers, stocks eked out gains as the long-bond dropped modestly and EUR fell 4% against the USD…
China's afternoon session rescue bid…
Provided the pre-market ramp in futures for US markets, but the selling began as US opened…
On the day, The fabled FANGs went red… (just remember Cramer said not to sell)
And that weighed on all major indices (although Trannies were weak from the start as Crude gave up overnight ramp gains)…Small Caps broke a 5-day winning streak
The USDollar oscillate in a narrow range around unchanged today (early JPY weakness reverted)…
Even as the Offshore Yuan surged…
Treasuries rallied after China closed and accelerated as US opened…
Credit markets notably weak in November…
Commodities were mixed today…
With gold's best day in over a month…
Crude surged overnight for no good reason whatsoever aidse from algos need to run stops above Friday's shortened close, then dumped it all as US opened…
Charts: Bloomberg
Bonus Chart: As @NanexLLC explains, 10% of all S&P 500 futures volume since midnight occurred between 15:59:50 and 16:00:10…
- New Smoking Gun: U.S. and UK KNEW Saddam Did NOT Possess WMDs
We've reported again and again and again and again and again that everyone knew that Iraq didn’t have weapons of mass destruction (WMDs).
Indeed, the architects of the Iraq war admitted that it was illegal … and really fought for oil (and Israel).
Today, a new smoking gun has been disclosed. The Guardian notes:
Tony Blair went to war in Iraq despite a report by South African experts with unique knowledge of the country that showed it did not possess weapons of mass destruction, according to a book published on Sunday.
God, Spies and Lies, by South African journalist John Matisonn, describes how then president Thabo Mbeki tried in vain to convince both Blair and President George W Bush that toppling Saddam Hussein in 2003 would be a terrible mistake.
Mbeki’s predecessor, Nelson Mandela, also tried to convince the American leader, but was left fuming that “President Bush doesn’t know how to think”.
***
The claim was this week supported by Mbeki’s office, which confirmed that he pleaded with both leaders to heed the WMD experts and even offered to become their intermediary with Saddam in a bid to maintain peace.
South Africa had a special insight into Iraq’s potential for WMD because the apartheid government’s own biological, chemical and nuclear weapons programme in the 1980s led the countries to collaborate. The programme was abandoned after the end of white minority rule in 1994 but the expert team, known as Project Coast, was put back together by Mbeki to investigate the US and UK assertion that Saddam had WMD – the central premise for mounting an invasion.
Mbeki, who enjoyed positive relations with both Blair and Saddam, asked for the team to be granted access.
“Saddam agreed, and gave the South African team the freedom to roam unfettered throughout Iraq,” writes Matisonn, who says he drew on sources in Whitehall and the South African cabinet. “They had access to UN intelligence on possible WMD sites. The US, UK and UN were kept informed of the mission and its progress.”
The experts put their prior knowledge of the facilities to good use, Matisonn writes. “They already knew the terrain, because they had travelled there as welcome guests of Saddam when both countries were building WMD.”
On their return, they reported that there were no WMDs in Iraq. “They knew where the sites in Iraq had been, and what they needed to look like. But there were now none in Iraq.”
In January 2003, Mbeki, who succeeded Mandela as president, sent a team to Washington to explain the findings, but with little success. Mbeki himself then met Blair for three hours at Chequers on 1 February, the book relates.
He warned that the wholesale removal of Saddam’s Ba’ath party could lead to a national resistance to the occupying coalition forces. But with huge military deployments already under way, Blair’s mind was clearly made up. When Frank Chikane, director-general in the president’s office, realised that the South Africans would be ignored, it was “one of the greatest shocks of my life”, he later wrote in a memoir.
Matisonn adds: “Mandela, now retired, had tried as well. On Iraq, if not other issues, Mandela and Mbeki were on the same page. Mandela phoned the White House and asked for Bush. Bush fobbed him off to [Condoleezza] Rice. Undeterred, Mandela called former President Bush Sr, and Bush Sr called his son the president to advise him to take Mandela’s call. Mandela had no impact. He was so incensed he gave an uncomfortable comment to the cameras: ‘President Bush doesn’t know how to think,’ he said with visible anger.”
***
Mbeki’s spokesman, Mukoni Ratshitanga, confirmed that Mbeki met Blair at Chequers to advise against the war and the UK’s involvement in it. Blair disagreed, Ratshitanga said, insisting that he would side with Bush.
