Today’s News December 25, 2015

• US National Insecurity: The Art Of Blaming Russia (For Everything)

  Submitted by Daniel Spaulding via 21stCenturyWine.com,

  In American politics the nation of Russia, especially as personified in its leader Vladimir Putin, becomes all things to all men.

  To American leftists, Russia is a neo-fascist, violently nationalist country that ruthlessly suppressed minority groups, especially homosexuals. To the American Right, Putin is the second coming of Stalin who is working to subvert good old-fashioned American values around the world.

  In line with the latter narrative, a certain Christian Gomez recently published an article on The New American website, the flagship of the John Birch Society, supposedly revealing that the Russian government is the real power behind the ISIS terrorist group, as well as being behind the recent terrorist attacks in Paris. The source of this “revelation” is a single, alleged and unidentified ‘defector’ from the FSB, Russia’s security service, who spilled these supposed secrets on Ukrainian television, a mouthpiece for the Washington-backed Kiev coup-junta that never misses an opportunity to slander all things Russian.

  Such charges are absurd on their face; there is absolutely no evidence to hint, much less demonstrate, that Russian intelligence had any involvement in the formation of ISIS. Why Russia would want to support a terrorist entity that seeks to destabilize and overthrow its close and reliable ally, Bashar Assad of Syria, is never explained or analyzed by either the faux defector or his American champions at the John Birch Society.

  Indeed, even mainstream Western media sources no longer make serious attempts to hide the fact that America’s regional allies, and not Russia, are to be identified as the sources of ISIS development and support. Countries like Saudi Arabia, Turkey, and even Israel have all played a significant role in funding, arming, and enabling ISIS, Jahbat al-Nusra, and other similar jihadist factions in Iraq and Syria.

  
  Turkey has an awfully peculiar way of “fighting” ISIS (Image: RT)

  America itself is certainly in a far better position to be plastered with the charge of supporting ISIS. According to Washington’s own Defense Intelligence Agency, the American government knew from the beginning of its support for the “Arab Spring” in Syria that the violent insurgency against Bashar Assad was composed primarily of unsavory, vicious Islamist factions, including the Muslim Brotherhood and Al-Qaeda sympathizers, and even predicted these factions, if empowered, would seek to create a Salafist “principality.”

  Meanwhile, Russian president Vladimir Putin has been stalwart in his support for Bashar Assad, recently going as far to providing air cover to the Syrian military as it seeks to reclaim the country from ISIS and other terrorist brigades. An undertaking that has earned Putin even more irrational hatred from the Western media and political establishment, which cheers on jihadists as they pillage and plunder their way through Syria.

  So where did this preposterous charge against Russia originate? The faux defector that would smear Russia with responsibility for ISIS is obviously a pawn of Langley’s Ukrainian satraps, but his absurd conspiracy theory still finds fans in the West, especially among so-called American conservatives and ‘patriots’, since it fits in with a much older narrative, one stretching back to the Cold War.

  During the height of the Cold War, figures like W. Cleon Skousen, a former FBI agent and an associate of the John Birch Society, and the opportunistic Soviet KGB defector Anatoly Golitsyn propagated the narrative that the Soviet Union was not merely a geopolitical rival of the United States, but was fantastically successful in its quest to undermine American democracy and replace it with a communist society. Golitsyn and Cleon Skousen’s nephew, Joel Skousen, have gone as far as to claim the collapse of the Soviet Union was a clever ruse designed to lull America and the West into a false sense of security so that the “communist agenda” might continue, with no one the wiser.

  Coincidentally, this non-falsifiable conspiracy theory plays well to more fringe elements of the American “patriot” movement and many Christian dispensationalists, who see Russia as the Biblical ‘Gog and Magog’ set to devour their idol, the State of Israel. It also provides a convenient scapegoat for American conservatives who are unable or unwilling to see the real culprits behind the social chaos in their country – and that their country is the prime source of both geopolitical and cultural subversion abroad.

  Communist influence on American society and culture during the era of the Cold War shouldn’t be wholly discounted. In fact, the neo-Marxist Frankfurt School certainly left its mark, though often exaggerated, on the deconstruction of traditional institutions in the West. But often overlooked by anti-communist conspiracy theorists is the reality that cultural Bolsheviks like Herbert Marcuse and Theodor Adorno didn’t receive their marching orders from Moscow, a power which they disdained, but rather were assets of Western elites and their intelligence apparatus, particularly the U.S. Office of Strategic Services (OSS), the forerunner of the CIA. Nor did Bolshevism in the first part of the 20th century spawn indigenously from Russian soil, like Athena from the head of Zeus. Rather, the dictatorship of the proletariat was helped along in its ascendancy by oligarchs in New York and London.

  
  PROPAGANDA’S ROLE REVERSAL: “It’s only feigned reverence, obviously Neo-Soviet propaganda.”

  Furthermore, its impossible to find any evidence that Russia exerts any significant social, economic, or political influence on America, or is working toward turning America into the “socialist workers’ paradise”. On the contrary, whatever minor outreach that Russians have extended to America has actually been toward Christian conservatives wishing to preserve the traditional family and other social values.

  While neoconservatives and their useful idiots among the American “patriots” cynically dismiss President Putin as a Soviet retrograde and Tom Clancy villain, the Kremlin implements communist policies neither at home, nor abroad. On the other hand, Russian Orthodoxy has returned slowly but surely as a central part of Russian life, and Russian patriotism has no need for Marxist rhetoric about workers’ revolutions or the dictatorship of the proletariat.

  Instead of tired, CIA-fueled Cold War narratives and covers for liberal imperialism, perhaps sincere conservatives and ‘patriots’ in America should look to the Soviet dissident, Russian patriot, and devout Christian, Alexander Solzhenitsyn, a man far wiser than any ‘FSB defector’. Solzhenitsyn saw a positive, stabilizing role in Putin’s leadership as Russian culture and identity revived, and it was Solzhenitsyn who also saw that the “Euro-Atlantic alliance” was the engine of the “decline of Christian civilization.” Meanwhile, the West sinks further into its simulacrum Babylon, and its spiritually blind “defenders” will blame anyone but themselves.

  

  

  

  

  

• Exclusive: "And It's Gone… It's All Gone" – The One Gold Scandal That Goes To The Very Top

  Long before Turkey was flagrantly arming and funding the CIA-created “terrorist organization” known as ISIS, there was another, far more elaborate way in which Turkey was flaunting international sanctions against an ostracized state – in this case Iran – which involved an epic gold smuggling triangle of Hollywood-thriller proportions, all made possible thanks to the United Arab Emirate city of Dubai.

  Best known known for its luxury shopping, ultramodern architecture including the world’s tallest building, a lively nightlife scene, and a facade of openness and decorum, what Dubai is less known for is its unprecedented seedy underbelly of corruption and untouched criminality among the handful of billionaire oligarchs, princes, sheiks and sultans, who quietly dominate the local (and global) power and financial structure.

  But first, a little history.

  It may seem like a distant memory now, but just a few short years ago, instead of a close ally of Barack Obama, Iran was a pariah state subject to international financial sanctions due to its nuclear program development, one which Israel had repeatedly (and famously) threatened would attack preemptively to prevent Iran from obtaining a nuclear weapon.

  Iran, of course, had no choice but to find ways to keep its economy going, and in order to circumvent these sanctions, it resorted to the oldest form of trade known to man: gold.

  This, in itself, is not surprising. What is surprising is how and with whom Iran collaborated to breach the international embargo in order to obtain this valuable and much needed gold, which it could then barter with other countries – notably those along the Pacific Rim – in exchange for any and all needed products and services.

  A Reuters article from October 23, 2012 explained, in broad terms, just how Iran’s intricate smuggling operation worked.

  To see one of Iran’s financial lifelines at work, pay a visit to Istanbul’s Ataturk International Airport and find a gate for a flight to Dubai. Couriers carrying millions of dollars worth of gold bullion in their luggage have been flying from Istanbul to Dubai, where the gold is shipped on to Iran, according to industry sources with knowledge of the business.

   

  The sums involved are enormous. Official Turkish trade data suggests nearly $2 billion worth of gold was sent to Dubai on behalf of Iranian buyers in August. The shipments help Tehran manage its finances in the face of Western financial sanctions.

   

  The sanctions, imposed over Iran’s disputed nuclear program, have largely frozen it out of the global banking system, making it hard for it to conduct international money transfers. By using physical gold, Iran can continue to move its wealth across borders.

   

  “Every currency in the world has an identity, but gold means value without identity. The value is absolute wherever you go,” said a trader in Dubai with knowledge of the gold trade between Turkey and Iran.

   

  The identity of the ultimate destination of the gold in Iran is not known. But the scale of the operation through Dubai and its sudden growth suggest the Iranian government plays a role.

   

  The Dubai trader and other sources familiar with the business spoke to Reuters on condition of anonymity, because of the political and commercial sensitivity of the matter.

   

  Iran sells oil and gas to Turkey, with payments made to state Iranian institutions. U.S. and European banking sanctions ban payments in U.S. dollars or euros so Iran gets paid in Turkish lira. Lira are of limited value for buying goods on international markets but ideal for a gold buying spree in Turkey.

  So three years ago, Turkey was purchasing Iran oil and paying in gold. Now it is purchasing ISIS oil and paying in dollars, for the simple reason that there is no banking embargo against the Islamic State like there was against Iran in 2012. One almost wonders why the international community was far stricter with Iran than it is with ISIS now.

  Anyway, continuing on, we present: the Dubai connection.

  In March [of 2012] as the banking sanctions began to bite, Tehran sharply increased its purchases of gold bullion from Turkey, according to the Turkish government’s trade data. Direct gold exports to Iran from Turkey, long a major consumer and stockpiler of gold, hit $1.8 billion in July – equivalent to over a fifth of Turkey’s entire trade deficit in that month.

   

  In August, however, a sudden plunge in Turkey’s direct gold exports to Iran coincided with a leap in its sales of the precious metal to the UAE.

   

  Turkey exported a total $2.3 billion worth of gold in August, of which $2.1 billion was gold bullion. Just over $1.9 billion, about 36 metric tons, was sent to the UAE, latest available data from Turkey’s Statistics Office shows. In July Turkey exported only $7 million of gold to the UAE. At the same time Turkey’s direct gold exports to Iran, which had been fluctuating between $1.2 billion and about $1.8 billion each month since April, slumped to just $180 million in August.

   

  The Dubai-based trader said that from August, direct shipments to Iran were largely replaced by indirect ones through Dubai, apparently because Tehran wanted to avoid publicity.

   

  “The trade from Turkey directly to Iran has stopped because there was just too much publicity around it,” said the trader.

  However, instead of suddenly having a craving for Turkish gold, Dubai was merely a middleman which would then resell Turkey’s gold to Iran, in exchange for a very generous commission.

  Dealers, jewelers and analysts in Dubai said they had not noticed any large, sudden increase of supply in the local gold market during August. They said that suggested the increased shipments to the UAE were sent straight on to Iran.

   

  It is not clear how the gold is moved from Dubai to Iran, but there is substantial trade between the two economies, much of it conducted by wooden dhows and other ships crossing the Gulf, a distance of only about 150 kilometers (100 miles) at its narrowest point.

  And as everyone knows, what better way to “lose” gold at a moment’s notice than to be involved in an “unfortunate shipping accident”…

  A trader in Turkey said Tehran had shifted to indirect imports because the direct shipments were widely reported in Turkish and international media earlier this year. “Now on paper it looks like the gold is going to Dubai, not to Iran,” he said.

   

  Iranian gold buyers may want to conceal their Turkish gold deliveries for fear of attracting attention from the United States, which is pressing countries around the world to shrink their economic ties with Iran.

   

  The buyers may also want to make their purchases less vulnerable to any possible interference by Turkey’s government. Turkey’s close relationship with Iran has begun to sour as the two states find themselves on opposite sides of the civil war in Syria, with Turkey advocating the departure of President Bashar al-Assad and Iran remaining Assad’s staunchest regional ally.

  Fear not: if the Erdogan family was guaranteed, say 5% of the total transaction price, it would gladly close its eyes, even if it meant the Ayatollah singing lullabies and war chants to Assad in his bedroom.

  But why gold?

  Simple: while Iran’s banks had been locked out of SWIFT international money transfer system (until mid-2015 when Obama’s historic nuclear deal with Iran was announced and let Iran back into the global financial community), and commerce was virtually impossible in fiat currency terms, the UN sanctions did not prohibit most forms of trade. As a result there was no suggestion that the gold trade involving Dubai was violating international sanctions. In fact, the west tacitly encouraged, and Turkey latched on to this great source of trade arbitrage, and unbridled corruption with both hands. Reuters continued:

  Turkish trade data confirms the gold is being transported to Dubai by air. According to the data, $1.45 billion of Turkey’s total gold exports in August [2012] were shipped through the customs office at Ataturk airport’s passenger lounge. Almost all of the rest, $800 million, were shipped from Istanbul’s smaller Sabiha Gokcen airport.  Turkey’s total exports of all goods to the UAE totaled $2.2 billion in August. Of that amount, $1.19 billion were registered at the Ataturk passenger lounge, while $776 million were registered at Sabiha Gokcen.

  It was a golden free for all: “a customs broker who does business at Ataturk said couriers were boarding Turkish Airlines and Emirates flights to Dubai at the airport, carrying the metal in their hand luggage to avoid the risk of it getting lost or stolen.”

  The maximum amount of gold bullion which a passenger is allowed to take is 50 kilograms (110 pounds), he said. This suggests that during the month of August, as many as several hundred courier trips may have taken gold to Dubai on Iran’s behalf.

   

  “It is all legal, they declare it, they give their tax number and it is all registered so there is nothing illegal about this,” the broker said.

  The Reuters article cut off at the most important part: who were the people organizing the trade? “The trade data shows almost $1.4 billion worth of Turkey’s August exports to the UAE came from a company or companies with a tax number registered in the coastal city of Izmir, Turkey’s third biggest. Customs officials at Ataturk declined a Reuters request to provide documents identifying the exporters, saying the information was confidential. The identity of the companies handling the business could not be confirmed. Traders said that because of the risk of attracting unwelcome attention from U.S. authorities, only a few companies were likely to be willing to get involved.”

  Almost a year later, we found out just why the local authorities were so very cautious about identifying the people on the Turkish side behind this “perfectly legal trade”- it involved everyone from an Iranian billionaire, Riza Sarraf, to Turkey’s then economy minister, Zafer Caglayan, all the way to the very top, you guessed it, current president and then prime minister, Recep Tayyip Erdogan. A Bloomberg follow up piece from the summer of 2013 laid out all the key actors on the Turkish side:

  As the minister in charge of Turkey’s $800 billion economy in 2013, Zafer Caglayan was facing a series of numbers that didn’t bode well for coming elections. Inflation was up, growth was slowing and the lira was weakening.

   

  One key measure of financial health was particularly worrisome: the country was importing far more goods, services and capital than it was sending abroad. By October, when he was interviewed by a local CNBC affiliate, Caglayan described the gap as unsustainable and said the government would take steps to improve it.

   

  What he didn’t mention was a clandestine export-boosting operation started up more than a year before that was helping to solve the trade imbalance.

   

  At the time of the television appearance, it was still underway. Three weeks before, Caglayan had been secretly taped by national-police investigators telling his collaborators to find a way to increase exports by at least $1 billion a month. His orders came from the top in a two-hour meeting with Prime Minister Recep Tayyip Erdogan, he told an associate.