“President Mbeki informed the prime minister that the South African government was about to send its own experts to assist and encourage the Iraqis to extend full cooperation to the UN weapons inspector, Dr Hans Blix,” Ratshitanga said. “He urged the prime minister to await the report of the SA experts before making any final commitment about going to war against Iraq.
***
Mbeki also had a phone conversation with Bush in 2003 and tried to discourage him from going to war, the spokesman said. “President Bush said he would rather not go to war but needed a clear and convincing signal that the Iraqis did not have WMDs to enable him to avoid the invasion of Iraq.
“President Mbeki informed him about the report of the SA experts which by then had already been sent to the UN secretary general, Dr Hans Blix and the UN security council. He informed President Bush that the report of the SA experts said Iraq had no WMDs. President Bush said he did not know about the report but would obtain a copy from the US ambassador at the UN, New York.”
It is not known whether Bush did obtain a copy of the report.
Mbeki later contacted Blair to ask him to find out from the US president what would constitute a “convincing signal” from Saddam, promising that he would contact Saddam to persuade him to send such a signal, according to Ratshitanga. “President
Mbeki understood from his sources and was convinced that Prime Minister Blair received his message as reported above, but did not convey it to President Bush.”
Blair’s office did not deny the meeting with Mbeki or the specifics of what was said.
But the U.S. and UK wanted war … not peace. They even rejected an offer from Saddam Hussein to leave Iraq and allow in weapons inspectors.
Obama and Clinton did the same thing in Libya and Syria. They also falsely blamed those regimes of using WMDS or the like, and supported Islamic terrorists in both Libya and Syria.
Related … Research Paper: ISIS-Turkey List
- President Obama's Latest ISIS Strategy Illustrated
- The Lull Before The Storm – An Ideal Chance To Exit The Casino, Part 1
Submitted by David Stockman via Contra Corner blog,
Last night’s Asia action brought another warning that the global deflation cycle is accelerating. Iron ore broke below $40 per ton for the first time since the central banks kicked off the world’s credit based growth binge two decades ago; it’s now down 40% this year and 80% from its 2011-212 peak.
As the man said, however, you ain’t seen nothin’ yet. That’s because the above chart is not merely reflective of too much supply and capacity growth enthusiasm in the iron ore industry or even some kind of worldwide commodity super-cycle that has gone bust.
Instead, the iron ore implosion is symptomatic of a much deeper and more destructive malady. Namely, it reflects the monumental malinvestment generated by two decades of rampant credit expansion and falsification of debt and equity prices by the world’s convoy of money printing central banks.
Since 1994 the aggregate balance sheet of the world’s central banks has expanded by 10X – rising from $2.1 trillion to $21 trillion over the period. This rise does not measure some kind of ordinary trend which temporarily got out of hand; it represents an outbreak of monetary insanity that is something totally new under the sun.
What it means is that the Fed, ECB, BOJ, People’s Bank of China (PBOC) and the manifold lesser central banks bought $19 trillion of government bonds, corporate debt, ETFs and even individual equities and paid for it by hitting the electronic “print” button on their respective financial ledgers.
This central bank balance sheet expansion, in fact, represented 70% of the world’s entire GDP at the time the print-fest began in 1994. Yet as an accounting matter this monumental expansion was inherently suspect .
That’s because the asset side was mushroomed by already existing assets which had originally funded the purchase of real goods and services. By contrast, the equal and opposite liability side expansion consisted of newly bottled monetary credit conjured from thin air, representing nothing of tangible value, and most especially not savings from the prior production of real economic output.
Stated differently, the central banks substituted $19 trillion of fiat credit for $19 trillion of real savings from current income that would have otherwise been required to fund debt and equity issued by businesses, households and governments during the last two deades.
Needless to say, this giant substitution drastically falsified the price of money and capital. It represented a big fat bid in the financial markets that drove cap rates to deeply sub-economic levels, meaning that bond yields were far too low and equity prices and PE ratios way too high.
Had the world economy tried to issue trillions of new securities and loans in the absence of this massive central bank balance sheet expansion, interest rates would have soared and PE ratios would have weakened, thereby short-circuiting the reckless expansion of finance which actually occurred.
In short, the torrid pace of central bank bond buying during the last 20 years has caused the global economy to became bloated with over-financialization.
In the case of debt, for example, the expansion ratio was nearly 4X. That is, total worldwide public and private debt outstanding soared from $40 trillion to $225 trillion. This astounding $185 trillion gain compared to just a $50 trillion gain in GDP, meaning that the world’s leverage ratio has soared to unprecedented heights.
The expansion of equity capital on the traded stock markets of the world showed the same trend. Global equity market cap rose by $60 trillion or at a 11% annual rate during the two decades through the May 2015 peak. That was more than double the 5.0% growth rate of nominal GDP, meaning that the implicit capitalization rate of world income was soaring even as the world economy was being bloated and deformed by the greatest credit bubble ever imagined.
At the recent peak, therefore, worldwide finance stood at $300 trillion ($225 trillion of debt plus $75 trillion of market equity) compared to just $60 trillion ( $40 trillion of debt and $20 trillion of equity) in 1994. Needless to say, this 5X gain fueled, among other things, the greatest CapEx binge the world has ever seen.
But is was not healthy, sustainable CapEx because the underlying debt and equity which financed it – a 5X surge in listed company investment during this period – was drastically under-priced. Consequently, the world is now drowning in uneconomic, excess capacity along the entire food chain of final production – mining, bulk shipping, manufacturing, warehousing, containerships and air freight and downstream distribution.
Consequently, the collapse of iron ore mining in Australia and shale drilling in North Dakota alike denote not just traditional commodity cycles in petroleum and steel, but the arrival of what will be a long-running CapEx depression that will shrink final demand for energy and steel products for years to come.
Global Capex- Click to enlarge
The chart below purports to show a difficult outlook for iron ore prices in the next several years owing to an expected further reduction of demand, while supply is expected to grow by another 5% through 2017.
But that is wishful mainstream thinking. In fact, world shipbuilding is coming to a screeching halt; industrial infrastructure building in Brazil, Turkey and throughout the EM economies is in freefall; and China’s credit Ponzi, which generated massive overinvestment in apartment buildings, industrial production and public infrastructure,is visibly toppling.
Accordingly, global iron-ore demand is likely to plunge by 20%, not 2% as shown in the graph. Prices are therefore heading into the $20 per ton range, meaning massive bankruptcies in the industry and a multiplier effect among adjacent sectors.
WSJ
- Erdogan Says Will Resign If Oil Purchases From ISIS Proven After Putin Says Has "More Proof"
“I’ve shown photos taken from space and from aircraft which clearly demonstrate the scale of the illegal trade in oil and petroleum products,” Vladimir Putin told reporters earlier this month on the sidelines of the G-20 summit in Antalya. Putin was of course referencing Islamic State’s illicit and highly lucrative oil trade, the ins and outs of which we’ve documented extensively over the past two weeks:
- The Most Important Question About ISIS That Nobody Is Asking
- Meet The Man Who Funds ISIS: Bilal Erdogan, The Son Of Turkey’s President
- How Turkey Exports ISIS Oil To The World: The Scientific Evidence
- ISIS Oil Trade Full Frontal: “Raqqa’s Rockefellers”, Bilal Erdogan, KRG Crude, And The Israel Connection
Turkey’s move to shoot down a Russian Su-24 warplane near the Syrian border afforded the Russian President all the motivation and PR cover he needed to expose Ankara’s alleged role in the trafficking of illegal crude from Iraq and Syria and in the aftermath of last Tuesday’s “incident,” Putin lambasted Erdogan. “Oil from Islamic State is being shipped to Turkey,” Putin said while in Jordan for a meeting with King Abdullah. In case that wasn’t clear enough, Putin added this: “Islamic State gets cash by selling oil to Turkey.”
To be sure, it’s impossible to track the path ISIS oil takes from extraction to market with any degree of precision. That said, it seems that Islamic State takes advantage of the same network of smugglers, traders, and shipping companies that the KRG uses to transport Kurdish crude from Kurdistan to the Turkish port of Ceyhan. From there, the oil makes its way to Israel and other markets (depending on which story you believe) and if anyone needs to be thrown off the trail along the way, there’s a ship-to-ship transfer trick that can be executed off the coast of Malta. The maneuver allegedly makes the cargoes more difficult to track.