   

  The operation featured an Iranian-born businessman who liked fast horses, faster cars and the fastest planes. His unique skill: Getting gold into sanctions-encircled Iran. Enough gold that for a time he became the government’s key instrument in improving Turkey’s irksome economic imbalance.

   

  How a team that included Turkey’s economy minister sought to manage the current account deficit, as the gap is called, by juicing exports to Iran is laid out in a 300-page document prepared by Turkish investigators in 2013. Caglayan and his collaborators also came away with tens of millions of dollars in bribes, according to the document, which has been cited in parliament by opposition lawmakers.

  Caglayan resigned on Dec. 25 as economy minister after the investigation became public, is immune from prosecution as a member of parliament. Erdogan, whose bribes from this operations were in the hundreds of millions of dollars, did everything in his power as then-prime minister to kill the probe and decried the inquiry as an “attempted coup”, a card he has pulled every single time some political probe gets too close to his unprecedented financial crimes, which have a recurring pattern: sell goods and services to an organization isolated by the international community, and pocket tens or hundreds of millions in “commissions” and bribes in the process.

  Since then Erdogan has made Turkey his personal despotic fiefdom, and after serving as prime minister from 2003 to 2014, he was “elected” president in which role he serves to this day. There is not a soul in Turkey who poses any political threat to Erdogan, whose vast plundered financial fortune assures that the army would be on his side even in a military coup scenario.

  In any case, the spice, or rather gold, flowed. As Bloomberg confirmed in 2013, “the covert efforts that Caglayan and his associates undertook eventually swelled to a multi-billion dollar enterprise that reached from Ghana to China, according to the investigation. Tons of gold flowed from Turkey to Iran, much of it via Dubai. That freed up Iranian money trapped in Turkish banks, in turn boosting Turkish exports.

  When the gold trade was foiled by tightening American sanctions starting in July 2013, Sarraf and his collaborators kept exporting. They sent thousands of tons of overpriced — and sometimes fictitious — food onto ships steaming between Dubai and Iran, according to the document.”

  It was not just Erdogan and Caglayan who made a killing: “Smoothing out the complications of this shadowy and complex trade were bribes to Turkish government ministers: multimillion-dollar diamonds, and millions of dollars stuffed into suit bags, chocolate boxes and even shoe boxes, the investigation document says.”

  Meanwhile, the amounts of gold shipped from Turkey to Iran via Dubai were simply staggering:

  In an interview with television channel A Haber, Sarraf estimated he had facilitated the transfer of about $12 billion in gold — about 200 tons — to Iran. That represented “about 15 percent-15.5 percent of the current account deficit that I closed by myself,” he said. He didn’t say what period he was referencing.

   

  “There’s a serious benefit to the Turkish economy with profit that’s gone into state coffers,” he told the interviewer.

  Ultimately, this unprecedented in its vast scale and scope gold smuggling operation, which stretched as far as China, Moscow and Azerbaijan, faded: in July 2013 the U.S. added precious metals to the list of items that couldn’t be sold to Iran as part of an effort to curtail that country’s nuclear enrichment program.

  At that moment that Iran gold smuggling party for Turkey was over, and it was time to find a new foreign “trade” partner. A year later one emerged in the form of ISIS as has been documented here previously…

  * * *

  All of this has been publicly known so far. What follows is being reported for the first time.

  While in 2012 and 2013 the world’s attention was focused on Iran and Turkey, with both Reuters and Bloomberg scrambling to find the involved parties, nobody paid any attention to the key middle-man responsible for billions in smuggled gold, Dubai. And while the main Turkish actors and beneficiaries of this gold smuggling have been extensively documented, nothing at all has been written about any of the Dubai intermediaries who also made hundreds of millions, if not more, simply for facilitating the move of gold from point A to point B.

  Which is strange, because for anyone doing even a little cursory digging, the answer was there in broad daylight all along.

  Presenting Mohammed Abu-Alhaj: the key Dubai “connection” in the Turkey-Iran gold smuggling triangle.

  

   

  Who is Abu-Alhaj? A brief biography from his public profile:

  Mohammad has many years of vast experience in the finance and financial technology industry. He began his career establishing an e-commerce business in the United States followed by another e-commerce of a different trade. He then moved on to Dubai in the early 2000s to establish a brokerage firm. Following its success he was a major shareholder in its subsidiaries across the MENA region.

   

  Meanwhile he has set-up, directed and operated many entities in the online trading of financial products, and now gold and precious metals. Mohammad is very resourceful and possesses many highly qualified skills; he has developed innovative platforms for online trading, effective management and leading skills and he is thorough in analyzing problems and finding creative solutions.

   

  Mohammad’s latest accomplishment is the set-up of the Gold AE DMCC and its subsidiaries across the region, Switzerland and Africa, one of the first online trading entities for deliverable gold and silver, and Islamic dinars and dirhams in the United Arab Emirates.

   

  Presently, Mohammad is the Founder, Chairman and Managing Director of Gold AE. He is also the deputy Chairman and a board member of Abu Alhaj Holdings, registered in the Dubai International Financial Centre.

  What made Abu-Alhaj unique was his early fascination and interest in Turkey and its role in “physical deliverable gold” trading. A fascination which paid off in droves. Follow excerpts from article from Turkish newspaper Dunya…

  

  … ironically written on October 23, 2012, the same day as Reuters first exposed Turkey’s role in this epic gold smuggling triangle.

  Dubai businessmen connects Gulf investors with Turkey

   

  Mohammed Abu-Alhaj, vice chairman and chief executive officer of his Dubai-based family-owned Abu-Alhaj Holding, first visited Turkey as a tourist in 2004, and explored the economic possibilities of the country.

   

  “I saw stability had started to take hold in the nation. Turkey was a highly productive country. I was certain it would become among the top emerging markets for years to come,” the 40-year old businessmen reminisced in an interview in Istanbul on Saturday.

   

  Soon he acquired a Turkish brokerage house, Ikrisat Yatirim, through the Savings Deposits Insurance Fund (TMSF), a state banking receivership fund, for S15 million, and became one of the first Arab Investors in Turkey.

   

  In 2009, he sold the brokerage house to Dubai Holding. He then established in Istanbul’s Atasehir financial district the company Altin 24.com, an on-line gold trading company. Altin 24 serves as the Istanbul office of his regional gold commerce company Gold.AE. He also founded a store in Istanbul’s Covered Bazaar, the main gold and jewelry market of Turkey. Altin 24 provides full services in gold bullion and certificates trading for Turkish clients.

   

  Although he employs only nine persons in Turkey, his Altin 24 has already carried out $700 million in gold trading in the country.

   

  Istanbul and Dubai are the world’s two biggest centers for gold trade.

   

  Acting as bridge

   

  “I started to believe I could be a bridge between the Arab world, especially the six nation Gulf Cooperation Countries (GCC), and the Turkish market,” he said. “I resolved to help remove the obstacles preventing GCC oompanies from investing in the country.”

   

  He has been successful so far.

   

  Although once shy of secular Turkey, Arab investment has been pouring into Turkey since Prime Minister Recep Tayyip Erdogan’s moderately Islamist Justice and Development Party came to power a decade ago.

   

  * * *

   

  Mr. Abu-Alhaj’s father found Abu-Alhaj holding as a logistics company and then went into industry. The group, which he still runs with his five sons, now has investments in technical textiles, pharmaceuticals, agribusiness, real estate development, investment banking and tourism in seven nations: Dubai, Jordan, Kuwait, Saudi Arabia, Switzerland, Yemen and Turkey.

   

  A graduate of computer science and information technologies from Concordia University in Montreal, Quebec, Canada, he worked on Wall Street during the dot.com bubble that led to the collapse of hundreds of technology upstarts. He returned to his homeland to run the family business.

   

  Mr. Abu-Allhaj believes that the decision of Turkey’s Central Bank to allow depositors and banks to hold gold accounts has helped the country distance itself from the economic crises gripping the world.

   

  “Gold accounts will save the country from the crisis in international markets that will happen for sure” he asserted.

  He may be right about that, but it is everything else that has raised a red flag. Incidentally, those curious can read much more about Abu-Alhaj’s push into Turkey’s gold market in the Press section of his Gold.AE website.

  But just who is Gold Arab Emirate, or Gold AE, based out of Dubai? We ask because we – like most of our readers – had never heard of this company before. Perhaps the company’s biggest claim to fame was the first gold ATM it introduced in the Emirates back in 2010, to much media fanfare.

  

   

  Ok, so they make gold ATMs. What else? For the answer we go straight to the company’s website.

  Gold AE, Like Your Gold Bank

   

  Gold Arab Emirate, Gold AE is the first corporate entity in Middle East incorporated in Dubai – UAE, for E-Commerce of Gold & Silver bullion being its core commercial activity. Gold AE is conducting its operations under the commercial license # DMCC 30821, issued by Dubai Multi Commodities Centre (DMCC). DMCC is a Dubai Government’s initiative to monitor and facilitate the trading in precious metals.

   

  In addition to its presence in Dubai, it has branches in Abu Dhabi (UAE), Jordan, Turkey, Switzerland and affiliations in Qatar, Saudi Arabia and Egypt.

   

  Gold AE is led by an experienced team of seasoned bullion professionals which gives it a competitive advantage over contemporary firms in the market and gaining a remarkable reputation as an emerging market participant in the gold markets of the gulf. We are proud to provide investor friendly schemes in bullion investments through our highly valuable trading platform apart from providing international brands in bullion products on our E-shop at comparatively low cost.

   

  Gold AE is a subsidiary of M/s Gold Holding Ltd, a Dubai International Financial Centre (DIFC) based company. M/s Gold Holding Ltd. owns various trading entities involved in online bullion trading of physical gold and silver, gold mining and refining industries as well as entities serving the financial institutions for gold logistics. The Holding company professionally supports its subsidiaries with financing, operational business management and controlling activities. This includes market sectors such as gold industry, information technology, as well as financial investments.

  Notable is the website’s description of its executive management, which presents Abu-Alhaj as Chairman and Managing Director. Keep that in mind because it will be important shortly.

  

   

  But even more important, is the company’s description of itself as a subsidiary of Gold Holding Ltd. Who is Gold Holdings? Again, we go to the source:

  Gold Holding Limited is an investment holding company headquartered in Dubai and registered under the laws and regulations of the Dubai International Financial Centre. Gold Holding is a thriving group that is constantly seeking new companies to join its growing portfolio of precious metal and mining companies. It does however have stringent ethical values that mean its procurement methods are always of the highest moral standards and it is highly selective in where it chooses to operate.

  Basically, if Gold AE is the Turkey-focused trading front, Gold Holding is the mothership which deals with all major activities behind the scenes. This becomes immediately obvious when looking at the main shareholders and management team of the Holding company.

  Main Shareholders:

   

  – SBK Business Holding www.sbkholding.com
  – Sheik Sultan BIn Khalifa bin sultan Al-nahyan (Chairman)
  – Sheik Malek Hmood Alsabah (Vice Chairman)
  – Abu-alhaj Holding
  – Aruntani Sac

  Management:

   

  – Chairman: Sheik Sultan bin khalifah Al nahyan
  – Vice Chairman: Sheik Malek Hmood Alsabah
  – Managing Director: Mo Nico Consari
  – CEO: Andre Gauthier
  – CFO: Fahad Ayoob

  Please bear with us a few more minutes as we close all these semingly unconnected loops of ownership, because while most other names presented so far are largely meaningless, one name above stands out, that of Sheikh Sultan Bin Khalifa Bin Zayed Al Nahyan.

  Sultan is the advisor to the President of UAE, the eldest son of Khalifa Bin, President of the United Arab Emirates, Supreme Commander of the UAE Armed Forces, and Ruler of Abu Dhabi.

  Sultan was promoted to the rank of lieutenant colonel staff pilot in 1999 and then to the rank of colonel staff in February, 2000. He is the advisor to the president of the UAE, Khalifa bin Zayed, and the board chairman of the SBK Holding. He is among the board members of the Executive Council of Abu Dhabi. He was appointed the board member of the Abu Dhabi Investment Authority for three years in April 2013.
  

  
  

  Basically, Sultan is the second in command in the United Arab Emirates.
  

  As for SBK Holding, it is the Holding Company of Sultan Bin Khalifa. “With its headquarters in the United Arab Emirates, SBK Holding has a range of companies that serve a broad cross-section of industries not only in the Gulf region but also globally.”

  A quick glance at the company’s website shows that it is involved in virtually everything, and among the things it is involved in, is a vast gold trading empire courtesy of the Gold Holding company.

  * * *

  To recap the story so far:

  • Mohammed Abu-Alhaj is the owner of Gold.AE, a gold trading operation, whose primary role has been facilitating gold trade in Turkey (and ostensibly, since it is the primary Dubai gold company involved in Turkey, was the dominant player in Turkey’s smuggling of gold to Iran).
  • Gold.AE is a subsidiary of Gold Holdings Ltd, a company which is owned by SBK Business Holdings and Abu Dhabi’s second in command, the son and avisor to the ruler of Abu Dhabi, Sheik Sultan bin khalifah Al nahyan

  All of this brings us to today, and the following letter which the suddenly very unfortunate clients of Gold.AE aka “Your Gold Bank“, just received.

  Dear Client

   

  A group of minority shareholders of GOLD HOLDING suspected that there were questionable financial transactions being undertaken in Gold AE DMCC (“the Company”). Acting on these suspicions they initiated internal investigations. During the course of the investigations the entire then management team abruptly resigned with no notice. Since the majority shareholders also seemed to be unavailable, the minority shareholders did not accept this resignation. However, these persons went to DMCC, submitted their resignations and managed to get their visas cancelled.

   

  Following this, in august 2015, Mr. Andre Gauthier has been appointed as the manager of the Company so that investigations continued and once completed necessary action can be taken to secure the interests of the clients and shareholders of the company. His appointment took effect from August 9 ,2015 . When he took over, new management realized that he now had access to more information concerning the activities of the previous management and, he realized that there had been substantial withdrawals from the company’s account to the personal accounts of some of the management and the majority shareholders.

   

  Management has also uncovered information with respect to the existence of a bank account with Arab Bank (Switzerland) Ltd in Switzerland in the name of the Company. An attempt has been made to approach this bank but, since none of the current management or minority shareholders are signatories to the account and, due to the stringent Swiss banking laws and regulations regarding confidentiality, no additional information or access has been provided by the bank.

   

  In order to try and secure/recover monies that had been taken out of the accounts of the company, Mr. Gauthier in his capacity as manager has filed various cases as against the recipients of the funds from the Company (Dubai Police ( Bur Dubai Police Station), Case No: 24378). The minority shareholders are doing everything within their powers to support him in his efforts to recover these monies that were withdrawn from Gold AE in questionable circumstances.

   

  DMCC has alleged that some of these activities undertaken by the previous management are in breach of DMCC’s rules and as such they have taken the decision to terminate the license of the Company. We are working closely with DMCC to find a solution and in the meanwhile, we request that you bear with us. In the meanwhile, as a statutory consequence of the license being terminated, the trading platform of the Company has to shut down as of the date of termination of the license which is 24th November 2015.

   

  We trust the forgoing is of assistance.

   

  Sincerely,

   

  On behalf of GOLD AE MANAGEMENT

  To loosely paraphrase South Park “aaaannd it’s gone. The gold is all gone.“

  For all those who just received the letter, and had funds at Gold.AE, our condolences, because if there is any confusion, what it says is that after a cursory inquiry into the operations of the “former” management team, the one led by Abu-Alhaj, not only did the “management team” vaporize with all the funds held in the trading group, but they “seemed to be unavailable”, meaning the management team itself vaporized. It also means that any funds you may have had there are gone for ever.