Some believe Erdogan’s son Bilal – who owns a marine transport company called BMZ Group – is heavily involved in the trafficking of Kurdish and ISIS crude. Most of the ships BMZ owns are Malta-flagged.
In light of the above, some have speculated that Turkey shot down the Su-24 in retaliation for Russia’s bombing campaign that recently has destroyed over 1,000 ISIS oil trucks. Here’s what Syrian Information Minister Omran al-Zoub said on Friday:
“All of the oil was delivered to a company that belongs to the son of Recep [Tayyip] Erdogan. This is why Turkey became anxious when Russia began delivering airstrikes against the IS infrastructure and destroyed more than 500 trucks with oil already. This really got on Erdogan and his company’s nerves. They’re importing not only oil, but wheat and historic artefacts as well.”
Al-Zoub isn’t alone in his suspicions. In an interview with RT, Iraqi MP and former national security adviser, Mowaffak al Rubaie – who personally led Saddam to the gallows – said ISIS is selling around $100 million of stolen crude each month in Turkey. Here are some excerpts:
“In the last eight months ISIS has managed to sell … $800 million dollars worth of oil on the black market of Turkey. This is Iraqi oil and Syrian oil, carried by trucks from Iraq, from Syria through the borders to Turkey and sold …[at] less than 50 percent of the international oil price.”
“Now this either get consumed inside, the crude is refined on Turkish territory by the Turkish refineries, and sold in the Turkish market. Or it goes to Jihan and then in the pipelines from Jihan to the Mediterranean and sold to the international market.”
“Money and dollars generated by selling Iraqi and Syrian oil on the Turkish black market is like the oxygen supply to ISIS and it’s operation,” he added. “Once you cut the oxygen then ISIS will suffocate.”
“There isn’t a shadow of a doubt that the Turkish government knows about the oil smuggling operations. The merchants, the businessmen [are buying oil] in the black market in Turkey under the noses – under the auspices if you like – of the Turkish intelligence agency and the Turkish security apparatus.”
“There are security officers who are sympathizing with ISIS in Turkey. They are allowing them to go from Istanbul to the borders and infiltrate … Syria and Iraq.”
“There is no terrorist organization which can stand alone, without a neighboring country helping it – in this case Turkey.”
That’s pretty unequivocal. But it gets better.
On Monday, Putin was back at it, saying that Russia has obtained new information that further implicates Turkey in the Islamic State oil trade. “At the moment we have received additional information confirming that that oil from the deposits controlled by Islamic State militants enters Turkish territory on industrial scale,” Putin said on the sidelines of the climate change summit in Paris. “We have traced some located on the territory of the Turkish Republic and living in regions guarded by special security services and police that have used the visa-free regime to return to our territory, where we continue to fight them.”
“We have every reason to believe that the decision to down our plane was guided by a desire to ensure security of this oil’s delivery routes to ports where they are shipped in tankers,” he added, taking it up another notch still.
As for Erdogan, well, he “can’t accept” the accusations which he calls “not moral”:
- ERDOGAN: TURKEY CAN’T ACCEPT RUSSIA CLAIMS THAT IT BUYS IS OIL
LATEST – Erdo?an: Russia’s claim that Turkey bought oil from Daesh is not ‘moral’, such claims have to be proved pic.twitter.com/PZka8MwzpL
— DAILY SABAH (@DailySabah) November 30, 2015
Hilariously, the man who just finished starting a civil war just so he could regain a few lost seats in Parliament and who would just as soon throw you in jail as look at you if he thinks you might be a threat to his government, now says he will resign if Putin (or anyone else) can present “proof”: “We are not that dishonest as to buy oil from terrorists. If it is proven that we have, in fact, done so, I will leave office. If there is any evidence, let them present it, we’ll consider [it].”
Hold your breath on that.
And so, the Turkey connection has been exposed and in dramatic fashion. Unfortunately for Ankara, Erdogan can’t arrest Vladimir Putin like he can award winning journalists and honest police officers who, like Moscow, want to see the flow of money and weapons to Sunni militants in Syria cut off.