  Furthermore, since the letter explicitly highlights the “minority shareholders”, one wonders: was Sheik Sultan bin khalifah Al nahyan, the second most important person in Abu Dhabi, and a majority shareholder, involved in this unprecedented raiding of a company that was instrumental in the Turkey-to-Iran gold smuggling campaign?

  And if he wasn’t directly involved, just how much about this company’s gold-smuggling operations did he know?

  But perhaps the money is not completely vaporized. Perhaps it is simply sitting in the following Swiss bank as per the letter:

  

   

  Then again, we doubt that any money parked by the fraudulent management team of Gold AE will ever be uncovered, if only in the public realm: after all, the tentacles of this particular scandal stretch very far, so far that anyone who dares to talk will not live to say much more.

  How far?

  Let’s summarize once again: a gold-smuggling scandal that took place under the nose of the US and the international community for years, one which allowed Iran to skirt international sanctions using gold as a barter tool to keep its economy going and involved China and Russia among many other nations, and one which saw the participation of not only the economic and prime ministers of Turkey (and current president) but also countless corrupt Turkish politicians and the richest person in Iran, but also the second most powerful person in Dubai, the largest holding company in the Arab Emirates and the largest gold holding company in the Gulf state.

  A scandal which resulted in untold riches for everyone involved, and has also resulted in the Dubai management team disappearing with what may well be billions in stolen funds.

  And, naturally, there is a token “anonymous” Swiss bank to boot, which is likely the resting place of said stolen billions.

  All of this it is real, it happened, and is not the screenplay of the next James Bond movie.

  And – the punchline – it all revolves around one of the simplest products known to man: gold.

  

  

  

  

  

• The Fed Has Created A "Monster" And Just Made A "Dangerous Mistake," Stephen Roach Warns

  Stephen Roach is worried that the Fed has set the world up for another financial market meltdown. 

  Lower for longer rates and the proliferation of unconventional monetary policy have created “a breeding ground for asset bubbles, credit bubbles, and all-too frequent crises, so the Fed is really a part of the problem of financial instability rather than trying to provide a sense of calm in an otherwise unstable world,” Roach told Bloomberg TV in an interview conducted a little over a week ago. 

  To be sure, Roach’s sentiments have become par for the proverbial course. That is, it may have taken everyone a while (as in five years or so) to come to the conclusion we reached long ago, namely that central banks are setting the world up for a crisis that will make 2008 look like a walk in the park, but most of the “very serious” people are now getting concerned. Take BofAML for instance, who, in a note we outlined on Wednesday, demonstrated the prevailing dynamic with the following useful graphic:

  

  Perhaps Jeremy Grantham put it best: “..in the Greenspan/ Bernanke/Yellen Era, the Fed historically did not stop its asset price pushing until fully- fledged bubbles had occurred, as they did in U.S. growth stocks in 2000 and in U.S. housing in 2006.”

  Indeed. It’s with that in mind that we bring you the following excerpts from a new piece by Roach in which the former Morgan Stanley chief economist and Yale fellow recounts the evolution of the Fed and how the FOMC ultimately became “beholden to the monster it had created”.

  *  *  *

  From “The Perils of Fed Gradualism” as posted at Project Syndicate

  By now, it’s an all-too-familiar drill. After an extended period of extraordinary monetary accommodation, the US Federal Reserve has begun the long march back to normalization.

  A majority of financial market participants applaud this strategy. In fact, it is a dangerous mistake. The Fed is borrowing a page from the script of its last normalization campaign – the incremental rate hikes of 2004-2006 that followed the extraordinary accommodation of 2001-2003. Just as that earlier gradualism set the stage for a devastating financial crisis and a horrific recession in 2008-2009, there is mounting risk of yet another accident on what promises to be an even longer road to normalization.

  The problem arises because the Fed, like other major central banks, has now become a creature of financial markets rather than a steward of the real economy. This transformation has been under way since the late 1980s, when monetary discipline broke the back of inflation and the Fed was faced with new challenges.

  The challenges of the post-inflation era came to a head during Alan Greenspan’s 18-and-a-half-year tenure as Fed Chair. The stock-market crash of October 19, 1987 – occurring only 69 days after Greenspan had been sworn in – provided a hint of what was to come. In response to a one-day 23% plunge in US equity prices, the Fed moved aggressively to support the brokerage system and purchase government securities.

  In retrospect, this was the template for what became known as the “Greenspan put” – massive Fed liquidity injections aimed at stemming financial-market disruptions in the aftermath of a crisis. As the markets were battered repeatedly in the years to follow – from the savings-and-loan crisis (late 1980s) and the Gulf War (1990-1991) to the Asian Financial Crisis (1997-1998) and terrorist attacks (September 11, 2001) – the Greenspan put became an essential element of the Fed’s market-driven tactics.

  The Fed had, in effect, become beholden to the monster it had created. The corollary was that it had also become steadfast in protecting the financial-market-based underpinnings of the US economy.

  Largely for that reason, and fearful of “Japan Syndrome” in the aftermath of the collapse of the US equity bubble, the Fed remained overly accommodative during the 2003-2006 period. The federal funds rate was held at a 46-year low of 1% through June 2004, before being raised 17 times in small increments of 25 basis points per move over the two-year period from mid-2004 to mid-2006. Yet it was precisely during this period of gradual normalization and prolonged accommodation that unbridled risk-taking sowed the seeds of the Great Crisis that was soon to come.

  Today’s Fed inherits the deeply entrenched moral hazard of the Asset Economy. The longer the Fed remains trapped in this mindset, the tougher its dilemma becomes – and the greater the systemic risks in financial markets and the asset-dependent US economy.

  Full post here

  *  *  *

  Roach goes on to say that we’re already seeing the beginnings of what may very well turn out to be a dramatic unwind as high yield rolls over and the emerging world struggles to cope with a soaring dollar (remember, even though EM has largely avoided “original sin” i.e. borrowing in dollars, at the sovereign level, corporates are another story). 

  As an aside, those interested in a comprehensive account of what Roach covers in the article cited above are encouraged to reach David Stockman’s “The Great Deformation.”

  

  

  

  

  

• Why 'The Regime' Hates Gold

  Submitted by Doug Casey via InternationalMan.com,

  A meme is now circulating that gold is the investment equivalent of a pet rock, and that the smart investor should sell gold, and buy stocks. That’s a ridiculous notion. In fact, if you believe in buying low and selling high, this is the time to buy gold, and sell stocks.

  It pays to remain as objective as you can be when analyzing any investment. People have a tendency to fall in love with an asset class, usually because it’s treated them so well. We saw that happen most recently with Internet stocks in the late ’90s and with houses up to 2007. Investment bubbles are driven primarily by emotion, although there’s always some rationale for the emotion to latch on to. Perversely, when it comes to investing, reason is recruited mainly to provide cover for passion and preconception.

  In the same way, people tend to hate certain investments unreasonably, usually at the bottom of a bear market, after they’ve lost a lot of money; even thinking about the asset means reliving the pain and loss. Love-and-hate cycles occur for all investment classes.

  But there’s only one investment I can think of that many people either love or hate reflexively, almost without regard to market performance: gold. And, to a lesser degree, silver. It’s strange that these two metals provoke such powerful psychological reactions – especially among people who dislike them. Nobody has an instinctive hatred of iron, copper, aluminum, or cobalt. The reason, of course, is that the main use of gold has always been as money. And people have strong feelings about money. Let’s spend a moment looking at how gold’s fundamentals fit in with the psychology of the current market.

  What Gold Is – and Why It’s Hated

  Let me first disclose that I’ve always been favorably inclined toward gold, simply because I think money is a good thing. Not everyone feels that way, however. Some, with a Platonic view, think that money and commercial activity in general are degrading and beneath the “better” sort of people – although they’re a little hazy about how mankind rose above the level of living hand-to-mouth, grubbing for roots and berries. Some think it’s “the root of all evil,” a view that reflects a certain attitude toward the material world in general. Some better-informed people (who have actually read Paul of Tarsus) think it’s just the love of money that’s the root of all evil. Some others see the utility of money, but think it should be controlled somehow – as if only the proper authorities know how to manage the dangerous substance.

  From an economic viewpoint, however, money is just a medium of exchange and a store of value. Efforts to turn it into a political football invariably are signs of a hidden agenda, or perhaps a psychological aberration.

  But, that said, money does have a moral as well as an economic significance. And it’s important to get that out in the open and have it understood. My view is that money is a high moral good. It represents all the good things you hope to have, do, and provide in the future. In a manner of speaking, it’s distilled life. That’s why it’s important to have a sound money, one that isn’t subject to political manipulation.

  Over the centuries, many things have been used as money, prominently including cows, salt, and seashells. Aristotle thought about this in the 4th century BCE and arrived at the five characteristics of a good money:

  • It should be durable (which is why, say, wheat isn’t a good money – it rots).

  • It should be divisible (which is why artwork isn’t a good money – you can’t cut up the Mona Lisa for change).

  • It should be convenient (which is why lead isn’t a good money – it just takes too much to be of value).

  • It should be consistent (which is one reason why land can’t be money – each piece is different).

  • And it should have value in itself (which is why paper money leads to trouble).

  Of the 92 naturally occurring elements, gold has proved the best money (silver is second). It’s not magic or superstition any more than it is for iron to be best for building bridges and aluminum for building airplanes.

  Of course, we do use paper as money today, but only because it recently served as a receipt for actual money. Paper money (currency) historically has a half-life that depends on a number of factors. But it rarely lasts longer than the government that issues it. Gold is the best money because it doesn’t need to be “faith based” or rely on a government.

  There’s much more that can be said on this topic, and it’s important to grasp the essentials in order to understand the controversy about whether now is a good time to buy. But this isn’t the place for an extended explanation.

  Keep these things in mind, though, as you listen to the current blather from talking heads about where gold is going. Most of them are just journalists, reporters that are parroting what they heard someone else say. And the “someone else” is usually a political apologist who works for a government. Or a hack economist who works for a bank, the IMF, or a similar institution with an interest in the status quo of the last few generations. You should treat almost everything you hear about finance or economics in the popular media as no more than entertainment.

  So, let’s take some recent statements, assertions, and opinions that have been promulgated in the media and analyze them. Many impress me as completely uninformed, even stupid. But since they’re floating around in the infosphere, I suppose they need to be addressed.

  Misinformation and Disinformation

  Let’s examine some memes floating around.

  “Gold is expensive.”

  This objection is worth considering – for any asset. In fact, it’s critical. We can determine the price of almost anything; that’s easy. The hard part is figuring out its value. From the founding of the U.S. until 1933, the dollar was defined as 1/20th of an ounce of gold. From 1933 to 1971, it was redefined as 1/35th of an ounce. After the 1971 dollar devaluation, the official price of the metal was raised to $42.22 – but that official number is meaningless, since nobody buys or sells the metal at that price. More importantly, people have gotten into the habit of giving the price of gold in dollars, rather than the value of the dollar in gold. But that’s another subject.

  Here’s the crux of the argument. Before the creation of the Federal Reserve in 1913, a $20 bill was just a receipt for the deposit of one ounce of gold with the Treasury. The U.S. official money supply equated more or less with the amount of gold. Now, however, dollars are being created by the trillion, and nobody really knows how many more of them are going to be shazammed into existence.

  It’s hard to determine the value of anything when the inch marks on your yardstick keep drifting closer and closer together.

  “The smart money is long gone from gold.”

  This is an interesting assertion that I find is based on nothing at all. Who really is the “smart money”? How do you really know that? And how do you know exactly what they own (except for, usually, many months after the fact) or what they plan on buying or selling? The fact is that very few billionaires (John Paulson perhaps being the best known of them) have declared a major position in the metal. Gold is only a tiny proportion of the financial world’s assets, both absolutely or relative to where it has been in the past:

  

  “Gold is risky.”

  Risk is largely a function of price. And, as a general rule, the higher the price, the higher the risk, simply because supply is likely to go up and demand down – leading to a lower price. So, yes, gold is riskier at $1,100 than it was at $700 or at $200. But even when it was at $35, there was a well-known financial commentator named Eliot Janeway (I always thought he was a fool and a blowhard) who was crowing that if the U.S. government didn’t support it at $35, it would fall to $8.

  In any event, risk is relative. Stocks are very risky today. Bonds are ultrarisky. Real estate, at least in many major cities, is in a near mania. And the dollar, although it’s cyclically popular, is on its way to reaching its intrinsic value. In fact, stock, bonds, property, and the dollar are all in bubble territory.

  Yes, gold is risky now. But it is actually much less risky than most alternatives.

  “Gold pays no interest.”

  This is kind of true. But only in the sense that a $100 bill pays no interest. You can get interest from anything that functions as money if it is lent out. Interest is the time premium of money. You will not get interest from either your $100 or your gold unless you lend them to someone. But both the dollars and the gold will earn interest if you lend them out. The problem is that once you make a loan (even to a bank, in the form of a savings account), you may not even get your principal back, much less the interest. And, of course, many banks around the world now pay negative interest for loaning them money – an absurd inversion of reality.

  “Gold pays no dividends.”

  Of course it doesn’t. It also doesn’t yield chocolate syrup. It’s a ridiculous objection, because only corporations pay dividends. It’s like expecting your Toyota in the driveway to pay a dividend, when only the corporation in Japan can do so. But if you want dividends related to gold, you can buy a successful gold mining stock.

  “Gold costs you insurance and storage.”

  This is arguably true. But it’s really a sophistic misdirection to which many people uncritically nod in agreement. You may very well want to insure and professionally store your gold. Just as you might your jewelry, your artwork, and most valuable things you own. It’s even true of the share certificates for stocks you may own. It’s true of the assets in your mutual fund (where you pay for custody, plus a management fee).

  You can avoid the cost of insurance and storage by burying gold in a safe place – something that’s not a practical option with most other valuable assets. But maybe you really don’t want to store and insure your gold, because the government may prove a greater threat than any common thief. And if you pay storage and insurance, they’ll definitely know how much you have and where it is.

  “Gold has no real use.”

  This assertion stems from a lack of knowledge of basic chemistry as well as economics. Yes, of course people have always liked gold for jewelry, and that’s a genuine use. It’s also good for dentistry and micro-circuitry. Owners of paper money, however, have found the stuff to be absolutely worthless hundreds of times in scores of countries.

  In point of fact, gold is useful because it is the most malleable, the most ductile, and the most corrosion resistant of all metals. That means we’re finding new uses for it literally every day. It’s also the second-most conductive of heat and electricity, and the second-most reflective (after silver). Gold is a hi-tech metal for these reasons. It can do things no other substance can and is part of the reason your computer works so well.

  But all these reasons are strictly secondary, because gold’s main use has always been (and I’ll wager will be again) as money. Money is its highest and best use, and it’s an extremely important one.

  “The U.S. can, or will, sell its gold to pay its debt, depressing the market.”

  I find this assertion completely unrealistic. The U.S. government reports that it owns 265 million ounces of gold. Let’s say that’s worth about $300 billion right now. I’m afraid that’s chicken feed in today’s world. It’s only half of this year’s federal deficit alone. It’s only half of one year’s trade deficit. It represents perhaps only 2% of the dollars outside the U.S. The U.S. government may be the largest holder of gold in the world, but it owns less than 5% of the approximately 6 billion ounces above ground.