The real question is how NATO will react now that Turkey is quickly becoming a liability. Furthermore, you can be sure that the US, Saudi Arabia, and Qatar (who are all heavily invested in the Sunni extremist cause in Syria), are getting nervous. No one wants to see this blown wide open as that would mean the Western public getting wise to the fact that it is indeed anti-ISIS coalition governments that are funding and arming not only ISIS, but also al-Nusra and every other rebel group fighting to wrest control of the country from Assad. Worse, if it gets out that the reason the US has refrained from bombing ISIS oil trucks until now is due to the fact that Ankara and Washington had an understanding when it comes to the flow of illicit crude to Cehyan, the American public may just insist on indicting “some folks.”
Remember, when it comes to criminal conspiracies, the guy who gets caught first usually ends up getting cut loose. It will be interesing to see if Erdogan starts to get the cold shoulder from Ankara’s “allies” going forward.
- Which Stocks Are Cheap?
Across 4,888 US listed stocks, only the micro-est of micro-caps remain (historically speaking) cheap… do you feel lucky?
- Fashion Company SQBG Tries To Crush Shorts, Force Squeeze After Chairman Urges Investors To Pull Borrow
Last Thursday, in a move which we had expected would happen, KaloBios new CEO Martin Shkreli gave shorts in KBIO a “thanksgiving present” when he announced he would stop lending out his 70% block of KBIO shares, thus making shorting virtually impossible and forcing a short squeeze, one which sent the stock up over 100% the next day.
It appears the idea of withdrawing one’s borrow has spread to other troubled companies, and moments ago in a very surprising statement, the Chairman of small-cap fashion company, Sequential Brands Group (SQBG), William Sweedler issued the following statement today “with respect to the recent volatility in the Company’s stock price”, by which we assume meant the 10% intraday slide in the company’s price.
“Tengram Capital Partners, as the largest shareholder of the Company, has been closely monitoring the significant decline in the Company’s stock price and associated increase in trading volume. We believe this decline in stock price and related increase in volume is being driven primarily by short sellers. The Securities and Exchange Commission only permits this activity if the short sellers have access to shares that may be borrowed to cover their positions. What you may not know is that you, as a stockholder of the Company, may be facilitating the ability of these short sellers to create these positions by permitting your shares to be borrowed.
The problem, however, is that unlike KBIO, Tengram owns a modest 16% of the company and hardly enough to cause a panic short covering burst in the stock, which according to Bloomberg has 9% of its float shorted.
As a result the Chairman had no choice but to ask every other investor in the company to do the same, and force the kind of squeeze witnessed in KBIO (and of course Volkswagen):
“Tengram has instructed its broker that it will not permit borrowing of any of its shares by short sellers who are only interested in reducing the value of the Company’s stock price for their short-term gain. We urge each of you to contact your broker today and inform them that your shares may not be made available to be borrowed by short sellers.”
In other words, the war against shorts takes on a new form, one where executives and investors are pulling borrow, making naked shorting virtually impossible, and hoping to technically trap shorts and force a short squeeze.
It remains to be seen if they will succeed, although for now the SQBG price has returned back to opening levels…
… although we are confident that as more and more companies try the “Shrekli” angle, many more squeezes among some of the most troubled public companies will become the norm, leading to even more pain for those who are short them, just as we predicted a week ago. At least until the SEC and Finra have something to say about this practice.
- How To Defeat ISIS (In 9 Simple Steps)
Having fixed the greatest threat to the world – climate change – and following the deadly Paris attacks and numerous other violent incidents perpetrated by the terror group ISIS, many governments and populations worldwide are wondering how we can eliminate this threat. Here are some strategies to defeat the Islamic State…
- Publish a long-form article detailing the challenges involved in fighting an enemy that does not value human life
- Refuse to appear terrorized by this constant, worldwide threat of violence and death
- Organize a coup, leaving the U.S. free to prop up the ISIS leader of their choice
- Spend $1.7 trillion
- Attempt to compromise with our adversary by meeting them halfway on their demand to spill the blood of all apostates
- Stop flow of new ISIS recruits from West by encouraging disaffected youth to join violent extremist groups back home
- Maybe draw them out to sea?
- Simply coordinate with our allies on a comprehensive strategy that targets ISIS militants while limiting civilian casualties, while simultaneously addressing the longstanding socioeconomic struggles that drive young Arab men to embrace radicalism, reaching out to liberal and moderate factions within Syria, and addressing our own prejudices that galvanize support for terror around the Islamic world
- Train and arm somebody else’s kids to go over there and shoot them
Sound crazy?
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