  From the ’60s until about 2000, most Western governments were selling gold from their treasuries, working on the belief it was a “barbarous relic.” Since then, governments in the advancing world – China, India, Russia, and many other ex-socialist states – have been buying massive quantities.

  Why? Because their main monetary asset is U.S. dollars, and they have come to realize those dollars are the unbacked liability of a bankrupt government. They’re becoming hot potatoes, Old Maid cards. But the dollars can be replaced with what? Sovereign wealth funds are using them to buy resources and industries, but those things aren’t money. And in the hands of bureaucrats, they’re guaranteed to be mismanaged. I expect a great deal of gold buying from governments around the world over the next few years. And it will be at much higher dollar prices.

  “High gold prices will bring on huge new production, which will depress its price.”

  This assertion shows a complete misunderstanding of the nature of the gold market. Gold production is now about 90 million ounces per year and is trending down. That’s partly because, at high prices, miners tend to mine lower-grade ore. And partly because the world has been extensively explored, and most large, high-grade, easily exploited resources have already been put into production. And partly because most production is now unprofitable. Miners aren’t putting any new mines into production.

  But new production is trivial relative to the 6 billion ounces now above ground, which only increases by about 1.3% annually. Gold isn’t consumed like wheat or even copper; its supply keeps slowly rising, like wealth in general. What really controls gold’s price is the desire of people to hold it, or hold other things – new production is a trivial influence.

  That’s not to say things can’t change. The asteroids have lots of heavy metals, including gold; space exploration will make them available. Gigantic amounts of gold are dissolved in seawater and will perhaps someday be economically recoverable with biotech. It’s now possible to transmute metals, fulfilling the alchemists’ dream; perhaps someday this will be economic for gold. And nanotech may soon allow ultralow-grade deposits of gold (and every other element) to be recovered profitably. But these things need not concern us as practical matters for years to come.

  “You should have only a small amount of gold, for insurance.”

  This argument is made by those who think gold is only going to be useful if civilization breaks down, when it could be an asset of last resort. In the meantime, they say, do something productive with your money…

  This is poor speculative theory. The intelligent investor allocates his funds where it’s likely they’ll provide the best return, consistent with the risk, liquidity, and volatility profile he wants to maintain. There are times when you should be greatly overweight in a single asset class – sometimes stocks, sometimes bonds, sometimes real estate, sometimes what-have-you. From 1971 to 1980 and 2001 to 2011, it was wise to be hugely overweight gold. From 1981 to 2000 and 2011 to the present, it was wise to only keep an insurance position. Right now, you again want an overweight position. The idea of keeping a constant, but insignificant, percentage in gold impresses me as poorly thought out.

  “Interest rates are near zero; gold will fall as they rise.”

  In principle, as interest rates rise, people tend to prefer holding currency deposits. So they tend to sell other assets, including gold, to own interest-earning cash. But there are other factors at work. What if the nominal interest rate is 20%, but the rate of currency depreciation is 40%? Then the real interest rate is minus 20%. This is more or less what happened in the late ’70s, when both nominal rates and gold went up together. Right now governments all over the world are suppressing rates even while they’re greatly increasing the amount of money outstanding; this will eventually (read: soon) result in both much higher rates and a much higher general price level. At some point, high real rates will be a factor in ending the gold bull market, but that time is many months or years in the future.

  “Gold sentiment is dead.”

  That’s quite true. Gold sentiment is not just quite subdued among the public; most of them barely know the metal even exists.

  You’ll know sentiment is at a high when major brokerage firms are hyping newly minted gold products, and Slime Magazine (if it still exists) has a cover showing a golden bull tearing apart the New York Stock Exchange. We’re a long way from that point. When it arrives, I hope to sell my gold and buy the NYSE.

  “Mining stocks are risky.”

  This is absolutely true. In general, mining is a horrible business. It requires gigantic fixed capital expense to build a mine, but only after numerous, expensive, and unpredictable permitting issues are handled. Then, the operation is immovable and subject to every political risk imaginable, not infrequently including nationalization. Add in continual and formidable technical issues of every description, compounded by unpredictable fluctuations in the price of the end product. Mining is a horrible business, and you’ll never find Graham-Dodd investors buying mining stocks.

  All these problems (and many more that aren’t germane to this brief article), however, make mining stocks excellent speculative vehicles from time to time. Like right now.

  “Mineral exploration stocks are very, very risky.”

  This is very, very true. There are thousands of little public companies, and some are just a couple steps up from a prospector wandering around with a mule. Others are fairly sophisticated, hi-tech operations. Exploration companies are often classed with mining companies, but they are actually very different animals. They aren’t so much running a business as engaging in a very expensive and long-odds treasure hunt.

  That’s the bad news. The good news is that they are not only risky but extraordinarily volatile. The most you can lose is 100%, but the market cyclically goes up 10 to 1, with some stocks moving 1,000 to 1. That kind of volatility can be your best friend. Speculating in these issues, however, requires both expertise and a good sense of market timing. But they’re likely to be at the epicenter of the gold bubble when it arrives – even though few actually have any gold, except in their names.

  “Warren Buffett is a huge gold bear.”

  This is true, but irrelevant – entirely apart from suffering from the logical fallacy called “argument from authority.” Nonetheless, when the world’s most successful investor speaks, it’s worth listening. Here’s what Buffett said about gold in an interview with Ben Stein, another goldphobe:

  You could take all the gold that’s ever been mined, and it would fill a cube 67 feet in each direction. For what that’s worth at current gold prices, you could buy all – not some, all – of the farmland in the United States. Plus, you could buy 10 ExxonMobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?

  I’ve long considered Buffett an idiot savant – a genius at buying stocks but at nothing else. His statement is accurate, but completely meaningless. The same could be said of the U.S. dollar money supply – or even of the world inventory of steel and copper. These things represent potential, but are not businesses or productive assets in themselves. Buffett is certainly not stupid, but he’s a shameless and intellectually dishonest sophist, despite his disarming and avuncular demeanor. And although a great investor, he’s neither an economist nor someone who believes in free markets.

  “Gold is a religious statement.”

  Actually, since most religions have an otherworldly orientation, they’re at least subtly (and often stridently) anti-gold. But it is true that some promoters of gold seem to have an Elmer Gantry-like style. That, however, can be said of True Believers in anything, whether or not the belief itself has merit. In point of fact, I think it’s more true to say goldphobes suffer from a kind of religious hysteria, fervently believing in collectivism in general and the state in particular, with no regard to counterarguments. Someone who understands why gold is money and why it is currently a good speculative vehicle is hardly making a religious statement. More likely, he’s taking a scientific approach to economics and thinking for himself.

  So Where Are We?

  So, these are some of the more egregious arguments against gold that are being brought forward today. Most of them are propounded by knaves, fools, or the uninformed.

  My own view should be clear from the responses I’ve given above. But let me clarify it a bit further. Historically – actually just up until the decades after World War I, when world governments started issuing paper currency with no relation to gold – the metal was cash, and it was used as money everywhere, on a daily basis. I believe that will again be the case in the fairly near future.

  The question is: At what price will that occur, relative to other things? It’s not just a question of picking a dollar price, because the relative value of many things – houses, food, commodities, labor – has been distorted by a very long period of currency inflation, increased taxation, and very burdensome regulation that started at the beginning of the last depression. Especially with the fantastic leaps in technology now being made and breathtaking advances that will soon occur, it’s hard to be sure exactly how values will realign after the Greater Depression ends. And we can’t know the exact manner in which it will end. Especially when you factor in the rise of China and India.

  A guess? I’ll say the equivalent of about $5,000 an ounce of today’s dollars. And I feel pretty good about that number, considering how shaky the world financial situation is, and that we are – I believe – about to enter another gold bull market. Classic bull markets have three stages. We’re still in the “Stealth” stage – when few people even remember gold exists, and those who do mock the idea of owning it. Next, we’ll enter the “Wall of Worry” stage, when people notice it and the bulls and bears battle back and forth. At some point, we’ll enter the “Mania” stage – when everybody, including governments, is buying gold, out of greed and fear. But also out of prudence.

  The policies of Bernanke, Yellen, and Obama – and also of almost every other central bank and government in the world – are not just wrong. These people are, perversely, doing just the opposite of what should be done to cure the problems that have built up over decades. One consequence of their actions will be to ignite numerous other bubbles in various markets and countries. I expect the biggest bubble will be in gold, and the wildest one in mining and exploration stocks.

  When will I sell out of gold and gold stocks? Of course, they don’t ring a bell at either the top or the bottom of the market. But I expect to be a seller when there really is a bubble, a mania, in all things gold related. There’s a good chance that will coincide to some degree with a real bottom in conventional stocks. I don’t know what level that might be on the DJIA, but I think its average dividend yield might then be in the 6% to 8% area.

  The bottom line is that gold and its friends are again cheap, and they have a long way – in both time and price – to run. Until they’re done, I suggest you be right and sit tight.

  

  

  

  

  

• Manhattan Luxury-Home Prices Drop For 8th Straight Month Amid "Glut In Overpriced Apartments"

  The poor are getting poorer but the rich, it appears, are no longer getting richer. With apartment vacancies at 9-month highs, Bloomberg reports that Manhattan's luxury-home market is rapidly losing its luster. Prices have been dropping every month since February, when they reached their highest point on record, and, as one analyst notes, "the downward trend in that decline hasn’t abated, and we haven’t seen it wavering in any way."

  As we detailed previously,

  The vacancy rate in November was 2.87 percent, up from 2.31 percent a year earlier and the highest since August 2006, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Landlords eager to fill empty units lured tenants with the most concessions since 2011.

   

  

   

  The rise in vacancies suggests tenants are reaching the upper limits of what they’re able to pay after more than four years of almost continuous rent growth, according to Jonathan Miller, president of Miller Samuel. In November, the median monthly apartment rent climbed 3.9 percent from a year earlier to $3,361. Leasing costs have jumped more than 18 percent since the end of the recession in June 2009.

   

  “We’re reaching the point where things can’t go up as much,” Miller said in an interview. “The economics don’t make much sense anymore.”

   

  …

   

  “The conditions that are driving rents higher haven’t changed,” Miller said. “What’s changed is the acceptance of it, the affordability of it.”

   

  The luxury-apartment market, the top 10 percent of all rentals by price, was the only category with a decline in prices. The median rent in November fell 1.4 percent to $8,537.

   

  “Complaining about high rents in Manhattan is nothing new, but now it’s becoming more visceral to tenants,” said Miller, who’s been tracking the apartment market since 1991.

   

  “We’re hitting the point where affordability is really becoming a much bigger issue than it has been in the past.”

  And now luxury home prices are falling…

  

  As Bloomberg details,

  Prices for luxury homes are moving in the opposite direction from the broader Manhattan market, where values are still rising and discounts are few. New York’s high-end inventory has ballooned in recent years as developers focused on building large and lavish units in an appeal to wealthy investors, who now appear to be more hesitant to buy. Listings for more moderately priced homes, meanwhile, haven’t been replenished because the high cost of land makes building in that range unprofitable, and owners are reluctant to sell because they can’t afford to trade up.

   

  The result is a pool of listings that’s light on the properties that more people want to buy, Lightfeldt said. In the third quarter, the supply of homes for sale in the top fifth of the the market rose more than in any other segment, jumping 8.9 percent to 4,055 units, according to StreetEasy. For the other four levels combined, listings declined more than 3 percent.

   

  The Federal Reserve, in its December Beige Book of regional economic conditions, noted the same bifurcation in the New York market, citing a “supply glut” of high-end homes and slackening buyer demand for them. The top price tier was also the only one in which sellers as a group didn’t get their full asking price in the third quarter, StreetEasy data show.

   

  “Every asset has a threshold in pricing and once you push past it, you’re going to see the buyers resist,” said Donna Olshan, president of Olshan Realty Inc. and author of a weekly newsletter on the New York luxury market.

   

  Olshan, who defines luxury as units listed for at least $4 million, described having had four good sales weeks out of the past four months, with prospective buyers choosing to pause rather than submit to ever higher prices.

   

  “We have a lot of overpriced apartments on the market and that’s the reason for a slowdown,” said Olshan, who said she believes the market has plateaued rather than peaked.

   

  “Tremendous overpricing means that marketing periods are longer, and the people who are overpriced are going to have to correct.”

  The luxury market “has been over-served and the demand seems to be fully satiated,” said Lightfeldt of StreetEasy.

  The firm’s price index is based on a representative sampling of resales in a given month, which are compared to their previous sales prices.

   

  Demand for the most-expensive homes has also been dimmed by the weakening of the euro against the U.S. dollar, gyrations in the Chinese stock market and a losing year for hedge funds, Olshan said.

   

  “You take all of those factors and you sprinkle them onto a real estate market that was overpriced to begin with, and you’re going to feel it,” she said.

  *  *  *

  So what market's property bubble explodes next?

  

  

  

  

  

  

  

• Ukraine's Looming "19 Fukushimas" Scenario

  Submitted by Dmitry Orlov via ClubOrlov.com, (author of The Five Stages Of Collapse)

  With all the action in Syria, the Ukraine is no longer a subject for discussion in the West. In Russia, where the Ukraine is still a major problem looming on the horizon, and where some 1.5 million Ukrainian refugees are settling in, with no intentions of going back to what's left of the Ukraine, it is still actively discussed. But for the US, and for the EU, it is now yet another major foreign policy embarrassment, and the less said about it the better.

  In the meantime, the Ukraine is in full-blown collapse – all five glorious stages of it – setting the stage for a Ukrainian Nightmare Before Christmas, or shortly after.

  Phase 1. Financially, the Ukrainian government is in sovereign default as of a couple of days ago. The IMF was forced to break its own rules in order to keep it on life support even though it is clearly a deadbeat. In the process, the IMF stiffed Russia, which happens to be one of its major shareholders; what gives?

   

  Phase 2. Industry and commerce are approaching a standstill and the country is rapidly deindustrializing. Formerly, most of the trade was with Russia; this is now over. The Ukraine does not make anything that the EU might want, except maybe prostitutes. Recently, the Ukraine has been selling off its dirt. This is illegal, but, given what's been happening there, the term “illegal” has become the stuff of comedy.

   

  Phase 3. Politically, the Ukrainian government is a total farce. Much of it has been turned over to fly-by-night foreigners, such as the former Georgian president Saakashvili, who is a wanted criminal in his own country, which has recently stripped him of his citizenship. The parliament is stocked with criminals who bought their seat to gain immunity from prosecution, and who spend their time brawling with each other. Prime Minister Yatsenyuk was recently hauled off the podium by his crotch; how dignified is that? He seemed unfazed. Where are his testicles? Perhaps Victoria Nuland over at the US State Dept. is keeping them in a jar. This sort of action may be fun to watch on Youtube, but the reality is quite sad: those who “run” the Ukraine (if the term still applies) are only interested in one thing: stealing whatever is left.

   

  Phase 4. Ukrainian society (if the term still applies) has been split into a number of warring factions. This was, to some extent, inevitable. What happens if you take bits of Poland, Hungary, Romania and Russia, and stick them together willy-nilly? Well, results may vary; but if you also spend $5 billion US (as the Americans did) turning the Ukrainians against Russia (and, since they are mostly Russian, against themselves), then you get a complete disaster.

   

  Phase 5. Cultural collapse is quite advanced. The Ukraine once had the same world-class educational system as Russia, but since independence they switched to teaching in Ukrainian (a made-up language) using nonexistent textbooks. The kids have been taught a bogus history hallucinated by rabid Ukrainian nationalists. They've been told that Russia is backward and keeping them back, and that they deserve to be happy in the EU. (Just like the Greeks? Yeah…) But now the population has been reduced to levels of poverty not commonly seen outside of Africa, and young people are fleeing, or turning to gangsterism and prostitution, to merely survive. This doesn't make for a happy cultural narrative. What does it mean to be “a Ukrainian” now? Expletives deleted. Sorry I asked.

  Now, here's what it all really means. With so much going wrong, the Ukraine has been unable to secure enough natural gas or coal supplies to provide a supply cushion in case of a cold snap this winter. A few weeks of frosty weather will deplete the supply, and then pipes will freeze, rendering much of the urban areas unlivable from then on (because, recall, there is no longer any money, or any industry to speak of, to repair the damage). That seems bad enough, but we aren't quite there yet.

  You see, the Ukraine produces over half of its electricity using nuclear power plants. 19 nuclear reactors are in operation, with 2 more supposedly under construction. And this is in a country whose economy is in free-fall and is set to approach that of Mali or Burundi! The nuclear fuel for these reactors was being supplied by Russia. An effort to replace the Russian supplier with Westinghouse failed because of quality issues leading to an accident. What is a bankrupt Ukraine, which just stiffed Russia on billions of sovereign debt, going to do when the time comes to refuel those 19 reactors? Good question!

  But an even better question is, Will they even make it that far? You see, it has become known that these nuclear installations have been skimping on preventive maintenance, due to lack of funds. Now, you are probably already aware of this, but let me spell it out just in case: a nuclear reactor is not one of those things that you run until it breaks, and then call a mechanic once it does. It's not a “if it ain't broke, I can't fix it” sort of scenario. It's more of a “you missed a tune-up so I ain't going near it” scenario. And the way to keep it from breaking is to replace all the bits that are listed on the replacement schedule no later than the dates indicated on that schedule. It's either that or the thing goes “Ka-boom!” and everyone's hair falls out.

  How close is Ukraine to a major nuclear accident? Well, it turns out, very close: just recently one was narrowly avoided when some Ukro-Nazis blew up electric transmission lines supplying Crimea, triggering a blackout that lasted many days. The Russians scrambled and ran a transmission line from the Russian mainland, so now Crimea is lit up again. But while that was happening, the Southern Ukrainian, with its 4 energy blocks, lost its connection to the grid, and it was only the very swift, expert actions taken by the staff there that averted a nuclear accident.

  I hope that you know this already, but, just in case, let me spell it out again. One of the worst things that can happen to a nuclear reactor is loss of electricity supply. Yes, nuclear power stations make electricity—some of the time—but they must be supplied with electricity all the time to avoid a meltdown. This is what happened at Fukushima Daiichi, which dusted the ground with radionuclides as far as Tokyo and is still leaking radioactive juice into the Pacific.

  And so the nightmare scenario for the Ukraine is a simple one. Temperature drops below freezing and stays there for a couple of weeks. Coal and natural gas supplies run down; thermal power plants shut down; the electric grid fails; circulator pumps at the 19 nuclear reactors (which, by the way, probably haven't been overhauled as recently as they should have been) stop pumping; meltdown!

  And so, if you want to say a prayer for the Ukraine this holiday season, don't bother because it's well and truly fucked. But do say a prayer for global warming. If this winter stays very, very warm, then the “19 Fukushimas” scenario just may be averted. This is not impossible: we've been seeing one freakishly warm winter after another, and each passing month is setting new records. The future is looking hot—as in very warm. Let us pray that it doesn't also turn out to be hot—as in radioactive.

  

  

  

  

  

• Two-Thirds Of Young Democrats Eager To Accept Refugees From Fictional City In Aladdin Movie

  Earlier in the week, many scoffed at the stereotype-confirming 30% of Republicans than supported the bombing of Agrabah – the fictional city from the Disney movie Aladdin. Now, according to WPAResearch, a new poll shows a stunning 66% of young Democrats are especially eager to take in the imaginary refugees.

  As WPAResearch reports,

  Public Policy Polling, which is known for adding questions in surveys to exploit Republicans who are less informed, recently found that 30% of Republican voters would support bombing Agrabah, a fictional country in the Disney film Aladdin.

   

  On December 20, 2015, WPA Research fielded a national survey of 1,132 registered voters that found 44% of Democrats would support taking refugees from that same Agrabah.

   

  Would you support or oppose allowing refugees from Agrabah to be re-settled in the United States?

   

  

   

  PPP may have proven that some Republicans will support bombing a fictional country, but fully 44% of Democrats will allow refugees from anywhere into the country, whether they are potential ISIS supporters from Syria or potential cartoon characters on a magic carpet ride.

   

  Additionally, 'Young' Democrats aged 18-34, a key constituency of President Obama, are especially eager to take in imaginary refugees.

   

  

   

  So, nearly two-thirds of these voters support accepting refugees from Agrabah. This seems particularly suprising given this generation grew up watching Disney films such as Aladdin.

  *  *  *

  As Mike Krieger concluded recently,

  And you wonder why things are the way they are. These are the people who will choose the Presidential nominees for each corrupt political party.

  

  

  

  

  

• 58 Facts About The U.S. Economy From 2015 That Are Almost Too Crazy To Believe

  Submitted by Michael Snyder via The Economic Collapse blog,

  The world didn’t completely fall apart in 2015, but it is undeniable that an immense amount of damage was done to the U.S. economy.

  This year the middle class continued to deteriorate, more Americans than ever found themselves living in poverty, and the debt bubble that we are living in expanded to absolutely ridiculous proportions.  Toward the end of the year, a new global financial crisis erupted, and it threatens to completely spiral out of control as we enter 2016. 

  Over the past six months, I have been repeatedly stressing to my readers that so many of the exact same patterns that immediately preceded the financial crisis of 2008 are happening once again, and trillions of dollars of stock market wealth has already been wiped out globally.  Some of the largest economies on the entire planet such as Brazil and Canada have already plunged into deep recessions, and just about every leading indicator that you can think of is screaming that the U.S. is heading into one.

  So don’t be fooled by all the happy talk coming from Barack Obama and the mainstream media.  When you look at the cold, hard numbers, they tell a completely different story.  The following are 58 facts about the U.S. economy from 2015 that are almost too crazy to believe…

  #1 These days, most Americans are living paycheck to paycheck.  At this point 62 percent of all Americans have less than 1,000 dollars in their savings accounts, and 21 percent of all Americans do not have a savings account at all.

  #2 The lack of saving is especially dramatic when you look at Americans under the age of 55.  Incredibly, fewer than 10 percent of all Millennials and only about 16 percent of those that belong to Generation X have 10,000 dollars or more saved up.

  #3 It has been estimated that 43 percent of all American households spend more money than they make each month.

  #4 For the first time ever, middle class Americans now make up a minority of the population. But back in 1971, 61 percent of all Americans lived in middle class households.

  #5 According to the Pew Research Center, the median income of middle class households declined by 4 percent from 2000 to 2014.

  #6 The Pew Research Center has also found that median wealth for middle class households dropped by an astounding 28 percent between 2001 and 2013.

  #7 In 1970, the middle class took home approximately 62 percent of all income. Today, that number has plummeted to just 43 percent.

  #8 There are still 900,000 fewer middle class jobs in America than there were when the last recession began, but our population has gotten significantly larger since that time.

  #9 According to the Social Security Administration, 51 percent of all American workers make less than $30,000 a year.

  #10 For the poorest 20 percent of all Americans, median household wealth declined from negative 905 dollars in 2000 to negative 6,029 dollars in 2011.

  #11 A recent nationwide survey discovered that 48 percent of all U.S. adults under the age of 30 believe that “the American Dream is dead”.

  #12 Since hitting a peak of 69.2 percent in 2004, the rate of homeownership in the United States has been steadily declining every single year.

  #13 At this point, the U.S. only ranks 19th in the world when it comes to median wealth per adult.

  #14 Traditionally, entrepreneurship has been one of the primary engines that has fueled the growth of the middle class in the United States, but today the level of entrepreneurship in this country is sitting at an all-time low.

  #15 For each of the past six years, more businesses have closed in the United States than have opened.  Prior to 2008, this had never happened before in all of U.S. history.

  #16 If you can believe it, the 20 wealthiest people in this country now have more money than the poorest 152 million Americans combined.

  #17 The top 0.1 percent of all American families have about as much wealth as the bottom 90 percent of all American families combined.

  #18 If you have no debt and you also have ten dollars in your pocket, that gives you a greater net worth than about 25 percent of all Americans.

  #19 The number of Americans that are living in concentrated areas of high poverty has doubled since the year 2000.

  #20 An astounding 48.8 percent of all 25-year-old Americans still live at home with their parents.

  #21 According to the U.S. Census Bureau, 49 percent of all Americans now live in a home that receives money from the government each month, and nearly 47 million Americans are living in poverty right now.

  #22 In 2007, about one out of every eight children in America was on food stamps. Today, that number is one out of every five.

  #23 According to Kathryn J. Edin and H. Luke Shaefer, the authors of a new book entitled “$2.00 a Day: Living on Almost Nothing in America“, there are 1.5 million “ultrapoor” households in the United States that live on less than two dollars a day. That number has doubled since 1996.

  #24 46 million Americans use food banks each year, and lines start forming at some U.S. food banks as early as 6:30 in the morning because people want to get something before the food supplies run out.

  #25 The number of homeless children in the U.S. has increased by 60 percent over the past six years.

  #26 According to Poverty USA, 1.6 million American children slept in a homeless shelter or some other form of emergency housing last year.

  #27 Police in New York City have identified 80 separate homeless encampments in the city, and the homeless crisis there has gotten so bad that it is being described as an “epidemic”.

  #28 If you can believe it, more than half of all students in our public schools are poor enough to qualify for school lunch subsidies.

  #29 According to a Census Bureau report that was released a while back, 65 percent of all children in the U.S. are living in a home that receives some form of aid from the federal government.

  #30 According to a report that was published by UNICEF, almost one-third of all children in this country “live in households with an income below 60 percent of the national median income”.

  #31 When it comes to child poverty, the United States ranks 36th out of the 41 “wealthy nations” that UNICEF looked at.

  #32 An astounding 45 percent of all African-American children in the United States live in areas of “concentrated poverty”.

  #33 40.9 percent of all children in the United States that are being raised by a single parent are living in poverty.

  #34 There are 7.9 million working age Americans that are “officially unemployed” right now and another 94.4 million working age Americans that are considered to be “not in the labor force”.  When you add those two numbers together, you get a grand total of 102.3 million working age Americans that do not have a job right now.

  #35 According to a recent Pew survey, approximately 70 percent of all Americans believe that “debt is a necessity in their lives”.

  #36 53 percent of all Americans do not even have a minimum three-day supply of nonperishable food and water at home.

  #37 According to John Williams of shadowstats.com, if the U.S. government was actually using honest numbers the unemployment rate in this nation would be 22.9 percent.

  #38 Back in 1950, more than 80 percent of all men in the United States had jobs.  Today, only about 65 percent of all men in the United States have jobs.

  #39 The labor force participation rate for men has plunged to the lowest level ever recorded.

  #40 Wholesale sales in the U.S. have fallen to the lowest level since the last recession.

  #41 The inventory to sales ratio has risen to the highest level since the last recession.  This means that there is a whole lot of unsold inventory that is just sitting around out there and not selling.

  #42 The ISM manufacturing index has fallen for five months in a row.

  #43 Orders for “core” durable goods have fallen for ten months in a row.

  #44 Since March, the amount of stuff being shipped by truck, rail and air inside the United States has been falling every single month on a year over year basis.

  #45 Wal-Mart is projecting that its earnings may fall by as much as 12 percent during the next fiscal year.

  #46 The Business Roundtable’s forecast for business investment in 2016 has dropped to the lowest level that we have seen since the last recession.

  #47 Corporate debt defaults have risen to the highest level that we have seen since the last recession.  This is a huge problem because corporate debt in the U.S. has approximately doubled since just before the last financial crisis.

  #48 Holiday sales have gone negative for the first time since the last recession.

  #49 The velocity of money in the United States has dropped to the lowest level ever recorded.  Not even during the depths of the last recession was it ever this low.

  #50 Barack Obama promised that his program would result in a decline in health insurance premiums by as much as $2,500 per family, but in reality average family premiums have increased by a total of $4,865 since 2008.

  #51 Today, the average U.S. household that has at least one credit card has approximately $15,950 in credit card debt.

  #52 The number of auto loans that exceed 72 months has hit at an all-time high of 29.5 percent.

  #53 According to Dr. Housing Bubble, there have been “nearly 8 million homes lost to foreclosure since the homeownership rate peaked in 2004″.

  #54 One very disturbing study found that approximately 41 percent of all working age Americans either currently have medical bill problems or are paying off medical debt.  And collection agencies seek to collect unpaid medical bills from about 30 million of us each and every year.

  #55 The total amount of student loan debt in the United States has risen to a whopping 1.2 trillion dollars.  If you can believe it, that total has more than doubled over the past decade.

  #56 Right now, there are approximately 40 million Americans that are paying off student loan debt.  For many of them, they will keep making payments on this debt until they are senior citizens.

  #57 When you do the math, the federal government is stealing more than 100 million dollars from future generations of Americans every single hour of every single day.

  #58 An astounding 8.16 trillion dollars has already been added to the U.S. national debt while Barack Obama has been in the White House.  That means that it is already guaranteed that we will add an average of more than a trillion dollars a year to the debt during his presidency, and we still have more than a year left to go.

  What we have seen so far is just the very small tip of a very large iceberg.  About six months ago, I stated that “our problems will only be just beginning as we enter 2016″, and I stand by that prediction.

  We are in the midst of a long-term economic collapse that is beginning to accelerate once again.  Our economic infrastructure has been gutted, our middle class is being destroyed, Wall Street has been transformed into the biggest casino in the history of the planet, and our reckless politicians have piled up the biggest mountain of debt the world has ever seen.

  Anyone that believes that everything is “perfectly fine” and that we are going to come out of this “stronger than ever” is just being delusional.  This generation was handed the keys to the finest economic machine of all time, and we wrecked it.  Decades of incredibly foolish decisions have culminated in a crisis that is now reaching a crescendo, and this nation is in for a shaking unlike anything that it has ever seen before.

  So enjoy the rest of 2015 while you still can.

  2016 is almost here, and it is going to be quite a year…

  

  

  

  

  

• Declassified Top Secret Documents Show US Planned To Nuke Moscow, Berlin, Beijing

  Back in September, we noted that the US was set to send 20 new nuclear bombs to Germany each of which has four times the destructive power of the explosive dropped on Hiroshima.

  “[These] new attack options against Russia” constitute “a conscious provocation of [Germany’s] Russian neighbors,” one member of Angela Merkel’s Christian Democrats warned. Sergei Lavrov’s de facto number-two, Maria Zakharova said the move represented an “infringement of Articles 1 and 2 of the Treaty on Non-Proliferation of Nuclear Weapons.” 

  Just days after the news crossed the wires, Interfax reported that in response, Moscow was set to deploy Iskander ballistic missiles to its enclave of Kaliningrad if the US indeed moved to upgrade its nuclear weapons in Germany.

  

  The tension underscores the fact that even before Russia officially entered the fray in Syria, relations between NATO and Moscow had deteriorated markedly to post-Cold War lows on the back of mutual distrust tied to Crimea and Ukraine. 

  Against that rather ominous backdrop, we bring you the Strategic Air Command’s Atomic Weapons Requirements Study for 1959, produced in June 1956 and published Tuesday for the first time by the National Security Archive. 

  As Dr. William Burr, the senior analyst who directs the Archive’s nuclear history documentation project writes, the document “provides the most comprehensive and detailed list of nuclear targets and target systems that has ever been declassified.”

  He continues: “The SAC study includes chilling details. According to its authors,  their target priorities and nuclear bombing tactics would expose nearby civilians and ‘friendly forces and people’ to high levels of deadly radioactive fallout. Moreover, the authors developed a plan for the ‘systematic destruction’ of Soviet bloc urban-industrial targets that specifically and explicitly targeted “population” in all cities, including Beijing, Moscow, Leningrad, East Berlin, and Warsaw.”  

  The National Security Archive, which is based at The George Washington University, says it obtained the 800-page study, through the Mandatory Declassification Review process. 

  Below, find excerpts from Burr’s summary.

  *  *  *

  SAC Nuclear Planning for 1959

  SAC’s top priority for destruction was Soviet “air power” because of the apparent immediate threat that Soviet bombers posed to the continental United States and to U.S. forces in Europe and East Asia.  The report’s detailed introduction explained that the priority given to Air Power (BRAVO) targets dictated the surface bursting of high-yield thermonuclear weapons to destroy priority targets, including airbases in Eastern Europe.  That tactic would produce large amounts of radioactive fallout compared to bursting weapons in the air.  According to the study, “the requirement to win the Air Battle is paramount to all other considerations.”

  The “greatly compressed time factor”—the danger of a speedy Soviet attack and counterattack– encouraged targeters to require the surface bursting of high-yield nuclear weapons. According to SAC, bursting the weapon in the air would “result in decrease of blast effect.” Detonating the weapon on or close to the ground would maximize blast effects, destroy the target, and disperse irradiated particles which would be picked up by winds and descend far and near.

  SAC’s top priority for destruction, the Soviet bloc’s air power, was a complex target system.  Before the Soviet Union  acquired the atomic bomb and significant capability to deliver nuclear weapons at long distances,  SAC’s priority had been the destruction of the Soviet urban-industrial complex, but during the mid-1950s the “greatly compressed time factor” produced a reversal.[3]   In the SAC Atomic Weapons Requirements Study for 1959, SAC broadly defined the “Air Power” target: air and missile bases for strategic  and tactical forces, defensive and offensive, but also government and military control centers that would direct the air battle and nuclear weapons storage sites, air industry, atomic industry, and petroleum-oil-lubricants (POL) storage areas.

  Given the expansive definition of Air Power, this suggested that targets in major cities such as Moscow and Leningrad could be subjected to H-bomb attack because both were rich in air power targets. 

  If fighting continued once the air power battle was over, the second phase of the war was to be the “systematic destruction” of Soviet bloc war-making potential. The “final blows” in the bombing campaign would strike “basic industries”—those industries and economic activities which most contributed to war-making capability.

  Moscow, the number one urban target, had around 180 installations slated for destruction; some were in the air power category, but many involved a variety of industrial activities, including factories producing machine tools, cutting tools, oil extraction equipment, and a most vital medicine: penicillin.  Other targets involved significant infrastructural functions: locks and dams, electric power grids, railroad yards, and repair plants for railroad equipment.

  What is particularly striking in the SAC study is the role of population targeting.  Moscow and its suburbs, like the Leningrad area, included distinct “population” targets (category 275), not further specified.  So did all the other cities recorded in the two sets of target lists. In other words, people as such, not specific industrial activities, were to be destroyed.

  East Germany was the site of major Soviet airbases and East Berlin itself was a target for “systematic destruction.”  A sampling of the SAC airfields list finds more than a few Soviet-operated installations among the top 200, with some not very far from Berlin. Among them were Briesen (number 140), Gross Dolln (Templin) (number 70), Oranienberg (number 95), Welzow (number 96), Werneuchen (Verneuchen) (number 82). 

  East Berlin had a priority ranking of 61 in the list of urban-industrial slated for “systematic destruction.”  The SAC study identified 91 DGZs in East Berlin and its suburbs: a wide range of industries and infrastructural activities including electric power, railroad yards, liquid fuel storage, machine tools, and radio and television stations.

  Whether China was fighting on the Soviet side or not in a war, SAC treated it as part of the Soviet bloc and listed Chinese airfields and cities in the target lists, including Beijing. Of the list of targets scheduled for “systematic destruction,” Beijing [Peiping in Wade-Giles transliteration] was in the top 20 (number 13) with 23 DGZs.

  *  *  *

  So while Berlin may now be set to receive 20 nuclear bombs from Washington, the city was also set to be on the “receiving” end of several nukes five decades ago. Needless to say, the “fallout” for West Berlin would have been disastrous, a fact which was greeted with “shock and awe” (pun fully intended) in Germany this week. Here are some representative tweets:

  Und als Kollateralschaden wäre Westberlin mal eben verglüht: Hunderte Ziele von US-Atombomben in der DDR https://t.co/QXXShVtwmW via @welt

  — Oliver Michalsky (@omichalsky) December 23, 2015

  USA wollten im Ernstfall 91 Ziele in Ost-Berlin treffen Damals glaubten wir noch an Freundschaft?
  https://t.co/s8BE7Q0dg2 via @SPIEGELONLINE

  — Franz W.Winterberg (@franzwi3) December 23, 2015

  Here’s Spiegel (translated):

  Disastrous consequences for West Berlin

   

  The documents show that the end of the fifties the quick elimination of the Soviet Air Force was the most important war aims of the United States. The 1100 Air Force bases in the Eastern bloc should be turned off before the Soviet bombers could take off at all.

   

  Among the main destinations of the 200 US nuclear bombers were numerous military installations in East Germany:

  • The front bomber base the Soviet Air Force in Briesen, south of Berlin
  • The largest Soviet military airfield in the GDR in Great Dölln, north of Berlin
  • The Soviet military airfield in Welzow, south of Berlin
  • The base of the 16th Soviet Air Army in Werneuchen, east of Berlin
  • The Soviet military airfield in Oranienburg, on the outskirts of Berlin

  In case of war, these military installations had been bombed with thermonuclear weapons. Large areas in the environment would have been exposed to radioactive radiation.

   

  Remains unclear whether the US Army had calculated the consequences of the nuclear attacks on West Berlin. William Burr doubts: “The atomic bombing of East Berlin and its suburbs have caused among other nuclear-generated firestorms. This would have had disastrous consequences for West Berlin..”

  What the documents seem to show, in a nutshell, is that the US was willing to wipe Moscow, Berlin, and Beijing off the face of the earth despite the fact that West Berlin was an ally and regardless of whether Beijing was actually involved in the fight.

  Mass civilian casualties were part and parcel of the plan, as was the complete destruction of German and Russian industrial capacity. If this is any indication of what a nuclear standoff between the US and Russia would resemble today, we hope, for humanity’s sake, that cooler heads will prevail in what is likely to be a yearslong period of heightened tensions.

  *  *  *

  SAC Docs

  

  

  

  

  

• Bernie Sanders: We Need A "Full And Independent Audit" Of The Federal Reserve

  Submitted by Barry Donegan via TruthInMedia.com,

  2016 Democratic presidential candidate and U.S. Senator from Vermont Bernie Sanders wrote an op-ed for The New York Times on Wednesday calling for the Federal Reserve to be audited independently by the Government Accountability Office on an annual basis.

  Meanwhile, Senate Majority Leader Mitch McConnell (R-Ky.) has scheduled a historic Jan. 12 vote on a bill, colloquially referred to as “Audit the Fed,” which was introduced by Sen. Rand Paul (R-Ky.). The bill would authorize the GAO to perform full audits of the Federal Reserve System.

  “To rein in Wall Street, we should begin by reforming the Federal Reserve, which oversees financial institutions and which uses monetary policy to maintain price stability and full employment. Unfortunately, an institution that was created to serve all Americans has been hijacked by the very bankers it regulates,” wrote Sen. Sanders.

  He added, “What went wrong at the Fed? The chief executives of some of the largest banks in America are allowed to serve on its boards. During the Wall Street crisis of 2007, Jamie Dimon, the chief executive and chairman of JPMorgan Chase, served on the New York Fed’s board of directors while his bank received more than $390 billion in financial assistance from the Fed. Next year, four of the 12 presidents at the regional Federal Reserve Banks will be former executives from one firm: Goldman Sachs.”

  Sanders called for the Glass-Steagall Act to be reinstated, a Depression-era banking regulation that created a wall of separation between consumer and investment banks prior to its repeal by former President Bill Clinton. He also suggested that the Fed should be prevented from providing incentives to encourage banks to sit on cash reserves.

  “As a condition of receiving financial assistance from the Fed,” said Sanders, “large banks must commit to increasing lending to creditworthy small businesses and consumers, reducing credit card interest rates and fees, and providing help to underwater and struggling homeowners.”

  Sanders argued that the Federal Reserve suffers from a lack of transparency. “In 2010, I inserted an amendment in Dodd-Frank to audit the emergency lending by the Fed during the financial crisis. We need to go further and require the Government Accountability Office to conduct a full and independent audit of the Fed each and every year,” he said.

  Audit the Fed legislation first became a hot political topic as a result of the sudden, meteoric 2008 rise to popularity of libertarian icon and former Congressman Ron Paul (R-Texas), who made the push for Fed transparency a central focus of his entire political career.

  The Dodd-Frank amendment that Sen. Sanders is referring to that provided for a limited audit of the Federal Reserve drew strong criticism from Congressman Paul back in 2010, as Paul felt that Sanders had hijacked his momentum for a full audit and replaced it with a more limited, watered-down version. Congressman Paul’s full Audit the Fed legislation had already passed the House prior to Sanders’ push for a tamer audit in the Senate.

   

  In the above-embedded video from 2010, an irate Ron Paul can be seen saying,

  “I had expected Bernie Sanders to offer S. 604 which is the same as H.R. 1207, which is Audit the Fed bill, and at the last minute he switched it and watered it down and, really, it adds nothing. It’s a possibility that it even makes the current conditions worse… We need to get as many messages as possible to any senator you can think of — especially to Bernie Sanders’ office — that we don’t want this version. We want a true audit of the Fed. We need to know what the Open Market Committee does and we need to know what they’re doing overseas with the agreements with central banks and financial institutions and other governments.”

  

  

  

  

  

• Switzerland To Vote On Ending Fractional Reserve Banking

  One year ago (and just two months before the shocking announcement the Swiss Franc’s peg to the Euro would end, dramatically revaluing the currency, and leading to massive FX losses around the globe and for the Swiss National Bank) the Swiss held a referendum whether to demand that their central bank should convert 20% of its reserves into gold, up from 7% currently. After the early polls showed the Yes vote taking a surprising lead, the Diebold machines kicked in and the result was a sweeping victory for the No vote, without a single canton voting for sound money.

  

   

  Ironically, this unexpected nonchallance about the Swiss central bank’s balance sheet by one of Europe’s more responsible nations took place just before the same bank announced CHF30 billions in losses on its long EUR positions following the revaluation of the CHF. It also took place when not just Germany, but the Netherlands and Austria announced they would repatriate a major portion of their gold in a move which, all spin aside, signals rising concerns about the existing monetary system.

  We wonder if the Swiss have changed their mind about just how prudent it is to have their central bank operate as one of the world’s largest – and worst – after its CHF 30 billion loss in Q1 FX traders, and hedge funds with $94 billion in stock holdings, since then.

  We may soon have the answer, because in what is shaping up to be another historic referendum on the treatment of money, earlier today the Swiss Federal Government confirmed that it had received enough signatures and would hold a referendum as part of the so-called “Vollgeld”, or Full Money Initiative, also known as the Campaign for Monetary Reform, which seeks to ban commercial banks from creating money, and which calls for the central bank to be given sole power to create the money in the financial system.

  In other words, an initiative to ban fractional reserve banking, and revert to a 100% reserve.

  As Finanzen.ch reports, after 111,763 signatures urging a referendum were submitted, of which 110,955 valid, the Federal Chancellery announced on Thursday that the popular vote would take place. Under Switzerland’s direct democracy, a referendum can be held if a motion gains 100,000 signatures within 18 months of launching.

  “Banks won’t be able to create money for themselves any more, they’ll only be able to lend money that they have from savers or other banks,” said the campaign group.

  Ever since the SNB was established in 1891, it has had exclusive power to mint coins and issue Swiss banknotes. However, as with every other fractional reserve banking system, over 90% of the money in circulation in Switzerland, as in every other country, now exists in the form “electronic” cash created by private banks, rather than the central bank.

  It is this threat of uncontrolled money creation and the risks to systemic stability that the Vollgeld campaign is seeking to stem.

  “Due to the emergence of electronic payment transactions, banks have regained the opportunity to create their own money,” said the Swiss Sovereign Money campaign. “The decision taken by the people in 1891 has fallen into oblivion.”

  So with the referendum now docketed, will this vote too be mysteriously “lost” in the final minutes of voting? According to the Telegraph, unlike the gold vote – which was seen as a precursor to re-introducing the Gold Standard in Switzerland – economists have been more supportive of the idea of “sovereign money” as a way to stabilize the economy and prevent excess credit growth.

  A date for the Swiss referendum has not been set.

  If the vote passes, and if Swiss banks are barred from creating deposits (by way of loans), it would shake to the core the entire modern financial system, which these days is exclusively reliant on runaway fractionalization of sound money, as more and more layers are added to the top of the Exter’s Pyramid, as the only possible “growth” left in a world that has never seen so much debt, is to find new and creative ways to borrow from the future, with banks getting all the benefits and stuffing taxpayers when the inevitable collapse happens.

  

   

  Below is a pdf provided by the Vollgeld Initiative, responding to popular criticisms against its “100% reserve” crusade.

  

  

  

  

  

• During the Next Crisis, Central Banking Itself Will Fail

  For six years, the world has operated under a complete delusion that Central Banks somehow fixed the 2008 Crisis.

   

  All of the arguments claiming this defied common sense. A 5^th grader would tell you that you cannot solve a debt problem by issuing more debt. If the below chart was a problem BEFORE 2008… there is no way that things are better now. After all, we’ve just added another $10 trillion in debt to the US system.

   

  Similarly, anyone with a functioning brain could tell you that a bunch of academics with no real-world experience, none of whom have ever started a business or created a single job can’t “save” the economy.

   

  However, there is an AWFUL lot of money at stake in believing these lies. So the media and the banks and the politicians were happy to promote them. Indeed, one could very easily argue that nearly all of the wealth and power held by those at the top of the economy stem from this fiction.

   

  So it’s little surprise that no one would admit the facts: that the Fed and other Central Banks not only don’t have a clue how to fix the problem, but that they actually have almost no incentive to do so.

   

  So here are the facts:

   

  1)   The REAL problem for the financial system is the bond bubble. In 2008 when the crisis hit it was $80 trillion. It has since grown to over $100 trillion.

   

  2)The derivatives market that uses this bond bubble as collateral is over $555 trillion in size.

   

  3)Many of the large multinational corporations, sovereign governments, and even municipalities have used derivatives to fake earnings and hide debt. NO ONE knows to what degree this has been the case, but given that 20% of corporate CFOs have admitted to faking earnings in the past, it’s likely a significant amount.

   

  4)   Corporations today are more leveraged than they were in 2007. As Stanley Druckenmiller noted recently, in 2007 corporate bonds were $3.5 trillion… today they are $7 trillion: an amount equal to nearly 50% of US GDP.

   

  5)   The Central Banks are now all leveraged at levels greater than or equal to where Lehman Brothers was when it imploded. The Fed is leveraged at 78 to 1. The ECB is leveraged at over 26 to 1. Lehman Brothers was leveraged at 30 to 1.

   

  6)   The Central Banks have no idea how to exit their strategies. Fed minutes released from 2009 show Janet Yellen was worried about how to exit when the Fed’s balance sheet was $1.3 trillion (back in 2009). Today it’s over $4.5 trillion.

   

  We are heading for a crisis that will be exponentially worse than 2008. The global Central Banks have literally bet the financial system that their theories will work.  They haven’t. All they’ve done is set the stage for an even worse crisis in which entire countries will go bankrupt.

   

  The situation is clear: the 2008 Crisis was the warm up. The next Crisis will be THE REAL Crisis. The Crisis in which Central Banking itself will fail.

   

  Smart investors are preparing now.

   

  We just published a 21-page investment report titled Stock Market Crash Survival Guide.

   

  In it, we outline precisely how the crash will unfold as well as which investments will perform best during a stock market crash.

   

  We are giving away just 1,000 copies for FREE to the public.

   

  To pick up yours, swing by:

  https://www.phoenixcapitalmarketing.com/stockmarketcrash.html

   

  Best Regards

   

  Graham Summers

  Chief Market Strategist

  Phoenix Capital Research

   

   

   

   

   

   

   

   

   

  

  

  

  

• How Turkey's Erdogan "Risks The Destruction Of The Country"

  As those who frequent these pages are no doubt aware, Turkish President Recep Tayyip Erdogan has lost his mind.

  

  To the extent Washington’s favorite autocrat had any sanity left going into the summer, he lost it completely in the wake of June elections that saw AKP lose its absolute majority in Parliament. That meant Erdogan would have a more difficult time rewriting the political rule book on the way to consolidating his power in an executive presidency. 

  Adding insult to injury, the election showed increased voter support for the pro-Kurdish HDP which Erdogan equates with the PKK, Ankara’s terrorist boogeyman. 

  All in all, Erdogan decided the outcome needed to be undone. After intentionally undermining the coalition building process, Erdogan – gun to his head – had to call for new elections. Conveniently, Ankara decided it needed to reignite the conflict with the PKK, a move which immediately plunged the country into violence, affording Erdogan an opportunity to play the “this is why Turkey needs a strongman” card on the way to securing a “better” ballot box result in early November. 

  Next, he shot down a Russian fighter jet and invaded Iraq. 

  

  All of this comes as Turkey’s role in financing the ISIS terror machine has been laid bare for the world to see. Ankara was long suspected of facilitating the flow of foreign fighters into Syria and the country’s role in funding and arming the various Sunni militants battling the SAA is well known. But allegations that Erdogan’s family may be leveraging the network Barzani and the Iraqi Kurds use to pipe Kurdish crude to Ceyhan (in defiance, mind you, of SOMO) on the way to helping ISIS smuggle stolen oil are new, and have made the world reconsider how we should view Turkey.

  At this point, it’s not clear what will happen next, but what we do know is that the US has rolled back requests that Turkey step up strikes in Syria and the Russians are fully prepared to shoot down Turkish F-16s that venture into Syrian airspace. Meanwhile, Erdogan still has troops in Iraq, much to Baghdad’s chagrin. 

  Here with a take on why Erdogan is dangerous is Burak Bekdil, an Ankara-based, Turkish columnist for the Hurriyet Daily 

  *  *  *

  Excerpted from “Turkey’s Dangerous Ambitions” via The Gatestone Institute

  It is the same old Middle East story: The Shiite accuse Sunnis of passionately following sectarian policies; Sunnis accuse the Shiite of passionately following sectarian polices; and they are both right. Except that Turkey’s pro-Sunni sectarian policies are taking an increasingly perilous turn as they push Turkey into new confrontations, adding newcomers to an already big list of hostile countries.

  Take President Recep Tayyip Erdogan’s recent remarks on the centuries-old Shiite-Sunni conflict: they amusingly looked more like a confession than an accusation: “Today we are faced with an absolute sectarianism. Who is doing it? Who are they? Iran and Iraq,” Erdogan said.

  This is the same Erdogan who once said, “The mosques are our barracks, the domes our helmets, the minarets our bayonets and the faithful our soldiers….” Is that not sectarian?

  So, with a straight face, the President of one sectarian country (Sunni Turkey) is accusing another country (Shiite Iran and Shiite-dominated Iraq) of being sectarian.

  Erdogan went on: “What about the Sunnis? There are Sunni Arabs, Sunni Turkmen and Sunni Kurds [in Iraq and Syria]. What will happen to their security? They want to feel safe.”

  Never realizing that its ambitions to spread Sunni Islam over large swaths of the Middle East, especially Syria and Iraq, were bigger than its ability to do so, Turkey now finds itself confronting a formidable bloc of pro-Shiite countries: Russia, Iran, Syria, Iraq, and (not to mention the much smaller Lebanon).

  Even before the crisis with Russia that began on November 24 — over Turkey’s shooting down a Russian SU-24 along the Turkish-Syrian border — has shown any sign of de-escalation, another Turkish move had sparked a major dispute with neighboring Iraq.

  Through its efforts to oust Syria’s non-Sunni president, Bashar al-Assad, and build a Muslim Brotherhood-type of Sunni Islamist regime in Damascus, Turkey has become everyone’s foe over its eastern and southern borders — in addition to having to wait anxiously for the next Russian move to hit it — not knowing where the blow will come from.

  As Professor Norman Stone, a prominent expert on Turkish politics, explained in a recent article: “Erdogan’s adventurism has been quite successful so far, but it amounts to an extraordinary departure for Turkish foreign policy, and maybe even risks the destruction of the country. How on earth could this happen? The background is an inferiority complex, and megalomania.” 

  

  

  

  

  

• Coming To America? Somalia, Brunei Ban Christmas To Avoid Damage To Muslim Faith

  The governments of both Somalia and Brunei have prohibited public festivities celebrating Christmas saying that they could damage the Muslim faith. Of course, as we saw yesterday, this kind of suppressive, micro-aggression is already here in America (at Cornell University) but while Mistletoe and crosses are banned here, Brunei's Sultan Hassanal Bolkiah has banned "hats or clothes that resemble Santa Claus," fearing they could "provoke al-Shabab to carry out attacks."

   

  As Al Jazeera reports, Somalia has issued a ban on Christmas celebrations in the Muslim-majority country after the Southeast Asian sultanate of Brunei announced a similar prohibition earlier this month with the threat of five years in jail.

   Sheikh Mohamed Khayrow, director general of Somalia's religious affairs ministry, said on Tuesday that Christmas and New Year celebrations threatened the country's Muslim faith.

   

  "There should be no activity at all," he told reporters, adding security forces had been ordered to break up any such festivities.

   

  "All events related to Christmas and New Year celebrations are contrary to Islamic culture, which could damage the faith of the Muslim community."

   

  Sheikh Nur Barud Gurhan, of the Supreme Religious Council of Somalia, also warned against celebrations, saying they could provoke al-Shabab "to carry out attacks".

   

  Last year, the armed group launched a Christmas Day attack on the African Union's heavily fortified headquarters in the capital Mogadishu, killing three AU soldiers and a civilian.

   

  Somalia, which issued a similar ban in 2013, follows the Islamic calendar that does not recognise January 1 as the beginning of the year.

   

  There are almost no Christians left living in the country, although a bombed-out Italian-built Catholic cathedral remains a city landmark Mogadishu.

   

  Foreign diplomats, aid workers, and soldiers living in the AU compound are permitted to mark the day privately.

  Similarly, Brunei's Sultan Hassanal Bolkiah has also banned public celebrations of Christmas.

  Religious leaders in the oil-rich sultanate warned the ban on Christmas would be strictly enforced, with violators facing up to five years in jail.

   

  "Using religious symbols like crosses, lighting candles, putting up Christmas trees, singing religious songs, sending Christmas greetings … are against Islamic faith," imams said in sermons published in the local press.

   

  The government warned last year that Muslims would be committing an offence if they so much as wore "hats or clothes that resemble Santa Claus".

   

  Christians represent about nine percent of Brunei's 430,000 population.

   

  Businesses have been warned to take decorations down and authorities have stepped up spot checks across the capital. Hotels popular among Western tourists that once boasted dazzling lights and giant Christmas trees are now barren of festive decor.

  *  *  *

  No, this is not from The Onion.

  We presume therefore that any of this would be unacceptable?

  

  Just checking.

  

  

  

  

  

• Dozens Killed In Huge Nigeria Gas Plant Explosion

  A massive explosion has occurred at an industrial gas plant (owned by Inter Corp Oil) in the southeastern Nigeria town of Nnewi. Local media reports the blast occurred while a truck was discharging its contents, and the ensuing fireball has left over 100 people burned to death.

   

  Explosion at chicason gas plant Nnewi pic.twitter.com/O3a9IjlzFE

  — Mcdonald ezenwa (@makavelli49) December 24, 2015

   

  Nigeria's Vanguard reports,

  Tragedy occurred, Thursday in the industrial town of Nnewi, Anambra state when an industrial Gas plant suddenly exploded and with over 100 persons burnt to death.

   

   

  

   

  The explosion rocked the Inter Corp Oil limited(LPG Gas Plant), an subsidiary of Chikason Group.

   

  According to an eye-witness, the fire incident which started at about 11am, was caused by an explosion when a truck  was discharging its contents.

   

  The source hinted that all the customers who went to the gas plant to get a refill were allegedly burnt to death while some of the victims who were in the neighborhood and passers-by also got caught in the inferno.

   

  At the scene of the incident, the charred bodies of the victims and other  severely burnt persons  were taken to Nnamdi Azikwe University Teaching Hospital, NAUTH, Nnewi.

   

  It was gathered that the  inferno did not allow rescue workers into the factory where hundreds were allegedly trapped.

  *  *  *

  

  

   

  The horrific scene…

  

   

  Is this what happens when a 'poor' nation loses enough of its oil revenues that safety standards (and the costs associated with them) get abused?

  

  

  

  

  

• Faltering Faith, Losing Hope, & Rising Charity – 15 Striking Findings From 2015

  Every year, Pew Research Center looks back at the most memorable facts that illustrate important trends shaping our world. From faltering faith in government to the decline of Christians in America and from increased racial tensions to the shrinking American middle-class, here are some of our most striking findings of 2015.

  Authored by George Gao via Pew Research,

  1. Just 19% of Americans say they can trust the federal government always or most of the time. That’s among the lowest levels in over 50 years. The long-term erosion of public trust is mirrored by a steep decline in the belief that the government is run for the benefit of all Americans.

  

   

  2. The American middle class is shrinking. After more than four decades of serving as the nation’s economic majority, the U.S. middle class is now matched in size by those in the economic tiers above and below it. A separate analysis also finds that globally, the middle class is more promise than reality. (See where you fit in the U.S. and worldwide with our interactive calculators.)

   

   

  3. For the first time since the 1940s, more immigrants from Mexico are leaving the U.S. than coming into the country. The shift is due to several reasons, including slow economic recovery after the Great Recession that may have made the U.S. less attractive, as well as stricter enforcement of U.S. immigration laws, particularly at the border.

  

   

  4. There’s a substantial rise in the share of Americans who say the country needs to continue making changes to give blacks equal rights with whites. In July 2015, six-in-ten (59%) Americans said changes are needed, up from 46% in March 2014. These findings come in a year where racial tensions were high in much of the country, from protests over police shootings to student strikes at universities. Our poll also shows that a racial divide in public opinion persists: Blacks are much more likely than whites to say changes are needed.

  

   

  5. Millennials surpassed Baby Boomers in sheer numbers to become the largest U.S. generation. There are an estimated 75.3 Millennials (ages 18 to 34) compared with 74.9 million Baby Boomers. This racially diverse, economically stressed and politically liberal group is also taking over American jobs: Millennial workers this year grew to outnumber Gen X workers, making them the largest share of the U.S. labor force.

  

   

  6. For news about politics and government, social media may be for the Millennial generation what local TV is for the Baby Boomer generation. Six-in-ten (61%) online Millennials say they get political news on Facebook in a given week, a much larger percentage than any other source for news. That’s a stark contrast to internet-using Baby Boomers, for whom local TV tops the list. These trends also reflect a major shift taking place in the news world, as social networking sites increasingly become an integral part of Americans’ news experience.

  

   

  7. For American teens, it’s not just a Facebook and Instagram world. While these two social media sites are the most popular, a majority (71%) of teens say they use more than one of the seven social networking sites we asked about. Much of this frenzy is facilitated by mobile devices: Nearly three-quarters of U.S. teens have access to a smartphone.

  

   

  8. People in countries with significant Muslim populations express overwhelmingly negative views of ISIS, according to our spring survey in 11 countries. Recent attacks in Paris, Beirut and Baghdad linked to the Islamic State in Iraq and Syria (ISIS) have once again brought terrorism and Islamic extremism to the forefront of international relations. Majorities in most of the 11 countries express unfavorable views of ISIS, but the exception is Pakistan, where a majority offer no opinion.

  

   

  9. Islam will grow faster than any other major religion in the world over the next four decades, according to our religious projections. The number of Muslims will grow more than twice as fast as the overall world population between 2010 and 2050, and, in the second half of this century, will likely surpass Christians as the world’s largest religious group. Driving these changes are simple demographics: Muslims have more children than members of other religions, and they’re also relatively younger.

  

   

  10. Christians are declining as a share of the U.S. population, while the number of U.S. adults who do not identify with any organized religion is growing. While the U.S. remains home to more Christians than any other country, the percentage of Americans identifying as Christian dropped from 78% in 2007 to 71% in 2014. By contrast, religious “nones,” driven in large part by Millennials, have surged seven percentage points in that time span to make up 23% of U.S. adults last year.

  

  11. Nearly 59 million immigrants have arrived in the U.S. in the past fifty years, after the passage of a landmark 1965 bill that rewrote U.S. immigration policy. Today, a near-record 14% of the country’s population is foreign-born compared with just 5% in 1965, and that share is expected to rise to 18% by 2065. New settlers today also look very different from the predominately European immigrants of the 19^th and 20^th centuries: Among immigrants who have arrived since 1965, half (51%) are from Latin America and one-quarter are from Asia.

  

   

  12. Multiracial Americans account for 6.9% of adults, and they are growing at a rate three times as fast as the population as a whole. For much of the nation’s history, America has discussed race in the singular form. But with the rise of interracial couples, combined with a more accepting society, the language of race is changing. More than half of multiracial Americans are proud of their background and feel more open to other cultures. But a majority (55%) also say they have been subjected to slurs or jokes because of their racial background.

  

   

  13. Scientists and the American public are often far apart when it comes to views about science-related issues. Members of the science community, for example, are much more likely to say genetically modified foods and foods grown with pesticides are safe to eat, and that climate change is mostly due to human activity, according to our recent survey of U.S.-based members of the American Association for the Advancement of Science.

  

   

  14. A global median of 54% consider climate change a very serious problem, according to our survey of 40 nations. But there are regional differences on views of climate change, with people from Latin America and Africa expressing more concern than others. Before delegates from 195 nations approved a landmark climate accord in Paris this year to limit carbon emissions, our spring survey found a median of 78% supporting such a deal.

  

   

  15. Reporters for niche outlets now fill more seats in the Senate press gallery than do journalists who work for daily newspapers. The face of the Washington press corps has changed markedly in recent years, transformed by this increase in the number of journalists working for “niche” publications and digital startups.

  

  *  *  *

  So faltering Faith in government, losing Hope in the American Dream, and the need for more Charity to manage retirees and refugees.

  

  

  

  

  

• Best "Santa Rally" In 4 Years Ends With Lump Of Coal

  Happy Holidays…

   

  This is the best 'week before Christmas' since 2011… Did we pull forward all that hope-strewn Santa Rally meme?

  

   

  Best week for stocks since the first week of October… A Total melt-up off Friday's OPEX lows

  

   

  On the day an overnight dip was bought… and then puked into the early close

  

   

  Seems like everyone and their pet reindeer was hedged…

  

   

  And credit started to weaken notably…

  

   

  And Bonds diverging…

  

   

  Notably, Energy broke a 3-day winning streak despite higher oil prices

  

   

  Post-FOMC, stock gave back most of their post-Fed gains…

  

   

  And even stocks decoupled from oil's exuberance…

  

   

  Treasury yields did not play along with equity exuberance today but ended the week up 4-5bps (curve flat)

  

   

  The USDollar Index slipped lower again today to end the shortened week down 0.8%… worst week in 3 weeks and worst 4 weeks sicne August black monday crash

  

   

  Commodities were all higher on the week (as the dollar slid)…

  

   

  WTI Crude was up over 5% on the week – its best week since the end-of-August "Andy Hall Ramp' Melt up.

  And what inspired this ripfest… surgingh oil and gasoline prices – "unequivocally good" for Americans – oh wait!

  

   

  Charts: Bloomberg

  

  

  

  

• Has The Great Carry Unwind Arrived: Yen Surges After Warning USDJPY 100 Coming

  For all the talk that the BOJ would unleash more stimulus, buy REITs, more ETFs (both existent or non-existent), or outright stocks, today the USDJPY did something it has not done in 7 weeks: the world’s preferred carry trade currency just slumped to the lowest level since early November. If it wasn’t for  the recent bounce in crude, and if the traditional USDJPY-ES correlation pair had not broken down as a result, the S&P would be well below 2000 at this moment.

  One reason for this is the epic confusion delivered by the BOJ one week ago, when instead of delivering its traditional “forceful” intervention, Kuroda & Co., disappointed the market by presenting half-measures which sent the USDJPY briefly spiking only to see it plunge shortly thereafter.

  

   

  But another, perhaps more troubling catalyst, was the call overnight by JPM’s Tohru Sasaki, Tokyo-based head of Japan markets research, who as Bloomberg reports, warned that the USDJPY will gain 110 next year from about 121 now, the most bullish among around 60 forecasts compiled by Bloomberg. Worse, he sees the equilibrium exchange rate at “below 100.”

  Sasaki believes that the time to be contrarian has arrived: “What investors like to hear is that the yen is weak and stocks are up — but if everyone’s constantly betting that way, at some point they’re going to get burned,” Sasaki, who worked at the Bank of Japan for more than a decade before joining JPMorgan in 2003, said in a Dec. 18 interview. “It’s possible that equity prices keep going up forever, because everyone is working to maximize their returns. But in the forex market, it will never happen — there’s an up and down.”

  If correct, this is a big problem for the BOJ, for Japan, Inc., for Abenomics and certainly for the Nikkei, which has soared in recent years only because of the Yen’s devaluation, as Japan – unlike Europe – has actually reaped the profitable benefits of export-stimulating currency debasement. Recall

  This is how Albert Edwards explained this a month ago:

  Japanese corporate profits since 2013 have boomed like never before. Abe hopes and prays this will spill over and spark a positive wage/price spiral. Yet, in the absence of further Japanese QE, the yen has been paddling sideways against the dollar in a ¥125-118 range since last November – and the yoy decline will soon drop away to zero. In fact, that is already the case on the BoE trade-weighted yen measure – see chart below.

  

  Sasaki’s view is quite contrarian and clashes with the consensus among analysts for the yen to slide to 125 per dollar next year, which would complete a five-year decline of 38 percent. The problem, as the recent ECB fiasco showed, is that if everyone expects the same thing, just the opposite happens.

  What is more troubling for the crowd, is that Sasaki has a history of being spot on:

  The yen has also become “significantly” undervalued after the BOJ’s trade-weighted index slid to an eight-year low in June, according to Sasaki. A Bloomberg gauge of consumer purchasing power parity shows the yen is 39 percent undervalued compared to the dollar, the most among major currencies.

   

  It’s not the first time JPMorgan has gone against the grain. Sasaki’s contrarian call for the currency to rally in the first half of 2014 proved prescient. In the second half of the same year, he escalated his forecast for yen weakness following a surprise BOJ easing, predicting 120 per dollar for Sept. 30 of this year. It closed that day at 119.88.

  Think Goldman or Gartman, just the opposite.

  More disturbing is the BOJer’s prediction that the Bank of Japan can no longer drive Yen weakness:

  Many bears are counting on BOJ Governor Haruhiko Kuroda to drive weakness, after two rounds of stimulus since April 2013 helped push the currency to a 13-year low of 125.86 per dollar in June. Analysts are almost evenly split on the chances of an expansion of the quantitative and qualitative easing program. JPMorgan sees additional QQE late in 2016 having no lasting impact on the yen.

  Incidentally this is precisely what we warned in early September when we presented an IMF report in which the monetary fund confirmed what we had been saying for years, namely that central banks are now monetization constrained, something which explains the BOJ’s recent backtracking.

  The result of all this skepticism, is that what until recently was the world’s most profitable trade – long USDJPY – is rapidly losing steam: “Yen declines are slowing, with this year’s 1 percent loss just a fraction of the at-least 11 percent tumbles each year from 2012. Hedge funds are also closing bets on depreciation, slashing so-called net shorts by the most since August in the week to Dec. 15, Commodity Futures Trading Commission data show.”

  Sasaki’s near term recommendation is for at least 5 big figures of USJPY downside. :

  Sasaki expects an unwinding of bearish positions among domestic investors too, driving the yen to 115 by March 31 next year. They include the 8.5 trillion yen in bets against the yen, 10 trillion yen in overseas holdings of investment trusts and the 50 trillion yen in retained earnings at Japanese corporations that could see increased hedging, JPMorgan estimates.

  Sasaki adds, that “different from past episodes of the yen carry trade, this time the major sellers of the yen are Japanese,” he said, referring to a strategy where investors borrow yen cheaply to invest in higher-yielding nations. “Japanese will need to unwind those positions eventually. The yen is no longer the ideal funding currency.”

  It he is correct, not only will the Nikkei plunge, but the weakness will quickly spill over the US, where Yellen herself will have no choice but to launch even more QE, in the process weakening the dollar and potentially leading to even more Yen weakness in a feedback loop.

  But the main reason why we are virtually certain the right trade here is to be short the USDJPY (and thus long the Yen), is the following blurb from Goldman’s FX crucifier, Robin Brooks from this past Saturday:

  … the BoJ’s 2% target is a long way away, however further progress towards this goal should lead to a decline in real rates – as the nominal curve is anchored by QE – and a decline in both JPY spot and forwards (Exhibit 4). We think the BoJ is closer to easing further to attempt to achieve a successful reflation than it is to giving up altogether, and so we continue to expect $/JPY higher. We recommend being long $/JPY as part of our 2016 top trade recommendation (along with short EUR/$) and forecast $/JPY at 130 in 12 months.

  Three days later, the USDJPY is 100 pips lower.

  To summarize, in finance, there are many unknowns, but one thing is absolutely certain: anyone who listens to Goldman’s advice to clients, ends up looking like this.

  

  

  

  

  

  

• "Unstoppable" California Gas Leak Now Being Called Worst Catastrophe Since BP Spill

  Since initially reporting on California's Alison Canyon gas leak, more details have emerged on the scale (and potential for no solution) of the problem as the infamous Erin Brockovich writes, "the enormity of the Aliso Canyon gas leak cannot be overstated. Gas is escaping through a ruptured pipe more than 8,000 feet underground, and it shows no signs of stopping," as according to the California Air Resources Board, methane – a greenhouse gas 72 times more impactful in the atmosphere than carbon dioxide – has been escaping from the Aliso Canyon site with force equivalent “to a volcanic eruption” for about two months now.

  New infrared footage exposes the massive leak..

   

  Infographic of leak (and potential solution)

  

   

  As TheAntiMedia.org's Claire Bernish details, methane gas continues spewing, unchecked, into the air over southern California from a fractured well to an underground storage site — at such an alarming rate that low-flying planes have necessarily been diverted by the FAA, lest internal combustion engines meet highly volatile gas and, well, blow the entire area to hell.  

  This is, indeed, the biggest environmental catastrophe since the BP Deepwater Horizon oil rig exploded in the Gulf of Mexico in 2010; and for now, there is no way to stop it.

  This methane disaster is worse than can be sufficiently described in words, because while it’s estimated well over 100,000 pounds of methane spew into the atmosphere every hour, the leak can’t be halted, at least until spring. Even then, that stoppage depends entirely on the efficacy of a proposed fix — which remains a dubiously open question.

  According to the California Air Resources Board, methane — a greenhouse gas 72 times more impactful in the atmosphere than carbon dioxide — has been escaping from the Aliso Canyon site with force equivalent “to a volcanic eruption” for about two months now. So far, the total leaked gas measures somewhere around 100,000 tons — adding “approximately one-quarter to the regular statewide methane emissions” during that same time frame.

  “The relative magnitude of emissions from the leak compared to other sources of methane in the State underscores the urgency of stopping the gas leak. This comes on top of any problems caused by odor and any potential impacts from exposure,” states the initial report on the Aliso leak by air quality officials.

  “The enormity of the Aliso Canyon gas leak cannot be overstated. Gas is escaping through a ruptured pipe more than 8,000 feet underground, and it shows no signs of stopping. As the pressure from the weight on top of the pipe causes the gas to diffuse, it only continues to dissipate across a wider and wider area,” explained Erin Brockovich, who spent time in nearby Porter Ranch investigating the leak.

  Officials and experts are concerned, and they can’t recall another leak of this magnitude in decades — if ever. “I asked this question of our staff of 30 years,” said Steve Bohlen, who recently left his position as state supervisor of oil and gas. “This is unique in the last three or four decades. This is an unusual event, period.”

  Though methane, itself, has no odor, the addition of odorants methyl mercaptan and tetrahydrothiophene — a safety measure to alert people by smell to the presence of natural gas — has made the enormous methane seepage impossible to ignore. Thousands of households have evacuated the area, despite little help, much less information, from the gas company about when they might be able to return. As reported by the Los Angeles Times, SoCalGas spokesperson Michael Mizrahi claimed the company had paid to relocate and house 2,092 households — but that effort is severely lacking, says Los Angeles City Attorney Mike Feuer.

  Yesterday, the city attorney’s office sought a restraining order to mandate SoCalGas relocate residents in the affected area within 48 hours of their request; and it is also seeking a “special master” to oversee the entire relocation operation, which is currently being handled by the gas company. Not only does the present relocation lack speed and coordination, but a housing crunch has resulted in surrounding areas — in some cases landlords, who prefer year-long leases to shorter terms, have driven rent as high as $8,500 per month. Hotels are operating at capacity, and in “some of those hotel rooms there are not enough beds for the people who are being moved,” explained chief deputy to the city attorney, James P. Clark.

  “It’s time Porter Ranch residents had direct and complete answers about all facets of this leak,” Clark continued, “including what caused it, how to stop it, and what will be done to assure it never happens again. They should receive better, quicker, and completely adequate relocation assistance.”

  On Thursday, Los Angeles Unified School District board members voted unanimously to close two Porter Ranch schools and relocate their 1,900 students and staff to different locations for the foreseeable future. A local emergency has been declared by the Los Angeles County Board of Supervisors.

  Multiple lawsuits have now been initiated against SoCalGas and/or its parent company, Sempra Energy. A Los Angeles firm representing three of the families, who filed their suit Friday, described in a statement that the well has been “leaking noxious odors, hazardous gases, chemicals, pollutants, and contaminants due to a massive well failure and blowout. However, SoCalGas failed to inform residents of neighboring communities of the disastrous gas leak in a timely manner, putting the health and well-being of thousands of families in jeopardy.” Those suits allege “negligence, strict liability of ultra-hazardous activity, private nuisance, inverse condemnation, and trespass.”

  A class-action lawsuit has also been filed on behalf of the Save Porter Ranch group; and City Attorney Mike Feuer filed a civil suit earlier this month due to the leak’s continued threat to residents’ health and damage to the environment, alleging failure by SoCalGas to prevent the leak and further exacerbation of “the effects of that failure by allowing the acute odor and health problems faced by the community to persist for more than one month, to say nothing about the indefinite time it will persist into the future,” state the court documents. “No community should have to endure what the residents of Porter Ranch have suffered from the gas company’s continued failure to stop that leak,” Feuer stated.

  SoCalGas insists there will be no long-term health effects resulting from the persistent leak; but as Brockovich pointed out, “no one really knows the potential long-term side effects of benzene and radon, the carcinogens that are commonly found in natural gas.” In an email to the Los Angeles Daily News, SoCalGas stated they were “providing air filters for people’s homes” and “have established a claims process for those who feel they may have suffered harm or injury. And our top priority remains stopping this leak as quickly and safely as possible.

  “While the odor added to the leaking gas can cause symptoms for some, the gas is not toxic and county health officials have said the leak does not pose a long-term health risk.”

  But what’s making this massive leak so difficult to stop pertains to the storage ‘container,’ itself. “We have the largest natural gas storage system in the world,” boasts Chris McGill, vice president of the American Gas Association. In the United States, old underground oil fields are often put to use as storage vessels for natural gas — because, hey, that geology worked just fine to hold oil for millions of years, so why not natural gas?

  In fact, there are some 300 such depleted subterranean oil fields being employed this way around the United States. Aliso Canyon, a natural gas storage site since the 1970s, has one of the largest capacities: 86 billion cubic feet. During the summer, gas earmarked for winter heating is pumped into these underground cavities by SoCalGas — and the process is reversed with the turn of the seasons. However, this year, workers encountered what quickly became evident was anything but a typical hiccup. As Wired reported:

  “On October 23, workers noticed the leak at a 40-year-old well in Aliso Canyon. Small leaks are routine, says Bohlen, and SoCalGas did what it routinely does: put fluid down the well to stop the leak and tinker with the well head. It didn’t work. The company tried it five more times, and the gas kept leaking. At this point, it was clear the leak was far from routine, and the problem was deeper underground.”

  Beginning December 4th, SoCalGas crews began drilling a relief well to intercept the fissured pipe. Cement will then be poured into both to seal the wells permanently. Of course, for this to work, crews must locate that original pipe, which is a mere seven inches in diameter, thousands of feet underground — without accidentally creating any sparks, whatsoever. Work near the leak site, therefore, has been prohibited after nightfall, when lighting equipment could potentially cause such a spark; though drilling for the relief well is situated far enough away to continue nonstop.

  Flaring, or setting a deliberate fire to burn off excess gas, simply isn’t an option. The mammoth scope of this leak means a flare would ultimately complicate matters even further.

  “There is no stone being left unturned to get this well closed,” Bohlen stated. “It’s our top priority.”

  In the meantime, it will be months without any possibility of halting this disaster-in-motion. Sickened, uprooted, and furious residents can rest assured, though, because even as methane spews nonstop into the air, SoCalGas did have this consolation:

  “We are deeply sorry for the frustration.”

  

  

  

  

  

Digest powered by RSS Digest